ProBiotix Health Plc

Earnings Release • Aug 30, 2024

National Storage Mechanism | Additional information

RNS Number : 2131C

Probiotix Health PLC

30 August 2024

30 August 2024

ProBiotix Health plc

("ProBiotix" or the "Company" or, together with its subsidiary, the "Group")

Unaudited Interim Results to 30 June 2024

ProBiotix Health p lc (AQSE: PBX), the life sciences business developing probiotics to support cardiometabolic health, a nnounces its unaudited results for the six months to 30 June 2024 .

Highlights (including post period end)

·      Turnover: +84% to £1.01m (2023: £0.55m)

·      Gross Profit margin:  +8% to 56% (2023: 48%)

·      Net loss reduced by 49% to £0.262m (2023: £0.512m)

·      Substantial progress expanding the sales pipeline in North America and Europe

·      Strategic partnership with a North American based contract manufacturer in late stage negotiations for bulk strains and finished formats

·      Key appointments in Head of Marketing and regional Sales Manager Europe

·      Operational separation from OptiBiotix Health due to conclude by the end of 2024

·      Signed agreement with Chinese consumer brand, DanCare, for InstaMelt - launch due in Q4 2024

·      Current trading shows continued good momentum.

Steen Andersen, CEO of ProBiotix, commented: "We are pleased with the performance of the Company for the first six months of the year, and the increasing market opportunity allows the Board to remain confident for our future growth strategy. With the anticipated addition of a local Sales Manager for North America, we will then have the core team in place which will help us drive forward our commercial efforts. Our focus remains on creating long term sustainable revenue growth through building the sales project pipeline and extending the product portfolio with existing customers, focusing on expanding the commercial platform in Europe and North America.

"With a typical sell-in cycle of 18-24 months in the dietary supplement industry, the Company began to see the first commercial return of the strategic investment materialising in a substantial expansion of the sales project pipeline, new customers being onboarded and a high success rate progressing line extensions with existing customers.  I am enthusiastic when it comes to the short as well as the long-term potential for creating value and a good return for the Company and its investors. I would like to thank our investors for their commitment and long standing support."

This announcement contains information which, prior to its disclosure, was considered inside information for the purposes of the UK Market Abuse Regulation and the Directors of the Company are responsible for the release of this announcement.

For further information, please contact:

ProBiotix Health plc	https://probiotixhealth-ir.com/
Steen Andersen, Chief Executive Officer	Contact via Walbrook below
Peterhouse Capital Limited (Aquis Corporate Adviser and Broker)	Tel: 020 7220 9793
Mark Anwyl Duncan Vasey	Tel: 020 7469 0930
Walbrook PR Ltd	[email protected]
Anna Dunphy	Mob: 07876 741 001

Chief Executive Officer's overview

Strategic overview

The strategic aspiration of reaching a revenue of £10 million by 2028 with an estimated 20% EBITDA margin remains the key driver for the Company. The execution continues to take off, which is set out in a number of strategic pillars and KPI's derived from the overall strategy plan:

·    Grow business through existing products by focusing on acquisition of new regional/global customers in the dietary supplement space

·    Expand commercial reach through completion of a strong commercial platform in Europe and North America in combination with establishing a structure in Asia Pacific

·    Expand commercial opportunities by stepwise expanding the health indication focus from cholesterol through to embracing cardiometabolic health and, eventually, healthy aging, this being the fastest moving consumer mega trend in the supplement industry today

·    Increase customer value and competitive entry barriers through providing finished format turnkey solutions rather than LPLDL as an ingredient

·    Provide customers with innovative new dosage formats like the InstaMelt stick, offering entry opportunity into new markets, differentiation and growth opportunities

·    Add new clinically documented strains to the portfolio to expand product offering and secure long term sustainable growth

·    Support our commercial activities by expanding our science network and exploring into new indication areas with clinical trials

·    Increase profitability by consolidating business with selected strategic contract manufacturing partners in Europe and North America

Progress Update

Commercial

We have made substantial progress in expanding the sales pipeline in North America and Europe as well as progressing the distribution activities in Australia and New Zealand and conducting partnership negotiations with a leading South Korean brand in the supplement/probiotic space. 

The partnership with one of the Company's key partners in North America continued to develop positively, with growth of the existing business as well as line extensions linked to the publication of clinical data supporting the efficacy of the partner's hero product, with LPLDL, in the area of IBS and antibiotic recovery. Both indications having significant market potential and present an excellent fit with the Company's value proposition and product offerings within probiotics.

A number of new promising agreements with European partners progressed to late-stage negotiations holding the potential for completion by the end 2024 or early 2025, with launches in additional European countries where the Company is not currently present with commercial products on the market.

Post period end, we signed an agreement with Chinese consumer brand DanCare, focusing on import and cross-border sales of high quality European manufactured supplements into China, which successfully progressed to last phase negotiations with an anticipated launch in late 2024. This will be the first launch of the Company's new direct dose InstaMelt stick which has an extraordinarily high appeal to Chinese consumers. The project presents a key milestone in opening the opportunities within the vast Chinese market.       

Operations

The strategic partnership discussions with a North American based contract manufacturing organisation ("CMO") entered into late-stage negotiations for bulk strains and finished formats. The partnership is intended to provide and strengthen the supply chain platform supporting the Company's North American activities as well as provide a driver for long-term cost optimisation. As part of the agreement, the CMO will also obtain distribution rights for Canada and will be supporting the Company's strategic efforts to obtain Health Canada approval for its LPLDL strain. Approval by Health Canada will, if received, help pave the way for entry into a number of Asian countries, the Health Canada accreditation being a well-recognised quality stamp globally.    

Research & Development

The Company approved the plan for initiation of a new clinical trial measuring the impact of LPLDL intake on sleep, anxiety and stress. The study will be investigated in a double-blinded, placebo-controlled, randomised study in adults suffering from mild stress. The study protocol has been approved by the UK Health Research Authority and will be conducted in the Universities of Southampton and Leeds in the UK. The study will aim to build on promising pre-clinical data and link the intake of LPLDL with sleep/stress and anxiety markers, impact on gut microbiome composition and metabolite changes.

The decision to engage in this study is part of the Company's strategic plan to further diversify into the healthy aging segment. Sleep and anxiety are two key factors playing a pivotal role in maintaining health throughout our lifespan and have shown to be core concerns among consumers as they age. The study will allow the Company to retain its pioneer position in the category and will pose a novel growth and differentiation opportunity.    

Results

Sales for the period showed an increase of 84% to £1.01m (2023: £0.55m) with a gross profit of £0.564m (2023: £0.264m).  Gross profit percentage remains strong at 55% (2023:48%). Net loss for the period had improved by 49% to £0.261m (2023: £0.512m), driven by the strong increase in sales and modest increase in costs associated with the new sales team put in place in the second half of last year.

The Group ended the period with cash balances totalling £0.865m. (2023 year end : £1.5m).  

Board and Management

The separation process from OptiBiotix Health continued during the first half of 2024 with termination of the final remaining shared service agreements and establishment of independent IT systems and structures. The process is anticipated to be completed at the latest by end of 2024 after which the two companies will have fully separated organisations and systems.

To further fuel the commercial activities in the European sales organisation, a local sales manager responsible for Europe, Middle-East and Africa, was recruited. In phase one, the new resource will be focussing on growing the portfolio in the United Kingdom, Benelux and Spain, which the Company believes to hold significant growth potential. Current customer platform as well as Eastern European sales activities will be maintained by the Company's existing resources. Later in 2024, sales resources in North America will be expanded further by hiring of a local Sales Manager to increase commercial reach there as well.

Outlook

Management maintains the positive outlook for the full year driven by the solid commercial performance for the first six months and a cardiometabolic health supplement market continuing to track attractive growth rates of around 8%, combined with the excellent progress made to move several projects in the pipeline significantly forward. The mega consumer trend in the healthy ageing space is projected to continue for a number of years, thus creating increasing opportunities for the Company's value proposition and expanded product offering based on the core LPLD® strain in combination with other ingredients and novel strains.

The very positive customer feedback which the Company received on its new innovative LPLD® InstaMelt stick dosage format following the introduction at Vitafoods in Geneva in May 2024 gives high expectations that this dosage format will play a pivotal role in supporting the Company in meeting the growth ambitions for this and the following years.

The new clinical initiatives focusing on the healthy ageing category allows the Company to broaden the scope to additional attractive indication areas outside the core of cholesterol and cardiometabolic health. This is anticipated to cater for an even more rapid expansion of the product offering and thus further driving positive sales growth in the medium and long term. 

Our efforts to increase liquidity in ProBiotix shares through working with AQUIS and exploring opportunities within other markets, including AIM, as well as improving investor communication, will continue.

The performance of the first six months of the year and the increasing market opportunity allows the Board to remain confident and filled with enthusiasm when it comes to the short as well as the long term potential for creating value and return for the Company and its investors.

Consolidated Statement of Comprehensive Income

For the 6 months to 30 June 2024                          

			6 months to 30 June 2024 Unaudited	Period to 30 June 2023 Unaudited	Period to 31 December 2023 Audited
Continuing operations			£'000	£'000	£'000
Revenue			1,006	552	1,673
Cost of sales			(442)	(288)	(801)
			───────	───────	───────
Gross Profit			564	264	872
Share based payments			(10)	(80)	(31)
Depreciation and amortisation			(26)	(28)	(53)
Other administrative costs			(796)	(668)	(1,550)
			───────	───────	───────
Total administrative expenses			(832)	(776)	(1,634)
			───────	───────	───────
Operating (loss)/profit			(268)	(512)	(762)
Finance income / (costs)			-	-	-
			───────	───────	───────
Profit/(Loss) before Income tax			(268)	(512)	(762)
Income tax			7	-	15
			───────	───────	───────
Profit/(Loss) for the period			(261)	(512)	(747)
Other Comprehensive Income			-	-	-
			───────	───────	───────
Total comprehensive income for the period			(261)	(512)	(747)
			═══════	═══════	═══════
Total comprehensive income attributable to the owners of the Group			(261)	(512)	(747)
			═══════	═══════	═══════
			(261)	(512)	(747)
Earnings/(loss)   per share
Basic & Diluted - pence	4		(0.21)p	(0.42)p	(0.61)p
			═══════	═══════	═══════

Consolidated Statement of Financial Position

As at 30 June 2024

	Notes	As at 30 June  2024 Unaudited	As at 30 June  2023 Unaudited	As at 31 December  2023 Audited
ASSETS		£'000	£'000	£'000
Non-current assets
Intangibles		275	359	301
		───────	───────	───────
		275	359	301
		───────	───────	───────
CURRENT ASSETS
Inventories		95	77	103
Trade and other receivables		631	101	266
Cash and cash equivalents		865	1,948	1,502
		───────	───────	───────
		1,591	2,126	1,871
		───────	───────	───────
TOTAL ASSETS		1,866	2,485	2,172
		═══════	═══════	═══════
EQUITY
Shareholders' Equity
Called up share capital	5	61	61	61
Group reorganisation reserve		(945)	(945)	(945)
Share premium		3,338	3,338	3,338
Share based payment reserve		67	88	57
Retained Earnings		(1,241)	(727)	(980)
		───────	───────	───────
Total Equity		1,280	1,815	1,531
		───────	───────	───────
LIABILITIES
Current liabilities
Trade and other payables		520	581	566
		───────	───────	───────
		520	581	566
		───────	───────	───────
Non - current liabilities
Deferred tax liability		66	89	75
		───────	───────	───────
		66	89	75
		───────	───────	───────
TOTAL LIABILITIES		586	670	641
		───────	───────	───────
TOTAL EQUITY AND LIABILITIES		1,866	2,485	2,172
		═══════	═══════	═══════

Consolidated Statement of Changes in Equity

For six months to 30 June 2024

	Called up Share Capital	Share premium	Group Reorganisation reserve	Share-based Payment reserve	Retained Earnings	Total Equity
	£'000	£'000	£'000	£'000	£'000	£'000
	──────	───────	───────	───────	──────	───────
Balance at 31 December 2022	61	3,338	(945)	8	(215)	2,247
Prior Period adjustment	-	-	-	18	(18)	-
	──────	───────	───────	───────	──────	───────
As at 21 January 2023 (restated)	61	3,338	(945)	26	(233)	2,247
Loss for the period	-	-	-		(432)	(432)
Share based payments	-	-	-	-	-	-
	──────	───────	───────	───────	──────	───────
Balance at 30 June 2023	61	3,338	(945)	26	(665)	1,815
Loss for the period	-	-	-	-	(315)	(315)
Share based payments	-	-	-	31	-	31
	──────	───────	───────	───────	──────	───────
Balance at 31  December 2023	61	3,338	(945)	57	(980)	1,531
Loss for the period	-	-	-	-	(261)	(261)
Share based payments	-	-	-	10	-	10
	──────	───────	───────	───────	──────	───────
Balance at 30 June 2024	61	3,338	(945)	67	(1,241)	1,280
	──────	───────	───────	───────	──────	───────

Consolidated Statement of Cash Flows

For the six months to 30 June 2024

	Notes	6 months to 30 June 2024 Unaudited	Period to 30 June 2023 Unaudited	Period to 31 December 2023 Audited
		£'000	£'000	£'000
Reconciliation of loss before income tax to cash outflow from operations
Operating (loss)/profit		(268)	(512)	(762)
Decrease/ (Increase) in inventories		8	(28)	(53)
(Increase)/decrease in trade and other receivables		(366)	395	231
(Decrease)/increase in trade and other payables		(46)	275	260
Share based payments		10	80	33
Depreciation and amortisation		26	28	53
Net Fx Difference		(1)	(1)	-
		──────	──────	──────
Net cash outflow from operations		(637)	237	(238)
Tax received		-	-	-
		──────	──────	──────
Net cash (outflow)/inflow from operating activities		(637)	237	(238)
Cash flows from investing activities
Purchase of intangible assets		-	(29)	-
		──────	──────	──────
Net cash (outflow)/inflow from investing activities		(637)	(29)	-
		──────	──────	──────
Cash flows from financing activities
Share issues		-	-	-
		──────	──────	──────
Net cash inflow from financing activities		-	-	-
		──────	──────	──────
Increase/(decrease) in cash and equivalents		(637)	208	(238)
Cash and cash equivalents at beginning of period		1,502	1,740	1,740
		──────	──────	──────
Cash and cash equivalents at end of period		865	1,948	1,502
		══════	══════	══════

Notes to the results

For the three months to 30 June 2024

1.    General Information

ProBiotix Health plc is a com pany incorp orated and d omiciled in England and Wales. The Com pan y 's offices are in Wakefield. The Com pany is listed on the Aquis Growth Market (ticker: PBX).

The financial information set out in this report does not constitute statutory accounts as defined in Section 434 of the Companies Act 2006.  The Group's statutory financial statements for the period ended 31 December 2023 were prepared under UK - adopted  International Financial Reporting Standards ("IFRS").

Copies of the annual statutory accounts and the Half Yearly report can be found on the Company's website https://probiotixhealth-ir.com/financials/latest-results

2.    Basis of preparation and significant accounting policies

This report has been prepared using the historical cost convention, on a going concern basis and in accordance with UK - adopted International Financial Reporting Standards ("IFRS").

The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the accounting policies and making any estimates. Changes in assumptions may have a significant impact on the financial statements in the period the assumptions changed. The Board of Directors believe that the underlying assumptions are appropriate and that the financial statements are fairly presented. The Board of Directors believes that there are no areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements, and therefore, these financial statements have limited disclosures.

3.    Segmental Reporting

In the opinion of the directors, the Group has one class of business, in three geographical areas, being that of identifying and developing microbial strains, compounds and formulations for use in the nutraceutical industry. The Group sells into three highly interconnected markets, all costs assets and liabilities are derived from locations in the UK and Denmark.

Revenue analysed by geographical market

	6 months 30 June   2024	Period to 30 June   2023	Year to 31 December 2023
	£'000	£'000	£'000
UK	14	28	65
US	749	350	1,008
International	243	174	600
	──────	──────	──────
	1,006	552	1,673
	══════	══════	══════

During the reporting period one customer represented £749k, 74.5% (2023: £342k, 62.2%) of Group revenues.

4.    Earnings per Share

Basic earnings per share is calculated by dividing the earnings attributable shareholders by the weighted average number of ordinary shares outstanding during the period.

Reconciliations are set out below:

	6 Months to 30 June 2024 Unaudited	Period  to 30 June 2023 Unaudited	Year to 31 December 2023 Audited
	£	£	£
Basic  & Diluted
Earnings attributable to ordinary shareholders	(261,064)	(512,452)	(747,189)
Weighted average number of shares	121,666,666	121,666,666	121,666,666
Earnings /(Loss) per-share - pence	(0.21)p	(0.42) p	(0.61)p
	═════	═════	═════

As at 30 June 2024 there were 5,500,000 (2023:6,500,000) outstanding share options.  These are non-dilutive due to the losses incurred in the year.

5.   Share Capital

Issued share capital comprises:

		6 Months to 30 June 2024 Unaudited	Period  to 30 June 2023 Unaudited	Year to 31 December 2023 Audited
		£	£	£
Ordinary shares of 0.05p each 121,666,666		60,833	60,833	60,833
		───────	───────	───────
		60,833	60,833	60,833
		═══════	═══════	═══════

6.   Post balance sheet events

No post balance sheet events.

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