OptiBiotix Health : Results Report

28 June 2023

OptiBiotix Health plc

("OptiBiotix" or the "Company" or the "Group")

Final results

Notice of Annual General Meeting

OptiBiotix Health plc (AIM: OPTI), a life sciences business developing compounds to tackle obesity, high cholesterol, diabetes and skin care announces its audited results for the 12 months ended 31 December 2022. The Group's results reflect its new structure following the listing of ProBiotix Health plc (PBX) on the AQSE Growth Market on 31 March 2022 with its costs and revenues not included in the accounts post listing. This makes meaningful comparisons with previous years difficult.

Highlights

• Admission of ProBiotix Health plc to the AQSE Growth Market on 31 March 2022 raising £2.5m for the further development of our former Probiotic subsidiary and providing OptiBiotix shareholders with a dividend in specie of over £10m
• Launch of LeanBiome® in The Hut Groups ("THG") impact lean product range and product range extension with a breakfast smoothie with excellent customer reviews
• Launch of GoFigure® products in India with Apollo Hospitals & Pharmacies in September 2022
• Launch of GoFigure® products containing SlimBiome® in China on Tmall.com with over 500 million monthly active users
• Regulatory approval by the Saudi Food & Drug Authority (SFDA) for the sale by our exclusive distributor Nahdi Medical Co (Nahdi) of GoFigure® shakes and bars containing SlimBiome® and subsequent launch in January 2023
• Registration of four new on pack health claims in Australia and New Zealand for SlimBiome® for feelings of fullness, reduction of hunger, and improvement of the gut microbiome and improving digestive health
• British Retail Consortium accreditation, confirming our compliance with the Global Food
  Safety Initiative ('GFSI') benchmark
• A joint development agreement with Firmenich, the world's largest privately owned taste and fragrance company, to develop new products containing SweetBiotix®
• Publication of a peer-reviewed scientific study of one of our second-generation SweetBiotix® products, confirming its suitability as a healthy replacement for sugar
• Significant scientific and commercial progress in the development of our microbiome modulators
• No debt with valuable assets in SkinBiotherapeutics and ProBiotix Health providing a strong balance sheet

Post period

• Strong sales growth of own brand products on e-commerce. The listing of SlimBiome® Medical and Gofigure® products on Amazon UK in February 2023, and Slimbiome® Medical on Amazon Germany and Walmart USA in May 2023. We anticipate further international listings on Amazon throughout 2023 including Amazon India, the Gulf States, and Amazon USA. This is all part of the internationalisation of our own brand products online
• New orders from both The Hut Group (THG) and Holland & Barrett in the UK
• Three new partners in Asia who have all placed initial orders for SlimBiome®

• Published the results of a third human study on SlimBiome® demonstrating statistically significant benefits to appetite and hunger regulation with a single dose (3g) of SlimBiome®
• Good progress from both partners in the commercial scale up of our second-generation SweetBiotix® family of products and microbiome modulators offering exciting potential for future growth

The Report & Accounts which will be shortly posted to shareholders contain a Notice of Annual General Meeting ("AGM") which will be at 11:00am on 26 July 2023 at Walbrook PR Ltd, 75 King William Street, London, EC3V 9HD. Stephen Hammond and Chris Brinsmead will not put themselves for re-election as directors of the Company and will therefore cease to be directors following the conclusion of the AGM.

Stephen O'Hara, CEO of OptiBiotix Health plc said: "2022 has been a challenging year with high stock levels accumulated from the large amount or orders placed in Q4 2021 by two large partners and low sales in H1 2022 (£118K) caused by the global downturn. As anticipated, sales improved in H2 (£339k) but were insufficient to make up the H1 deficit with full year revenues from customer contracts of £457K. A further ten metric tonnes of SlimBiome, approximating to £300k was taken from stock held by distributors for our two largest partners, and not included in these accounts. Once this stock overhang is clear this should have a material impact on reportable revenue.

"Our focus in 2023 is on looking forward with the aim of each business unit reaching profitability by the end of the year. We believe this can be achieved by a reduction in costs, a focus on existing partners returning to forecast, bringing in new partners particularly in the USA and Asia, and expanding e- commerce channels to reduce partner dependency. With our products winning awards in Europe, Asia, and the USA and an increasing number of large companies like The Hut Group, Holland and Barrett, Apollo Hospitals, and Nahdi Medical using our products, we believe we are in strong position for further growth.

"Despite a challenging 2022 the group has no debt, a strong balance sheet, products with excellent customer reviews, second generation products close to commercialisation, and retains significant exposure to the considerable growth potential of the microbiome through its shareholdings in ProBiotix Health plc and SkinBiotherapeutics plc".

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.

Forward-Looking Statements

Certain statements made in this announcement are forward-looking statements. These forward- looking statements are not historical facts but rather are based on the Company's current expectations, estimates, and projections about its industry; its beliefs; and assumptions. Words such as 'anticipates,' 'expects,' 'intends,' 'plans,' 'believes,' 'seeks,' 'estimates,' and similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and are subject to known and unknown risks, uncertainties, and other factors, some of which are beyond the Company's control, are difficult to predict, and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements. The Company cautions security holders and prospective security holders not to place undue reliance on these forward-looking statements, which reflect the view of the Company only as of the date of this announcement. The forward-looking statements made in this announcement relate only to events as of the date on which the statements are made. The Company will not undertake any obligation to release publicly any revisions or updates to these forward-looking statements to reflect events, circumstances, or unanticipated events occurring after the date of this announcement except as required by law or by any appropriate regulatory authority.

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For further information, please contact:
OptiBiotix Health plc	www.optibiotix.com
Neil Davidson, Chairman	Contact via Walbrook below
Stephen O'Hara, Chief Executive
Cairn Financial Advisers LLP (NOMAD)	Tel: [phone]
Liam Murray / Jo Turner / Ludovico Lazzaretti
Peterhouse Capital Limited (Broker)	Tel: [phone]
Duncan Vasey / Lucy Williams
Walbrook PR Ltd	Mob: [phone]
Anna Dunphy

About OptiBiotix - www.optibiotix.com

OptiBiotix Health plc (AIM: OPTI), which was formed in March 2012, brings science to the development of compounds which modify the human microbiome - the collective genome of the microbes in the body - in order to prevent and manage human disease and promote wellness.

OptiBiotix has an extensive R&D programme working with leading academics in the development of microbial strains, compounds, and formulations which are used as active ingredients and supplements. More than twenty international food and healthcare supplement companies have signed agreements with OptiBiotix to incorporate their human microbiome modulators into a wide range of food products and drinks.

OptiBiotix is also developing its own range of consumer supplements and health products. The Company's current areas of focus include obesity, cardiovascular health, and diabetes.

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Chairman and CEO report

The Group addresses a very large and fast-growing market with a unique portfolio of proven ingredients and finished products. The year has seen progress in both scientific human studies and regulatory approvals in key international markets demonstrating our products effectiveness and global acceptability. After strong sales growth through 2019 (£745K), 2020(£1.5m) and 2021 (£2.2m) the Company expanded its team in 2021 including the appointment of CEO, Rene Kamminga to run the prebiotic business, to meet growth demands post Covid but as with many companies in the industry suffered from lower sales in 2022 caused by the global economic uncertainty that followed the Russian invasion of Ukraine.

This was compounded by the large amount of orders placed in Q4 2021 resulting in high stock levels held by customers accompanied by delays in launching new products and re-ordering due to the global economic down turn in 2022. The Company are pleased that its products have begun to be commercialised by a number of large and well known commercial partners. Agreements with these partners are time consuming with extensive due diligence and consumer testing prior to launch. Launch of products with these partners is a significant endorsement of our products which we believe in the absence of recent global economic events (COVID and Ukraine) would have led to strong revenue growth.

Post period the Company has responded to these changes in the external environment by a reduction in costs, a focus on sales and partners delivering to forecast, and building up operational resilience by broadening its partner base and building its ecommerce channels to reduce partner dependency. The Company believes subject to no significant change to the external environment these measures will return the business to the high levels of growth and EBITDA profitability achieved in 2020 and 2021. The Group remains financially robust with no debt, and valuable assets in SkinBiotherapeutics and ProBiotix Health providing a strong balance sheet, with commercialisation of our second-generation technologies affording potential for future growth and shareholder value.

Strategic overview

OptiBiotix Health is a life sciences business founded on the development of prebiotic and probiotic compounds to tackle obesity, cardiovascular disease, diabetes and skincare: all markets offering strong growth potential in every part of the world. The Company has built a broad portfolio of microbiome assets in this field including prebiotic products like SlimBiome®, WellBiome®, SweetBiotix®, and Microbiome modulators within its core business and skincare through SkinBiotherapeutics and probiotics through ProBiotix Health plc. These create a diverse portfolio of opportunities in an emerging area of healthcare.

The first phase of the Company's two-stage growth strategy was to establish the credibility of our science and financial sustainability of each business through an initial focus on building sales of our first-generation products (principally SlimBiome® in prebiotics and LPLDL® in probiotics) though business-to-business deals with partners in multiple territories around the world, starting in Europe, while at the same time pursuing the development of our more innovative second-generation products that offer potentially larger future returns. This was achieved in 2020 and 2021 with combined revenues of £2.2m and both the Probiotic (now ProBiotix Health plc) and Prebiotic trading businesses being EBITDA profitable in both years and the Group showing a £5.8m profit in 2020 and £6.2m in 2021, albeit largely due to the gain in the value of its investments.

With SlimBiome® and LPLDL® winning international awards, gaining excellent customer reviews, and becoming established ingredient brands with a number of key national and international partners in 2019 we started to move towards developing and testing market acceptance of our own label branded

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products (e.g GoFigure, SlimBiome Medical, and CholBiomeX3) on our online store. The aim was to use the online store as a display window to attract B2B partners and major retailers and assess the potential of selling final products direct to consumers. With positive customer feedback on our own products and more consumers buying online as a result of the COVID pandemic (Mintel, Vitamins and Supplements: Inc Impact of COVID-19 - US, August 2020) a decision was made in 2021 to develop this into a business unit with the appointment of a E-commerce director. This was one of a number of changes made in 2022 to allow the Company to respond to changes in the external environment. These also included:-

• Gradually moving from ingredient sales to the sale of finished own brand SlimBiome Medical or private label products, both through larger partners and direct-to-consumer through our own online store, Amazon, and other outlets such as Tmall.com in Asia. This increases margins and reduces partner dependency.
• Shifting the focus from Europe to large partners in key strategic markets, particularly the USA and Asia. This broadens the partner base and reduces revenue dependency on a small number of partners whilst accessing larger markets with substantially higher sales volumes.
• Expanding our first-generation product portfolio of functional ingredients by extending our technology into new channels such as sports nutrition with LeanBiome® and new product areas such as WellBiome®, and
• Progressing the commercialisation of our second-generation products, SweetBiotix® and Microbiome Modulators.

This was accompanied by a number of new appointments throughout 2022 in marketing, business development in the USA, and e-commerce to support growth of the business. Whilst global economic conditions temporarily impacted on progress during 2022 we believe the changes made in 2022 increase the Company's resilience to volatility in the external environment and are seeing sales slowly returning to previous forecast levels as market conditions improve. The other key point is that now we have established the SlimBiome® brand and OptiBiotix's market credibility customers are starting to place orders without having to go through a complex negotiation process.

Commercial and scientific overview

Key developments during the financial year and their impact on potential sales growth in 2023 include:

• The achievement in January 2022 of British Retail Consortium accreditation, confirming our compliance with the Global Food Safety Initiative (GFSI) benchmark. This certification by one of the leading international food safety standards, accepted by most large retailers and their suppliers worldwide, is an important support to our commercial strategy of increasing our sales of final product solutions to retail partners and will enhance opportunities in other retail channels both within the UK and international markets.
• Our entry into the sports nutrition market with the launch of LeanBiome®, a patented blend of dietary and prebiotic fibres and a trace mineral, developed to support athletes increase lean muscle mass and to improve metabolism, gut health and satiety. Our distribution agreement with leading e-commerce retailer The Hut Group PLC ("THG"), signed in December 2021, saw LeanBiome® launched in January 2022 in a small number of products including its Impact Diet Lean product as part of its My Protein range in the UK and at the end of H1 2022 a product extension with a breakfast smoothie. Both products are receiving excellent customer reviews. High inflation in 2022 led to consumers becoming more price- conscious leading to a trading down of high protein products which reduced the forecast demand for protein powder shakes across the industry and a lower than forecast sales from

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