Member Info for AquaeSulis01

OK I'll buy it Toyin and expect to see the entry in the revenue column. One thing to note is that the "downgraded" £5.1M Forecast is because only 8mths of BTS Trading are to be recognised rather than 9mths. Ironic that the h/y RNS reported "Revenues up significantly to £1.58m (HY24: £0.11m) reflecting 20% growth in AxisBiotix sales and addition of Dermatonics revenues, £1.03m (HY24: £0.91m), and BTS sales of £0.42m (HY24: £0.39m) from 12 October 2024." was based on 9mths but the accompanying Apr Investor Meets presentation slide 21 stated BTS contributed just 0.31M rather than 0.42 which would be 8mths revenue.

So £4.3M Revenue ex Croda represents a £800K miss but we were told that the Timing of orders for BTS and Dermatonics meant many just missed the year end making July an exceptionally strong month. One way or another the outlook statement in the audited accounts should make for quite an exciting read.

Toyin, Actually agree we accrue payments once IP is used albeit a quarter in arrears and cash has undoubtedly arrived. However, let's assume all the free samples have been produced by Sederma from their 600 ltr VAT and the very first paid orders required the first commercial use of the 20000 Ltr VAT at Widnes and that as we have been told a little of zenakine goes a long way, that each 20000 ltr batch run results in between £2.5 - £3.0M for Croda and £250 - £300K for SBTX, that initially pre-launch it will take a while to build up enough paying orders to do a 20000L batch run and payment is required by Croda upfront (deferred Consideration). Assuming with Dass onboard Stuart was aware of these time lags and hence negotiated to be paid once Croda are pre-paid not when the IP is used to produce zenakine, then SBTX would also record as a liability not revenue until the product has been produced which may have taken some months whilst initial demand was aggregated from VIPs. So that would explain the Aug Trading Update where revenue was given as between £4.5M -£4.8M whilst SBTX waited confirmation the first delivery had been made and the accounts finalised to reflect a move from a deferred liability of trade & payables to revenue of £300K say. The second pre-paid order (£300K) would be more certain and remain as a liability on the books at year end.

Does that work for you?

Toyin, what we can agree on is cash likely received and an entry in the accounts must be made to reflect that somewhere.

We're talking pre-launch payments here ox so no idea how long it will take for full performance criteria to be met and for pre-payments to move from a liability to Revenue in Croda's accounts

The audited accounts for SkinBioTherapeutics submitted via RNS in 2025 are for the consolidated group, and therefore IFRS 15 applies for revenue recognition, including royalties from Croda and product sales via AxisBiotix not FRS 102

Just to clarify:

- FRS 102 references in trading updates or notes typically relate to the parent company’s standalone statutory accounts, which may still be prepared under FRS 102 for simplicity and cost-efficiency.

- This is common among AIM-listed UK companies: Group accounts under IFRS, parent-only accounts under FRS 102.

- Under current FRS 102, royalty income is recognized when it is probable that economic benefits will flow and the amount can be measured reliably.

- Under revised FRS 102 (2026 onward), royalty income will follow IFRS 15’s sales-based royalty constraint, meaning revenue is recognized only when the underlying sale occurs.

- This aligns with SkinBioTherapeutics’ current approach of deferring royalty recognition until Croda’s product sales are confirmed.

Toyin, one scenario:

Implication for SkinBioTherapeutics: Royalty Recognition Depends on Croda’s Revenue Recognition

- SkinBioTherapeutics’ royalty agreement is based on Croda’s recognized sales revenue, not cash receipts or prepayments.

- Therefore, no royalty is due until Croda recognizes revenue from the Zenakine sale.

- Even if Croda were to pay SkinBioTherapeutics a portion of the prepayment (e.g., as a goodwill gesture or advance), SkinBioTherapeutics cannot recognize it as revenue unless:

- The underlying sale has occurred (i.e., Croda has recognized revenue), or

- The payment is non-refundable and unconditional, and SkinBioTherapeutics has fulfilled its performance obligations.

📘 IFRS 15 Guidance: Matching Revenue to Performance

- IFRS 15 requires revenue to be recognized when the entity satisfies a performance obligation.

- For SkinBioTherapeutics, the performance obligation is typically licensing the IP and enabling Croda’s commercialization.

- However, royalty revenue is constrained until Croda’s sales occur, per the “sales-based or usage-based royalty” exception in IFRS 15. B63–B63B.

🧮 Accounting Treatment in SkinBioTherapeutics’ Books

🧠 Strategic Implication

If Croda’s customer prepayments are substantial and recurring, SkinBioTherapeutics may want to clarify in future disclosures whether any advance payments from Croda are being held as deferred income, especially if they’re non-refundable. But under current IFRS guidance, royalty revenue recognition is tethered to Croda’s revenue, not its cash flow.

Toyin, that's the whole point, it is recognised as a liability not revenue.

In both accounting standards and legal terms, a contract liability is defined as:

“An entity’s obligation to transfer goods or services to a customer for which the entity has received consideration (or an amount is due) but has not yet satisfied the related performance obligation.”

In layman’s terms: If a customer pays you upfront, or even just agrees to pay, you owe them something. Until you deliver that product or service, that money sits on your books as a liability, not revenue. It’s your promise in financial form.

https://dealhub.io/glossary/contract-liability/

Caveat to the post below, despite the version of AI confirming several times the contract liability financial figure below, I cannot find those figures mentioned in the notes anywhere in the Croda Accounts so would ignore the actual amounts but the logic of such advance payments and how they are dealt with stands

Toyin, I have struggled for some time to reconcile the £4.5 - £4 .8M revenue figure which I believe excludes any Cross revenue with the high cash figure but I think I have cracked it. Deferred Contract Liabilities under IFRS result in cash being booked in year whilst not impacting the revenue line and Croda use it to charge upfront for their Consumer Care ingredients which in turn would allow SBTX to do the same. "This is consistent with Croda’s business model, where customers (especially in Life Sciences and Consumer Care) often pay in advance for ingredient supply agreements." Full Year 2024 (Annual Report & Accounts)

Contract liabilities at 31 Dec 2024: £36.8m

Contract liabilities at 31 Dec 2023 (comparative): £34.2m

These represent advance payments from customers for goods/services not yet delivered, recognised as revenue when performance obligations are satisfied.

Half Year 2025 (Interim Results, 30 June 2025)

Contract liabilities at 30 Jun 2025: £34.6m

Contract liabilities at 30 Jun 2024 (comparative): £33.1m

The interim note confirms that part of the 2024 year‑end balance was recognised as revenue in H1 2025, with new liabilities added from fresh customer advances. "

Toyin, all I am saying is let's wait for the audited accounts which are 2-3 weeks away rather than mither and speculate over what they will or will not reveal today.

Regarding MD, thank goodness we have got shares moving to someone with a level head and sticky hands

£500K earn out for Dermatonics Performance not achieved and we simply do not know the quantum of money that had to be committed by the end of June 25 to secure the delivery timescales for the Superdrug launch (10% delivery deposit to get the ball rolling perhaps). As I said, if the royalties received FY 2025 were substantial then they will require to be separately reported under IFRS and as I understand it despite several referrals by you to the Financial Regulating bodies no issues have been flagged up have they?

Thanks for that post shychap, perhaps time for the speculation to stop. The EOY Audited Accounts will be informative one way or another. With a forecast revenue of £4.5-£4.8M a significant royalty payment of over £96K is the sort of threshold that would need to be flagged up so its absence may well be because anticipated revenues in significant amounts from zenakine are taking longer to come through than many of us expected. I noted the following from the H/Y Croda Results "Euromonitor data suggests that L&Rs now represent more than 30% of global beauty and personal care markets by value, up from 27% in 2019. There has also been a significant increase in their share of beauty product launches • L&R customers now represent 81% (H124: 79%) of our Consumer Care sales compared with 72% in 2019" in other words the Multinationals do not represent 80% of Croda's Business following Croda's strategic switch to focus on smaller and more agile local and regional markets.

As previously noted, there was a big jump in Croda Beauty Actives revenue in their Qtr 3 Trading update so perhaps the best we can hope for in the SBTX EOY Accounts is a statement to the effect that "The Company is now operating Profitably on a day to day basis" which would do me.

I think the answer is likely to be a substantial percentage Clio as we know Croda have blended it with other Active ingredients such as Luceane which we know was a success as it was credited with helping to boost the big jump in 2024 Actives Revenue.

https://www.crodabeauty.com/en-gb/formulations/formulation/8493-bioferment-infused-reviving-cream

Also, looked into the different accounting and categorisation of Beauty Actives v Beauty Care:

Croda’s Beauty Actives range focuses on high-efficacy bioactive ingredients like peptides and biotech molecules, while Beauty Care offers functional ingredients for formulation performance and sensory appeal.

Beauty Actives: High-Efficacy Bioactive Ingredients

Purpose: Targeted skin and hair benefits with proven efficacy

Beauty Care: Functional and Sensory Ingredients

Purpose: Enhance formulation performance, texture, and sensory experience.

Key Product Types:

- Emollients, Surfactants, Rheology Modifiers: Improve spreadability, cleansing, and texture.

- Sensory Enhancers: Deliver luxurious feel and finish.

- Stabilizers and Solubilizers: Ensure product consistency and compatibility.

- UV Filters and SPF Boosters: Support sun care formulations.

Zenakine™ is part of Croda’s Beauty Actives portfolio. It’s a biotech-derived neuroactive ingredient designed to counteract stress-induced skin ageing and enhance emotional well-being

If Zenakine™ and Luceane™ are blended, the resulting formulation would still be classified under Croda’s Beauty Actives portfolio, assuming the blend maintains a bioactive, efficacy-driven positioning.

Here’s why:

Both Ingredients Belong to the Beauty Actives Range

- Zenakine™: A biotech-derived neuroactive designed to improve emotional well-being and counteract stress-induced skin ageing.

- Luceane™: A marine-origin active that boosts cellular energy and oxygenation, often used for revitalizing tired or dull skin.

Both are:

- Efficacy-driven: Supported by clinical or mechanistic data.

- Biotech or natural-origin actives: Aligned with Croda’s premium Beauty Actives positioning.

- Claim-based: Targeting skin vitality, regeneration, and wellness.

Croda separates Beauty Actives and Beauty Care in its financial and strategic reporting because they serve distinct roles in the value chain, have different margin profiles, innovation cycles, and customer engagement models.

Here’s a breakdown of the rationale:

Beauty Actives are positioned as high-value, claim-based ingredients with measurable skin or hair benefits.

- Beauty Care ingredients are functional enablers that support formulation structure and sensory appeal.

Distinct Margin and Pricing Dynamics

- Beauty Actives typically command higher gross margins due to:

- IP protection (e.g., Matrixyl™ peptides)

- Clinical substantiation

- Lower volume, higher price-point sales

- Beauty Care operates at larger volumes but lower margins

Most welcome martinu.

I have also estimated the FY 2025 Consumer Care Revenue forecast (including qtr 4) at constant currency based on the current growth trajectory and come up with a figure of £965.84M which marginally tops the maximum analyst forecast of £964.6M (2026E and 2027E are even more bullish when compared to Analyst forecasts but obviously less reliable).

FY 2025 Estimate

Beauty Actives £201.4M (21%), Beauty Care £420.30M (44%), F&F £301.99M (31%) and Home Care £42.15M (4%) giving a total £965.84M

FY 2024 (For Comparison)

FY 2024 Consumer Care

Beauty Actives £184M (20%), Beauty Care £414M (45%), F&F £276M (30%) and Home Care £46M (5%) giving a total £920M

https://www.croda.com/en-gb/investors/analyst-consensus

Part 2

FY 2025 Consumer Care (2024 – 2025 HY and 3rd Qtr Comparitors)

H/Y 2024

Beauty Actives £93.68M (20%), Beauty Care £210.78M (45%), F&F £140.52M (30%) and Home Care £23.42M (5%) giving a total £468.40M

H/Y 2025

Beauty Actives £92.74M (19%), Beauty Care £212.89M (43%), F&F £161.60M (33%) and Home Care £24.59M (5%) giving a total £491.82M

Beauty Actives flat for the first half of this year albeit on a big growth year in 2024.

3rd Qtr 2024

Beauty Actives £45.62M (20%), Beauty Care £102.65M (45%), F&F £68.43M (30%) and Home Care £11.41M (5%) giving a total £228.11M

3rd Qtr 2025

Beauty Actives £50.64M (20%), Beauty Care £105.73M (43.5%), F&F £75.96M (31%) and Home Care £10.73M (4.5%) giving a total £243.06M

So a big jump in Beauty Actives revenue in qtr 3 which could point to a big zenakine royalty payment in SBTX Q2 2026 (assuming paid qtr in arrears), supported by the following commentary from Croda “Steve Foots: Yeah. In terms of the broader point, Lisa. We expect the trends to continue from quarter three into quarter four. What you're seeing is consumer care. You've got consumer care growing well, particularly with innovation-led growth in actives” and “I'll do actives and crop and Stephen on guidance. Yeah. I was Amsterdam last week for two days, just running the rule of the business, and I mean great progress there. Innovation-led growth. We are we have been growing, by the way, over the last few quarters, but this is a bigger growth, and we're very pleased with that. Well balanced across local and regional, and multinationals. Actually, it's USA-led and there's many things behind the growth figures. It's not one or two customer wins. It's many product launches with customers of all different shapes and sizes. Primarily, virtually all of it is on innovation, some great new products coming out and some existing products with new data. So we feel very confident about the active's business.”

Part 1

I have done a bit of a deep dive on Croda Results over the years. When the FY Results are published the rounded to nearest 5% breakdowns are given for the Consumer Care Segments which allow approx. calculations to be made for the value of the individual parts; Beauty Actives (where zenakine resides), Beauty Care, Fragrance & flavours (F&F) and Home Care. From there tracking the quarterly % increases/decreases reported since the 2024 FY Results were published provides a rough idea of the changing revenue value of the Beauty Actives segment for 2025.

FY 2022 Consumer Care;

Beauty Actives £134.67M (15%), Beauty Care £493.79M (55%), F&F £224.45M (25%) and Home Care £44.89M (5%) giving a total £897.80M

FY 2023 Consumer Care

Beauty Actives £132.92M (15%), Beauty Care £439.47M (50%), F&F £264.85M (30%) and Home Care £44.31M (5%) giving a total £886.10M

Little change in Beauty Actives revenue.

FY 2024 Consumer Care

Beauty Actives £184M (20%), Beauty Care £414M (45%), F&F £276M (30%) and Home Care £46M (5%) giving a total £920M

Big jump in Beauty Actives explained thus in the report;

Our innovation pipelines are expanding as customer demand increases for our innovation-led approach:

• NPP sales grew 11% at constant currency and improved to 43% of total sales (2023: 42%)

• We are developing and launching more new products including:

o Luceane, obtained from the bio-fermentation of a marine micro-organism, and proven to reduce premature skin ageing by five years in one month, as well as immediately reducing skin fatigue

o New hair care ingredients derived from ceramides, currently used for skin care, such as Shingo’HAIR DryPure which promotes scalp health.

Beauty Actives grew 6%, in constant currency, driven by a 16% increase in sales to Asia (excluding acquired ceramides) including double-digit percentage growth in China where the business has excellent relationships with L&R customers which are winning market share. Whilst peptides drove the sales growth, new product development is also focused on biotech-based ingredients and ceramides, leveraging the combined expertise of teams in France and South Korea.

Regarding "Dustbin" he came across as a "big picture " man in terms of his investment approach and tended to ignore the details but sometimes it is important to study key details before you blindly jump in or jump out of an investment based on macro events.

In this instance, understanding the difference between melatonin supplements that directly provide synthetic melatonin that are chemically synthesized, often plant-derived and may override natural circadian rhythms, with zenakine, a natural melatonin stimulator that sends biochemical signals to stimulate endogenous melatonin release and works with the body’s feedback loops, preserving circadian rhythm integrity, is vital and the report is an irrelevance to Croda and SBTX.

Just the Chickens then net whilst you wait for them to come home to roost

Wonder if he'll buy back in for a smaller stake and post as pedal bin?