CRX.L Regulatory News (CRX)

Cyprotex PLC

("Cyprotex" or "the Company")

Interim Results 2015

Revenues up significantly and return to operational profitability

Cyprotex PLC (AIM: CRX), a specialist ADME-Tox Contract Research Organisation (CRO), today reports its interim results for the half year to 30 June 2015.

Financial Highlights

· Revenues up 28% to £6.93 million (H1 2014: £5.41 million).

· Gross margins were 76.7% (H1 2014: 78.7%, FY 2014: 75.0%).

· Operating profit of £0.36 million (H1 2014: Operating loss £0.58 million).

· Underlying EBITDA^ of £1.10 million (H1 2014: £0.04 million).

· Cash of £4.13 million (H1 2014: £4.56 million, FY 2014: £2.93 million).

^ excluding share based payment charge

Operational Highlights

· The investment plan for all 4 sites which commenced in early 2014 and completed in early 2015 is now bearing fruit and has contributed significantly to the revenue growth seen in H1.

· Investment in a new drug transporter facility for the support of full drug-drug interaction studies for regulatory submission, QTof based metabolite identification and 3D tissue-based toxicology assays at our UK sites has been highly successful in revenue generation. Successful translocation of our existing toxicology facility to a second UK site at the BioHub, Alderley Park.

· Validation of a replica High Throughput (HT) ADME screening platform at our Watertown site has also been completed and the platform is now supporting large scale screening contracts for the US Government.

· Investment in upgrading our toxicology assays at our Kalamazoo site (formerly CeeTox) to bring them fully into OECD compliance has been completed and these assays, along with our proprietary SenCeeTox® skin sensitization assays have been well received by existing and new customers.

· Website upgrades including a new blog page have contributed to a noticeable improvement in the global recognition of the Cyprotex brand.

· 103 new customers in H1 2015 (111 in H1 2014).

· Successful completion and continued expansion of two large US Environmental Protection Agency (EPA) contracts.

· Largest customer is 12.3% (FY 2014: 7.8%) of revenues and represents a continuing large strategic deal with a major pharmaceutical company.

Post Period-End Highlights

· Expansion of Research & Development into regulatory genotoxicity services and the creation of a new Biosciences Division across all four global sites.

Ian Johnson, Chairman of Cyprotex PLC, said:

"I am pleased to report a significant increase in first half revenues, which in large part is the result of the significant investment made in 2014 in widening and deepening our ADME and Toxicity testing services on all four of our global sites. The investment programme resulted in the generation of an operational loss for 2014, however, as anticipated the Company has rapidly returned to operational profitability in the first half of the year and the Board remain confident that trading for the year is in line with expectations and that this improvement in financial performance will be sustained in the second half of 2015 as we consolidate our new and improved service offerings."

For further information:

About Cyprotex PLC

Cyprotex is listed on the AIM market of the London Stock Exchange (CRX). It has sites in Macclesfield and Alderley Park, near Manchester in the UK, Watertown, MA and Kalamazoo, MI in the US. The Company was established in 1999 and works with more than 1100 partners within the pharmaceutical and biotech industry, cosmetics and personal care industry and the chemical industry. Cyprotex acquired Apredica and the assets of Cellumen Inc. in August 2010 and the combined business provides support for a wide range of experimental and computational ADME-Tox and PK services, extending from early drug discovery through to IND submission. The acquisition of the assets and business of CeeTox in January 2014 has enabled Cyprotex to expand its range of services to target the personal care, cosmetics and chemical industries. The Company's core capabilities include high quality in vitro ADME screening services, mechanistic toxicology and high content toxicology screening services, including our proprietary CellCiphr® toxicity prediction technology, predictive modelling using PBPK and QSAR techniques, including Cloe® PK for in vivo PK prediction, and a range of skin, ocular and endocrine disruption services. For more information, see www.cyprotex.com

Chairman and Chief Executive Officer's Statement

The Company has made a very promising start to the year reporting a 28% increase in sales over the corresponding period last year. More importantly, the Company has returned to operational profitability.

The increase in sales is predominantly due to the investments made as part of a wide ranging strategic investment review which commenced in early 2014. Whilst last year we experienced delays in validating some of these assays and incurred the corresponding overhead costs which had a resultant impact on profitability, the decision to make the investments, financed by the cash injection of £6.88 million in September 2013 led by Harwood Capital, was the right one for the business.

The ADME-Tox services market remains fragmented and highly competitive and our planned expansion into high value and technically challenging new service offerings is a continuing part of our drive to make Cyprotex the acknowledged world leader in the provision of such services and to positively differentiate ourselves in the eyes of our customers.

Since the beginning of 2014 the Company has made significant investments with close to £2 million of capital expenditure including £0.34 million in H1 2015. At our Macclesfield site, and at the new BioHub facility at Alderley Park we have now validated the full panel of drug transporter assays, the data from which is required by both the US FDA (Food and Drug Administration) and EMA (European Medicines Agency) for regulatory submissions. We have also invested in a new Quadrupole Time of Flight Mass Spectrometer. This particularly sensitive instrument is being used to identify potential metabolites produced when a drug substance is administered, which is another critical requirement by the regulatory authorities before a drug can enter clinical trials. We have also invested in developing novel 3-dimensional tissue models for use in toxicology testing. These models are more representative of tissues in the body than existing 2-dimensional models and provide advantages such as enhanced longevity and improved functionality. In Watertown, we have replicated our highly successful High Throughput (HT) ADME screening facility. This was a very challenging project but we are now running samples on this new platform including high volume contracts. We anticipate that the HT platform will be a driver of significant growth for this US site in the future based on our customers' requirements for fast turnaround and high quality data. In Kalamazoo, we have upgraded many of the existing assays to comply with OECD (Organisation for Economic Co-operation and Development) guidelines under GLP (Good Laboratory Practice) conditions.

The results of these investments have benefitted all four sites in terms of revenue growth with much of the increase seen in the first half coming from these new services. Growth has also come from larger contracts from existing customers, which is a pleasing trend. In part this is due to increasing client inter-dependency between the sites. Customers, who might perhaps have only chosen to run ADME assays with us in the past, are now expanding their contracts to include toxicology services. In addition, large Government contracts, part of which was outsourced to third parties in the past are now able to be run entirely within the Company at our various sites.

US operations in 2014 were loss making and we are pleased to report that while there remain challenges these losses are diminishing. The performance of the UK sites, in terms of revenue generation and profitability, has been outstanding and has largely driven the 1st half results.

Customer Relationships

We have also invested in sales and marketing. The upgraded website now incorporates all the assays we offer across all the sites. Our new blog was launched on the Cyprotex website in April 2015, and this, along with a focus on social media, has driven a significant increase in customer enquiries. We are now focussing on making the Cyprotex name the brand of choice for ADME -Tox screening services given that we now have over 1100 customers including many of the major and medium sized pharmaceutical companies as well as clients in many other industry segments including cosmetics, agrochemicals, industrial chemicals, medical devices and aviation.

Several of our larger customers have signed up to longer term exclusive service contracts with Cyprotex which has benefitted us on several levels and is a reflection of the growing confidence our customers have in our ability to deliver a quality service.

We have spent considerable marketing efforts on relaunching and promoting our skin, ocular and endocrine disruption testing services offered from our Kalamazoo site. These efforts appear to be paying off with the growth of revenues for services being very encouraging.

We have completed several projects from customers in Japan following our increased marketing in the Far East. Furthermore, we have secured several other Asian clients indicating the expansion of our brand reach.

Post period end on 16 July 2015 the Company announced the launch of a new Biosciences division to complement its existing ADME-Tox business. The new Biosciences division enables customers to access expertise in 2D and 3D cell -based efficacy screening to investigate the therapeutic or biological effect of new molecules.

Financial Performance

Turnover is 28% higher than the comparable period last year driven by our investment strategy yielding benefits and growth from existing customers particularly in higher value contracts. Our UK site revenues, which contribute some three quarters of the total reported, are significantly enhanced compared to those reported in the comparative period, up 49%. Our revenues from the Watertown site are slightly down on the comparative period, due to less Government contract work being placed at this site over the period.

Gross margins have grown to 76.7%, up from 75.0% for FY 2014 with decreased outsourcing in H1 2015 to partners as several new services have been brought in-house.

We have invested in R&D projects to be able to launch new, competitive assays to the ADME-Tox market. In terms of capital expenditure, which is undertaken to support R&D programmes and drive new efficiencies, total additions in H1 2015 were £0.34 million with total investments in laboratory equipment in the last 18 months approaching £2.0 million. Upgrading our equipment and investment in new capabilities brings additional depreciation charges to the income statement and as a consequence the depreciation charge is 16% higher at £0.57 million (H1 2014: £0.50 million).

We have invested substantially in our internal expertise, skills and knowledge base increasing staff numbers from 112 at 30 June 2014 to 116 at 30 June 2015.

With the improved trading the Company reports a reversal of an operating loss of £0.58 million in H1 2014 to an operating profit in H1 2015 of £0.36 million, an increase of £0.94 million. Similarly, underlying EBITDA has increased to £1.10 million, up £1.05 million from H1 2014.

In September 2013, the Company issued Loan Notes to the value of £7.0 million. One of the conditions attached to the issue of these Loan Notes is that the value of an associated embedded derivative is linked to changes in the Company's share price via conversion or notional conversion rights into ordinary shares. The Loan Note holders will then ultimately effectively share with ordinary shareholders any increase in value of the Company above 60 pence per share. The value of the embedded derivative associated with both Loan Note liabilities is linked to the average share price in the 30 days preceding the reporting date. At 30 June 2015, this was 54.0 pence (v 43.8 pence at 31 December 2014). It has been calculated that this relative increase in share price leads to an upward revision in the fair value of the embedded derivative associated with the Loan Notes by £0.525 million in H1 2015 to £1.875 million. This increase is recorded as a finance charge in the income statement in H1 2015.

The Company's cash balances remain robust and stood at £4.13 million at period end, up from £2.93 million at the start of the year. Principal movements are £1.69 million generated from operations, £0.34 million spent on tangible fixed assets and £0.15 million in servicing debt and contingent consideration obligations.

Strategy

Our stated strategy for future growth remains dependent on three factors. The first is growing our existing service revenues by better marketing our services and by outperforming our competitors in what is still a fragmented market. The second is growing revenues by investing in targeted Research & Development to provide new services to address customer needs which will provide superior quality revenues. And finally, to grow the business by acquisition of selective assets or companies which are technically and philosophically aligned with the Cyprotex vision.

The investments made in 2014/15 which are now being actively sold to customers have significantly strengthened the second arm of this strategy as evidenced by the results in H1 2015. We intend to prioritise this internal investment strategy for the foreseeable future.

Outlook

Our 2014/15 investment plan in new Research & Development to provide state-of-the-art equipment and valuable assays is now complete and these new services have been launched and well received by existing and new customers alike. Revenues from these services have contributed significantly to the excellent growth we have seen in the first half. Growth from existing customers particularly in higher value contracts to assist with regulatory filings of new drug substances has also been noted. We expect these growth trends to continue into the 2nd half of the year and we should also benefit from the usual and historical increase in general trading in the second part of the year.

We will continue to focus on improving operational efficiency, particularly in the US as well as making selective investments in new services, albeit on a smaller scale for the remainder of 2015 and 2016.

The Board would like to thank all of our employees for an excellent 1st half performance and looks forward to being able to report further improvements in financial performance in the second half, in line with management expectations.

18 August 2015

Consolidated interim income statement

six months to 30 June 2015

Consolidated interim statement of comprehensive income

six months to 30 June 2015

Consolidated interim statement of financial position

at 30 June 2015

Consolidated interim statement of changes in equity

six months to 30 June 2015

Consolidated interim statement of cash flows

six months to 30 June 2015

Notes to the interim condensed consolidated financial statements

six months to 30 June 2015

1. Nature of operations and general information

Cyprotex PLC ('Cyprotex') and subsidiaries' (together 'the Group') principal activity is the provision of in vitro and in silico ADMET/PK (Absorption, Distribution, Metabolism, Excretion, Toxicity, and Pharmacokinetic) information to a number of different industries including the Pharmaceutical, Biotechnology, Cosmetic, Personal Care, Agrochemical, Chemical Industries and Academia. Cyprotex's vision is to provide, in partnership with our customers in drug discovery and development, the highest quality, fastest turnaround and most cost effective ADMET and pharmacokinetic data to those customers.

Cyprotex PLC is the Group's ultimate parent company. It is incorporated and domiciled in England and Wales. The address of Cyprotex PLC's registered office is 100 Barbirolli Square, Manchester M2 3AB. The addresses of its principal places of business are 15 Beech Lane, Macclesfield, Cheshire, United Kingdom, SK10 2DR, BioHub at Alderley Park, Alderley Edge, Cheshire, SK10 4TG, 313 Pleasant Street, Watertown, Massachusetts, MA02472 USA and 4717 Campus Drive, Kalamazoo, Michigan MI49008 USA. It trades through its wholly owned subsidiaries, Cyprotex Discovery Limited based in Macclesfield and Alderley Park in the UK and Cyprotex US, LLC in Watertown and Kalamazoo in the USA. Cyprotex PLC's shares are listed on the Alternative Investment Market of the London Stock Exchange.

Cyprotex's interim condensed consolidated financial statements ('the interim financial statements') are presented in Pounds Sterling (£), which is also the functional currency of the parent company. These interim financial statements have been approved for issue by the Board of Directors on 18 August 2015.

The financial information for the year ended 31 December 2014 set out in these interim financial statements does not constitute statutory accounts as defined in section 435 of the Companies Act 2006. The Group's statutory financial statements for the year ended 31 December 2014 have been filed with the Registrar of Companies. The auditor's report on those financial statements was unqualified and did not contain statements under section 498(2) or section 498(3) of the Companies Act 2006.

2. Basis of preparation, going concern and accounting policies

Basis of preparation

These interim financial statements are for the six months to 30 June 2015. They have been prepared in accordance with IAS 34, Interim Financial Reporting. They do not include all of the information required for full annual financial statements, and should be read in conjunction with the annual consolidated financial statements of the Group for the year ended 31 December 2014.

Going concern

The Directors have reviewed the budget, financial forecast including cash flow forecasts and other relevant information. They believe that the Group has adequate resources to continue in operation for the foreseeable future.

Accounting policies -

New standards, interpretations and amendments adopted by the Group

The accounting policies adopted in the preparation of the interim financial statements are consistent with those followed in the preparation of the Group's annual consolidated financial statements for the year ended 31 December 2014, except for the adoption of new standards and interpretations effective as of 1 January 2015.

The Directors do not consider that the adoption of these standards and interpretations would have a material impact on the consolidated or company financial statements in the period of initial application.

3. Seasonal fluctuations

Historically revenues are strongest in the second half of the year. Revenues slow following the Christmas and New Year holidays, and again during the summer holidays, particularly from European clients.

The provision of ADMET services is subject to seasonal fluctuations, historically with peak demand in the second half of each year. For the six months ended 30 June 2015, revenues represented 59.9% of the annual level of revenues in the year ended 31 December 2014.

4. Segmental information

The Group has a single operating and reporting segment, that of providing in vitro and in silico ADMET/PK (Absorption, Distribution, Metabolism, Excretion, Toxicity, and Pharmacokinetic) information to a number of different industries including the Pharmaceutical, Biotechnology, Cosmetic, Personal Care, Agrochemical, Chemical Industries and Academia. The revenue and operating profit or loss for the periods are derived from the Group's single operating and reportable segment. This has been determined by reference to the information that the Chief Operating Decision Maker receives about the Group.

The Group gives a geographic analysis of revenue by destination. Key markets for the Group are identified as North America, Mainland Europe and the United Kingdom.

5. Finance income and finance cost

Finance income comprises the following:

Finance cost comprises the following:

The Group entered into a Subscription Agreement on 21 August 2013 with Trident Private Equity Fund III LP, the ultimate outcome of which was the issue of £3 million of unsecured Redeemable Loan Notes ("Redeemables") and £4 million of unsecured Convertible Loan Notes ("Convertibles") in September 2013. By way of an Open Offer the Company issued £4 million nominal value of Convertible Loan Notes at par. Additionally it also, by way of subscription, issued £3 million nominal value of Redeemable Loan Notes at par. Details of this fundraising were sent to all shareholders by way of a circular. Both instruments pay interest in the form of 'payment in kind' ('PIK') notes at the rate of 5% per annum on a compound basis, payable on each anniversary of issue for a period of five years.

Convertible Loan Notes were offered and issued such that each shareholder would be entitled to 0.01783003 of nominal value £1.00 Convertible Loan Notes. Convertible Loan Notes are convertible at 6 pence per share, now 60 pence following a ten for one share consolidation in July 2014. Redeemable Loan Notes were issued subject to a notional conversion price of 6 pence per ordinary share, now 60 pence following a ten for one share consolidation in July 2014. Issue costs associated with this fundraising amounted to £122,000. Net proceeds from the issue of Loan Notes amounted to £6,878,000.

The Convertible Loan Notes and associated PIK notes can be converted at the election of the holders of Convertible Loan Notes into ordinary shares of the Company on 30 September 2014 and/or on each anniversary of that date. Subject to conversion rights being exercised by the Noteholder, Loan Notes are repayable by the Company on the earlier of:

· the Offer Date where there is a change in control of the Company or a scheme of arrangement put in place.

· the Maturity Date (30 September 2018). The Maturity Date in respect of the Convertible Loan Notes and Redeemable Loan Notes may also be extended by up to two years at the option of a 50% majority of the holders of Convertible Loan Notes and Redeemable Loan Notes respectively.

The amount to be paid by the Company in respect of the redemption of the Loan Notes will be the greater of:

i) the nominal amount of the Loan Notes and the PIK Notes: and

ii) where a change in control of the Company or a scheme of arrangement is put in place, the amount calculated by applying the Offer Price per ordinary share applicable to the Offer to the number of Ordinary Shares represented by the Notes on the assumption that the nominal value of the Loan Notes then in issue (including any PIK notes issued or to be issued on or immediately prior to the Offer Date) had been converted in to Ordinary Shares at the Conversion Price (60 pence) or Notional Conversion Price (60 pence), as the case may be, on the Offer Date: and

iii) where the Loan Notes are redeemed on the Maturity Date the amount calculated by applying the average mid-market closing price of the Ordinary Shares in the 30 Business days prior to the Maturity Date to the number of Ordinary shares represented by the Loan Notes on the assumption that the nominal value of the Loan Notes then in issue (including any PIK notes issued or to be issued on or immediately prior to the Maturity Date) had been converted into Ordinary shares at the Conversion Price (60 pence) or Notional Conversion price (60 pence) on the Maturity date (30 September 2018).

The Convertible Loan Notes and Redeemable Loan Notes are subject to a multiplier based upon the increase in share price from the Conversion or Nominal Conversion price of 60 pence. In both cases any increase in the average mid-market closing price of Cyprotex shares from a nominal base of 60 pence in the 30 prior market dealing days leads to a broadly proportionate increase in the amount of potential Loan Note related debt repayable on maturity. This increase in debt, relating to share price movements of the Company, is accounted for under International Financial Reporting Standards ("IFRS") as an additional finance cost in the income statement. Any decrease in debt, relating to share price movements of the Company, is accounted for under International Financial Reporting Standards ("IFRS") as an additional finance income in the income statement.

The Convertible Loan Notes have three separate economic components as follows:

· a liability component being a discounted fixed rate debt;

· an equity component due to the holders right to convert into Ordinary shares; and

· an embedded derivative due to conversion rights being linked to the Company's share price.

Each of these components is measured to fair value at the issue date.

This results in recognition of £164,496 (net of associated issue costs) as an equity component and the initial recognition of the debt component.

The Redeemable Loan Notes have two separate economic components as follows:

· a liability component being a discounted fixed rate debt; and

· an embedded derivative due to conversion rights being linked to the Company's share price via a notional issue price.

Each of these components is measured to fair value at the issue date and a gain of £122,734 is deferred in respect of differences in market and coupon rates at the date of issue.

Subsequently, the liability components of both the Convertible and Redeemable Loan Notes are recorded at amortised cost using the effective interest method, with interest-related charges recognised as an expense in finance cost in the income statement. The embedded derivatives associated with the Convertible and Redeemable Loan Notes are subsequently measured at fair value at each balance sheet date, and the gain or loss on re-measurement to fair value is recognised as finance cost/income in the income statement.

The carrying value attributed to the Loan Notes are as follows:

A summary of the components of the finance costs/(income) associated with the issue of Redeemable and Convertible Loan Notes is as follows:

The number of Redeemable Loan Notes in issue is as follows:

The number of Convertible Loan Notes in issue is as follows:

In the case of the embedded derivatives in calculating their values, principal assumptions used were a share price volatility of 38%, a credit spread of 20% and a risk free rate of 1.1%.

6. Loss per ordinary share

The calculation of the basic loss per share is based on the loss attributable to ordinary shareholders divided by the weighted average number of shares in issue during the period.

The calculation of diluted earnings per share is based on the basic earnings per share, adjusted to allow for the issue of shares and the post tax effect of dividends and/or interest, on the assumed conversion of all dilutive options and other dilutive potential ordinary shares.

Reconciliations of the earnings and weighted average number of shares used in the calculations are set out below.

^ rebased for ten for one share consolidation on 24 July 2014

Where a loss is reported for a period the weighted average number of ordinary shares in issue, for the purpose of calculating diluted loss/earnings per share, is the same as that used for the basic loss/earnings per share calculation. This is because outstanding share options would have the effect of reducing the loss per ordinary share and would therefore not be dilutive.

On 24 July 2014, following approval by shareholders at General Meeting the Company proceeded to effect a ten for one share consolidation. The effect of this share consolidation was to reduce the number of shares in issue by 90% from 224,340,569 to 22,434,056. Accordingly historic reported (loss)/earnings per share after that date are rebased by multiplying by a factor of ten.

Under the Share Consolidation every ten existing ordinary shares with nominal value £0.001 were consolidated into one new ordinary share with nominal value £0.01. The rights attaching to the New Ordinary Shares are identical in all respects to those of the Existing Ordinary Shares. Application was made for 22,434,056 New Ordinary Shares of £0.01 each to be admitted to trading on AIM with dealing commencing on 28 July 2014, with any fractional entitlements aggregated and sold in the market and the proceeds given to charity.

Following the ten for one share consolidation the conversion or notional conversion price for Loan Notes issued by the Company, and the target and exercise price of any share option awards are all adjusted upwards by a factor of ten.

7. Share issues

No shares were issued in the 6 month period to 30 June 2015 or 6 months to 30 June 2014.

During the year ended 31 December 2014, 8,643 ordinary shares were issued pursuant to the conversion of Loan Notes at 60 pence per share. The share issues in exchange for the cancellation of Loan Notes yielded £nil in cash and increased equity by £5,186. The share price at the date of conversion was 51 pence.

Shares issued and movements in share capital may be summarised as follows:

The Company has only one class of shares.

8. Share based payment

The Company adopted a Long Term Incentive Plan ('LTIP') on 22 January 2014. The purpose was to allow participants, who are executives in the Company, to potentially share in the creation of value for shareholders. A total of 2,999,999 share options under the LTIP have been awarded. The vesting of these executive options is on grant, at an exercise price of 60 pence per share, and are exercisable only upon change of control of the Company within a ten year period, dependent upon the Company's share price performance and subject to a minimum share price of 120 pence.

In order to calculate the fair value of potential awards a Monte Carlo simulation was used. The principal inputs to the valuation model were as follows:

^ rebased following ten for one share consolidation on 24 July 2014

The amounts charged to the income statement in respect of these awards, is as follows:

9. Additions and disposals of property, plant and equipment

The following tables show the significant additions and disposals of property, plant and equipment:

10. Intangible fixed assets

The following tables show the movement on intangible fixed assets:

Additions in the period to 30 June 2014 and year ended 31 December 2014 to technology & knowhow relate to development work associated with Drug Transporter technology.

Additions in the period to 30 June 2014 to goodwill arose on the acquisition of certain assets and trade of CeeTox, Inc.

11. Contingent consideration

On 4 August 2010 prior to the acquisition of Cyprotex US, LLC by Cyprotex PLC; Cyprotex US, LLC acquired certain assets and the trade of Cellumen, Inc under an asset purchase agreement. Under the terms of that agreement Cyprotex US, LLC agreed to pay a contingent payment based on future sales revenues using the CellCiphrTM technology acquired for a period up to four years at a rate of between 10% and 20%. These potential payments were classified as contingent consideration and terminated in August 2014.

On 1 January 2014 the Group's US subsidiary, Cyprotex US, LLC, under an asset purchase agreement ('APA'), purchased certain assets and trade of CeeTox, Inc. (CeeTox) from North American Science Associates, Inc ('NAMSA'). CeeTox is based in Kalamazoo, Michigan, USA. The initial purchase price of £0.84 million was paid on completion. There is potentially further consideration payable to NAMSA at a rate of 5% of net sales until 31 December 2016 if sales of certain identified assays exceed the level achieved in the year to 30 September 2013 in subsequent 12 month periods to a maximum of £3.1 million.

These potential payments have been classified as contingent consideration and the provision below represents an estimate of potential payments that may fall due under that agreement. No payments have been made to date.

12. Taxation

At 30 June 2015, the Group has tax losses and tax deductibles of approximately £8.0 million that are available for offset against future profits arising from the same trade.