MED.L Regulatory News (MED)

MedaPhor Group plc

("MedaPhor" or the "Group" or the "Company")

Acquisition of Inventive Medical Limited

MedaPhor Group plc (AIM: MED), the global provider of advanced ultrasound skills training simulators for medical professionals, announces the acquisition of Inventive Medical Limited ("IML"), a UK company which is the global supplier of cardio ultrasound simulation products under the HeartWorks brand, for a total consideration of £3m payable in shares.

About Inventive Medical Limited

Developed by leading cardiac anaesthesiologists at University College London Hospital and owned by University College London Hospitals Charity, IML's HeartWorks simulators and online training materials are recognised as one of the most true-to-life and comprehensive simulation tools for Transthoracic and Transoesophageal echocardiography training.

Using HeartWorks, medical practitioners can learn through interactive online content, the complete anatomy of the heart, view it from all angles and recognise patient cases with pathological conditions. They can then practise acquiring ultrasound images though correct probe positioning on a manikin based simulator, interpret those images to determine correct diagnosis and treatment, and finally be tested to ensure that all required competencies have been achieved to the highest standard. For more information about IML please visit: www.inventivemedical.com

Background to the acquisition

On 24 June 2015 MedaPhor announced a new collaboration with IML. This was the first step in an association that has resulted in the acquisition of IML by MedaPhor. IML's HeartWorks simulator is used in cardiology related ultrasound training (echocardiography, cardiac anatomy and lung ultrasound) and is a complementary technology to MedaPhor's ScanTrainer simulator which specialises in female pelvis (obstetrics and gynaecology) and upper abdomen (general medical and emergency medicine) ultrasound training. This strategic partnership focussed on lead generation and joint marketing opportunities that required full torso ultrasound scanning solutions. The acquisition of IML will enable this positive collaboration to be developed even further.

Terms of the acquisition

The Company entered into a Sale and Purchase Agreement on 2 August 2016 with the Incorporated Trustees of University College London Hospitals Charity and certain option holders to acquire IML and the benefit of shareholder loans owed by IML totalling £2.7m.

The £3m consideration will be satisfied by the issue of 6,976,745 new Ordinary Shares in the Company at 43 pence each ("the Consideration Shares"), representing 20% of the enlarged share capital of the Company. The issue of one third of the Consideration Shares will be deferred for 12 months and the issue of these shares will be contingent on no Seller warranty or indemnity breaches (as specified in the Sale and Purchase Agreement) arising during that 12 month period. Each of the Sellers has agreed not to dispose of their Consideration Shares, save in certain limited circumstances, for a period of 12 months from Completion. Application will be made for Admission of 4,651,164 of the Consideration Shares to dealings on AIM and it is expected that Admission will occur on 8 August 2016 when the transaction will complete.

Following Admission and Completion of the Acquisition, the total number of voting rights of the Company's Ordinary Shares will be 31,898,576.

Benefits of the acquisition

The Directors believe that the enlarged Group will benefit from:

· the addition of a complementary suite of ultrasound training products;

· an expanded sales team providing wider coverage across the US, UK and Europe;

· a larger combined reseller network;

· cross-selling opportunities across a wider customer base; and

· enlarged revenues (for the year ended 31 March 2015 IML recorded audited revenue of £1.9m and a loss before tax of £0.3m).

The net liabilities of IML at 31 March 2015 were £1.2m. The pro-forma completion balance sheet for IML has net assets (excluding intangible fixed assets and intercompany indebtedness to its sister company) of £0.3m.

The Directors believe that, while the acquisition may result in a greater working capital requirement initially, the investment will be earnings enhancing in the short to medium term and the net funds raised by the placing of MedaPhor shares in April this year are still expected to finance the enlarged Group through to profitability and positive operating cash flow for the combined business.

Commenting, Stuart Gall, CEO of MedaPhor, said:

"Having worked closely together for a year, both teams have recognised the opportunities that a closer alliance will bring, not just in combining sales and reseller networks and cross-selling across our customer base, but by offering an integrated and complementary solution. Increasingly, medical simulation centres are requesting full torso ultrasound training and we believe the coming together of our two technologies paves the way for this to become a reality for clinicians seeking to acquire the highest levels of competence in ultrasound practice."

This announcement contains inside information which is disclosed in accordance with the Market Abuse Regulations which came into effect on 3 July 2016.

Enquiries:

About MedaPhor (www.medaphor.com)

MedaPhor (AIM: MED) is a global provider of advanced ultrasound skills training simulators for medical professionals. Founded in 2004, the Company is headquartered in Cardiff, UK and San Diego, USA, with customers in over 16 countries across the world.

ScanTrainer Professional, MedaPhor's market-leading ultrasound skills training simulator, offers a realistic ultrasound scanning learning experience that combines 'real-feel' haptic technology with real full anatomy patient scans, real-time one-to-one expert guidance and curriculum based teaching. The system offers trainees a flexible self-learning experience without the need for patients and with minimal requirement for expert supervision - making ScanTrainer Professional both resource efficient and highly cost effective. 

ScanTrainer Professional's subscription-based Cloud 2 service offers ScanTrainer users access to the Case Generation Engine, which enables them to upload and publish their own patient scans and share these with other Cloud 2 subscribers within their organisation or around the world. Cloud Case Library offers users flexible cloud-access to a growing library of close to 300 normal and abnormal cases created using real patient scans.

About Inventive Medical (www.inventivemedical.com)

Developed by leading cardiac anaesthesiologists at University College London Hospitals, and owned by University College London Hospitals Charity, Inventive Medical's HeartWorks simulators and online training materials are recognised as one of the most true-to-life and comprehensive educational tools for Transthoracic and Transoesophageal echocardiography.

Medical practitioners can learn, through interactive online content, the complete anatomy of the heart, view it from all angles and recognise patient cases with pathological conditions. They can then practise acquiring ultrasound images though correct probe positioning on a simulator, interpret those images to determine correct diagnosis and treatment, and finally be tested to ensure that all required competencies have been achieved to the highest standard.