SKIN.L Regulatory News (SKIN)

22 November 2018

Integumen plc

("Integumen" or "the Company")

Conditional Subscription and Placing to raise £355,000; Notice of General Meeting

Introduction and Background

The trading update of 15 November 2018 indicated that extra staff and 40 per cent. more laboratory space is needed to satisfy the increase in service contracts and production at Labskin. These are having a positive effect on revenues in H2 2018 and there are strong indications that 2019 revenues will continue to improve. Management of short-term cash flow is critical in a fast-growing company and following the cancellation of the second tranche of the fundraising announced on 16 July 2018, the Company is pleased to announce details of a conditional Placing and Subscription to raise £355,000 for the Company.

Use of Proceeds

In addition to the debt facility provided by Cellulac, announced on the 11 October 2018, the Company plans to use the net proceeds of the Subscription and Placing:

- to support the accelerating growth of Labskin,

- to add more Laboratory space and leasing equipment for increased Labskin production,

- to roll out of Labskin Association Workshops,

- to roll out of the Labskin AI platform,

- to promote Algzym Technology as part of the Commercial Technology Agreement with

Cellulac, and

- for general working capital purposes.

Placing and Subscription

The Company is proposing to raise £355,000 in aggregate (before expenses), by way of a Placing of £170,000 and a Subscription of £185,000. The Placing Shares and Subscription Shares will be issued at an Issue Price of 0.44 pence per share. This price represents a discount of 13.7 per cent. to the closing middle market price of 0.51 pence per Existing Ordinary Shares of the Company on 21 November 2018, being the date prior to the announcement of the Placing and Subscription.

The Placing Shares and Subscription Shares represent approximately 17.7 per cent. of the Enlarged Share Capital immediately following Admission.

Placing

38,636,400 Placing Shares will be issued at the Issue Price with clients of Hybridan, raising £170,000 for the Company.

The Placing is conditional upon:

• the Resolutions (as defined below) being duly passed at the General Meeting by 7 December 2018;

• Admission by 10 December 2018 (or such later time and/or date as the Company, Hybridan and SPARK may agree, but in any event by no later than 8.00 a.m. on 17 December 2018); and

• receipt of the Subscription monies.

The Placing is not being underwritten. Subject to General Meeting approvals, the Placing Shares will be allotted on 7 December 2018 and are expected to be admitted to trading on AIM on 10 December 2018.

Subscription

42,045,450 Subscription Shares will be issued at the Issue Price raising £185,000 for the Company.

The Subscription is conditional upon:

• the Resolutions (as defined below) being duly passed at the General Meeting by 7 December 2018; and

• Admission by 10 December 2018 (or such later time and/or date as the Company may agree, but in any event by no later than 8.00 a.m. on 17 December 2018).

Subject to General Meeting approvals, the Subscription Shares will be allotted on 7 December 2018 and are expected to be admitted to trading on AIM on 10 December 2018.

Settlement Shares

In addition, the Company has agreed to issue 6,000,000 new Ordinary Shares (at the Issue Price) to the former Chief Executive, Mr Declan Service, together with a payment of €40,000. These amounts constitute the full and final settlement of amounts due to him in lieu of notice under his service and termination agreement and outstanding amounts of deferred salary and loan. This combined equity and cash consideration represents a discount to the total amounts contractually owed to Mr Service.

Related Party Transaction

Mr Declan Service was a director of the Company until 16 April 2018. As such he is regarded as a related party under the AIM Rules for Companies.

The settlement of amounts owing to Mr Service, as set out above and which includes 6,000,000 new Ordinary Shares ("Settlement Shares") constitutes a related party transaction under the AIM Rules for Companies.

The Directors, who are considered to be independent directors of the Company for the purposes of AIM Rule 13 in relation to the related party transaction, have considered the terms of settlement with Mr Service, including the issue of the Settlement Shares at the Issue Price. Having consulted with SPARK Advisory Partners Limited, the Company's nominated adviser, the independent directors consider that the terms of Mr Service's settlement are fair and reasonable insofar as Shareholders are concerned.

Dealings

The Subscription Shares, the Placing Shares and the Settlement Shares (totalling in aggregate 86,681,850 new Ordinary Shares) are expected to be allotted following the General Meeting. Application will be made to the London Stock Exchange for the Placing Shares, the Subscription Shares and the Settlement Shares to be admitted to trading on AIM. It is expected that Admission will occur at 8.00 a.m. on 10 December 2018. The Placing Shares, the Subscription Shares and the Settlement Shares will, when issued, rank pari passu in all respects with the Existing Ordinary Shares including the right to receive dividends and other distributions declared following Admission.

General Meeting

A notice will be sent to Shareholders later today convening a General Meeting to be held at the offices of Jeffreys Henry LLP at Finsgate, 5-7 Cranwood Street, London EC1V 9EE at 10.00 a.m on 7 December 2018 at which the Resolutions will be proposed.

Resolutions

The following resolutions will be proposed at the General Meeting.

Resolution 1, which will be proposed as an ordinary resolution, is to authorise the Directors to allot the Subscription Shares, the Placing Shares and the Settlement Shares and further new Ordinary Shares up to an aggregate nominal value of £15,161; and

Resolution 2, which will be proposed as a special resolution and which is subject to the passing of Resolution 1, dis-applies statutory pre-emption rights, provided that such authority shall be limited to the Subscription Shares, the Placing Shares and the Settlement Shares and further new Ordinary Shares having an aggregate nominal value of £2,275.

The authorities contained in the Resolutions replace those granted to Directors at the most recent Annual General Meeting.

Recommendation

The Directors unanimously recommend that shareholders vote in favour of the Resolutions to be proposed at the General Meeting as they intend to do in respect of their own beneficial holdings amounting, in aggregate, to 95,615,571 Existing Ordinary Shares, representing approximately 25.97 per cent. of the Existing Ordinary Shares.

Tony Richardson (Chairman of Integumen) commented:

"As mentioned in the recent trading update of the 15th, the improvement of service offerings in Labskin and product sales in STOER Skin Care divisions have been transformational for the enlarged group. Managing cash flow is critical to meet the demands of an expanding order book. With clear visibility of sales and services into 2019 we are increasing personnel and laboratory space to remove bottlenecks and accelerate production. The debt support provided by Cellulac and the new subscribing investors offer the Company working capital to meet the needs for higher production and increased sales into 2019.

In keeping with our guidance on progess, further news is expected this year from our collaboration partners with the launch of the Labskin Artifical Intelligence platform."

Total Voting Rights

For the purpose of the Disclosure Guidance and Transparency Rules, the Company's total issued ordinary share capital following Admission will be 454,826,872 ordinary shares of 0.01p each. This figure may be used by shareholders as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in, the Company under the Disclosure Guidance and Transparency Rules.

Market Abuse Regulation (MAR) Disclosure

Certain information contained in this announcement would have been deemed inside information for the purposes of Article 7 of Regulation (EU) No 596/2014 until the release of this announcement.