Tissue Regenix Group Regulatory News (TRX)

Tissue Regenix Group plc

Annual results for period ended 31 December 2017

Group Revenues increase to £5.2m

Acquisition of CellRight Technologies completed

 Significant commercial agreements signed

Leeds, 26 March 2018 - Tissue Regenix Group (AIM:TRX) ("Tissue Regenix" or "The Group") the regenerative medical devices company, today announces its results for the 12 months ended 31 December 2017.

Corporate and Recent Highlights

· Completed acquisition of CellRight Technologies, August 2017

· Delivered £40m equity fundraise, August 2017

· Appointed Steve Couldwell as CEO, November 2017

· Signed significant strategic distribution partnerships with Arthrex, Inc. and ARMS medical, Q1 2018

· Gained complete Medicare coverage for DermaPure in the US, Q1 2018

Operational Highlights

· Launched additional product lines, addressing surgical reconstructive procedures and dental applications

· Began processing of SurgiPure XD at the UK facility for US market

· Recognised distribution synergies following the CellRight Acquisition 

· Transfer of DermaPure manufacturing on schedule

Financial Highlights

(Note: 2016 comparatives are for the 11 months ended 31 December 2016)

· Revenues increased more than three-fold to £5.2m (2016: £1.4m)

o Dermapure - sales increased by 46% to £1.9m (2016: £1.3m)

o Controlled joint venture - sales increased more than 8-fold to £1.1m (2016: £0.1k)

o CellRight - sales momentum maintained - five months post-acquisition were £2.2m

· Gross profit increased to £2.6m (2016: £0.7m)

· Operating loss before exceptional items of £9.7m (2016: £11.1m)

· Operating loss £10.8m (2016: £11.1m)

· Cash at 31 December 2017 of £16.4m

· Equity issued during the year of £40.0m raised cash of £37.7m net of costs

· Cash of £19.9m was used for investment in CellRight Technologies (towards total consideration at fair value of up to £22.7m) together with £1.0m used to pay costs

Steve Couldwell, CEO, Tissue Regenix Group, commented: "2017 was a transformative year for the Tissue Regenix Group with the completion of the acquisition of CellRight Technologies providing a complementary regenerative platform technology, state-of-the-art manufacturing facility in San Antonio, TX, and a vastly experienced team of research, regulatory and manufacturing personnel.

This has brought a step- change in the strategic vision of the Company, as we enter a new phase of commercialisation, highlighted by the post-period announcements of strategic partnerships with ARMS Medical for DermaPure, and Arthrex, Inc. for the distribution of CellRight's innovative 'BioRinse' portfolio. Moving forward strategic partnerships of this nature will be of increasing importance to the Company, as we look for ways to increase our market penetration and maximise our research and manufacturing capabilities to deliver differentiated products, and a long term return on investment.

The underlying dCELL® business in the US continued to perform well. With a realigned strategy focusing on the inpatient setting where the clinical benefits of DermaPure are pertinent, and where the advantages of our 'Innovative Technology' awards with the Premier and Vizient Group Purchasing Organisations can be recognised. The expansion of DermaPure's use into surgical applications; primarily in the orthopaedics and urogynaecology space, has allowed us to access new clinical areas. Recognising this expanded potential, we rebranded our wound care division 'TRX BioSurgery' in February 2018.

In Europe, the CE mark approval for OrthoPure XT is ongoing, and we continue to undertake pre-approval marketing activities as we position ourselves for launch. We remain optimistic that this approval will be received to allow a roll out during 2018. Controlled joint venture GBM-V also continues to progress through the regulatory body for the approval of the CardioPure heart valves, and in tandem has initiated a revenue stream through the processing of allograft corneas.

The performance of CellRight in the five months since the acquisition had a material effect on the Group's revenue figure, and we continue to look at synergistic opportunities to maximise the cross selling potential of the enlarged Group. CellRight has a successful OEM and distributor commercial model, and continues to establish strategic partnerships. We are developing a blended commercial model combining the historic branded, direct sales model of Tissue Regenix Group with the CellRight white label, indirect sales approach and expect that this will provide significant growth opportunities moving forward.

We now have two complementary platform technologies which allows us to offer a broader portfolio to our customers and bring further clinical benefits to patients

With the initial integration of the Companies now complete we are optimistic around the Group's potential for 2018 and beyond."

For more Information:

About Tissue Regenix

Tissue Regenix is a leading medical devices company in the field of regenerative medicine. Tissue Regenix was formed in 2006 when it was spun-out from the University of Leeds, UK. The company's patented decellularisation ('dCELL®') technology removes DNA and other cellular material from animal and human soft tissue leaving an acellular tissue scaffold which is not rejected by the patient's body and can then be used to repair diseased or worn out body parts. Current applications address many critical clinical needs such as sports medicine, heart valve replacement and wound care.

In November 2012 Tissue Regenix Group plc set up a subsidiary company in the United States - 'Tissue Regenix Wound Care Inc.', rebranded TRX BioSurgery in February 2018. January 2016 saw the establishment of joint venture GBM-V, a multi- tissue bank based in Rostock, Germany.

In August 2017 Tissue Regenix acquired CellRight Technologies®, a biotech company that specializes in regenerative medicine and is dedicated to the development of innovative osteoinductive and wound care scaffolds that enhance healing opportunities of defects created by trauma and disease. CellRight's human osteobiologics may be used in spine, trauma, general orthopedic, foot & ankle, dental, and sports medicine surgical procedures.

Chairman Introduction and Highlights 

"I am very pleased with the progress the Group has made, delivering against our strategic objectives for the year. We have completed a transformative acquisition, delivered 46% growth in DermaPure sales and expanded the clinical applications of our products to access new healthcare professionals whilst successfully progressing integration activities. We now have a more differentiated and diverse product portfolio, robust pipeline and the route to market from which to drive sustainable long-term growth."

Our Business

The Group has performed well against our strategic milestones for the year. The acquisition of CellRight Technologies is a transformative opportunity for the Group, combining two innovative, regenerative platforms with large addressable markets and synergistic growth opportunities. With the appointment of Steve Couldwell as CEO, the Board is confident that it has the leadership in place to take the company to the next stage and a comprehensive review of the development pipeline is ongoing. With our augmented, established product portfolio generating a growing level of sales, we have identified key development assets to focus our commercial resources behind, and we are confident that following final product validation and transfer of manufacturing in-house, the newly focused strategy will drive significant shareholder returns. 

Financial Performance

Overall Group performance

The Group delivered revenues of £5,233K in the 12 months to 31 December 2017 a 263% increase when compared to the 11 month period to December 2016.

Organic DermaPure sales grew 46% in the US to £1,932K, and the commercial traction of the European controlled joint venture continued with increased revenues to £1,135K. 

Following the equity fundraise undertaken in August 2017, the Group has a robust cash position to fund the near term future of the enlarged Group and we maintain our expectation that the Group will be cash break even during 2020.

Leadership

In November 2017, we announced the appointment of Steve Couldwell as CEO of the Group. Steve succeeds Antony Odell who stepped down in October 2017 after nine years leading the Group. We would like to thank Antony for his leadership during the Group's early years.

Steve has experience spanning over 25 years in the Medical Device space and a proven track record of delivering revenue and profit growth. He has had an extensive career including Smith & Nephew and more recently, Sanofi BioSurgery based in Boston, Massachusetts. Having held senior commercial positions in both the US and Europe, Steve has the necessary skill set to drive the next stages of the Group's commercial strategy required to deliver shareholder returns.

Following the resignation of Paul Devlin on 30 November, we have appointed an interim CFO and initiated a search for a permanent candidate.

Our people 

The Board and I would like to extend our thanks to our employees and partners, especially throughout this year of significant change. With the integration of CellRight Technologies, we welcomed a new team in the US, led by CEO Jesus Hernandez, and the addition of their experience and the ongoing commitment of all our employees remain fundamental to our success.

CEO Operational Review

2017 was a transformational year for the Tissue Regenix Group.

The acquisition of CellRight Technologies and successful equity fundraise augments our commercial opportunity, financial position and distribution outreach of the Group; combining two complementary platform technologies across key clinical markets in an expanding number of territories.

Growth in our dCELL® Technology product portfolio was underpinned by a 46% increase in DermaPure sales. With its first full year of sales, controlled joint venture GBM-V increased revenue by 8 fold to £1.1m. The contribution of CellRight Technologies, acquired on 9 August 2017, included in the year end figure means we have increased overall Group revenue to over £5m.

Alongside the acquisition of CellRight Technologies we have commenced a review of the enlarged Group's product pipeline and opportunities to establish the best strategy to drive the Group forward.

Business developments and product pipelines

TRX BioSurgery (previous Tissue Regenix Wound Care, Inc)

DermaPure has proven successful in a number of clinical applications outside of the traditional advanced wound care settings. With adoption by the acute surgical and wound reconstruction markets, due to its impressive clinical outcomes with a single application, DermaPure has seen significant uptake in the orthopaedic trauma and urogynaecology arenas where treatment innovation has been in high demand. 

Having identified an opportunity in this market, we have signed an exclusive distributor agreement with ARMS Medical, a specialist urogynaecology distributor in the United States to maximise this opportunity, leveraging their strong relationships with Key Opinion Leaders and surgeons. The partnership allows our direct sales force to remain focussed on the in-patient woundcare, plastics, orthopaedics and general surgery sales channels. 

Alongside this, the addition of CellRight's advanced wound care products give the Group a wide product portfolio in this field, offering physicians access to DermaPure, a room temperature stable decellularised single application allograft, Matrix IQ, a frozen or freeze dried decellularised allograft, and AmnioWorks, derived from amniotic tissue.

Following the end of the period, Tissue Regenix Wound Care Inc. was rebranded as TRX BioSurgery.

dCELL® Orthopaedics

Changes to Medical Device Regulations have extended the timeline to receive CE marking for OrthoPure XT (xenograft tendon) within the EU. However, this has resulted in the opportunity to submit an extension to this application to include other ligament indications accelerating the broadening of the commercial opportunity. Subject to approval, this would allow OrthoPure XT to be utilised not only in primary and revision ACL reconstruction, but also procedures in small ligaments in the knee, expanding utilisation and broadening our label claims. We have commenced pre-launch activities and have engaged European distributors in selective key markets to facilitate a timely roll out once country registrations have been received.

The OrthoPure XT clinical data collected at one year showed the implant to be comparable, and in some indications, preferable to the current gold standard treatment, an autograft harvested from the hamstring and without the additional rehabilitation of an autograft procedure.

This clinical data has also been used to validate the potential for a pre-clinical trial in the US. As reported previously we have been in discussions with the FDA and it is expected that this pre-clinical work will commence during 2018 with the support of our Orthopaedic Clinical Advisory Board. 

The technology transfer for the production of OrthoPure HT (allograft ligament), at the CellRight facility continues according to plan and we expect the first product to be available in H2 2018. As this is a human tissue derived application, it can be approved under the HCT/P pathway for minimally manipulated tissue thus expediting the time to market. This would serve as a pathfinder validating the dCELL® Technology within the US Orthopaedic market.

Cardiac and GBM-V

The regulatory submission for CardioPure dCELL® allograft pulmonary and aortic heart valves, continues to progress through the German regulatory authorities. The clinical data generated by Dr Francisco da Costa, our clinician partner in Brazil, continues to demonstrate the clinical relevance and advantages of these transplants even after more than 10 years of follow up. Subject to the regulatory process we anticipate that approval will be received for launch during 2019. 

In addition to the preparation and commercialisation of CardioPure, the controlled joint venture in Germany has captured a 12%[1] market share in its first year of operations with processed corneas. We expect to release further cryo-preserved tissues throughout the year.

Orthopaedics and Dental - CellRight Technologies

CellRight Technologies officially became a part of the Tissue Regenix Group in August 2017.

Based around a proprietary processing technology 'BioRinse®', CellRight produces a portfolio of inductive, verified bone matrices in different physical forms to address clinical indications in the orthopaedic, spine, dental and general surgery procedures.

BioRinse® offers a complementary platform Technology to dCELL®, allowing the Group to address regenerative solutions for both soft tissue and bone.

DentalFix® a portfolio of traditional as well as innovative, dental biologics validated as being osteoinductive, was launched. The dental market is an area in which we see a significant opportunity for the Group with both dCELL® and BioRinse® products, and currently comprises around 20% of CellRight sales. 

CellRight has reached several milestones since the completion of the acquisition. In October they commenced the production of AmnioWorks®, an advanced wound care product derived from human amniotic membrane. Alongside this, additional sizes of their frozen and freeze dried wound care product Matrix IQ were released to address larger surgical site procedures.

With no direct sales force, CellRight based their business model around establishing strategic partnerships for distribution of both their white label (OEM) as well as branded products. These partnerships have continued to gain traction and we expect to see further partnerships develop in the coming year.

CellRight delivered on their revenue expectations during 2017 and we continue to see increasing commercial traction and momentum. We expect to report positive advances with the CellRight portfolio during 2018.

Integration

The integration process has continued to progress according to plan and we expect the initial commercial and financial synergies to materialise in H1 2018.

The technology transfer for DermaPure production has been initiated. The completion of residual DNA testing returned positive results, demonstrating over 99% removal of DNA from the tissue. We expect that this process will complete ahead of schedule with our first CellRight-processed DermaPure becoming available during H1 2018. Having our own in-house source, of DermaPure manufactured in the US, for the US market, will support supply from our relationship with CTS, removing the risk of single sourcing and ensuring that our product inventory can align with customer demand.

In October, the Tissue Regenix Wound Care office, also based in San Antonio, TX, moved into the CellRight facility, allowing all US operations to be centralised in one location. A shared services infrastructure has been implemented and the advantages of a cross selling distribution and partnership network are beginning to be realised.

Post period developments

Following the reported period, the Group reached a number of regulatory and commercial milestones which will play an important part in the strategy and commercial success of the Group moving forward.

Fundamental to this was the announcement of a long-term, multi-year distribution agreement with Arthrex, Inc. for CellRight's osteobiologic products. Arthrex is one of the world's leading sports medicine businesses and a premier innovator of orthopaedic surgical solutions. This is the first agreement of this nature to be signed since completing the acquisition and paves the way for the Group to pursue relationships with other strategic partners.

In order to expedite a route to market in Europe for the CellRight products Tissue Regenix applied for a Human Tissue Authority licence and we expect this to be granted imminently, allowing for the import of CellRights osteobiologics to the manufacturing facility in Leeds for direct distribution. It is expected that the first sales under this approval will commence in H2 2018.

Further to this, initial manufacturing for commercial distribution of SurgiPure XD has begun at the Leeds facility for export to the US where it is approved under the 510(k) market clearance pathway. We are in discussions with potential partners to determine the optimal route to market.

Outlook

The Group has reached a significant inflection point in terms of its development as a commercial entity. Having successfully completed the acquisition and integration of CellRight Technologies we now have two complementary and highly valuable regenerative technology platforms and a comprehensive product portfolio. Looking forward, we have a diverse distribution network, a strengthened commercial management team and significant opportunities to increase our commercial footprint both in the US, and international markets.

The Group is well positioned for future growth with a clearly defined strategy, strong leadership and a robust product portfolio and pipeline. The CellRight acquisition allows for acceleration of our route to market; specifically, for the dCELL® business, and offers an enhanced product portfolio, which strengthens our ability to increase our market adoption and penetration. This was demonstrated during Q1 2018 where we announced strategic distribution agreements with ARMS Medical, a specialist urogynaecology distributor for DermaPure, and Arthrex, Inc. a world leader in orthopaedic sports medicine.

We are grateful for the continued support of our shareholders throughout the year. Their commitment enables us to continue to advance the strategic vision of the Group which we are confident will create significant value as we accelerate the commercialisation of our product portfolio.

Sales in both CellRight and BioSurgery have had a strong start to the year, including shipments under two significant distributor agreements. With the recent launch of the CellRight DentalFix portfolio and AmnioWorks product, the approval of the OrthoPure XT CE mark and additional BioSurgery product line extensions expected to come onstream throughout the year, 2018 is set to be a year of significant newsflow, increasing commercial traction and revenue growth.

Trading for 2018 remains in line with Board expectations.

Financial Overview

Note: 2016 comparatives are for the 11 months ended 31 December 2016.

Sales

In the year ended 31 December 2017 revenue increased by 263% to £5,233K (2016: £1,443K). Revenue from existing businesses increased by 113% to £3,067K (2016: £1,443K). Revenue from CellRight was £2,166K (2016: £nil) since its acquisition on 09 August 2017.

Cost of sales and gross profit

Cost of sales includes cost of product of £2,039K (2016: £354K) and third party commissions of £588K (2016: £376K). Gross profit increased by 265% to £2,606K (2016: £713K).

Trading results

Administrative expenses increased by £1,649K from £11,773K to £13,422K. These included £1,098K of exceptional costs. Other costs increased by £551K. Overheads included staff costs (55%), sales and marketing (1%), research and development (11%), establishment and administration costs (33%). Operating loss was £10,816K (2016: £11,060K).

CellRight was acquired on 9 August 2017 and the operating profit of £277K for the period to 31 December 2017 is included within the consolidated result.

Exceptional items

Non-recurring costs include the costs of acquisition of CellRight of £996K and £102K of legal costs in relation to the LifeNet litigation which were written off in arriving at the operating loss. A further £2,258K was set off against the share premium account arising on the issue of new shares.

Finance income

Finance income of £47K (2016: £114K) represents interest earned on cash deposits.

Taxation

Net taxation was a credit of £1,348K (2016: credit £1,034K). The Group submits enhanced research and development tax claims and elects to exchange tax losses for a cash refund. The refund expected for the year ended 31 December 2017 is £799K. (2016: £875K), 2016 R&D tax credits were received in January 2018. Tax payable of £31K (2016: £Nil) represents corporation tax payable in the US on the profits of CellRight since acquisition.

Gross tax losses carried forward in the UK were £35,819K (2016: £32,037K). The Group does not currently pay tax in the UK. A deferred tax asset has not been recognised as the timing and recoverable value of the tax losses is uncertain.

Loss for the year

Loss for the year was £9,421K (2016: Loss £9,912K). The number of shares in issue during the year was 1,170,990,924 (2016: 760,124,264) resulting in a basic loss per share of (1.00p) (2016: loss (1.29p))

Balance sheet

Cash absorbed by operations was £9,786K (2016: £10,811K)

The Company issued shares by way of a placing and subscription of shares which were admitted to AIM on 9 August 2017. This raised proceeds of £40,000K which, after expenses of £2,318K netted £37,682K. 

On 9 August 2017 the Group acquired CellRight for a maximum consideration of £23,078K of which £19,945K was paid to the vendors on the acquisition date and £3,133K is payable contingent upon achieving performance criteria. The fair value of the contingent consideration is assessed at £2,718K. The fair value of the net assets acquired was assessed at £7,359K. This includes £4,374K attributed to intangible assets not previously recognised in the financial statements of CellRight. Goodwill on acquisition was £15,304K.

At 31 December 2017 the Group had net assets of £39,522K (2016: £11,536K) of which cash in hand totalled £16,423K (2016: £8,173K)

Going Concern

The Group's forecasts indicate it has sufficient resources until more than one year from the date of this report.

Current trading and prospects

There has been a strong start in sales of both CellRight and BioSurgery product, including shipments under two significant distributor agreements. The integration of CellRight is progressing well. 2018 promises to be a further year of revenue generation and product launch. Trading for 2018 remains in line with expectations.

Consolidated Statement of Comprehensive Income for the year ended 31 December 2017

The loss for the period arises from the Group's continuing operations.

The accompanying notes form an integral part of the financial statements.

Consolidated Statement of Financial Position for the year ended 31 December 2017

Approved by the Board of Directors and authorised for issue on 26 March 2018.

Steven Couldwell

Chief Executive Officer

Consolidated Statement of Cash Flows for the year ended 31 December 2017

NOTES TO THE FINANCIAL STATEMENTS

GENERAL INFORMATION

The financial information set out above does not constitute the company's statutory accounts for the year ended 31 December 2017 or 2016 but is derived from those accounts. Statutory accounts for 2016 have been delivered to the registrar of companies, and those for 2017 will be delivered in due course. The auditor has reported on those accounts; their reports were (i) unqualified, (ii) did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying their report and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.

1) BASIS OF PREPARATION

The financial statements of Tissue Regenix Group plc are audited consolidated financial statements for the year ended 31 December 2017. These include audited comparatives for the 11 months period ended to 31 December 2016.

The Group financial statements consolidate the financial statements of Tissue Regenix Group plc and the entities it controls, being its subsidiaries and its joint venture interest, and are presented in the Group's functional currency that is GBP Sterling.

Going Concern

As at 31 December 2017, the Group had £16.4m of cash and cash equivalents available to it. The Directors have considered their obligation, in relation to the assessment of the going concern of the Group and each statutory entity within it and have reviewed the current budget cash forecasts and assumptions as well as the main risk factors facing the Group.

After due enquiry, the Directors consider that the Group has adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the financial statements. As is the nature of the business the Directors acknowledge there will be further funding requirements before revenues have grown to the point of self sufficiency

Change in Accounting Presentation

Cost of sales in the group's financial statements comprises cost of goods sold and external commissions payable. This is a change from previous years where external commissions were expensed as administration expenses. The change is because the Directors believe this presentation gives the users of the accounts a clearer view of the costs directly associated with generating revenue.

This change has increased Cost of sales by £376,000 from what was previously presented in the 11 months to December 2016 with a corresponding reduction in the administration expenses. The impact on the 2017 figure is an increase of £588,000 with a corresponding reduction in administration expenses. The loss before tax and earnings per share in both the current year and prior period are unaffected by this change.

2) SEGMENTAL REPORTING

The following table provides disclosure of the Group's revenue by geographical market based on location of the customer:

Analysis of revenue by customer

During the year ending 31 December 2017 the Group had two customers who individually exceeded 10% of revenue. These customers generated 13% and 11% of revenue respectively (2016:12% and 10%).

Operating segments

The Group is organised into BioSurgery, Orthopaedics & Dental, Cardiac and Other divisions for internal management, reporting and decision-making, based on the nature of the products of the Group's businesses. Managers have been appointed within these divisions, who report to the Chief Executive Officer. These are the reportable operating segments in accordance with IFRS8 "Operating Segments". The Directors recognise that the operations of the Group are dynamic and therefore this position will be monitored as the Group develops.

In accordance with IFRS8, the Group has derived the information for its operating segments using the information used by the Chief Operating Decision Maker. The Group has identified the Chief Executive Officer as the Chief Operating Decision Maker as he is responsible for the allocation of resources to the operating segments and assessing their performance.

Central overheads, which primarily relate to operations of the Group function, are not allocated to the business unit.

3) TAXATION

Tax loss on ordinary activities

The charge for the year can be reconciled to the loss before tax per the Statement of Comprehensive Income as follows:

Factors affecting the current tax charges

The tax assessed for the year varies from the main rate of corporation tax as explained below:

Deferred Tax

*The Group has not recognised a deferred tax asset relating to these losses as their recoverability is uncertain.

4) LOSS PER SHARE (BASIC AND DILUTED)

Basic loss per share is calculated by dividing the loss attributable to equity holders of the parent by the weighted average number of ordinary shares in issue during the period excluding own shares held jointly by the Tissue Regenix Employee Share Trust and certain employees. Diluted loss per share is calculated by adjusting the weighted average number of ordinary shares in issue during the year to assume conversion of all dilutive potential ordinary shares.

The Company has issued employee options over 243,105,607 ordinary shares and there are 16,112,800 jointly owned shares which are potentially dilutive. There is however, no dilutive effect of these issued options as there is a loss for each of the periods concerned.

5) BUSINESS COMBINATION

Acquisition of CellRight Technologies

On 09 August 2017, the Group acquired 100 per cent of the voting equity instruments of CellRight Technologies LLC. This acquisition was made as the first part of the expansion plan for the US group to process inhouse human tissue products in the US. The Group anticipated the close relationship between CellRight and Tissue Regenix businesses will be mutually beneficial including shared resources in manufacturing, sales, marketing and accounting.

Details of the fair value of the identifiable assets and liabilities acquired, purchase consideration and goodwill are as follows:

Deferred tax has been calculated on the value of the asset acquired at a US corporation tax rate of 21 per cent.

Fair value of consideration

Contingent consideration

The Group has agreed to pay the contingent consideration if Gross Revenue during the first year after acquisition equals or exceeds seven million dollars ($7,000,000), in an amount equal to $2,036,201.46.

The Group has agreed to a milestone advance payment of an amount equal to one million dollars ($1,000,000) in addition to the milestone payment earned, if Gross Revenue during the first milestone period equals or exceeds ten million dollars ($10,000,000),

The Group has agreed to pay a second milestone if Gross Revenue during the second annual period

equals or exceeds twelve million five hundred thousand dollars ($12,500,000) an amount equal to $2,036,201.46 less the amount of the milestone advance payment, if any.

Acquisition-related costs

Acquisition costs relating to this transaction amounted to £996,000 and have been disclosed within the exceptional costs in the statement of comprehensive income.

Since the acquisition date, CellRight has contributed £2,166,000 to Group revenues and a profit of £277,000 to Group income. If the acquisition had occurred on 1 January 2017, Group Revenue would have increased by £2,930,000 and Group income for the period would have increased by £702,000

Measurements of fair values

The trade receivables comprise gross contractual amounts due of £713k, which was acquired with a provision of £265k which was expected to be uncollectible at the date of acquisition to give a net value of £448k.

6) SHARE CAPITAL

As permitted by the provisions of the Companies Act 2006, the Company does not have an upper limit to its authorised share capital.

7) MOVEMENT IN RETAINED EARNINGS AND RESERVE FOR OWN SHARES