TIDMMED
RNS Number : 2510U
Intelligent Ultrasound Group PLC
28 March 2019
Intelligent Ultrasound Group plc
("Intelligent Ultrasound" or the "Group" or the "Company")
Unaudited Preliminary Results for the Year Ended 31 December
2018
Intelligent Ultrasound Group plc (AIM: MED), the artificial
intelligence (AI) software and simulation company, announces its
unaudited preliminary results for the year ended 31 December 2018,
an exciting year for the Group during which it piloted the lead AI
obstetric product of its Clinical AI Division and continued to grow
sales in its Simulation Division.
Financial highlights:
-- Group revenues (Simulation Division sales only) increased 27% to GBP5.3m (2017: GBP4.2m)
-- Expenditure on R&D up 76% to GBP1.8m (2017: GBP1.1m)
after significantly increased investment in AI
-- Raised GBP4.8m net of costs by way of placing of shares and open offer
-- Year-end cash at GBP5.6m (2017: GBP4.3m) and no debt
Operational highlights:
Simulation Division:
-- Successful launch of BodyWorks Eve, a new life-like
manikin-based simulator for the Point of Care Ultrasound (PoCUS)
market that combines ScanTrainer and HeartWorks technologies
-- Now over 700 simulators sold to over 400 medical institutions
in over 30 countries around the world
Clinical Division (AI):
-- Database used for training its AI products now exceeds 1 million obstetric ultrasound images
-- First ScanNav real-time AI-based ultrasound image analysis
software successfully piloted in two UK hospitals in advance of
commercialisation
-- Commenced a clinical study within the Aneurin Bevan
University Health Board to capture data for its AnatomyGuide AI
software for ultrasound-guided anaesthetic procedures such as
peripheral nerve blocks
Name change
-- Post year-end completed the name change that was announced in
November 2018 and changed the name of the Group from MedaPhor to
Intelligent Ultrasound reflecting that, in addition to being a
global leader in ultrasound training through simulation, the Group
has expanded into the development of AI software to guide and
support doctors and sonographers in clinical ultrasound
scanning
Commenting on the results, Riccardo Pigliucci, Chairman of
Intelligent Ultrasound said:
"Despite the disappointing share price performance during the
year, the Group made good progress in 2018 and I would like to
thank all our shareholders for their continued support, as well as
extending the Board's gratitude to all our staff and customers
around the world. The Simulation Division demonstrated encouraging
growth in the ultrasound simulation market and we expect broadly
similar growth to continue in the coming years. The Clinical
Division achieved all its development milestones in the year and is
now focussed on signing commercial agreements with the ultrasound
manufacturers and bringing our ScanNav and AnatomyGuide AI image
analysis software through regulatory approval to market. The Group
is currently trading in line with expectations and we look forward
to the year ahead with considerable enthusiasm."
The information contained within this announcement is deemed by
the Company to constitute inside information stipulated under the
Market Abuse Regulation (EU) No. 596/2014. Upon the publication of
this announcement via the Regulatory Information Service, this
inside information is now considered to be in the public
domain.
Enquiries:
Intelligent Ultrasound Group plc www.intelligentultrasound.com
Stuart Gall, CEO Tel: +44 (0)29 2075 6534
Wilson Jennings, CFO
Cenkos Securities - Nominated Advisor Tel: +44 (0)20 7397 8900
and broker
Giles Balleny / Cameron MacRitchie (Corporate
Finance)
Michael Johnson / Julian Morse (Sales)
Walbrook PR Tel: +44 (0)20 7933 8780 or intelligentultrasound@walbrookpr.com
Anna Dunphy / Paul McManus Mob: +44 (0)7876 741 001 / Mob: +44 (0)7980
541 893
About Intelligent Ultrasound
(www.investors.intelligentultrasound.com)
Intelligent Ultrasound (AIM: MED), the intelligent ultrasound
software and simulation company, develops artificial
intelligence-based clinical image analysis software tools,
augmented reality-based needle guidance software and advanced
hi-fidelity haptic and manikin-based training simulators for
medical practitioners.
Based in Cardiff and Oxford in the UK, Atlanta in the US and
with representation in Beijing in Asia, the Group operates two
divisions:
Intelligent Ultrasound Simulation Division
Focusses on hi-fidelity ultrasound education and training
through simulation. Its three main products are the ScanTrainer
OBGYN training simulator, the HeartWorks echocardiography training
simulator and the BodyWorks Eve Point of Care and Emergency
Medicine training simulator. To date over 700 simulators have been
sold to over 400 medical institutions in over 30 countries around
the world.
Intelligent Ultrasound Clinical Division
Focusses on augmented reality and deep-learning based algorithms
to make ultrasound machines smarter and more accessible. Products
in development include ScanNav which uses machine-learning based
algorithms to automatically identify and grade ultrasound images to
provide scan assessment and audit of obstetric scanning.
AnatomyGuide aims to simplify ultrasound-guided needling by
providing the user with real-time AI-based needle guidance software
for a range of medical procedures.
Some products in the pipeline may require US FDA or other
regulatory approval, as such this material should be considered
informational only and does not constitute an offer to sell, or
infer claims or benefits.
CHAIRMAN'S STATEMENT
I am pleased to present Intelligent Ultrasound's results for the
year ended 31 December 2018, during which we:
-- increased turnover by 27% to GBP5.3m, all of which is
currently derived from the Simulation Division;
-- increased expenditure on R&D by 76% to GBP1.8m (2017: GBP1.1m);
-- successfully piloted ScanNav, our first artificial
intelligence (AI) based ultrasound image analysis software in two
UK hospitals;
-- commenced a clinical study within the Aneurin Bevan
University Health Board to capture data for our AnatomyGuide AI
software for ultrasound-guided anaesthetic procedures such as
peripheral nerve blocks;
-- expanded our AI imaging database for obstetrics to over one million images; and
-- raised GBP4.8m net of costs by way of a share issue
In addition, post year-end, we changed the name of the Group
from MedaPhor to Intelligent Ultrasound, to reflect that, in
addition to being a global leader in ultrasound training through
simulation, the Group has expanded into the development of AI
software to guide and support doctors and sonographers in clinical
ultrasound scanning.
Financial performance
Summary financial results were:
2018 2017
GBP GBP
------------------------------------------------- ------------ ------------
Revenue 5,313,164 4,180,630
Gross profit 2,833,383 2,522,865
Gross margin 53% 60%
Other income 310,475 28,225
Administrative expenses excluding exceptional
items (7,120,434) (5,228,211)
------------ ------------
Operating loss before tax and exceptional items (3,976,576) (2,677,121)
Exceptional administrative items 362,718 (2,860,774)
------------ ------------
Loss after exceptional items (3,613,858) (5,537,895)
Finance costs (7,402) (7,833)
------------ ------------
Loss before tax (3,621,260) (5,545,728)
Income tax credit 203,796 127,609
------------ ------------
Loss after tax (3,417,464) (5,418,119)
------------------------------------------------- ============ ============
Cash at bank 5,607,052 4,250,198
------------------------------------------------- ============ ============
During the year revenues increased by 27% to GBP5.3m (2017:
GBP4.2m) and benefited from the launch of our new BodyWorks Eve
training platform for doctors wishing to practise Point-of-Care
Ultrasound (PoCUS) across emergency medicine and critical care.
The reduced gross margin in 2018 mainly reflects the higher
proportion of distributor sales in 2018, at just under 50% (2017:
42%).
The loss for the year, before tax and exceptional items, was
GBP4m (2017: GBP2.7m). Administrative expenses, excluding
exceptional items, increased by GBP1.9m. GBP0.6m of this increase
was attributable to consolidating a full year of overheads in
respect of Intelligent Ultrasound Limited (IUL) which we acquired
in October 2017.
IUL is the home of our Clinical Division. A number of specialist
R&D staff who were previously within the Simulation Division
moved across to the Clinical Division in 2018. The total overheads
of the Clinical Division including these staff, but excluding
depreciation, amortisation and exceptional items for the year was
GBP1.2m compared to GBP0.2m in 2017 which related to IUL for the 3
months from the date of acquisition.
Staff costs, excluding those attributable to IUL, were up by
GBP0.6m reflecting our increased investment in R&D, sales and
support staff. Staff costs expensed were also higher by GBP0.1m
because we capitalised less development time. Marketing and travel
costs were up GBP0.2m; depreciation and amortisation costs were
also up by GBP0.2m and external development costs expensed and
other costs were up by GBP0.2m.
Other income relates to grants received in the period.
The exceptional item for the year related to a credit in respect
of a fair value adjustment on the settlement of deferred
consideration in 2018 relating to the acquisition of IUL in the
prior year.
Key events
The Group operates as two divisions:
Simulation Division
The Simulation Division, which is based in Cardiff and
Alpharetta, Georgia (USA), is focussed on growing sales in the
ultrasound training and simulation market. The successful launch of
BodyWorks Eve, our new life-like manikin-based simulator was an
important contributor to growing sales in the year. Eve is a
combination of our ScanTrainer and HeartWorks simulation
technologies and is aimed at the growing PoCUS market.
Over 700 Intelligent Ultrasound simulators have now been sold to
over 400 medical institutions in over 30 countries around the
world.
Clinical Division
The Clinical Division, which is based in Oxford, is developing
the Group's new deep learning software for ultrasound image
analysis (ScanNav) and ultrasound needle guidance (AnatomyGuide).
During the year we completed two successful pilots of the ScanNav
software in St George's Hospital NHS Trust in London and the Royal
United Hospitals Bath. ScanNav has now completed its initial
development and is ready to move to its commercialisation phase. It
is believed to be the first CE marked artificial intelligence (AI)
system to carry out an automated, real-time "peer review" of
obstetric ultrasound images as the patient is scanned live in the
clinic.
We also expanded our AI imaging database to over one million
images and, post year-end, are working on establishing new
collaborations to provide access to additional high-quality
obstetric images for our simulation and AI products.
In November 2018 we commenced a clinical study within the
Aneurin Bevan University Health Board to capture data for our
AnatomyGuide AI software for Peripheral Nerve Block (PNB)
ultrasound-guided anaesthesia. For many procedures,
ultrasound-guided PNB is a safer and more cost-effective
alternative to general anaesthesia, but not all anaesthetists have
the specialist knowledge to recognise the necessary anatomy in the
ultrasound image. AnatomyGuide aims to provide support and guidance
to improve safety during the PNB procedure.
Finally, at the end of the year, we completed a placing and open
offer and raised GBP4.8m of funds net of costs from new and
existing shareholders with the placing of 59,750,331 new ordinary
shares in the Company.
Summary
Despite the disappointing share price performance during the
period, the Group made good progress in 2018 and I would like to
thank all our shareholders for their continued support, as well as
extending the Board's gratitude to all our staff and customers
around the world.
The Simulation Division demonstrated encouraging growth in the
ultrasound simulation market and we expect broadly similar growth
to continue in the near future. The Clinical Division achieved all
its AI development milestones in the year and is aiming to sign
commercial agreements with ultrasound manufacturers and bring our
ScanNav and AnatomyGuide AI image analysis software through
regulatory approval to market.
The Group is currently trading in line with expectations and we
look forward to the year ahead with considerable enthusiasm.
Riccardo Pigliucci
Chairman
28 March 2019
STATEGIC REPORT - OPERATIONS
2018 has seen considerable progress, with the Group taking
significant steps in expanding our business from a purely
ultrasound simulation-based training business, into the larger
clinical ultrasound software market.
Business model
The Group's business model is to invest in R&D to develop
and then commercialise software-based disruptive technologies in
the ultrasound healthcare market. Our key strategy involves
unlocking the potential of diagnostic ultrasound by (i) making it
easier for medical professionals to learn how to use ultrasound
through the development of advanced ultrasound training simulators
and then (ii) making it easier for them to use ultrasound in the
clinic by providing real-time AI assisted interpretation of the
ultrasound images while scanning the patient.
Ultrasound is one the world's leading diagnostic modalities and
although the increasing availability of low-cost handheld devices
has the potential to dramatically change the professional
ultrasound user base, we continue to believe that this alone is not
suf cient to open up the potential for ultrasound to become a
mass-market diagnostic tool that can also be used by medical
practitioners who do not possess specialist ultrasound skills. To
achieve this, ultrasound needs to become simpler to use by making
ultrasound machines 'smarter', supporting users both in their
scanning and with automated decision-making. This will involve
integrating image analysis using AI into the ultrasound imaging
machines including the new, smaller and cheaper handheld devices.
This is an emerging market and, although competitive and fast
moving, it's one we believe we have the skills and capabilities to
compete in.
As such we aim to be not only a major global provider of
hi-fidelity simulation-based ultrasound training, but also to
follow the medical professional into the clinic and be a provider
of AI based clinical ultrasound software that can support, guide
and speed up ultrasound scanning to make ultrasound more
accessible.
This model builds on the key strengths and resources of the
Group by leveraging our knowledge and experience in medical
ultrasound, simulation and machine learning to develop software
that can increase the numbers of medical professionals who can use
ultrasound, as well as increasing the speed and quality of the
scanning itself.
In the long term, as the price of machines comes down and the
performance of our AI enabled software increases, we aim to provide
enabling software for mass market AI based 'do-it-yourself' health
check scanning for the health-conscious consumer.
To achieve these aims the Group is organised under two divisions
- Simulation and Clinical. The report below details the business
models relevant to each division, the progress made over the year
and the key challenges faced.
Simulation Division
Based in Cardiff (UK), Alpharetta (US) and with representation
in Beijing (China), our Simulation Division designs, develops and
sells some of the world's leading hi-fidelity ultrasound training
systems for teaching ultrasound scanning to medical professionals.
Our simulator systems are high value, cap-ex sales made to the
global medical institution market and are sold through our direct
sales forces in the US and UK and a network of over 30 resellers in
the rest of the world. The Division has continued to grow sales
year-on-year, as it has established itself as one of the gold
standard providers of ultrasound training simulators in the
obstetrics/gynaecology and echocardiography/anaesthesiology
markets. With a growing range of training simulators that extend
sales into new ultrasound training sectors of the medical market,
the Division is expected to continue to grow and materially reduce
its cash burn impact on the Group.
Research & Development
During the year, the Simulation R&D team focussed on the
launch and on-going development of BodyWorks Eve, our new life-like
manikin-based simulator which is a combination of the ScanTrainer
and HeartWorks technologies, but aimed at the new and growing Point
of Care Ultrasound (PoCUS) market. BodyWorks Eve is the first
female manikin-based simulator specifically developed to meet the
educational needs of emergency medicine and critical care markets
and combines the normal and pathological hearts from our HeartWorks
simulator with the complete upper chest to pelvis real patient
scans from our ScanTrainer platform. With over 100 real patient
ultrasound cases and over 10,000 patient scenario combinations,
BodyWorks Eve replicates learning in a real-life emergency or
critical care setting, allowing the tutor to control and change the
severity and pathology of the patient in real time.
After its successful debut at the International Meeting on
Simulation in Healthcare (IMSH) in Los Angeles in January 2018, the
new simulator was launched to our resellers in February 2018 and
proved to be an immediate success, with the majority purchasing
demo systems. The first sales to end-user hospitals and medical
schools were also made and included sales to a number of major
institutions in the US.
Territory review
Our Simulation Division sales grew by 27% to GBP5.3m in 2018
(2017: GBP4.2m) and there are positive signs that the global
ultrasound simulator market for hi-fidelity training simulators
will continue this growth.
North America
Revenue in 2018 was flat at GBP1.7m (2017: GBP1.7m).
North America remains a key market for medical simulation and we
continue to sell into North America through our direct sales
operation based in Alpharetta, Georgia. With the US market actively
supporting US based purchasing, all our US sales are now made
through MedaPhor North America, Inc. and we expect the region to
return to growth in 2019.
United Kingdom
Revenue in 2018 increased by 39% to GBP1m (2017: GBP0.7m).
After a challenging 2017, UK sales bounced back in 2018,
increasing by 39% to GBP1m. Although this is encouraging, UK sales
growth in 2019 may depend on the outcome of Brexit related
decisions.
Rest of the World
Revenue in 2018 increased to GBP2.6m (2017: GBP1.8m).
Revenue in the Rest of the World is mainly generated by over 30
resellers. During the year sales increased by 50% to GBP2.6m (2017:
GBP1.8m), partly reflecting channel take up of the BodyWorks Eve
demo simulators. There were encouraging sales made in the French
and German markets although sales in 2019 in Europe may be affected
by the outcome of Brexit related decisions. At the end of the year
we also reorganised our reseller base in China, consolidating our
sales representation in the region into a single distributor.
Master Meditech has a proven track record of sales of our products
in China over the last three years. We also moved our regional
office from Hong Kong to Beijing.
Challenges to the Simulation Division
High values sales in the medical training sector are affected by
budgetary restraint in the healthcare sector. In addition, medical
simulation has competitive product and pricing challenges, that can
put pressure on margins.
The Division has responded well to these to date, by focussing
on offering products that provide a gold standard in training
ultrasound. When an end-user's career depends on their ability to
scan and diagnose using ultrasound, the market has recognised that
it needs to purchase the best simulators based on performance, not
price. We continue to develop and bring to market new evolutionary
products that target new areas of ultrasound training and our new
BodyWorks Eve is a good example. Developed in-house from the
ScanTrainer training platform, but incorporating a manikin, new
training methods and images, it is focussed on the growing PoCUS
market and is expected to make a major contribution to future
revenues.
Clinical Division
The Group's strategy is to become a provider of AI based
clinical ultrasound software that can support, guide and speed up
ultrasound scanning to make ultrasound accessible to more medical
professionals. We acquired The University of Oxford AI software
company, Intelligent Ultrasound Limited (IUL) in October 2017, to
supplement our in-house image analysis and ultrasound know-how and
enable us to develop potentially ground-breaking AI image analysis
tools for the professional ultrasound scanning market. This
integration was completed during 2018 and based on the work of
world-renowned University of Oxford academic, Professor Alison
Noble OBE FREng FRS, the Division has developed real-time image
analysis software for ultrasound by utilising deep-learning
techniques and sophisticated computer algorithms along with
researched insights into patient, clinician and healthcare provider
needs.
There are two key components to our algorithms: (i) an
excellent, growing database of curated obstetric images to drive
our machine learning and (ii) sophisticated deep learning models,
developed by Professor Noble and her team. This has enabled us to
develop our ScanNav image analysis software and pilot the first of
these algorithms in two leading UK hospitals.
ScanNav Audit
In February 2018, the first pilot of the ScanNav real-time audit
image analysis software was undertaken on a GE Voluson obstetrics
ultrasound machine at the Fetal Medicine Department of St George's
University Hospitals NHS Trust, London, UK. In July 2018, the pilot
was extended to a second UK hospital on a Toshiba Aplio obstetrics
ultrasound machine at the Princess Anne Wing Ultrasound Department
of the Royal United Hospitals (RUH), Bath.
The ScanNav Audit software provides real-time support for
obstetric ultrasound practitioners performing anomaly scans at 20
weeks gestation. ScanNav Audit aims to ensure that a complete set
of scan images which are fit for purpose and conform to the
required scanning protocol are captured during the procedure. The
UK mandates the Fetal Anomaly Screening Programme or "FASP"
protocol; other territories have their own related protocols. The
ScanNav software acts as a live virtual peer review, ensuring that
the scan is performed correctly by highlighting issues to the
sonographer as he or she saves each image. The software will also
provide a record of each sonographer's performance, allowing
managers to monitor staff and form part of the record keeping
requirements of the clinic. ScanNav Audit is currently a CE marked
product in the UK only, and will require further development and
regulatory approval to meet the US and global scanning
protocols.
ScanNav AutoCapture
The ScanNav AutoCapture software automatically captures and
analyses all the ultrasound image planes in real-time, as the
sonographer moves the ultrasound probe over the patient's abodomen
during the 20-week fetal anomaly scan. The current version of the
software then automatically selects and saves the key images
required to meet the FASP protocol in the UK. Further development
will be required to integrate this software into OEM machines as
well as expanding the image recognition to meet the American
College of Radiology (ACR) protocol in the US and the International
Society of Ultrasound in Obstetrics and Gynecology (ISOUG) global
protocol. The Directors believe that the ScanNav AutoCapture
software has the potential to:
-- speed up workflow - as the software automatically captures
the correct images, the operators do not need to manually freeze
and save each image required by the protocol - allowing them to
focus on their dynamic assessment of the fetus; and
-- improve accuracy and consistency - the use of AI software
should reduce the operator variability from the procedure, which is
expected to result in more accurate and consistent image
capture.
The Directors also believe that ScanNav AutoCapture's ability to
automatically capture protocol-adherent ultrasound images will have
more commercial value to OEMs looking to enhance the performance of
their ultrasound machines. Consequently, the Group is in
discussions with a number of OEMs to bring ScanNav Audit and
AutoCapture to market.
The Group expects to develop further obstetrics variants of
ScanNav AutoCapture to complement the 20-week protocol software
described above.
ScanNav AnatomyGuide
ScanNav AnatomyGuide is an AI based ultrasound software product
which can identify and highlight anatomical structures on a live
ultrasound image. The product is being developed for use during
Peripheral Nerve Block (PNB) procedures to support less experienced
practitioners. PNB is a form of local anaesthetic that can be used
in certain surgical procedures as an alternative to general
anaesthesia.
The Group is currently gathering data to assist in the
development of the product through a clinical study in partnership
with the Aneurin Bevan University Health Board in Newport, Wales.
It is anticipated that the product will also be sold into hospitals
through the ultrasound OEMs. The Directors expect that development
of ScanNav AnatomyGuide will be substantially completed in 2019 and
that the regulatory approval process for its sale in Europe and the
United States will commence thereafter.
Future ScanNav products
The Group is looking to develop future products including:
ScanNav NeedleGuide
NeedleGuide aims to use commercially available augmented reality
hardware, combined with AI needle guidance tools, to enable live
tracking of a needle during procedures such as PNB, kidney biopsy
and cyst aspiration. The initial research work for this project has
been part funded by the award of an Innovate UK grant of
GBP466,000. This is a long-term development project that will be
reviewed at the end of the Innovate UK grant in 2019.
ScanNav Assist
Assist is the next logical development for the ScanNav
technology and could facilitate the automatic recognition of
abnormalities within a general ultrasound scan. ScanNav Assist aims
to confirm that a clinician has correctly scanned the anatomical
area of interest and then highlight any areas of abnormality. The
Directors believe that ScanNav Assist has the potential to allow
more point-of-care medical practitioners to use ultrasound imaging
for front line diagnosis and that such a device could support a
broad range of medical professionals including GPs, midwives,
paramedics and doctors working in Emergency Rooms.
ScanNav HealthCheck
HealthCheck aims to take the concept of the ScanNav Assist
product to the next level by potentially enabling consumers to
perform scans on themselves. When combined with the next generation
of low-cost hand-held ultrasound devices, this software could have
the potential to enable health conscious individuals to benefit
from the ability to scan themselves at home.
Challenges to the Clinical Division
AI image analysis in ultrasound is a new area of medical
innovation and we are attempting to open-up markets in which
customer demand and revenue models are unproven. We are also
attempting to do this with relatively small amounts of development
funds, compared to some of the AI based medical image analysis
companies already operating in the US, China and Israel.
Our approach to these challenges is as follows:
-- focus on the growing area of ultrasound imaging, the fastest,
safest and cheapest imaging modality. Although this is probably one
of the hardest of the imaging modalities to develop AI based image
analysis tools for (MRI, CT and X-Ray being the others), we believe
we have a potentially world leading expertise in this technology,
combining ten years' experience in developing simulation-based
training tools with our AI development expertise from The
University of Oxford;
-- leverage the assets that the acquisition of IUL has given us
and which have already enabled us to bring our first pilot products
into clinic. We believe these are the first real-time obstetric
ultrasound AI software tools that are working in a live operational
environment;
-- focus on developing AI software that has both a clinical need
and a clear economic rationale for its purchase; and
-- partner our first products with OEMs who can access the large
ultrasound market more quickly with their existing product ranges
and sales networks and facilitate faster regulatory approvals.
The reception to our pilot ScanNav products at RSNA in December
2018 has given us confidence that the approach above is the right
one and that we are on track to turn these pilot products into
commercial products that can generate long-term revenue for the
Division.
Name Change
On 14 January 2019 Company announced that it had changed its
name from MedaPhor Group plc to Intelligent Ultrasound Group plc.
The name change will roll out across the Group during 2019. The
Board believes that the new name reflects the Group's expansion
into the development of AI related software to guide and support
doctors and sonographers in clinical ultrasound scanning.
Trading in the Group's shares under the new name commenced on 15
January 2019 and the Group's ticker symbol has remained as "MED".
The Group's website can now be found at
www.intelligentultrasound.com.
Management of ultrasound image data
The AI-based products being developed by the Group use
deep-learning models that are 'taught' by processing thousands of
ultrasound images. The curation and management of this data is of
paramount importance to the Group and, as such, all
externally-sourced ultrasound imaging data is anonymised before it
is sent to us. Patient consent and the right to use the data are
obtained under a GDPR-compliant data sharing agreement for each
image library. Ultrasound scans recorded by the Group from
volunteers are also stored anonymously and always obtained with
their consent and GDPR compliance.
Notwithstanding the data anonymisation, all image data is stored
securely and its use is restricted to those who require access for
development work. None of the source images are used in products
sold to end-users - these only contain the output of the
deep-learning models that the images were used to create.
Quality Management System
During the year we implemented a company-wide Quality Management
System (QMS). Originally this was intended to aid the development
of the Clinical Division's ScanNav software, as it progressed
towards regulatory approval, but in September 2018, the decision
was taken to implement the QMS across both divisions in the UK. We
expect to obtain ISO13485 accreditation during 2019.
STATEGIC REPORT - FINANCE
Revenue
Revenues for the Group increased 27% to GBP5.3m (2017: GBP4.2m).
The growth achieved this year was organic but was boosted by the
launch of our new BodyWorks Eve training simulator. The first Eve
sale was made in April 2018 and the simulator contributed GBP1.2m
to sales during the year, of which GBP0.5m were demo systems sold
to distributors.
Gross profit
The gross margin in the year was 53% compared to 60% in 2017.
The reduced margin mainly reflects the higher proportion of
distributor sales in 2018, at just under 50% (2017: 42%), but there
has also been some discounting in both direct and distribution
pricing to win new business and an increase in sales of a lower
margin third party owned product for whom the Group acts as
reseller has also had some impact.
Administrative expenses
Administrative expenses, excluding exceptional costs, increased
by GBP1.9m during the year to GBP7.1m (2017: GBP5.2m) as we
absorbed the first full year of overheads relating to Intelligent
Ultrasound Limited (IUL) acquired in 2017, compared to 3 months
post-acquisition overheads which were consolidated in 2017. Staff
costs, excluding those relating to IUL, were up by GBP0.6m
reflecting our increased investment in sales, R&D and support
staff.
Increase in administrative expenses excluding exceptional
items:
GBPm
------------------------------------------------------- -----
IUL (Clinical Division) overheads for the full year
(acquired 6 October 2017) 0.6
Staff costs, excluding those included in IUL above 0.6
Lower staff costs transferred to internally generated
development costs 0.1
Marketing and travel 0.2
Depreciation and amortisation 0.2
External development costs expensed 0.1
Other 0.1
------------------------------------------------------- -----
Total increase in administrative overheads excluding
exceptional costs 1.9
------------------------------------------------------- -----
Investment in the Clinical Division was also increased in 2018
by the transfer of specialist R&D staff from the Simulation
Division, which added a further GBP0.5m to Clinical Division
overheads.
Research and development costs and grants received
During the year the Group expensed through the income statement
GBP1.3m (2017: GBP0.6m) in relation to research and development
costs. In addition, development costs amounting to GBP0.5m (2017:
GBP0.5m) were capitalised within intangible assets and an
amortisation charge of GBP0.5m (2017: GBP0.4m) has been recognised
against cumulative capitalised development costs.
The Group received an R&D grant of GBP0.3m (2017: GBP0.03m)
which has been included as Other Income in the Statement of
Consolidated Income.
EBITDA
The loss for the year (including GBP0.8m additional expensed
R&D) before tax, exceptional items, depreciation and
amortisation was GBP2.7m (2017, loss GBP1.7m).
Exceptional items
The Exceptional Item in the year related to a credit of GBP0.4m
in respect of a fair value adjustment on the settlement of
contingent consideration relating to the acquisition of IUL in the
prior year (see note 4 below).
Exceptional items in the prior year
Goodwill of GBP3.3m arose on the acquisition of Inventive
Medical Limited (IML) and IUL and the Company is required under
International Accounting Standard 36 - Impairment of Assets (IAS
36) to test the carrying value of this goodwill for impairment
annually, using base cash flow projections that should not extend
beyond five years and must exclude net revenues from pipeline
products. As the majority of the Group's projected net revenues
arise from its on-going research and development activities which
are forecast to contribute more to revenue in later years, the
directors concluded that, while they believe the investments in
both IML and IUL will be monetised and yield returns in future
years, the goodwill arising on these acquisitions should be treated
as impaired under the strict requirements of IAS 36. Consequently,
an impairment charge equal to the total goodwill which arose on
these acquisitions of GBP3.3m was made to the Income Statement and
included in Exceptional Items in 2017.
Exceptional Items in 2017 also included acquisition costs
relating to the purchase of IUL of GBP0.2m and a credit of GBP0.6m
in respect of a fair value adjustment on the settlement of
contingent consideration relating to the acquisition of IML in the
prior year (see note 4 below).
Taxation
The Group claims each year for research and development tax
credits and, since it is loss-making, elects to surrender these tax
credits for a cash rebate. The amount included within the
consolidated income statement in respect of amounts received and
receivable for the surrender of research and development
expenditure was GBP113,796 (2017: GBP55,310) which was net of
R&D tax credit over-claims of GBP100,000 relating to prior
periods. The tax credit for the year also includes deferred tax of
GBP90,000 (2017: GBP72,299) on the fair value of intangible fixed
assets acquired with IML and IUL which is being recognised over the
life of those assets.
As at 31 December 2018, the Group has cumulative tax losses of
approximately GBP9.8m (2017: GBP8.8m).
Placing and open offer
On 13 December 2018 the Company issued 59,750,331 new ordinary
shares of 1 pence each in the capital of the Company at a price of
8.5 pence per share which raised GBP5,078,778 before costs of the
share issue and GBP4,818,046 after costs. The share issue costs of
GBP260,732 have been netted off against the share premium arising
on the new share issue.
Balance sheet
Consolidated net assets increased to GBP9.3m (2017: GBP7.1m).
Inventories at GBP0.85m at the year-end were double the level of
the previous year (2017 GBP0.41m) and we continue to hold higher
than normal stock levels to mitigate supply chain risks during the
Brexit transition period. Cash at GBP5.6m was up GBP1.3m on the
prior year (2017: GBP4.3m). Trade and other payables of GBP1.9m at
31 December 2018 (2017: GBP2.4m) include GBP0.2m of warrants issued
as part of the consideration paid for IUL (2017, retained
consideration and warrants relating to the acquisition of IUL:
GBP1.1m).
Cash flow
Cash at 31 December 2018 stood at GBP5.6m (2017: GBP4.3m), with
cash flow in the year boosted by the placing of new ordinary shares
in the Company which raised GBP4.8m net of costs (2017: placing
raised GBP5.4m net of costs). Net cash used in operating activities
was GBP2.6m (2017: GBP2.2m) and the net cash outflow arising from
investment activities was GBP0.9m (2017: GBP0.7m, excluding cash
used or acquired on the acquisition of IUL).
In early 2020 the Company will commence the process to secure a
further round of funds to take the Group through the next stage of
growth.
Contingent liability
The Board has been made aware of a potential over-claim of
R&D tax credits made by IUL in periods prior to its acquisition
by the Company arising from an omission to file certain tax
elections with HMRC on a timely basis. IUL has made full disclosure
of this matter to HMRC and requested that they accept retrospective
elections for the accounting periods concerned. The Company has
estimated that the potential amount that IUL could be asked to
repay if the retrospective elections are not permitted is
approximately GBP434,000 including interest and possible penalties,
but considers that the likelihood of HMRC demanding repayment is
possible rather than probable and consequently no provision has
been made for this contingent liability.
Events since the end of the financial year
Other than as disclosed above, there are no events to report
that have occurred since the end of the financial year.
STRATEGIC REPORT - SUMMARY
The Group has made good progress this year. Sales in the
Simulation Division continue to grow and after a well-received
showcasing of ScanNav at RSNA in Chicago, the world's largest
radiology exhibition, we believe there is considerable interest in
our AI software algorithms from both manufacturers and end
users.
The potential of the new ScanNav AI real-time image analysis
software combined with our existing revenue generating simulation
business enables us to look forward with considerable
confidence.
This Strategic Report was approved by the Board on 28 March 2019
and signed on its behalf by:
Stuart Gall
Chief Executive
Intelligent Ultrasound Group plc
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 December 2018
Unaudited Audited
Note 2018 2017
GBP GBP
REVENUE 3 5,313,164 4,180,630
Cost of sales (2,479,781) (1,657,765)
----------- -----------
Gross profit 2,833,383 2,522,865
Other income 310,475 28,225
Administrative expenses excluding exceptional
costs (7,120,434) (5,228,211)
Exceptional administrative costs 4 362,718 (2,860,774)
----------- -----------
Total administrative costs (6,447,241) (8,060,760)
----------- -----------
OPERATING LOSS (3,613,858) (5,537,895)
Finance costs (7,402) (7,833)
----------- -----------
LOSS BEFORE INCOME TAX (3,621,260) (5,545,728)
Income tax credit 5 203,796 127,609
LOSS ATTRIBUTABLE TO THE EQUITY SHAREHOLDERS
OF THE PARENT (3,417,464) (5,418,119)
----------- -----------
OTHER COMPREHENSIVE INCOME
Items that will or may be reclassified
to profit or loss:
Exchange gain/(loss) arising on translation
of foreign operations 844 31,171
------------- -----------
OTHER COMPREHENSIVE INCOME FOR THE YEAR 844 31,171
TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE
TO THE EQUITY SHAREHOLDERS OF THE PARENT (3,416,620) (5,386,948)
============= ===========
LOSS PER ORDINARY SHARE (PENCE) ATTRIBUTABLE
TO THE EQUITY SHAREHOLDERS OF THE PARENT
Basic and diluted 6 (3.59)p (11.70)p
------------- -----------
Intelligent Ultrasound Group plc
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2018
Ordinary Share Accumulated Share-based Merger Foreign Total
share premium losses payment Reserve exchange equity
capital reserve reserve attributable
to shareholders
GBP GBP GBP GBP GBP GBP GBP
BALANCE AS AT 1
JANUARY
2017 318,986 7,267,139 (7,005,812) 321,600 3,943,675 (10,980) 4,834,608
COMPREHENSIVE
INCOME
FOR THE YEAR
Loss for the
year
and total
comprehensive
income - - (5,418,119) - - 31,171 (5,386,948)
CONTRIBUTIONS
BY AND
DISTRIBUTIONS
TO OWNERS
Shares issued
for
cash 441,253 5,074,412 - - - - 5,515,665
Cost of raising
finance - (124,881) - - - - (124,881)
Retention
shares issued
further to
acquisition
of IML 23,256 - - - 340,116 - 363,372
Shares issued
on acquisition
of IUL 123,520 - - - 1,729,274 - 1,852,794
Cost of
share-based
awards - - - 92,000 - - 92,000
---------- ------------- --------------- ------------ ------------ ---------- ----------------
Total
contributions
by and
distributions
to owners 588,029 4,949,531 - 92,000 2,069,390 - 7,698,950
---------- ------------- --------------- ------------ ------------ ---------- ----------------
BALANCE AS AT
31 DECEMBER
2017 as
previously
stated 907,015 12,216,670 (12,423,931) 413,600 6,013,065 20,191 7,146,610
Prior year
adjustment
- IFRS 15
Revenue
from Contracts
with
Customers - - (13,041) - - - (13,041)
---------- ------------- --------------- ------------ ------------ ---------- ----------------
At 1 January
2018
as restated 907,015 12,216,670 (12,436,972) 413,600 6,013,065 20,191 7,133,569
---------- ------------- --------------- ------------ ------------ ---------- ----------------
COMPREHENSIVE
INCOME
FOR THE YEAR
Loss for the
year
and total
comprehensive
income - - (3,417,464) - - 844 (3,416,620)
CONTRIBUTIONS
BY AND
DISTRIBUTIONS
TO OWNERS
Shares issued
for
cash 597,503 4,481,275 - - - - 5,078,778
Cost of raising
finance - (260,732) - - - - (260,732)
Retention
shares issued
further to
acquisition
of IUL 61,760 - - - 524,958 - 586,718
Cost of
share-based
awards - - - 148,000 - - 148,000
---------- ------------- --------------- ------------ ------------ ---------- ----------------
Total
contributions
by and
distributions
to owners 659,263 4,220,543 - 148,000 524,958 - 5,552,764
---------- ------------- --------------- ------------ ------------ ---------- ----------------
BALANCE AT 31
DECEMBER
2018 1,566,278 16,437,213 (15,854,436) 561,600 6,538,023 21,035 9,269,713
========== ============= =============== ============ ============ ========== ================
Intelligent Ultrasound Group plc
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 31 December 2018
Unaudited Audited
2018 2017
Note GBP GBP
NON CURRENT ASSETS
Intangible assets 2,886,562 3,366,477
Property, plant and equipment 417,732 312,506
------------ ------------
3,304,294 3,678,983
------------ ------------
CURRENT ASSETS
Inventories 851,491 413,244
Trade and other receivables 1,912,975 1,709,436
Current tax assets 80,302 -
Cash and cash equivalents 5,607,052 4,250,198
------------ ------------
8,451,820 6,372,878
------------ ------------
TOTAL ASSETS 11,756,114 10,051,861
CURRENT LIABILITIES
Trade and other payables 7 (1,939,435) (2,369,743)
Income tax (100,000) -
Provisions (68,972) (80,555)
------------ ------------
(2,108,407) (2,450,298)
------------ ------------
NON CURRENT LIABILITIES
Deferred taxation (377,994) (467,994)
------------ ------------
TOTAL LIABILITIES (2,486,401) (2,918,292)
NET ASSETS 9,269,713 7,133,569
============ ============
EQUITY
CAPITAL AND RESERVES ATTRIBUTABLE TO EQUITY HOLDERS OF THE
COMPANY
Ordinary share capital 8 1,566,278 907,015
Share premium 16,437,213 12,216,670
Accumulated losses (15,854,436) (12,436,972)
Share-based payment reserve 561,600 413,600
Merger reserve 6,538,023 6,013,065
Foreign exchange reserve 21,035 20,191
TOTAL EQUITY 9,269,713 7,133,569
============= =============
Intelligent Ultrasound Group plc
CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 31 December 2018
Unaudited Audited
2018 2017
GBP GBP
CASH FLOW FROM CONTINUING OPERATING ACTIVITIES
Loss before tax (3,621,260) (5,545,728)
Depreciation 244,957 232,369
Amortisation of intangible assets 992,586 793,543
Impairment of goodwill - 3,328,166
Fair value adjustment on contingent consideration (362,718) (636,628)
Finance costs/(income) 7,402 7,833
Share-based payments 148,000 92,000
----------- -----------
Operating cash flows before movement in working
capital (2,591,033) (1,728,445)
Movement in inventories (438,247) 69,094
Movement in trade and other receivables (203,539) (61,351)
Movement in trade and other payables 507,545 (575,798)
----------- -----------
Cash used in operations (2,725,274) (2,296,500)
Income taxes received 133,495 100,844
NET CASH USED IN OPERATING ACTIVITIES (2,591,779) (2,195,656)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and
equipment (361,707) (183,012)
Disposal of property, plant and
equipment 11,523 11,440
Internally generated intangible assets (512,671) (492,118)
Cash used on acquisition of subsidiaries - (72,000)
Cash acquired on acquisition of subsidiaries - 1,559
NET CASH USED IN INVESTING ACTIVITIES (862,855) (734,131)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Issue of new shares 5,078,778 5,515,665
Share issue costs (260,732) (124,881)
Finance (costs paid)/income received (7,402) (7,833)
NET CASH GENERATED FROM FINANCING ACTIVITIES 4,810,644 5,382,951
--------- ---------
Exchange gains/(losses) on cash and cash equivalents 844 31,171
--------- ---------
NET INCREASE IN CASH AND CASH EQUIVALENTS 1,356,854 2,484,335
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 4,250,198 1,765,863
CASH AND CASH EQUIVALENTS AT OF YEAR 5,607,052 4,250,198
========= =========
Intelligent Ultrasound Group plc
NOTES TO THE PRELIMINARY RESULTS
for the year ended 31 December 2018
1. BASIS OF PREPARATION AND ACCOUNTING POLICIES
The Group's financial statements have been prepared in
accordance with International Financial Reporting Standards
("IFRS") as adopted by the European Union, IFRIC interpretations,
the AIM Rules, and the Companies Act 2006.
The financial statements have been prepared on the going concern
basis. The Group meets its day--to--day working capital
requirements from its cash reserves. The Board receives rolling
cash flow projections on a monthly basis and monitors these against
the Group's long-term projections. These projections indicate that
the Group will have sufficient funds to continue to trade for the
next 15 months.
Therefore, the directors have a reasonable expectation that the
Group has adequate resources to continue in operational existence
for the foreseeable future and therefore continue to adopt the
going concern basis of accounting in preparing the annual financial
statements.
While the financial information included in this preliminary
announcement has been computed in accordance with IFRS, this
announcement does not itself contain sufficient information to
comply with IFRS. The accounting policies used in the preparation
of this preliminary announcement have been applied consistently to
all periods presented. They are also consistent with those in the
Group's statutory financial statements for the year ended 31
December 2018 which have yet to be published. The preliminary
results for the year ended 31 December 2018 were approved by the
Board of Directors on 28 March 2019.
The financial information for the year ended 31 December 2018
and the year ended 31 December 2017 does not constitute the
company's statutory accounts for those years. Statutory accounts
for the year ended 31 December 2017 have been delivered to the
Registrar of Companies. The auditors' report on those accounts was
unqualified, did include a material uncertainty in respect of going
concern, and did not contain a statement under 498(2) or 498(3) of
the Companies Act 2006. The financial information for the year
ended 31 December 2018 is unaudited. The statutory accounts for
that year will be delivered to the Registrar of Companies in due
course.
The Company is a limited liability company incorporated and
domiciled in England & Wales and whose shares are quoted on
AIM, a market operated by The London Stock Exchange. The Group
financial statements are presented in pounds Sterling.
2. BASIS OF CONSOLIDATION
The consolidated preliminary results incorporate the results of
the Company and its subsidiary undertakings.
3. REVENUE ANALYSIS
The following table provides an analysis of the Group's revenue
by geography based upon the location of the Group's customers.
Year ended 31 December Simulation Clinical Total
2018 Division Division
Distribution Direct
GBP Sales GBP GBP
GBP
United Kingdom - 994,080 - 994,080
North America - 1,688,968 - 1,688,968
Rest of World 2,630,116 - - 2,630,116
2,630,116 2,683,048 - 5,313,164
============= ========== ========== ==========
Year ended 31 December Simulation Clinical Total
2017 Division Division
Distribution Direct
GBP Sales GBP GBP
GBP
United Kingdom - 715,531 - 715,531
North America - 1,708,984 - 1,708,984
Rest of World 1,756,115 - - 1,756,115
1,756,115 2,424,515 - 4,180,630
============= ========== ========== ==========
Included within non-UK revenues are sales to the following
countries which accounted for more than 10% of the Group's total
revenue for the year:
2018 2017
GBP GBP
USA 1,560,624 1,166,292
China 710,689 766,147
========= =========
4. EXCEPTIONAL ITEMS
2018 2017
GBP GBP
Goodwill impairment - 3,328,166
Fair value adjustments on contingent
consideration (362,718) (636,628)
Acquisition costs - 169,236
(362,718) 2,860,774
========== ==========
The fair value adjustment on contingent consideration arose on
the settlement during the year of the retained consideration on the
acquisition of IUL. The consideration was satisfied by the payment
of cash of GBP72,000 plus the issue of 18,527,936 new Ordinary
Shares ("the Consideration Shares") and 1,256,692 warrants ("the
Consideration Warrants") in Intelligent Ultrasound Group plc with a
combined fair value of GBP2,967,694 based on the market price of
the shares at the time of the completion of the transaction. Two
thirds of the Consideration Shares (12,351,961 shares) were
admitted to trading and two thirds of the warrants (837,795
warrants) were issued upon completion. The issue of the remaining
third of the Consideration Shares and Consideration Warrants
(together "the Deferred Consideration") was deferred for 12 months
from completion as the issue of these shares and warrants was
contingent on no seller warranty or indemnity breaches (as
specified in the Sale and Purchase Agreement) arising during that
12 month period. The issued warrants at their fair value of
GBP125,669 along with the Deferred Consideration (retained shares
at their original fair value of GBP926,396 and the retained
warrants at their original fair value of GBP62,835), were included
in creditors due within one year at 31 December 2017. The Company
was not aware of any seller warranty or indemnity breaches and so
the 6,175,975 deferred Consideration Shares were admitted to
trading on 9 October 2018 and the 418,897 deferred Consideration
Warrants were issued at the same time. The difference between the
original fair value of the Deferred Consideration and the fair
value of the Deferred Consideration at the settlement date of
GBP362,718 has been recognised in the Consolidated Statement of
Comprehensive Income as a fair value adjustment on deferred
consideration and included within exceptional items.
At the end of 2017 the directors reviewed the carrying amount of
goodwill arising on the acquisition of Inventive Medical Limited
(IML) in 2016 and Intelligent Ultrasound limited (IUL) in 2017 for
impairment. The conclusion of that review was that, there was an
impairment of goodwill if the base cash projections were not
extended beyond a five-year time horizon and cash flows from
pipeline products were excluded. The directors concluded that the
goodwill arising on the acquisition of IML and IUL should be
treated as impaired under IAS 36 and consequently an impairment
charge of GBP3,328,166 was been made to the 2017 Consolidated
Statement of Comprehensive Income.
The fair value adjustment on contingent consideration in 2017
arose on the settlement of the retained consideration on the
acquisition of IML. The issue of these ordinary shares in the
Company was contingent on there being no vendor warranty or
indemnity breaches arising in the 12-month period following the
acquisition of IML in August 2016. This contingent consideration
was included in creditors due within one year at 31 December 2016
at its original fair value of GBP1,000,000 being 2,325,582 shares
at 43 pence per share which was the market price of the shares at
the time of completion. There were no vendor warranty or indemnity
breaches that the directors were aware of and so all the contingent
consideration shares were issued in August 2017 when the fair value
of the contingent consideration was GBP363,372 based on the market
price of the shares of 15.625p on the day the shares were admitted
to trading. The difference between the original fair value of the
contingent consideration and the fair value of the contingent
consideration at the settlement date was transferred to the
Consolidated Statement of Comprehensive Income as a fair value
adjustment on contingent consideration and included within
exceptional items in 2017 above.
The acquisition costs in 2017 related to the purchase of
Intelligent Ultrasound Limited (IUL) in October 2017.
5. TAXATION ON ORDINARY ACTIVITIES
Analysis of credit in year:
2018 2017
GBP GBP
R&D tax credit (213,796) (55,310)
Adjustment for over-claim of R&D tax credit
in prior periods 100,000 -
Deferred tax credit (90,000) (72,299)
--------- ---------
(203,796) (127,609)
========= =========
6. LOSS PER SHARE
The earnings per ordinary share has been calculated using the
loss for the year and the weighted average number of ordinary
shares in issue during the year as follows:
Unaudited Audited
2018 2017
GBP GBP
Loss for the year after taxation (3,417,464) (5,418,119)
============ ============
2018 2017
Number of ordinary shares of 1p No. No.
each
Basic and diluted weighted average
number of ordinary shares 95,233,054 46,290,518
------------------ ----------------
Basic loss pence per share (3.59)p (11.70)p
At 31 December 2018 and 2017 there were share options
outstanding which could potentially have a dilutive impact but were
anti-dilutive in both years.
7. CURRENT LIABILITIES - TRADE AND OTHER PAYABLES
2018 2017
GBP GBP
Trade payables 665,040 389,911
Taxation and social security 88,870 80,319
Accruals 507,568 454,490
Deferred income 471,570 311,106
Warrants 165,464 125,669
Retention consideration shares - 926,396
Retention consideration warrants - 62,835
Other 40,923 19,017
1,939,435 2,369,743
========= =========
8. SHARE CAPITAL
2018 2017
No. GBP No. GBP
Authorised Unlimited Unlimited Unlimited Unlimited
=========== ========= ========== =========
Allotted, issued and fully
paid
Ordinary shares of 1p each
Balance at 1 January 90,701,443 907,015 31,898,576 318,986
Shares issued for cash 59,750,331 597,503 44,125,324 441,253
Shares issued on acquisition
of IML - - 2,325,582 23,256
Shares issued on acquisition
of IUL 6,175,975 61,760 12,351,961 123,520
Balance at 31 December 156,627,749 1,566,278 90,701,443 907,015
=========== ========= ========== =========
The fair values and premium arising on shares issued during the
year are as follows:
Date Description Shares Fair value Premium
number GBP GBP
Retention shares issued
09/10/18 to the vendors of IUL 6,175,975 586,718 524,958
Shares issued in connection
13/12/18 with capital raising 59,750,331 597,503 4,481,275
65,926,306 1,184,221 5,006,233
========== ========== ===========
One third of the consideration payable in respect of the
acquisition of IUL in 2017 was deferred for 12 months from
completion with the actual number of deferred shares and warrants
to be issued dependent on any vendor warranty or indemnity breaches
(as specified in the Sale and Purchase Agreement) arising during
that 12 month period. The Company was not aware of any vendor
warranty or indemnity breaches and so the 6,175,975 deferred
consideration shares (with a fair value of GBP586,718 at 9.5 pence
per share) were admitted to trading on 9 October 2018 and 418,897
deferred consideration warrants were issued at their fair value.
The share premium arising was subject to merger relief and has been
taken to merger reserve.
On 13 December 2018 the Company placed 59,750,331 newly issued
shares of 1 pence each in the capital of the Company at a price of
8.5 pence per share. Share issue costs of GBP260,732 have been
netted off against the share premium arising on the new share
issue.
9. CONTINGENT LIABILITY
The Company has been made aware of a potential over-claim of
R&D tax credits made by IUL in periods prior to its acquisition
by the Company arising from an omission to file certain tax
elections with HMRC on a timely basis. IUL has made full disclosure
of this matter to HMRC and requested that they accept retrospective
elections for the accounting periods concerned. The Company has
estimated that the potential amount that IUL could be asked to
repay if the retrospective elections are not permitted is
approximately GBP434,000 including interest and possible penalties,
but considers that the likelihood of HMRC demanding repayment is
possible rather than probable and consequently no provision has
been made for this contingent liability.
, the news service of the London Stock Exchange. RNS is approved by
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Provider in the United Kingdom. Terms and conditions relating to
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END
FR SEAEFWFUSESD
(END) Dow Jones Newswires
March 28, 2019 03:01 ET (07:01 GMT)
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