REG - RUA Life Sciences - Final Results
11/07/2022 07:00
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RNS Number : 9215R RUA Life Sciences PLC 11 July 2022
11 July 2022
RUA Life Sciences plc
("RUA Life Sciences", the "Company" or the "Group")
Final results for the year ended 31 March 2022
RUA Life Sciences, the holding company of a group of medical device businesses
focused on the exploitation of the world's leading long-term implantable
biostable polymer (Elast-Eon(TM)), announces its audited final results for
the year ended 31 March 2022.
Highlights:
· Revenue growth to £1,625,000 (2021: £1,528,000)
· Operating loss was £2,352,000 (2021: £1,551,000)
· Year-end cash balances of £2,963,000 (2021: £6,294,000)
· Return to growth in Contract Manufacturing revenues of 11%
· Board strengthened with two new executive directors appointed
· Biomaterials business volume growing year on year
· Major improvements in business processes
Bill Brown, Chairman of RUA Life Sciences, commented: "A great deal of work
has been undertaken within the business to continue the process of building
RUA into a full-scale medical device manufacturer. Key appointments have been
made in the Regulatory, Finance, Quality and R&D Engineering teams with
all departments making good headway. After the FDA indicated that they would
like to see additional data and in particular a relatively small clinical
study, constructive discussions continue on the precise requirements of the
510(k) process. The Group is currently accelerating the changes required to
fully transition to a medical device manufacturer and have a robust
manufacturing process in place to meet anticipated demand for product".
The information contained within this announcement is deemed by the Company to
constitute inside information as stipulated under the UK version of the EU
Market Abuse Regulation (2014/596) which is part of UK law by virtue of the
European Union (Withdrawal) Act 2018, as amended and supplemented from time to
time.
For further information contact:
RUA Life Sciences
Bill Brown,
Chairman
Tel: +44 (0)1294 317073
Caroline Stretton, Group Managing Director
Tel: +44 (0)1294 317073
Cenkos Securities plc (Nominated Advisor and Stockbroker)
Tel: +44 (0)20 7397 8900
Max Gould (Corporate Finance)
Giles Balleny (Corporate Finance)
Michael Johnson (Sales)
About RUA Life Sciences
RUA Life Sciences plc is the ultimate parent company of the Group, whose
principal activities comprise exploiting the value of its IP & know-how,
medical device contract manufacturing and development of cardiovascular
devices.
Our vision is to improve the lives of millions of patients by enabling medical
devices with Elast-Eon(TM), the world's leading long-term implantable
polyurethane.
Whether it is licensing Elast-Eon(TM), manufacturing a device or component, or
developing next generation medical devices, a RUA Life Sciences business unit
is pursuing our vision.
Elast-Eon™'s biostability is comparable to silicone while exhibiting
excellent mechanical, blood contacting and flex-fatigue properties. These
polymers can be processed using conventional thermoplastic extrusion and
moulding techniques. With over 8 million implants and 15 years of successful
clinical use, RUA's polymers are proven in long-term life enabling
applications.
The Group's four business units are:
RUA Medical: End-to-end contract developer and manufacturer of medical devices and
implantable fabric specialist.
RUA Biomaterials: Licensor of Elast-Eon(TM) polymers to the medical device industry.
RUA Vascular: Development of large bore polymer sealed grafts and soft tissue patches.
RUA Structural Heart: Development of tri leaflet polymeric heart valves.
A copy of this announcement will be available shortly
at www.rualifesciences.com/investor-relations/regulatory-news-alerts
(http://www.rualifesciences.com/investor-relations/regulatory-news-alerts) .
CHAIRMAN'S STATEMENT
On behalf of the Board, I am pleased to present the Company's audited final
results for the year ended 31 March 2022.
Trading for Year
Total revenue for the year amounted to £1,625,000 (2021: £1,528,000)
representing growth of 6% over the previous period. The contract manufacturing
business within RUA Medical saw a strong recovery from COVID related business
interruption and delivery of polymer measured by volume to our licensees saw
strong growth, although revenues in the biomaterials business were down
slightly due to a larger one-off timing benefit in Royalties last year. Gross
margins remained strong at over 84%, demonstrating both the attraction of the
polymer licensing model as well as the embedded value within medical device
contract manufacture.
As anticipated, the total loss for the year has increased from £1,451,000 to
£2,067,000 principally as a result of increased expenditure on the key
research and development activities undertaken on our grafts and heart valves,
along with further investment in growing the manufacturing infrastructure to
deliver upon our ambitions.
We continued to invest further in property and equipment with total additions
to tangible fixed assets being £907,000 in the period. Despite the
investments of both a capital and revenue nature, cash was well managed with
total cash resources at the period end of £2,963,000.
Our Businesses
RUA has two mature, revenue generating, high margin and attractively
profitable business units in RUA Biomaterials and the Contract Manufacturing
unit of RUA Medical. It is naturally the developing businesses of Vascular
Grafts and Heart Valves that attract the most investor attention however it is
appropriate to recognise the value of the mature businesses. The Biomaterials
business, as well as providing the platform technology for the Group, achieved
revenues of £487,000 during the period with minimal costs, the revenues are
based on royalties and licence fees and has many characteristics of an
annuity. Contract Manufacturing, although part of the wider RUA Medical
business that is the hub for Group activities, generated revenue of
£1,138,000 during the year and generated a net margin of around 48% and thus
contributed around £550,000 to the wider Group. The activities of the other
parts of the Group are described in a little more detail below.
Vascular Grafts
RUA Vascular, our business developing a range of surgical vascular grafts
designed to eliminate the need for animal tissue as a sealant has make good
progress over the period following the request by the FDA for additional data
in order to progress the 510(k) application. A comprehensive suite of
testing had been undertaken on the grafts to demonstrate their mechanical
integrity and improved sealant properties together with the in vivo healing
process particularly at the important blood contacting surface. The package of
test data was sent to the FDA in November 2021 as part of a 510(k) submission
which sought to demonstrate the substantial equivalence of the RUA grafts to
current technology. The in vivo testing did however demonstrate a difference
to current technology whereby, the Elast-Eon sealant in the RUA grafts
prevented the surrounding tissue from sticking or adhering to the outside of
the grafts as demonstrated with the control devices. Additionally, there was
some evidence that the RUA grafts were also less susceptible to an
inflammatory process. As the "healing" process was different, the FDA
determined that in order to approve the grafts under the 510(k) regime that
they would like to see additional data and in particular a relatively small
clinical study to allow a better understanding of the healing process. Our
regulatory team (now established in house) has been actively engaged with the
FDA in seeking consensus on the appropriate additional testing and this
process is anticipated to conclude during August, at which point we should
have agreement on the full scope of the anticipated additional testing
required.
The delay has been disappointing however it has allowed time for engineering
improvements to the graft manufacturing process, which should improve the
gross margin potential.
More detailed marketing data and segmental analysis has been undertaken,
confirming that the global market for the RUA Vascular range of products
(including patches) specifically designed to be used by cardio-thoracic (or
"heart") surgeons is around $1 billion. Taking into account the limitations of
current technology, the improvements that the RUA range would introduce to the
market and external feedback, we are building the infrastructure of the
business with the objective of meeting demand for at least a 10% market share
although industry insiders have suggested a multiple of that is possible.
Heart Valves
A patient faced with surgery for a diseased heart valve is also faced with a
major decision regarding which type of valve to have. A mechanical valve will
be very durable but has the disadvantages of noise (clicking) and the risks of
thrombosis or bleeding if warfarin levels are not controlled. A biological
valve is silent, avoids drug treatment but has a limited lifespan and as such
risks the need for a further operation when older and the procedural risks
increase.
RUA's vision with its heart valve development programme is to create a valve
that utilises the proven benefits of Elast-Eon's durability, non-thrombogenic
and anti-calcification properties to reduce or eliminate the compromises a
patient has to make. Over the year and in the current period, the project has
succeeded in meeting some important milestones. The design has seen further
refinement to reduce stress on the valve, the hydro dynamic performance has
been very promising and we have succeeded in developing a hybrid material that
could be a replacement for the pericardium material that is used to
manufacture biological valves without the durability drawbacks. This new
composite material is very thin, flexible, yet demonstrates tear resistance
many times greater than a simple polymeric sheet whilst retaining the blood
contacting properties of Elast-Eon. We believe this material coupled with our
valve design has the potential to eliminate the patient compromise whilst
avoiding the potential for sudden failure of a leaflet. The intention during
the current year is to further advance the testing of this technology and, if
it demonstrates the benefits as anticipated, advance to animal studies.
Outlook
It was clearly a great disappointment to have not achieved 510(k) approval at
the first time of asking, but I am convinced that it remains a question of
when, and not if, the polymer sealed grafts are approved for marketing. It is
a slightly unusual position that the reason for the delay is probably a
clinical benefit and the data we would expect to gather from the expanded
clinical requirement will be both invaluable from a marketing perspective but
also suggests that we could achieve a much greater market share than first
anticipated. We are still in the consultation phase with the FDA and as such
have a good idea of the additional work that will be required, and anticipate
final confirmation of these requirements in August.
William Brown
Chairman
8 July 2022
GROUP MANAGING DIRECTOR'S REPORT
Sales performance has improved
Total revenue reported from contract manufacturing and polymer licensing
businesses of £1,625,000 (2021: £1,528,000) represents an increase of 6%
over the same period in the previous year. Third party contract manufacturing
revenue increased 11% to £1,138,000 (2021: £1,021,000) reflecting a recovery
from Covid related disruption. Polymer licence and royalty fees represented
the balance of Group revenues of £487,000 (£2021: £507,000), which did not
reflect the underlying volume growth and was due to a major licencee hitting
its 2021 royalty cap in the last quarter of 2021 coupled with a weakened
dollar.
Research and development ("R&D") activities, along with the Group's
polymer IP, are the key platforms for future growth. Reflecting our ongoing
commitment to this area, R&D expenditure increased by almost two thirds
over the period with investment in this area rising from £541,000 to
£903,000.
Overall, loss after tax for the period has increased to £2,067,000 (2021:
£1,451,000) which resulted from a combination of increased R&D activities
and further investment in the infrastructure to support future growth.
The directors have prepared the financial statements on a going concern
basis. The assessment of going concern is included in note 2.
Pivoting to sustainable and profitable growth
Significant progress was made on product development activities for RUA
Vascular's large bore vascular grafts which enabled a 510(k) submission to the
FDA in November 2021. It was disappointing to receive feedback from the FDA
that human clinical data would be required to demonstrate substantial
equivalence of the grafts to existing products on the market on the basis that
they introduced novel technology compared to the predicate devices. Bringing
full time regulatory and clinical study expertise in house was already being
addressed prior to the 510(k) submission, and as a result resource has been
available to further engage with the FDA and review the regulatory strategy.
The need to generate clinical data means final FDA approval is now expected in
late 2024, and this has enabled a critical review of business processes and
afforded the time to progress the following advances in 2022:
1- Transform business processes in order to transition from a narrowly
focused contract manufacturer to a fully-fledged medical device
manufacturer.
2- Develop a high-throughput manufacturing process to ensure manufacturing
at scale from day one of FDA approval. This will allow RUA to maximise
initial vascular graft revenue and secure significant early market
penetration.
3- Accelerate the development and launch of the extended vascular graft
product pipeline. This will include an open surgical hybrid device to repair
the aortic arch and descending aorta.
4- Accelerate the development of a second design of a flexible leaflet
heart valve system; this new design is effectively a synthetic equivalent to
current pericardium material used to manufacture biological valves with the
objective of avoiding valve failure through polymer technology.
5- Increase the talent pool within the business with the necessary
experience, knowledge and skill sets to help deliver on RUA's ambitious plans.
Significant Board/Management changes for the period
The Group has restructured its operations and the team expanded with new
recruits from the medical device industry. Product development and all graft
R&D activities are now being managed by Simon Rosendale (Manufacturing
Engineering Manager). Stuart Elias (Medical Textiles Manager) continues to
manage day to day textile production and provide his invaluable textiles
expertise to Group businesses. Simon and Stuart have over 40 years medical
textiles expertise between them, including employment at Terumo Aortic on the
production and development of vascular grafts.
The further key appointments to the Board of Lachlan Smith, Chief Financial
Officer, and Iain Anthony, Director of Clinical and Regulatory Affairs, also
ensure the right management expertise is available to support growth of the
Group. Iain in particular has extensive cardiovascular medical device
experience in clinical, regulatory and R&D areas. I have also moved into a
wider Group role from the narrower focus I previously had within the RUA
Medical Devices subsidiary.
Capital Expenditure
The balance sheet of the Group retains a cash balance at the period end of
£2,963,000 (2021: £6,294,000) having invested a further £907k (2021:
£837k) in Property, Plant and Equipment. This mainly comprised heart valve
testing equipment, graft scale up equipment and a new facility. This new
facility was purchased in November 2021 to accommodate additional office space
for the expanding business, and a high output cleanroom facility to support
scale up manufacturing of RUA Vascular's graft range and associated support
functions. The new facility is planned to be commissioned during 2023.
RUA Biomaterials
RUA Biomaterial's manufacturing and licensing partner, Biomerics, continues to
actively promote the uptake of Elast-Eon™ as a world leading material to the
medical device industry. Elast-Eon has now been in long term human implants
for well over 15 years, is the enabling technology behind over 8 million
life-sustaining devices and is proven to have all of the characteristics
necessary for a long-term implantable biomaterial. Although 2022 revenues
decreased by 4%, this did not reflect the underlying volume growth, and was
due to a major licensee hitting its 2021 royalty cap in our last quarter of
2021 coupled with a weakened dollar. Future strategy is centered around
increasing royalty income by positioning Elast-Eon as an enabling technology
which de-risks the future of all current medical devices incorporating animal
derived material. Biomerics has expanded its manufacturing capacity and we
will look to enhance our Intellectual Property portfolio to add more value to
future licensing deals.
RUA Medical Devices
Third party contract manufacturing revenue increased 11% to £1,138,000,
reflecting a recovery from Covid related disruption, particularly in the US.
Our operations were not significantly affected during the year and we managed
to respond to COVID-19 supply chain disruption and ensure continued focus on
quality and delivery of customer products.
We have also entered into the final stages of negotiating a new manufacturing
and supply contract with a global medical technology company which is intended
to be finalised in the very near term.
Future strategy is focused on growing OEM customer demand and transforming the
aspirations for the Group's product portfolio into real results. RUA Medical
Devices remains the engine room for Group R&D and production, and, as the
inventor of the novel Elast-Eon coating process technology, will build upon
its reputation as the Centre of Excellence for Elast-Eon processing.
Vascular Grafts
We remain excited by the opportunities open to RUA Vascular which is now much
more than just another graft manufacturer with an interesting sealing
technology. The segments of the global vascular graft market being addressed
by the RUA product pipeline are estimated to be worth, in total, around $1
billion and represent, in the main, the products required and used by
cardio-thoracic (or heart) surgeons. Polyester vascular grafts have been
available on the market for over 50 years with little innovation. There are a
number of long-established competitors in the marketplace and many use animal
derived sealants for their polyester grafts. There is now a growing acceptance
in the surgical community of an inevitable switch away from animal sourced
products once a synthetic surgical graft is available, RUA's current range of
synthetic large bore grafts under development will be the enabler for the
development of more complex products in the vascular graft portfolio. Detailed
financial planning by Group management has estimated that the vascular graft
product pipeline could achieve a market penetration of 10% within the next ten
years.
Significant progress was made on product development activities for RUA
Vascular's large bore vascular graft in 2021, and after resolution of
cellulose contamination on the graft, a 510(k) submission to the FDA was made
in November 2021. After collaborative discussions with the FDA, the 510(k)
submission for the large bore vascular graft was converted to a
pre-submission, or Q-sub, allowing interactive discussions between the Company
and the FDA to determine the regulatory path to approval in the US. During
these discussions, many of the additional data requirements for a future
510(k) submission were agreed and a future pre-submission strategy identified.
On a positive note, it was confirmed that RUA can still follow the 510(k)
route to the US market provided that supplementary clinical data are generated
to support the Vascular Graft range. A clinical trial has now been designed
to demonstrate the safety and efficacy of Elast-Eon as a graft sealant. The
trial design has been submitted to the FDA in a further pre-submission to
ensure alignment with the FDA's expectations. These discussions are expected
to be completed by August of this year. While this adds some delay to the
front end of the process, the data generated in the trial will be utilised to
support marketing applications in multiple geographic regions including
Europe, and this is expected to drive faster acceptance and uptake of the
graft products than previously planned.
The recruitment of the first patient for the clinical trial is anticipated
within the current financial year, with regulatory submissions planned to
allow entry into US and European markets in 2025. Other markets will also be
pursued where market access can be achieved on the back of US/EU regulatory
clearance. The business is confident that this clinical trial will demonstrate
the benefits of an Elast-Eon sealed vascular graft for patients and surgeons
and drive the inevitable switch away from traditional animal-sourced graft
sealants such as gelatine and collagen. Therefore, we believe that once we
achieve regulatory approval for the grafts there will be ready buyers for the
devices. Interest continues to be strong for OEM use of the RUA vascular graft
and those opportunities are being advanced in parallel with our plans for
sales into hospitals via distribution partners.
Significant work has been completed on manufacturing process refinement and
efficiencies of the existing small-scale production line to support the build
of clinical trial stock and the future transfer of manufacturing to a new high
output cleanroom facility. Production capacity plans have therefore been
reviewed and a scale-up line is being developed that is capable of meeting the
increased volumes and margins required for a global launch of the vascular
graft pipeline.
We were successful in being awarded an Innovate UK grant to help finance an
early feasibility study for the use of an Elast-Eon device to treat Critical
Limb Ischaemia. Unfortunately, we had to allow the grant to lapse due to
COVID-19 restrictions, meaning the team was unable to travel to meet key
opinion leaders and potential partners. The project, however, remains in the
vascular pipeline.
Heart Valves
RUA Structural Heart is positioning itself to disrupt the $8bn surgical and
TAVI heart valve market. We believe that the key to success will be a leaflet
system which combines long-term durability together with the bio-stability of
Elast-Eon material. Two heart valve programmes are running in parallel - one
with a 100% polymer leaflet and the other a textile polymer composite leaflet.
Milestones in 2022 relate to the development and de-risking of both heart
valve designs and prioritising the design which ensures the most resilient and
appropriate technology. The design with the greatest potential will be ready
for in vivo trials during 2023, at which point options for clinical trial will
also be considered.
To further broaden our IP portfolio and to further understand and evaluate the
use of new synthetic materials as heart valve components, RUA is working with
the University of Strathclyde on a Knowledge Transfer Partnership (KTP) to
introduce new polymer science and processing knowledge and skills into the
heart valve programme. As well as enabling access to academic networks and
specialist equipment, this allows postgraduate students to gain experience
within industry and the opportunity to apply their skills in a practical
environment.
Outlook
RUA's world class products are being designed and developed to meet identified
needs in the market. By augmenting our team and focussing on laying the
foundations of a medical device manufacturing business, this will allow us to
disrupt the cardiovascular market with innovative products that ultimately
deliver on the goal of significantly growing shareholder value. The Group
looks forward to commencing the vascular graft clinical trial required for FDA
submission in the current financial year, while continuing to maximise
revenues from the RUA Medical and RUA Biomaterials divisions, alongside
further RUA Vascular and RUA Structural Heart division product development.
Caroline Stretton
Group Managing Director
8 July 2022
STRATEGY
The vision of the Group is to disrupt the Cardiovascular market with
innovative products that utilise our IP and expertise with Elast-Eon™ , the
world's leading long term implantable polyurethane. This is being undertaken
through:
· licensing Elast-Eon™ to third parties through RUA Biomaterials;
· developing and launching a range of Elast-Eon™ sealed vascular
grafts through RUA Vascular;
· developing a revolutionary and market-disrupting Elast-Eon™
leaflet polymeric heart valve through RUA Structural Heart; and
· becoming a centre of excellence for designing, developing and
manufacturing Elast-Eon™ based medical devices through RUA Medical Devices,
whilst continuing to serve and expand its current OEM customer base.
RUA Life Sciences will seek to maximise shareholder value by growing each
business to achieve attractive levels of profitability or disposing of
business areas if the valuations are attractive.
Summarised consolidated income statement
Year ended 31 March 2022 Year ended 31 March 2021
Notes GB£000 GB£000
Revenue 1,625 1,528
Cost of sales (267) (276)
Gross Profit 1,358 1,252
Other income 66 279
Administrative expenses
Share-based payments (145) (128)
Bad debt expense (3) 8
Amortisation & depreciation (313) (272)
Other administrative expenses (3,315) (2,690)
Total administrative expenses (3,776) (3,082)
Operating loss (2,352) (1,551)
Finance expense (8) (43)
Loss before taxation (2,360) (1,594)
Taxation 293 143
Loss from continuing operations attributable to owners of the parent company (2,067) (1,451)
(2,067) (1,451)
Loss attributable to owners of the parent company
4
Loss per share (9.32) (8.20)
Basic & Diluted (GB Pence per share)
There was no other comprehensive income for 2022 (2021: £Nil)
Summarised consolidated statement of financial position
31 March 2022 31 March 2021
Notes GB£000 GB£000
Assets
Non current assets
Goodwill 301 301
Other intangible assets 521 574
Property, plant and equipment 2,597 1,952
3,419 2,827
Total non current assets
Current assets
Inventories 124 85
Trade and other receivables 1,120 949
Cash and cash equivalents 2,963 6,294
Total current assets 4,207 7,328
Total assets 7,626 10,155
Equity & Liabilities
Equity
Issued capital 1,109 12,949
Share premium 11,729 11,729
Other reserve (1,552) (1,697)
Capital redemption reserve 11,840 -
Profit and loss account (16,542) (14,475)
Total equity attributable to equity holders of the parent 6,584 8,506
Liabilities
Non-current liabilities
Borrowings 199 223
Lease liabilities 83 124
Deferred tax 75 163
Other liabilities 174 40
Total non-current liabilities 531 550
Current liabilities
Borrowings 23 23
Lease liabilities 39 40
Trade and other payables 410 1,016
Other liabilities 39 20
Total current liabilities 511 1,099
Total liabilities 1,042 1,649
Total equity and liabilities 7,626 10,155
Summarised consolidated cash flow statement
Year ended Year ended
31 March 2022 31 March 2021
GB£000 G
B
£
0
0
0
Cash flows from operating activities
Group loss after tax
(2,067) (1,451)
Adjustments for:
Amortisation of intangible assets 53 68
Depreciation of property, plant and equipment 259 204
Share-based payments 145 128
Interest expense/(income) 8 9
Tax credit in year (293) (143)
(Increase) / decrease in trade and other receivables (53) (589)
(Increase) / decrease in inventories (39) 7
Taxation received 87 122
Increase / (decrease) in trade and other payables (453) 231
Net cash flow from operating activities (2,353) (1,414)
Cash flows from investing activities
Purchase of property plant and equipment (904) (620)
Proceeds from disposal of property plant and equipment - 18
Acquisition of subsidiary net of cash acquired - (341)
Interest paid (8) (9)
Net cash flow from investing activities (912) (952)
Cash flows from financing activities
Proceeds of issue of share capital, net of issue costs - 6,462
Proceeds from borrowing - 260
Repayment of borrowings and leasing liabilities (66) (38)
Net cash flow from financing activities (66) 6,684
Net (decrease)/increase in cash and cash equivalents (3,331) 4,318
Cash and cash equivalents at beginning of year 6,294 1,976
Cash and cash equivalents at end of year 2,963 6,294
Summarised consolidated statement of changes in equity
Issued share capital Share premium Other Capital redemption reserve Profit and loss account Total equity
GB£000 GB£000 reserve GB£000 GB£000 GB£000
GB£000
Balance at 31 March 2020 12,574 4,550 (1,825) - (13,024) 2,275
Share-based payments - - 128 - - 128
Issue of equity share capital - acquisition (net of fees) 75 1,004 - - - 1,079
Issue of equity share capital - exercise of warrants 8 42 - - - 50
Issue of equity share capital - fundraise (net of issue costs) 292 6,133 - - - 6,425
Transactions with owners 375 7,179 128 - - 7,682
Total comprehensive loss for the year - - - - (1,451) (1,451)
Balance at 31 March 2021 12,949 11,729 (1,697) - (14,475) 8,506
Share-based payments - - 145 - - 145
Buyback of deferred shares (11,840) - - 11,840 - -
Transactions with owners (11,840) - 145 11,840 - 145
Total comprehensive loss for the year - - - - (2,067) (2,146)
Balance at 31 March 2022 1,109 11,729 (1,552) 11,840 (16,542) 6,584
NOTES TO THE EXTRACTS FROM THE CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of preparation
The extracts from the Consolidated financial statements are for the year
ended 31 March 2022. The Consolidated financial statements have been
prepared in compliance with UK-adopted International Accounting Standards.
The Consolidated financial statements have been prepared under the historical
cost convention, with the exception of fair value adjustments made in
connection with the prior year acquisition of RUA Medical.
The accounting policies remain unchanged from the previous year.
2. Going concern
After considering the year-end cash position, making appropriate enquiries and
reviewing budgets and profit and cash flow forecasts to October 2023, which
incorporate planned investment in new product development and assumptions
related to the return towards regular business, particularly relating to the
RUA Medical Devices subsidiary, the Directors have formed a judgement at the
time of approving the financial statements that there is a reasonable
expectation that the Group will have sufficient resources to continue in
operational existence for the foreseeable future. For this reason, the
Directors consider that the adoption of the going concern basis in preparing
the consolidated financial statements is appropriate.
As part of the going concern assessment, the Board and management have
prepared and considered:
· Detailed financial forecasts, and cash flow requirements showing
that future financing will be required
· The level and timing of the additional financing needed to
support the business plan and cash burn rate
· Detailed business plan and management actions which may be
necessary depending on the Group's performance
· Appropriate sensitivities were applied to the business plan and
forecasts to stress test the model
· Appropriate assumptions surrounding order growth and
profitability
· The economic outlook over the following twelve months and beyond
· Current and future regulatory requirements concerning product
release milestones
· Current and future capital requirements
· New product launches
· The Group's liquidity and its ability to manage stress scenarios
· The Group's operational resiliency
The Board, however, recognises that the Group, Parent and Subsidiary is
loss-making and cash consumptive, and its revenue streams have been impacted
by the COVID-19 pandemic and the resulting macro-economic uncertainty and the
setback of a regulatory delay for the Vascular Graft Range. These events and
conditions may result in lower than forecasted revenues and increased costs
associated with the regulatory delay with our Vascular Graft Range. This
increases the risk that the Group will not be able to execute its business
plan, which could adversely impact its ability to generate profit or raise
sufficient capital to meet capital and liquidity requirements.
These obstacles, together with the requirement for financing, represent a
material uncertainty that may cast doubt on the Group's and parent company's
ability to continue as a going concern.
The Board remains confident in RUA Life Sciences' ability to execute its
business plan and raise further capital. To mitigate the risk, the Board has
taken into account:
· The strength of the product pipeline and potential international
demand for our products
· Management's dedication and commitment to achieving our business
plan and, where necessary taking difficult management actions
· If economic stresses continue to impact our business, the Group
will reassess its plans for product development and investment in capital to
reduce costs and control our balance sheet
· Consultation with its financial advisers
· The Group's access to additional equity through its listing on
the London Stock Exchange's AIM market. A previous equity fundraise in
December 2020 introduced new institutional investors to the Group's share
register and demonstrates there is investor support for Group's business
plan. The Board is confident that raising additional capital will be
achievable
If the board concludes financing is unlikely there are options to extend the
runway, including the licensing or sale of assets, products and programmes and
the delay and reduction of expenditure.
Based on this assessment and the Board's belief that sufficient financing can
be raised, the Board have a reasonable expectation that the Group will be able
to continue in operation and will have sufficient financial resources to meet
its liabilities and obligations as they fall due over the forecast period.
Accordingly, it is satisfied that the adoption of the going concern basis of
preparation is appropriate. The financial statements do not contain
adjustments resulting from the going concern basis of preparation being
inappropriate.
3. Preliminary announcement
The summary accounts set out above do not constitute statutory accounts as
defined by section 434 of the UK Companies Act 2006. The summarised
consolidated statement of financial position at 31 March 2022, the summarised
consolidated income statement, summarised consolidated statement of financial
position, the summarised consolidated cash flow statement and the summarised
consolidated statement of changes in equity for the year then ended have been
extracted from the Group's statutory financial statements for the year
ended 31 March 2022 upon which the auditor's opinion includes reference to
material uncertainty relating to going concern but is unqualified and did not
contain a statement under either sections 498(2) or 498(3) of the Companies
Act 2006. The audit report for the year ended 31 March 2022 did not contain
statements under sections 498(2) or 498(3) of the Companies Act 2006. The
statutory financial statements for the year ended 31 March 2021 have been
delivered to the Registrar of Companies. The 31 March 2022 accounts were
approved by the Directors on 8 July 2022, but have not yet been delivered to
the Registrar of Companies.
4. Earnings per share
The basic loss per ordinary share of 9.32 pence (2021: loss of 8.20 pence)
is calculated on the loss of the Group of £2,067,000 (2021: loss
of £1,415,000) and on 22,184,798 (2021: 17,697,120) ordinary shares, being
the weighted average number of shares in issue during the year. Diluted
earnings per share have not been calculated as the Group is loss making.
Posting and availability of accounts
The annual report and accounts for the year ended 31 March 2022 will be sent
by post or electronically to all registered shareholders on 15 July 2022.
Additional copies will be available for a month thereafter from the Company's
office 2 Drummond Crescent, Riverside Business Park, Irvine, Ayrshire KA11
5AN. Alternatively, the document may be viewed on, or downloaded from, the
Company's website: www.rualifesciences.com (http://www.rualifesciences.com/)
.
Notice of Annual General Meeting
Notice of the twenty-fifth Annual General Meeting of RUA Life Sciences
plc will be posted with the Annual Report and Accounts and will be held at
Riverside Lodge Hotel 46 Annick Road, Irvine, Ayrshire KA11 5LD on
Tuesday, 16 August 2022 at 11:00am.
FORMAT OF THE AGM
At the time of publication of this notice and having considered the ongoing
coronavirus (COVID-19) pandemic and the latest Scottish Government measures on
physical public gatherings, the Board is satisfied that the AGM can take place
in person this year. However, given potential uncertainty, the Board
encourages all shareholders to vote by proxy. Any changes to these
arrangements will be published on the Company's website as soon as possible
before the date of the meeting and will also be circulated via a Regulatory
Information Service.
Further details of the AGM will be included in the Annual Report and will
published on the Company's website at www.rualifesciences.com
(http://www.rualifesciences.com/) .
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