Final Results

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: [phone]  

Caroline Stretton, Group Managing Director                                           Tel: [phone]

Cenkos Securities plc (Nominated Advisor and Stockbroker)    Tel: [phone]

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 .

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)
Loss attributable to owners of the parent company		(2,067)	(1,451)
Loss per share Basic & Diluted (GB Pence per share)	4	(9.32)	(8.20)

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
Total non current assets			3,419		2,827
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  31 March 2022			Year ended  31 March 2021
	GB£000			GB£000
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 GB£000	Share premium GB£000	Other reserve GB£000	Capital redemption reserve GB£000	Profit and loss account GB£000	Total equity 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 .

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 .

 

END

 

 

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