AIM share code: SKIN

31 July 2019

Integumen PLC

("Integumen" or "Company")

AGM - Trading Update

Integumen issues the following update on current trading and outlook for the year, to coincide with the Company's Annual General Meeting taking place later today.

Outlook

The current level of pipeline activity continues to be significantly higher than the Company has experienced in the past. This has resulted in a requirement to increase the laboratory size by 100% in two announced upgrades in the last 12 months. Demand continues to increase for the company's products and services. The Board is satisfied that it is meeting its objective of increasing the average revenue per client as it evolves into a multiple revenue stream product and services company for skin related diseases, treatments and therapies.

Post Year-End 2018 commercial activity:

·      After increased demand for services:

o  Labskin York, UK laboratory increased by 40% in H1;

o  Investment of £400,000 for hi-tech laboratory equipment;

o  Labskin York, UK laboratory space will increase by a further 50% in Q3 2019;

o  Offices opened in Cork, Ireland for IT, AI infrastructure support and global sales;

·      Four Blue-Chip (US and EU) client agreements signed for test services on household name soap and cosmetic brands to comply with EU Directive 745/2013 Rule 21 and EU 655/2013

·      Labskin human volunteer bacteria cloning service launched that allows Integumen to enter the clinical trial and medical device sector.

·      First external development facility, at the digital hub enterprise zone within the University of Bradford and the Centre of Skin Science;

·      Following the positive results of Labskin Cannabinoid (CBD) testing protocols two CBD test contracts have been signed since the beginning of the year with eight contracts currently under negotiation;

·      STOER For Men skin products e-commerce division, continues to be used as a control for client testing within Labskin laboratories and remains at break-even;

·      Staff appointments, including Paul Ryan as Head of Enterprise sales will increase major client contracts and Colin O'Sullivan as AI Architect to ramp up the IT infrastructure to accommodate digital growth across the US, EU and Asia.

·      Wound pHase CBD development project agreement in place for new range of medical device wound care products for chronic diabetic wounds collaboration project with Cellulac, supported by EU Interreg grants and Irish Government state supported research facility tcbb Resource.

Post Year-End 2018 corporate activity:

·      Transformational £3m all-share Acquisition of Rinocloud Limited enabling scale-up of the business as it moves from a physical laboratory to an automated, real-time, real-world digital data platform;

·      Successful fundraising of £2.75m (gross); of which,

o  £232k was Vendor sale to allow 100% of Rinocloud to be acquired;

·      Additional strategic reduction of the indebtedness of the business:

·      Disposal of Visible Youth Group - saving £245k of future contractual liabilities;

·      Debt conversions - Venn £421k carried over since April 2017 IPO;

·      Cellulac debt conversion - £400k for hi-tech laboratory equipment;

·      Litigation issues settled - saving £250k of future liabilities.

o  Labskin York, UK laboratory increased by 40% in H1;

o  Investment of £400,000 for hi-tech laboratory equipment;

Legacy Share Trading matters:

July 2019: Venn Life Sciences (Open Orphan) 30m held in soft lock-in:

Open Orphan plc (formerly Venn Life Sciences Holdings plc ("Venn-OO")), was assisted in the disposal of Venn-OO's entire holding of 30,071,428 ordinary shares, representing 3.07%, of the Company. There being high liquidity and pent up demand for large blocks of shares in the Company, the Company broker arranged for an orderly disposal of the Venn-OO shares to be placed with existing long-term shareholders, thereby eliminating any overhang on the open market.

May 2019: Venn Life Sciences 42m with no lock-in:

On 5 April 2019, the 2-year lock-in that Venn Life Sciences plc entered into at the Integumen IPO in April 2017, expired. An RNS issued by Venn, on the 1 May 2019, confirmed that they had disposed of 42,244,682 ordinary shares.

May 2019: Enhance Skin Products Inc. 38m with no lock-in:

On May 22, Enhance Skin Products Inc ("Enhance") announced the settlement of its dispute with Integumen plc., and its plan to complete its plan of reorganisation, liquidation and dissolution. At that date Enhance held 29,488,144 wit a further 8,439,072 issued in respect of the settlement agreement. Following the further distribution of shares, which were not recognised as sale or transaction, the amount of shares now held by Enhance Skin Product Inc., is now 4,905,130 and Enhance is no longer a significant shareholder as ownership has fallen below 3%. The company is now satisfied that there is no longer a large overhang of shares in this matter.

Ross Andrews - Non-Executive Chairman of Integumen plc, comments:

"The Company has been completely transformed over the last 12 months. The objective of disposing of non-performing subsidiaries and incorporating fully integrated teams of skilled personnel, across multiple subsidiaries, with a single focus of increasing revenue per-existing client and closing bigger deals with new clients has been met.

The growth of the Company has been so well supported and received by the market that all corporate activity has been achieved, funding in place to accommodate the continued growth, and legacy share disposals from former directors and associated companies have been absorbed by the market, leaving no overhang, as we head into an exciting second half of 2019. The Board is grateful for this support and looks forward to providing you with continued updates as we progress." 

Interim H1 2019 results are expected to be released in early September 2019

Contacts

About Integumen:

Integumen is a vertically integrated business, collaborating their Labskin technology platform with partners in artificial intelligence, clinical research, medical device and life science. These collaborators are building their own technology on top of the Labskin AI backbone. Labskin allows skin-care, health-care, pharmaceutical manufacturers and cosmetic companies to test their products on human-like skin in a real-world environment with full access to multiple state-of-the-art partner technologies.

The Company combines data analytics with access to therapeutic operational expertise and offers solutions to our clients, from regulatory approvals, right through to marketing fully tested ingredients that have been certified on our Laboratory grown living human tissue.