Divestment of TSPro GmbH to remove c€1.34m (£1.19m) of short and long term liabilities from Integumen
Today the Company announces the divestment (“Disposal”) of TSpro GmbH (“TSPro”), a wholly-owned subsidiary of Integumen plc. The Company has entered into a conditional agreement with MediNova AG (“MediNova”), a company in which former Integumen director Helmut Schlieper is a shareholder and director. The consideration for the Disposal is €1. The Disposal will remove from the Group €441,000 of current liabilities and a further €900,000 of contractual obligations up to December 2020.
As announced on 29 August 2018 in the interim announcement of the (unaudited) results for the six months ended 30 June 2018 (“Interims”), a strategic review has been undertaken of the diﬀerent businesses within the Integumen Group (“Group”). It was announced that the Board sought to divest the Group of under-performing assets or those requiring signiﬁcant funding, which included the TSPro business segment.
Sales in TSpro are significantly down from projections at the time of its acquisition when Integumen completed its IPO in April 2017. In August 2018, subsequent to the new management and Board altering the strategic direction of the Group, it was decided to cease any and all further investment in low and non-performing assets and seek the divestment of such assets.
In the most recently completed financial year for which audited accounts are available, the year ended 31 December 2017, TSPro incurred a loss of €915,947 (£802,370) on turnover of €212,722 (£186,345). As at 31 December 2017 the net liabilities of TSPro were €890,948 (£791,162) . The value attributable to TSPro’s intangible assets was permanently impaired by £3.5m to a carrying value of £750,000 in Integumen’s consolidated accounts for year ended 31 December 2017. Since that time TSPro has posted (unaudited) losses of €188,326 (£163,996 after currency translation difference) in the 6 months ended 30 June 2018, on (unaudited) turnover of €108,304 (£95,307), and a further permanent impairment of £0.5m was accounted for in the Interims.
Key Deal Terms
The consideration for the Disposal is €1. In return, Medinova accepts full responsibility for and shall assume all obligations of the Company in relation to TSpro from the completion date, which is expected to be no later than Friday 21 December 2018.
Related Party Transaction
As at close of business on 17 December 2018 MediNova had a shareholding of 37,568,440 shares representing 8.26% of the existing share capital of Integumen, however it has held over 10% (and therefore been a substantial shareholder) within the last 12 months. Additionally Helmut Schlieper, who is a major shareholder in, and director of, MediNova, was a director of Integumen plc until 6 August 2018. Both MediNova and Mr Schlieper are regarded as related parties under the AIM Rules for Companies (“AIM Rules”); and therefore the sale of TSpro to MediNova constitutes a related party transaction under the AIM Rules.
All of the current Directors of the Company are regarded as independent directors for the purposes of consideration of this transaction under Rule 13 of the AIM Rules. The Directors, having consulted with SPARK Advisory Partners Limited, the Company’s Nominated Adviser, considers that the terms of the Disposal to be fair and reasonable in so far as shareholders are concerned.
Gerard Brandon CEO of Integumen commented:
“Since the Interim announcement there has been a major restructuring of the Group. The new Board has been actively seeking to divest the Group of under-performing assets. TSpro was one of those assets. With the increase in sales across other divisions, we are on track to achieve the new Board’s year-end 2018 goals.
The most obvious advantages with this Disposal are that it:
- Improves the Integumen Group’s working capital position by reducing existing debt servicing,
- Eliminates monthly, current and future contractual liabilities within the Group, amounting to €1.34m (£1.19m) up to the end of December 2020, and
- Allows management to focus on the underlying growth areas in Labskin, skin care and the recent commercial agreement with Cellulac for Omega 3 production already mentioned in previous trading updates.”