Full year results

Abzena plc

Full year results: revenues up 74%, strong outlook within growing market

Cambridge, UK, 14 June 2016 - Abzena plc (AIM: ABZA, 'Abzena' or the 'Group'), a life sciences group providing services and technologies enabling the development and manufacture of biopharmaceutical products, has published its full year results for the year to 31 March 2016.

Corporate highlights

· Expansion of Abzena business through two US acquisitions receiving positive customer response with integration progressing well

- Acquired PacificGMP for $7.0 million (£4.6 million) in September 2015 to provide GMP manufacturing capability within Abzena

- Acquired The Chemistry Research Solution LLC for $15 million (£9 million) in December 2015 to expand antibody drug conjugate (ADC) and chemistry services offering

· Raised £20m (net) by placing new Ordinary Shares with certain existing and new shareholders

· Entered into significant ThioBridge™ ADC technology licence deal with Halozyme Therapeutics (US) with potential to deliver $150 million of licence fees and milestone payments as well as royalties on sales of ThioBridge™ ADC products developed by Halozyme

· Three more ABZENA Inside products entered clinical development, bringing the total portfolio to eleven

- TNT009 being developed by True North Therapeutics disclosed as one of the products

- Gilead Sciences moved GS-5745 into a Phase III clinical study in gastric cancer, started enrolling patients in a Phase II/III study in ulcerative colitis and a Phase II study in Crohn's disease

· Conducted 208 service projects for 113 customers, including signing 8 contracts with the potential to generate future milestones and/or royalty payments

Financial summary

· Revenues up 73.7% to £9.9 million (Year-ended March 2015: £5.7 million)

· Research and Development expenditure up 41% to £4.2 million (Year-ended March 2015: £3.0 million)

· Reported loss after tax of £9.7 million (Year-ended March 2015: £4.7 million)

· Cash and cash equivalents of £13.7 million (March 2015: £15.8 million)

Post-period highlight

· True North Therapeutics presented positive results from a Phase I study of TNT009 in patients suffering from cold-agglutinin disease at the Congress of the European Hematology Association

Ken Cunningham, Chairman of Abzena, commented:

"Over the last 12 months, Abzena has been delivering on its growth strategy. This transformational year has seen the international expansion of the Group's operational footprint with the completion of two acquisitions in the US.

The Group is now able to support its partners further through the drug development process and to position its technologies to a broader set of customers."

John Burt, CEO of Abzena, commented:

"Abzena is fast becoming a preferred partner for biopharmaceutical services. The integration of our businesses in the UK and US enables us to offer more services to a broader set of organisations and helps existing customers access the tools to translate their research into clinical products.

We continue to focus on our growth strategy, investing in internal research & development to provide next generation technologies and enhancing our GMP manufacturing capabilities. ABZENA Inside partners and service customers alike are reacting very positively to our enlarged offering and we expect the number of opportunities to work on programmes across the Group to increase in the next financial year."

Enquiries:

About Abzena

Abzena (AIM: ABZA) provides proprietary technologies and complementary services to enable the development and manufacture of biopharmaceutical products, a growing area that requires specialist knowledge and expertise. The Group has a global customer base which includes the majority of the top 20 biopharmaceutical companies as well as large and small biotech companies and academic groups.

The term ABZENA Inside is used by Abzena to describe products that have been created using its proprietary technologies and are being developed by its partners, and include Composite Human Antibodies™ and ThioBridge™ antibody drug conjugates. Abzena has the potential to earn future licence fees, milestone payments and/or royalties on ABZENA Inside products.

Abzena offers the following services and technologies across its principal sites in Cambridge (UK), San Diego, California (USA) and Bristol, Pennsylvania (USA).

§ Immunogenicity assessment, protein engineering to create humanized antibodies and deimmunised therapeutic proteins, and cell line development for manufacture.

§ Contract process development and manufacture of biopharmaceuticals, including monoclonal antibodies, recombinant proteins, vaccines, and gene therapy and cell therapy products, for preclinical and clinical studies.

§ Proprietary site-specific conjugation technologies for antibody drug conjugate development and solutions for optimizing the therapeutic properties of biopharmaceuticals.

§ Contract chemistry and bioconjugation business focused on ADCs and is establishing the capability to manufacture ADCs to GMP standards.

For more information, please see www.abzena.com

Chairman's statement

Abzena acquired PacificGMP, a contract biomanufacturing company located in San Diego, and The Chemistry Research Solution LLC (TCRS), a specialist contract chemistry and bioconjugation company located in Bristol (US) near Philadelphia, in September and December 2015, respectively. The acquisitions have broadened the Group's offering and provide more opportunities for cross-selling. Both acquisitions have immediately enhanced the revenues of the Group.

The Group's financial performance over the year to 31 March 2016 has seen revenues increase by 73.7% to just under £10 million. Losses have widened as a result of exceptional costs incurred as a result of the acquisitions and impairment of certain intangible assets that are no longer material to the Group's ongoing operations. In addition, increased investment in R&D has delivered improvements to the ThioBridge technology and enhanced service offering within the immunology field.

Good progress has been made with the development of ABZENA Inside products - those created by Abzena using its proprietary technologies for its partners to develop. There are now 11 in clinical development, an increase of three from last year.

Gilead Sciences has moved GS-5745 forward in development by starting three new clinical studies. The studies are a Phase III study in gastric cancer, a Phase II/III study in ulcerative colitis and a Phase II study in Crohn's disease.

Roche is expected to move RG6125 (previously SDP051) into Phase II following its acquisition of Adheron in October 2015 in a deal worth up to $580m. SDP051 was the only product being developed by Adheron Therapeutics.

The Group produced new ABZENA Inside products for a number of organisations. These included a Composite Human Antibody™ with the potential to treat macular degeneration which is being developed by University College London.

Abzena also signed a significant licence deal for ThioBridge™, its novel linker technology for ADCs, with Halozyme Therapeutics. This could potentially provide the Group with up to $150m (£105m) in licence and milestone payments.

The Board is confident that the successful development and commercialisation of ABZENA Inside products by its partners has the potential to generate significant future revenues for Abzena.

The Group is well-positioned to capture a larger share of the outsourced biopharmaceuticals market following the broadening of its offering to include manufacture of therapeutic proteins for Phase I and II clinical studies and its increased capacity to produce ADCs. The Board is confident that synergies with the newly acquired businesses will drive growth in service revenue and increase opportunities to position ABZENA Inside technologies with the Group's customers.

Biopharmaceutical companies are expected to outsource about £2.9 billion ($4.1 billion) of biomanufacturing work by 2019 [HighTech Business Decisions, reported in BioPharma Reporter, 24-Apr-15]. In the future it is expected that the majority of the Group's service revenues will be generated from its manufacturing business in the US due to the high value of manufacturing contracts.

To support the growing biopharmaceutical outsourcing market, Abzena intends to increase its capacity for manufacture of biopharmaceutical products and invest in establishing the capability to manufacture ADCs for clinical studies. Work to reconfigure manufacturing suites to create two new cleanrooms is already ongoing in San Diego. The facilities and systems required to produce linker-payload reagents for ADCs in accordance with Good Manufacturing Practice (GMP) have been put in place in Bristol (US) and will be fully operational in the second half of 2016.

The additional capacity in San Diego and expanded capability in Bristol (US) will enable those customers for which Abzena has produced ADCs to be able to continue to work with the Group as the products move through development to testing in patients.

The Group is anticipating its partners progressing further ABZENA Inside products into clinical development during the coming year. For some of those currently in the clinic, the aim is for them to progress to the next phase of development and thus closer to potential commercialisation.

I would like to welcome our new colleagues in the US to the Abzena Group and thank all our employees, management and board for their hard work. I would also like to thank our shareholders and all other stakeholders for their support during the year. I look forward to seeing the Group continue its growth after the transformational year just ended.

K. Cunningham

Chairman

13 June 2016

Chief Executive Officer's review

Over the last year, Abzena has achieved the next stage of its transformation and is rapidly becoming the partner of choice for companies involved in the R&D of biopharmaceuticals. The Group has expanded by organic growth and acquisitions, which has given it a footprint on both the East and West coasts of the US and a broader offering for its customers.

In the year to 31 March 2016, the UK business has performed strongly with significantly increased revenue from immunology and bioconjugation in particular. With the strong underlying performance and the contributions from PacificGMP and TCRS since the acquisitions, Abzena generated just under £10 million in consolidated Group revenues. The majority of revenues were generated from the organic growth of the established business, which comprised 28% of the growth of the Group. Growth has been further accelerated by a revenue contribution from the acquired businesses of £2.7 million.

Whilst at this stage of its development Abzena is reporting an operating loss for the year of £8.4 million (before exceptional items), the business is on a trajectory to profitability.

The acquisitions of PacificGMP and TCRS have significantly expanded the scope, scale and reach of Abzena's offering. The enlarged Group now has a strong platform from which to continue its strategy for growth.

During the next few years we expect to see the validation of our integrated business model of providing specialist services to our partners which translate through technology licences to potential milestones and/or royalties from ABZENA Inside products. We also expect to see continued growth of the service business and the commencement of royalty revenues as ABZENA Inside products currently in later-stage clinical trials reach the market.

With the addition of PacificGMP and TCRS to the Abzena Group, we can now provide an integrated solution for our customers. Combined with the strategic marketing alliance announced with FairJourney Biologics, Abzena has the capability to work with a partner along the journey from antibody discovery to GMP manufacturing. We can therefore help our partners to translate their knowledge of disease biology and therapeutic targets into investigational products for evaluation in clinical studies.

As companies adopt ADC strategies for more antibody targets, Abzena's ability to provide a "one-stop shop" of chemistry, bioconjugation and manufacturing solutions represents an opportunity to engage with many more companies. Our offering is unique as our partners can also benefit from our proprietary technologies, such as the ThioBridge™ ADC linker, to enable best-in-class ADCs to be developed.

The business

Structure

Having expanded the Abzena Group with the two recent acquisitions, the business now operates in three complementary areas:

· Biology Research Services (immunology, protein engineering, bioassays and bioanalysis)

· Chemistry Research Services (custom synthesis, ADC linkers, payloads & bioconjugation)

· Manufacturing (cell line development, process development, GMP manufacturing)

Continued growth of the enlarged business is being driven by the demand from existing and prospective customers and partners to access the Group's services and technologies. We are also investing in service and technology innovation to maintain our position as an innovator in the field of biopharmaceutical R&D and expanding our capacity across the business.

Even prior to the acquisitions of PacificGMP and TCRS, the majority of Abzena's business came from the US. Now we have a physical presence on both the East and West coasts of the US, we are able to establish even closer links to the East coast pharmaceutical companies and the West coast biotech hubs. This geographic spread for the business enables local commercial engagement with Abzena's customers to access Group capabilities.

Our customers have responded very positively to the enlarged Abzena Group by cross-buying the range of services and technologies that we offer from the UK and US. We expect this trend to continue as the benefits of working with a preferred and integrated provider are realised by our customers across the academic, biotech and pharmaceutical company spectrum.

ABZENA Inside products

The application of our proprietary technologies for protein engineering and bioconjugation enables us to potentially earn licence fees, milestone payments and/or royalties on ABZENA Inside products created with these technologies as they progress through development and reach the market.

Over the last year, three further Composite Human Antibodies™ have entered clinical development, bringing the number of ABZENA Inside products in clinical development to eleven. These include the previously undisclosed TNT009 which is being developed by True North Therapeutics for the treatment of rare diseases in the fields of haematology, transplantation, and dermatology. Positive results from the Phase I study of TNT009 in patients suffering from cold agglutinin disease has been presented at the European Hematology Association Congress. We are pleased to see this translation of the successful relationship between Abzena and True North Therapeutics into a clinical program that has the potential to bring significant benefit to patients with this rare form of autoimmune haemolytic anaemia. True North has indicated that it intends to progress TNT009 into a pivotal clinical trial later this year.

Gilead Sciences is recruiting patients for a Phase III study in gastric cancer, a Phase II/III study in ulcerative colitis and a Phase II study in Crohn's disease. Furthermore, Gilead Sciences has announced its intention to initiate Phase II studies with GS-5745 in rheumatoid arthritis, chronic obstructive pulmonary disease (COPD) and cystic fibrosis.

Enabling emerging biotech companies to progress their pioneering research towards clinical development is rewarding. However, the real validation of the value of our ABZENA Inside technology comes when partners are acquired by large biopharmaceutical companies. These value realisations for our partners also help de-risk the development of the ABZENA Inside products as the large biopharmaceutical company can provide significant development funding and the expertise necessary for successful development, registration and commercialisation of the products.

Such an event happened in October 2015, when Roche acquired Adheron Therapeutics for up to 80 million. This acquisition is expected to lead to the progression of Adheron's sole asset, SDP051 (now designated as RG6125) to Phase II clinical development for rheumatoid arthritis.

Over the coming year, we expect to see further progression of ABZENA Inside products along the clinical pathway and data emerging from Phase I and Phase II trials for several of them. We also anticipate further ABZENA Inside products entering clinical development to further expand the portfolio, which was five at the time of Abzena's IPO in July 2014 and is eleven today.

Beyond the Composite Human Antibodies™ in the ABZENA Inside portfolio, Abzena also announced a significant licence agreement with Halozyme Therapeutics for its proprietary ThioBridge™ ADC linker technology. The deal provides Abzena with the potential to earn up to $150 million of licence fees and milestones plus royalties on the sale of ADCs addressing up to three cancer targets. Data presented by Halozyme at the American Association of Cancer Research conference in 2016 demonstrated the advantage of ThioBridge™ ADCs.

Biology Services

The Biology Services business comprises immunology, protein engineering and the supporting bioassay and bioanalysis groups. The revenues for the Biology Services business have increased by 27% for the year-ended 31 March 2016.

Immunology

The immunology research services include our proprietary EpiScreen™ immunogenicity assessment platform, along with the expertise to develop bespoke assays to address broader immunology issues.

Further investment in immunology research services will enable Abzena to remain at the forefront in this field. The Group is well-positioned to support companies as they continue to harness the power of the human immune system, particularly for the development of novel cancer therapies.

Protein engineering

The protein engineering services include the humanization and deimmunisation of antibodies and the deimmunisation of therapeutic proteins using our Composite Human Antibody™ and Composite Protein™ technologies.

Applying our Composite Human Antibody™ technology to optimise our partners' development candidates has resulted in six further agreements. These have the potential to provide future licence revenues should these ABZENA Inside products be progressed through development by our partners to the market.

Manufacturing cell line development

The acquisition of PacificGMP enables Abzena to provide an integrated offering for manufacturing cell line development, process development and GMP manufacturing. Prior to the acquisition, the cell lines developed by Abzena had to be transferred to another manufacturer but now Abzena can work with its customers through the development process to supply products for both preclinical and clinical studies.

During the year, the cell line development business has performed steadily and demand for cell line development is increasing as a result of the integrated offering with GMP manufacturing following the acquisition of PacificGMP.

Chemistry Services

The Chemistry Services business comprises custom synthesis, ADC linkers, payloads and bioconjugation using ThioBridge™ and other technologies. The revenues for this group have increased by 66% (an increase of £0.5 million) for the year-ended 31 March 2016 on a like-for-like basis.

Abzena's investment in the development of ThioBridge™ and in building its bioconjugation expertise has been rewarded with the licence agreement with Halozyme Therapeutics announced in January 2016.

The acquisition of TCRS complements Abzena's established bioconjugation capabilities and enhances the offering for ADCs. TCRS brings a strong reputation for the quality of its chemistry services, especially in the ADC field.

The addition of TCRS to Abzena's existing customer engagement provides a deeper penetration into the ADC market and allows the Group to cross-sell its GMP manufacturing capability for ADC linkers and linker-payload reagents.

The acquisition of TCRS has enabled the Group to provide custom synthesis and added further capacity to develop novel payloads for the next generation of ADCs.

The chemistry business, both in the UK and US, is seeing significant engagement with major pharmaceutical and biotech companies, providing a good opportunity to position Abzena's ThioBridge™ technology for adoption by these companies.

Manufacturing Services

The Group's Manufacturing Services business includes process development, GMP manufacture for Phase I and II clinical trials and the analysis of the antibodies and other proteins produced. These services are provided by PacificGMP in San Diego.

The addition of GMP biomanufacturing capability has provided the opportunity for Abzena's customers to expand their engagement with the Group from cell line development through to manufacturing for clinical trials. The acquisition of PacificGMP has also established a presence for Abzena on the US West coast in one of the world's leading biotech hubs, close to many of the Group's most innovative partners.

PacificGMP's manufacturing platform is built on single-use disposable technologies that provide efficient, flexible utilisation of space and equipment with reduced infrastructure requirements compared to traditional biomanufacturing facilities.

Since the integration of PacificGMP into Abzena, further service agreements have been secured with returning customers. There has been significant interest in our manufacturing capability from customers from other areas of the business, supporting the strong positioning of manufacture as part of the Abzena business.

Operations

With over 69,000 sq ft (6,400 m2) of laboratories, manufacturing suites and offices across the UK and US and over 180 employees, Abzena has the scale and breadth of operations to be a preferred partner for organisations engaged in biopharmaceutical R&D.

By the end of 2016, we expect to have consolidated all UK operations into a new building on the Babraham Research Campus, Cambridge (UK). This will mean the closure of the small chemistry facility that the Group retained on the University of Warwick Science Park after it acquired Warwick Effect Polymers Limited in January 2012.

We are expanding the GMP manufacturing capacity in San Diego which, with associated development laboratories, offices and available expansion, provide 27,200 sq ft (2,500 m2) of space. Work is ongoing to establish two further manufacturing clean rooms which are expected to be available from Q3 2016.

The facility in Bristol (US) is also being expanded to provide further chemistry and bioconjugation laboratories to support the growing chemistry services business. The first phase of the expansion, establishing GMP manufacture of ADC reagents, is due to be complete in Q3 2016.

Integration

Integration of PacificGMP and TCRS into Abzena has significantly increased the team of scientists, business professionals and administrative staff that are committed to enabling the development of better biopharmaceuticals.

Campbell Bunce (Biology Services), Naresh Jain (Chemistry Services) and Leigh Pierce (Manufacturing) have joined Abzena's executive management team during the last year, adding to the already strong team that will guide the development of the business over the coming years.

Current Trading and Outlook

The year-ended 31 March 2016 has been one of change and development for the Group. The underlying services business has grown well, winning new customers and the portfolio of ABZENA Inside products has expanded and matured. The acquisition of PacificGMP and TCRS has given the Group a footprint on both coasts of the US. The integration of both companies is nearing completion and we are already seeing the benefits of the acquisitions.

Going forward, the businesses within the Abzena Group will all trade as Abzena, demonstrating our commitment to present a unified offering to our customers to enable the development and manufacture of better biopharmaceuticals.

The benefits of the integrated Abzena Group are already evident. At this early stage of the current financial year contracted business is already in excess of £9 million, with a strong pipeline of further business opportunities being pursued across all areas of the Group. The Board of Directors expects reported Group revenues for the coming year to be significantly higher than the level reported this year.

The past year has been a pivotal one for Abzena where we have established the Group as a preferred partner for biopharmaceutical services through acquisitions and organic growth. The continued progression of ABZENA Inside products into the clinic demonstrates the value that we can add to the quality of healthcare by providing superior therapeutic options for patients. We look forward to this coming year with confidence.

J. Burt

Chief Executive Officer

13 June 2016

Financial report

Overview and Summary

During the year the businesses performed solidly, growing revenue by 73.7% year on year. The UK based businesses performed well increasing revenues by 28% to £7.2 million demonstrating the strength of their offering. Two acquisitions in the year broadening the range of customer services together with the further equity raise increased the net assets of the Group by £13 million to £41 million.

The Group has cash reserves of £13.7 million at the end of the year, to invest in the acquisitions and further establishing the business opportunities.

Group revenues increased by £4.2 million 73.7% to £9.9 million (2015: £5.7 million) for the full year as a result of continued organic growth from the existing businesses and the contribution from the two acquisitions.

R&D investment to broaden and enhance the services and technologies offered by the Group increased 41% to £4.2 million (2015: £3.0 million) and is expected to drive future growth in service and licence revenues.

Non-recurring exceptional costs of £2.5 million were incurred during the year. These were acquisition expenses of £1.5 million and the write off of intangible assets associated with the rebranding of the Group and with regards to the closure of the business of Warwick Effect Polymers, a subsidiary purchased in 2012.

The adjusted consolidated operating loss after taking into account the non-recurring exceptional items for the Group for the year-ended 31 March 2016 was £7.2 million, compared with £4.7 million in the previous year.

Summary Consolidated Statement of Comprehensive Income

Revenues

Total revenues for the year-ended 31 March 2016 were £9.9 million (2015: £5.7 million).

Total Revenues include both service and licences revenues.

The service revenues of PacificGMP and TCRS from acquisition at 11 September 2015 and 11 December 2015 respectively are included in the analysis above.

The established UK businesses of PolyTherics and Antitope maintained the revenue growth seen in prior years in the second half of the year showing 28% annual growth of £1.5 million (2015: £0.9million) over the first half of the year.

Modest licence revenue includes amounts received under licences to the technologies of both Antitope Limited and PolyTherics Limited, in both the current and previous financial years.

Key to the ongoing success of the Group and providing an indicator on the view of the services provided and its technology, is the number of repeat customers buying additional services from the Group. The Group has historically retained a high level of repeat customers particularly for the Episcreen™ immunogenicity assessment studies.

Revenue generated from repeat customers for the year-ended 31 March 2016 was £5.2 million, 52% of the total revenue, compared with £3.8 million, 67% of the total revenue, in the prior year.

The Group does not rely on just a few large partners and was working with 113 partners during the year-ended March 2016 (2015: 99 customers). The top 10 partners represent £4.2 million in revenue (43%), compared with the prior period where the top 10 represented £2.4 million (43%) demonstrating the spread of the customer base.

Gross Profit

Cost of sales rose to £5.3 million (2015: £2.5 million) due to the revenue increase of the established UK businesses of PolyTherics and Antitope which generated 50% gross margin on sales; and due to US acquisitions during the financial year and the gross profit margin generated from service revenues is 44% (2015: 53%).

Operating income and expenditure

Total R&D costs were £4.2 million (2015: £3.0 million). The movement in R&D costs mainly relates to increased material, reagent and laboratory costs of £0.8 million as the Group took some of the technologies into external trials.

Administrative expenses rose to £9.0 million (2015: £5.6 million). The principal movements were an increase in staff, property and travel costs of £2.2 million increasing as a result of the acquisition of the subsidiary undertakings in the year.

The Group does not anticipate a significant increase in the run rate of the combined R&D and administrative expenses for the coming year.

Depreciation and amortisation costs at £1.4 million increased by £0.6 million year on year as a result of increased capital expenditure in earlier years and amortisation of intangibles arising on consolidation.

The Group reported a pre-tax loss of £10.7 million (2015: £5.2 million).

Basic loss per share was 9p for the year-ended 31 March 2016 (2015: loss per share 7p). This movement is the result of combined effect of the fund-raising which took place in December 2015, increasing the average share capital and increased annual losses. See note 7 for further details.

Taxation

The Group is entitled to receive R&D tax credits on its UK operations and as such the Group does not pay UK corporation tax. The R&D tax credit is first used to offset any tax payable in the year and any excess is surrendered for a repayable tax credit. The Group received income from taxation in the year-ended March 2016 amounting to £0.8 million (2015: £0.5 million).

The Group also receives a R&D Expenditure Credit (RDEC). This is shown within Other Operating Income, in both the current and the prior year.

The US operations did not incur a tax charge during the year.

Cash and cash equivalents

The Group ended the year with £13.7 million (2015: £15.8 million) in cash or cash equivalents. The movement arises as a result of the funding of working capital and the acquisition of PacificGMP and TCRS in the year-ended March 2016, off-set by the net funds raised from the share placing which resulted in further cash raised for the Group of £20 million after fund raising costs.

The Group invests surplus cash to working capital requirements in short-term deposits, across a number of banks with a focus on capital preservation rather than interest earned. The Group has no foreign currency deposits, other than foreign currency held in instant access accounts for working capital purposes.

Financial Position

The Group made an investment in capital equipment during the year-ended 31 March 2016, with additions of short-term leasehold property and fixtures, fittings and equipment totalling £2.0 million (2015: £1.1 million). This investment has been made to enable the Group to continue to provide a wide range of services to its customers and to support R&D into broadening the application of the technologies of the Group.

Total current liabilities increased to £5.9 million (2015: £2.4 million). These arise largely as a result of deferred income for projects already invoiced (£1.3 million) and the timing of year-end invoices (£1.0 million) for projects under way at year-end. The increase is due to the acquisition of TCRS and PacificGMP.

Provisions of £0.4 million (2015: £nil) are included in total current liabilities. It is the policy of the Group to settle all trade payables, within the agreed payment terms, wherever possible, whilst adhering to documented approval policies.

The total current assets of the Group increased by £1.2 million to £22.1 million (2015: £20.9 million). The most significant increases were an increase in accrued income of £1.2 million and an increase in trade receivables of £0.9 million as a result of the increased turnover of the Group.

J. Smith

Chief Financial Officer

13 June 2016

Consolidated Financial Statements

Consolidated Income Statement

The accompanying notes are an integral part of these consolidated financial statements

Consolidated Statement of Comprehensive Income

The accompanying notes are an integral part of these consolidated financial statements

Consolidated Statement of Financial Position

Company Registered Number: 08957107

The financial statements were approved by the Board and are signed on its behalf by:

J. Smith

13 June 2016

Consolidated Cash Flow Statement

Consolidated Statement of Changes in Equity

For the year ended 31 March 2016

(i) £20.9 million of this amount was issued for cash with a further £2.4 million issued to acquire The Chemistry Research Solution LLC.

For the year ended 31 March 2015

Notes to the Summary Financial Information.

The summary financial information set out above, which was approved by the Board on 13 June 2016, is derived from the Consolidated Financial Statements for the year ended 31 March 2016 and does not constitute statutory accounts within the meaning of section 434 of the Companies Act 2006.

The Consolidated Financial Statements on which the auditors have given an unqualified report, and which does not contain a statement under section 498(2) or (3) of the Companies Act 2006, will be delivered to the Registrar of Companies in due course.

Copies of the Company's Annual Report will be available on the Company's website at www.abzena.com/results-and-presentations shortly.

1. Summary of significant accounting policies

Abzena Plc is a public limited company incorporated and domiciled in England and Wales with registered number 08957107. The Company's registered office is Babraham Research Campus, Babraham, Cambridge, CB22 3AT.

The principal activity of the Group is that of life science R&D and the provision of services and technology licensing to the biopharmaceutical industry.

The consolidated Financial Information comprises a consolidation of the Company and the following subsidiary companies:

All the subsidiaries of the Group are 100% owned by the Group and have been included in the consolidated Financial Information from the date of acquisition.

The Group's Financial Information presented is as at 31 March 2016 and 31 March 2015 and for the year ended 31 March 2016 and year ended 31 March 2015.

The principal accounting policies adopted in the preparation of the financial statements are set out below. These policies have been consistently applied to all the financial periods presented, unless otherwise stated.

The consolidated Financial Statements have been prepared in accordance with European Union Endorsed International Financial Reporting Standards (IFRSs), the IFRS Interpretations Committee (formerly the International Financial Reporting Interpretations Committee (IFRIC)) interpretations and the Companies Act 2006 applicable to companies reporting under IFRS. The Financial Statements have been prepared on a going concern basis and under the historical cost convention, except for certain financial instruments that have been measured at fair value.

The preparation of the Financial Statements in conformity with IFRS as endorsed by the EU requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group's accounting policies.

On 23 May 2014 Abzena Plc acquired the entire issued share capital of PolyTherics Limited in a share for share exchange, in an exact replication of the pre-existing share capital. Reorganisations involving entities under common control are outside the scope of IFRS 3, and there is no other specific IFRS guidance that applies in these circumstances. Accordingly, the Directors have used their judgement to develop an accounting policy that is relevant and reliable and therefore the Group reconstruction has been accounted for using the merger method of accounting in accordance with FRS 6, which treats the merged entities as if they had been combined throughout the current and comparative accounting periods. Under merger accounting, the results for the Group have been reported as if the Group had been in existence in its current form through the current and previous financial years. No purchased goodwill was created in the transaction and the assets and liabilities of PolyTherics Limited were not adjusted to reflect their fair value.

Revenue, which excludes value added tax, represents the income generated by the Group from services provided to external parties, licensing activities and grants. Revenue is recognised only when it is reasonably certain that the economic benefits associated with the transaction will flow to the Group.

Revenue in respect of service contracts, where the Group's contractual obligations are performed gradually over time, is recognised as the contracted activity progresses, to reflect the Group's partial performance of its contractual obligations. The stage of completion requires a degree of estimation and judgement by management, although typically obligations are discharged evenly over the performance period and revenue is therefore typically recognised on a straight-line basis. This is not necessarily in line with the stage payments specified within contractual agreements, resulting in accrued and deferred revenue, as appropriate. Where the substance of a contract is that a right to consideration does not arise until the occurrence of a critical event, revenue is not recognised until the event occurs. Consideration for options and similar contingent receipts are recognised when the contingency is resolved or from the point the option is exercised.

Revenue in respect of licensing activities typically comprises an initial up-front fee receivable on signature of the agreement, followed by subsequent payments when certain milestone conditions are met. In addition, future sales royalties may also be due under licence agreements. The initial up-front fee receivable on the signature of a licence agreement is generally recognised in full on the date the agreement is executed, as long as all of the Group's obligations required to enter into the licence have been completed and at the point that the up-front fee becomes non-refundable. Milestone payments are recognised only when all the conditions stipulated in the agreement are satisfied for the particular milestone payment and all the Group's obligations have been met. Future sales royalties receivable under a licence would generally be recognised on receipt of a royalty statement unless accurate sales information is available to accrue revenue for royalty over the financial period. To date, the Group has not received nor recognised any royalty income.

Grant income is typically claimed quarterly in arrears and is recognised on a straight line basis throughout each quarter. Where a grant claim has not been made, grant income is accrued on a straight line basis. Grant income is disclosed as Other Operating Income on the face of the Consolidated Statement of Comprehensive Income. Government grants received relating to property, plant and equipment are treated as deferred income and released to the Consolidated Statement of Comprehensive Income over the shorter of the period of the grant, or the life of the asset.

IFRS 3 (revised) "Business Combinations" requires that goodwill arising on the acquisition of subsidiaries is capitalised and included in intangible assets. IFRS 3 (revised) also requires the identification of other intangible assets at acquisition. The assumptions involved in valuing these intangible assets requires the use of estimates and judgements which may differ from the actual outcome. These estimates and judgements cover future growth rates, expected inflation rates and the discount rate used. Changing the assumptions selected by management could significantly affect the allocation of the purchase price paid between goodwill and other acquired intangibles.

Due to the nature of an initial public offering (IPO) and other public share issuances new shares are issued to raise additional capital and, along with existing shares, subsequently become listed on a stock exchange. Judgement is required in assessing whether the associated expenditure is directly attributable to the issue of shares and whether it meets the criteria to be offset against the share premium account.

The Company has adopted the following revisions and amendments to IFRS issued by the International Accounting Standards Board, which are relevant to and effective for the Group's financial statements for the period beginning 1 April 2015.

The Directors have assessed that the adoption of these revisions and amendments did not have an impact on the financial position or performance of the Company.

At the date of authorisation of these financial statements, the following Standards and Interpretations which have not been applied in these financial statements were in issue but not yet effective:-

01-Jan-16

· IFRS 10 and IAS 28 Sale or Contribution of Assets between an Investor and its Associate or Joint Venture - Amendments to IFRS 10 and IAS 28

· IFRS 10 and IAS 28 Sale or Contribution of Assets between an Investor and its Associate or Joint Venture - Amendments to IFRS 10 and IAS 28

· IFRS 10, IFRS 12 and IAS 28 Investment Entities: Applying the Consolidation Exception - Amendments to IFRS 10, IFRS 12 and IAS 28

· IFRS 11 Accounting for Acquisitions of Interests in Joint Operations - Amendments to IFRS 11

· IFRS 14 Regulatory Deferral Accounts

· IAS 1 Disclosure Initiative - Amendments to IAS 1

· IAS 16 and IAS 38 - Clarification of Acceptable Methods of Depreciation and Amortisation - Amendments to IAS 16 and IAS 38

· IAS 16 and IAS 41 Agriculture - Bearer Plants - Amendments to IAS 16 and IAS 41

· IAS 27 - Equity Method in Separate Financial Statements - Amendments to IAS 27

· IFRS 5 Non-current Assets Held for Sale and Discontinued Operations - Changes in methods of disposal

· IFRS 7 Financial Instruments: Disclosures - Servicing contracts

· IFRS 7 Financial Instruments: Disclosures - Applicability of the offsetting disclosures to condensed interim financial statements

· IAS 34 Interim Financial Reporting - Disclosure of information 'elsewhere in the interim financial report'

01-Jan-17

· IAS 7 Disclosure Initiatives - Amendments to IAS 7

· IAS 12 Recognition of Deferred Tax Assets for Unrealised Losses - Amendments to IAS 12

01-Jan-18

· IFRS 15 Revenue from Contracts with Customers

· IFRS 9 Financial Instruments

01-Jan-19

· IFRS 16 Leases

* the standard is effective for accounting periods beginning in or after this date

The Directors anticipate that the adoption of these Standards and Interpretations in future periods will have no material impact on the financial statements of the Group.

The Group's consolidated Financial Information consists of Abzena Plc and all of its subsidiaries.

Subsidiaries are consolidated from the date of their acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases. Control comprises the power to govern the financial and operating policies of the investee so as to obtain benefit from its activities and is achieved through direct or indirect ownership of more than half of the voting rights, or by way of contractual agreement. The acquisition method of accounting is used to account for the acquisition of subsidiaries by the Group.

The cost of acquisition is measured at fair value of assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange. Acquisition related costs are expensed as incurred. Identifiable assets acquired, and liabilities and contingent liabilities assumed, in a business combination are initially measured at their fair values at acquisition date, irrespective of the extent of any non-controlling interest. The excess of the cost of acquisition over the fair value of the Group's share of the identifiable net assets is recorded as goodwill.

Inter-company transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealised losses are also eliminated. Accounting policies of subsidiary undertakings have been changed where necessary to ensure consistency with the policies adopted by the Group.

The consolidated Financial Statements are presented in pounds sterling, which is the Group's presentational currency. The Group determines the functional currency of each entity. Transactions undertaken in foreign currencies are translated into the functional currency of the subsidiary at the exchange rate prevailing on the date of the transaction. Foreign currency assets and liabilities are translated into the functional currency at the rates of exchange ruling at the year-end date. Any exchange differences arising are included within 'Administrative expenses' in the Consolidated Income statement. This also applies to sterling-based entities with foreign currency transactions, assets and liabilities.

The Group has subsidiaries which are denominated in United States dollars. The results of these subsidiaries are translated monthly at the prevailing rate of exchange. At each reporting period end, the assets and liabilities are translated at the closing rate of exchange. Gains or losses on translation are recorded in the Consolidated Statement of comprehensive income and as a separate component of equity. Such gains or losses are transferred to the Consolidated Income statement on disposal or liquidation of the relevant subsidiary.

The Group uses financial instruments comprising cash and cash equivalents and various other short-term instruments such as trade receivables and trade payables which arise from its operations. The main purpose of these financial instruments is to fund the Group's business strategy and the short-term working capital requirements of the Group.

Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. A provision for impairment of trade receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of receivables. The amount of the provision is the difference between the asset's carrying amount and the present value of the estimated future cash flows, discounted at the effective interest rate. The amount of the provision is recognised in the Consolidated Statement of Comprehensive Income within administrative expenses.

Trade payables are recognised initially at fair value and subsequently held at amortised cost using the effective interest rate method.

Cash and cash equivalents include cash in hand, deposits held with banks, bank overdrafts and other short-term highly liquid investments with original maturities of less than 3 months. Short term liquid investments with a maturity of over three months would be included in a separate category, 'Short term liquidity investments'.

Research costs are written off to the Consolidated Income Statement in the year in which they are incurred. All research costs, whether funded by grant or not, are included within R&D costs on the face of the income statement.

All ongoing development expenditure is currently expensed in the year in which it is incurred. Due to the regulatory and other uncertainties inherent in the development of the Group's programmes, the criteria for development costs to be recognised as an asset, as prescribed by IAS 38, "Intangible assets", are not met until the product has been submitted for regulatory approval, such approval has been received and it is probable that future economic benefits will flow to the Group. The Group does not currently have any such internal development costs that qualify for capitalisation as intangible assets.

The Group makes payments to defined contribution schemes. The assets of the schemes are held separately from the Group in independently administered funds. Contributions made by the Group are charged to the Consolidated Statement of Comprehensive Income in the period to which they relate.

Inventories are stated at the lower of cost and net realisable value. Cost includes all expenditure directly attributable to bringing each product to its present location and condition on a first in first out basis, unless separately identified. Net realisable value is based on estimated selling price, or value in use less further costs expected to be incurred to completion and disposal. Where necessary, provision is made for obsolete, slow moving and defective inventories.

Income tax on the result for the year comprises current and deferred tax. Income tax is recognised in the Consolidated Statement of Comprehensive Income except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity.

Current tax is the expected tax payable or receivable on the taxable income for the period, using tax rates enacted or substantively enacted at the balance sheet date, and any adjustment to tax payable in respect of previous periods.

Deferred tax is provided using the balance sheet liability method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the balance sheet date.

The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis.

Rentals paid under operating leases are charged to the Consolidated Statement of Comprehensive Income on a straight line basis over the period of the lease.

Benefits received and receivable as an incentive to sign an operating lease are recognised on a straight line basis over the period of the lease.

Where the Company issues shares and equity-classified warrants in the same transaction, the Group estimates the fair value of the warrant instruments. If material, the fair value of the warrants is recorded as a separate component of equity.

Goodwill arising on the acquisition of a subsidiary represents the excess of the fair value of the consideration given over the fair value of the identifiable net assets acquired. Goodwill is initially recognised as an asset at cost and is subsequently measured at cost less any accumulated impairment losses. Goodwill impairment reviews are undertaken annually, or more frequently if events or changes in circumstances indicate potential impairment. The carrying value of goodwill is compared with the recoverable amount, which is the higher of the value in use and the fair value less costs to sell. Any impairment is recognised immediately as an expense, separately disclosed in the intangible fixed asset note to the financial statements, and is not subsequently reversed.

The carrying value of non-current assets is reviewed whenever events or changes in circumstances indicate that the carrying value may not be recoverable to determine whether there is any indication of impairment. If any such indication exists, the asset's recoverable amount is estimated. Intangible assets initially recognised during the current annual period which are not yet available for use are also tested for impairment by reference to the asset's recoverable amount at the balance sheet date.

An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the greater of the fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows over the remaining useful economic life of the asset in question are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.

The Group discloses separately items of income or expenditure which are by nature not expected to recur as part of the normal operational activity of the business. Such items are shown separately on the face of the Consolidated Statement of Comprehensive Income.

An operating segment is a component of an entity that engages in business activities from which it may earn revenues and incur expenses (including revenues and expenses relating to transactions with other components of the same entity), whose operating results are regularly reviewed by the entity's Chief Operating Decision Maker to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available. Operating segments are aggregated into reporting segments where they share similar economic characteristics.

All the classes of the Group's share capital are classified as equity. Share capital is determined using the nominal value of shares issued.

The share premium account represents premiums received on the initial issuing of share capital. Incremental costs directly attributable to the issue of new share capital are shown as a deduction, net of tax, from the share premium account.

The share based payment reserve represents the cumulative amount which has been expensed in the Consolidated Statement of Comprehensive Income in connection with equity settled share based payments, less any amounts transferred to the profit and loss account on the exercise of share options.

Retained earnings include all current and prior results as disclosed in the Consolidated Statement of Comprehensive Income

Where, as part of a business combination, the Group enters into an agreement which includes a contingent element that is classified as equity, these amounts are fair valued at the date of acquisition and held in a separate equity reserve. These amounts are not subsequently re-measured but are transferred to share capital and share premium on settlement of the contingent consideration.

The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated Financial Statements are as follows:

Where the Company issues restricted stock units classified as equity instruments, the Group estimates the fair value of the RSU's at the date of issue and records the value as a separate component of equity under deferred consideration. Where the Company issues restricted stock units classified as liabilities, the Group estimates the fair value of the RSU's at the date of issue and records this as a financial liability. At each subsequent balance sheet date the Group revalues the liability using observable market based data wherever possible and applying estimates where not possible. Fair value gains and losses are recorded in the income statement under financial income.

Provisions are recognised when the Group has a present legal or constructive obligation as a result of a past event, it is probable that the Group will be required to settle that obligation and the amount can be estimated reliably. Provisions are measured at the best estimate of the expenditure required to settle the obligation at the balance sheet date, and are discounted to present value where the effect is material.

Employees (and Directors) receive remuneration in the form of equity-settled share-based payments, whereby employees render services in exchange for shares or for rights over shares. The fair value of the employee services received in exchange for the grant of options or shares is recognised as an expense. The total amount to be expensed on a straight line basis over the vesting period is determined by reference to the fair value of the options or shares determined at the grant date, excluding the impact of any non-market based vesting conditions (for example, continuation of employment and performance targets).

The share options are valued using the Black-Scholes option pricing model. Non-market based vesting conditions are included in assumptions about the number of options that are expected to become exercisable or the number of shares that the employee will ultimately receive. This estimate is revised at each Balance Sheet date to allow for forecast leaving employees and the difference is charged or credited to the Consolidated Statement of Comprehensive Income, with a corresponding adjustment to reserves.

Determining whether goodwill is impaired requires an estimation of the value in use of the cash generating unit ("CGU") to which goodwill has been allocated. The value in use calculation requires the entity to estimate the future cash flows of the CGU, and a suitable discount rate, in order to calculate present value. Similar calculations are required in respect of other acquired intangibles. Changing the assumptions selected by management, in particular the discount rate and growth rate assumptions used in the cash flow projections, could significantly affect the Group's impairment evaluation.

At the date of acquisition of a subsidiary, intangible assets that are separately identifiable and that arise from contractual or other legal rights are capitalised and included within net identifiable assets acquired. These intangible assets are initially measured at fair value, which reflects market expectations of the probability that the future economic benefits embodied in the asset will flow to the entity, and are amortised as follows:

They are subsequently measured at cost less accumulated amortisation and impairment. At each balance sheet date, these assets are assessed for indicators of impairment and, in the event that an asset's carrying amount is determined to be greater than its recoverable amount, the asset is written down immediately through the Consolidated Statement of Comprehensive Income.

All property, plant and equipment are stated at historical cost less accumulated depreciation, together with any incidental costs of acquisition. Cost includes the original purchase price of the asset and the costs attributable to bringing the asset to its working condition for its intended use. Depreciation is provided on all property, plant and equipment at rates calculated to write each asset down to its estimated residual value on a straight line basis over its expected useful life, as follows:

Leasehold property improvements - over the life of the lease

Fixtures, fittings and equipment -20%-33% straight line

The assets' residual lives are reviewed annually and adjusted as appropriate.

2. Segmental reporting

The Group has adopted IFRS 8, "Operating Segments". IFRS 8 defines operating segments as those activities of an entity about which separate financial information is available and which are evaluated by the Chief Operating Decision Maker to assess performance and determine the allocation of resources. The Chief Operating Decision Maker has been identified as the Board of Directors. The Directors are of the opinion that under IFRS 8 the Group has only one operating segment, being the provision of services and technology licencing to the biopharmaceutical industry through short-term service contracts and long-term licencing agreements. The Board of Directors assess the performance of the operating segment using financial information which is measured and presented in a manner consistent with that in the Financial Statements. Segmental reporting will be reviewed and considered in light of the development of the Group's businesses over the next period.

The Group had no single significant customer which alone contributed more than 7 % of Group revenue in 2016 (2015: largest customer contributed 10%). An analysis of the revenue from all sources is as given below:

3. Finance income and expenses

4. Loss before income tax

Exceptional costs in the year amounted to £2,542,000 (2015: £nil). The charge principally arose from legal and professional fees pursuant to the PacificGMP and The Chemical Research Solution LLC acquisitions (£1,535,000). In addition, there was an impairment of the intangible assets and goodwill in respect of Warwick Effect Polymers and Antitope Limited (£1,007,000).

5. Employees and Directors

Average monthly number of persons (including Executive Directors but excluding non-executive Directors) employed:

The Group considers all members of the Board (including Non-Executive Directors) to be key management.

The Group contributes to defined contribution money purchase pension schemes for its Executive Directors and employees. Contributions of £2,000 (included in other payables) were payable to pension funds for the benefit of Directors at the year-end (2015: £2,000).The details of Directors who received emoluments from the Group are shown in the tables contained in the Directors' Remuneration Report.

6. Taxation

The Group is entitled to claim tax credits in the United Kingdom for certain R&D expenditure. The amount included in the financial information represents the credit receivable by the Group for the year. The 2016 amounts have not yet been agreed with the relevant tax authorities. 

Additionally, included in other operating income is £193,000 (2015: £132,000) in respect of a R&D expenditure credit.

There is no current tax charge in the year as the Group has utilized losses brought forward and is entitled to a cash tax credit in the United Kingdom for certain R&D expenditure. The repayable tax credit for the year is lower (2015: lower) than the credit that would be repayable at the standard rate of corporation tax in the UK of 20% (2014: 21%). The differences are explained in the following table:

The Finance Act 2013 which provided for reductions in the main rate of corporation tax for 23% to 21% effective from 1 April 2014 and to 20% effective from 1 April 2015, was substantively enacted on 22 July 2013. These rate reductions have been reflected in the calculation of deferred tax at the balance sheet date. Taxation for other jurisdictions is calculated at the rates prevailing in the respective jurisdictions. A change to the UK corporation tax rate was announced in the Chancellor's Budget on 16 March 2016. The change announced is to reduce the main rate to 17% from 1 April 2020. Changes to reduce the UK corporation tax rate to 19% from 1 April 2017 and to 18% from 1 April 2020 had already been substantively enacted on 26 October 2015. As the change to 17% had not been substantively enacted at the balance sheet date its effects are not included in these financial statements. The overall effect of that change, if it had applied to the deferred tax balance at the balance sheet date, would not be material.

As at 31 March 2016, the unrecognised deferred tax asset amounted to £2,860,000 (2015: £2,348,000). This deferred tax asset is in respect of cumulative losses incurred to date. The Directors have not recognised this asset, as they are not sufficiently certain, with regard to the recoverability of the asset.

7. Losses per share

Basic losses per share is calculated by dividing the loss for the financial year by the weighted average number of Ordinary Shares in issue during the period. The losses and weighted average number of shares used in the calculations are set out below:

As net losses were recorded in 2016 and 2015, the potentially dilutive share options and restricted stock units are anti-dilutive for the purposes of the losses per share calculation and their effect is therefore not considered.

8. Issued share capital

A schedule of the issued share capital of the Company at the period ends was as follows.

In December 2015 the Company issued 35,004,972 Ordinary shares of £0.002. Total consideration for these share issues was £20,924,000 with issue costs of £911,000.

In November 2015 the Company issued 3,609,978 Ordinary shares of £0.002, as part of the consideration for the acquisition of The Chemical Research Solution LLC for £2,369,000.

During the year ended 31 March 2016 a total of 798,134 (2015: 3,445,860) Ordinary shares were issued in consideration for the exercise of share options, for cash consideration amounting to £182 (2015: £688).

Where a "share re-organisation" is referred to throughout the Annual Report, this refers to the following items:

A) On 23 May 2014, the Company acquired the entire share capital of PolyTherics Limited on a share for share exchange basis.

B) A bonus issue followed on 30 June 2014, whereby each shareholder in the Company, received nine additional shares of the same class in the Company.

C) On admission every two issued shares of £0.001 were consolidated into one share each of £0.002 with the same rights and restrictions.

D) A total of 1,255,903 £0.002 Ordinary shares were then issued to the holders of E Ordinary Shares and E Preferred shares in settlement of the 8% per annum return on the subscription investment. This resulted in an increase to share capital of £2,511.

E) On Admission each of the A Preferred, B Ordinary, B Preferred, C Preferred, D Ordinary, D Preferred, E Ordinary and E Preferred Shares in the Company, were re-designated as Ordinary £0.002 shares.

On admission 25,000,000 new Ordinary £0.002 shares were issued as a result of the IPO and financing on 10 July 2014. Total consideration for shares issued in the year ended 31 March 2015 was £20,633,000, with issue costs of £1,590,000.

During the year ended 31 March 2015 1,877,778 Ordinary shares were issued as a result of warrants being exercised.

9. Warrants

On 1 July 2014 warrants in respect of B Ordinary shares in PolyTherics Limited, were exchanged for warrants over B Ordinary shares in the Company. Subsequent to this, the warrants were included with the share re-organisation of the Group, whereby each warrant holder received 4 additional warrants, for each warrant held and warrants over B Ordinary Share in the Group, became warrants over the Ordinary shares of the Group.

10. Business Combinations

On 11 September 2015, the Group completed the acquisition of PacificGMP, a contract development and manufacturing company based in San Diego, California, US. In addition to adding a significant line of service revenue and an operational base in the US, the acquisition extends Abzena's offering to include GMP manufacturing capability, to provide products for use in customers' clinical trials, and to enable Abzena to continue its engagement with customers further along the biopharmaceutical R&D value chain.

Abzena acquired the entire issued share capital of PacificGMP and settled certain acquisition related non-trading liabilities at the date of completion. The consideration comprised elements of cash consideration and deferred equity based consideration in the form of warrants granted to all shareholders and a restricted stock unit scheme vesting on the achievement of revenue based targets over the two years after acquisition.

The following table summarises the consideration paid for PacificGMP and the amounts of identifiable assets acquired and liabilities assumed at the acquisition date:

The fair value of the acquired net liabilities is as noted above. The acquired receivables are expected to be recoverable in full.

Details of the RSUs issued as deferred consideration for the acquisition of PacificGMP and the estimates applied in determining the number and value of the shares for award are detailed below.

The RSUs were issued as deferred consideration for the acquisition of PacificGMP to the previous owners and members of staff employed by the subsidiary. The vesting criteria is two years from acquisition date as follows:

· First year: Turnover in year to 30 September 2016 above $3,200,000 plus any deferred income is multiplied by 25% to calculate the award of shares

· Second year: Turnover in year to 30 September 2017 above $3,200,000 plus any deferred income is multiplied by 25% to calculate the award of shares.

For the purpose of calculating the number of shares for award, the share price is fixed at £0.80 per ordinary share. The award is capped at 5,129,939 shares, and shares awarded in the first year in priority to the second if the award would have exceeded the cap. For the purposes of valuation of the award, the share price at acquisition date was £0.69 per ordinary share. The award is valued on management projections of levels of turnover for the subsidiary. A liability is recorded in trade and other payables against this award which is re-valued at each accounting period and the resulting gain or loss reflected in finance income or expense in the Consolidated Income Statement.

The revenue included in the consolidated statement of comprehensive income since 12 September 2015 contributed by PacificGMP was £1.6 million, gross margin of £0.3 million, administration and laboratory expenses of £1.3 million.

On 11 December the Group completed the acquisition of TCRS. The following table summarises the consideration paid for TCRS and the amounts of identifiable assets acquired and liabilities assumed at the acquisition date:

The fair value of the acquired net liabilities is noted above. The acquired receivables are expected to be recoverable in full.

The revenue included in the consolidated statement of comprehensive income since 12 December 2015 contributed by TCRS was £1.1million, gross margin of £0.7 million, administration and laboratory expenses of £0.9 million.

Details of the RSUs issued as deferred consideration for the acquisition of TCRS and the estimates applied in determining the number and value of the shares for award are detailed below.

The RSUs were issued as deferred consideration for the acquisition of TCRS to the previous owners. The vesting criteria is, subject to discretion of the administrator, for employees to remain employed by the Group for one year after acquisition. If any employee leaves, the RSU's are awarded to the pre-acquisition owners of TCRS. The award is fixed at 901,697 shares. The share price for calculation of fair value at date of acquisition is £0.66 per share. The fair value of the award is recorded in deferred consideration in reserves in the Consolidated Statement of Financial Position and the Consolidated Statement of Changes in Equity.

During the period from 1 April 2015 to its acquisition PGMP recorded unaudited proforma revenues of £1.0 million and a net loss of £1.4 million.

During the period from 1 April 2015 to its acquisition TCRS recorded unaudited proforma revenues of £2.5 million and a net loss of £0.1 million.

Had PacificGMP and The Chemistry Research Solution LLP been consolidated from 1 April 2015, the consolidated Income Statement, would show pro-forma revenue of £13.4 million and a net loss, before amortisation of intangibles arising on the consolidation of the US subsidiaries, of £11.2 million.

Legal and professional costs amounting to £1.5 million associated with the acquisitions are included in exceptional items in the Consolidated Income Statement.