Preliminary Results

13 April 2016

Cronin Group Plc

("Cronin" or the "Company")

Preliminary announcement of audited results for the year ended 31 December 2015

Cronin Group Plc announces its audited financial results for the year ended 31 December 2015. 

Highlights:

- Strategic re-alignment of the Group including the acquisition of Cronin 3D Limited and

the demerger of Oxford Advanced Surfaces Limited.

- Appointment of Riccardo Pigliucci and Laurence Ede to the Company's Advisory

Committee.

- Operating loss on continuing operations of £0.39 million (2014: loss £0.40 million).

- Loss of £1.16 million after tax and discontinued operations (2014: loss £0.99 million).

- Share placing in September 2015 raised cash of £3.30 million.

- Cash and short term deposits at 31 December 2015 of £5.42 million (2014: £2.56 million).

- Net assets at 31 December 2015 of £9.63 million (2014: £2.95 million).

James Ede-Golightly, Chairman, said: "Following the strategic re-alignment in 2015, the Group's ongoing business activity is that of the digitization of chemical space coupled with innovative chemical drug discovery. The Board remains committed to delivering additional value for shareholders".

A full copy of the Company's 2015 Annual Report is now available on the Company's website at www.croningroupplc.com under the Investor Relations/Annual & Interim Reports section and will shortly be posted to shareholders. This contains on page 39, a Notice of the Annual General Meeting to be held at 12 May 2016 at 11.00 am at the offices of CMS Cameron McKenna, 191 West George Street, Glasgow, G2 2LD.

The Board of Directors approved this preliminary announcement on 13 April 2015. Whilst the financial information included in this preliminary announcement has been prepared in accordance with International Financial Reporting Standards ("IFRS") as endorsed by the European Union, this announcement does not itself contain sufficient information to comply with all the disclosure requirements of IFRS and does not constitute statutory accounts of the Company for the years ended 31 December 2015 or 31 December 2014.

The financial information has been extracted from the statutory accounts of the Company for the years ended 31 December 2015 and 31 December 2014. The auditors reported on those accounts; their reports were unqualified and did not contain a statement under either Section 498 (2) or Section 498 (3) of the Companies Act 2006 and did not include references to any matters to which the auditor drew attention by way of emphasis.

The statutory accounts for the year ended 31 December 2014 have been delivered to the Registrar of Companies, whereas those for the year ended 31 December 2015 will be delivered to the Registrar of Companies following the Company's Annual General Meeting.

CHAIRMAN'S STATEMENT

I am pleased to present the inaugural chairman's statement of the Company as Cronin Group Plc following completion of a restructuring and strategic re-alignment of the Group during 2015. This involved the acquisition of Cronin 3D Limited ("Cronin 3D") in September 2015 for £5.0 million, settled in full by the issue of shares in the Company, and the subsequent demerger of Oxford Advanced Surfaces Limited ("OASL") in October 2015. In order to provide ongoing working capital for the enlarged Group following completion of the acquisition, the Company also raised additional cash of £3.3 million by way of a share placing in September 2015.

These changes refocused the Company around the commercialisation of intellectual property developed by the Glasgow University research team ("The Research Group"), led by Professor Lee Cronin. The Research Group comprises approximately sixty students, post-doctoral researchers, technicians, visitors and undergraduates engaged in researching novel chemistry and biological systems. 

Principal Activities and the Chemputer

Cronin 3D is developing the ChemputerTM, an autonomous universal digital synthesis engine, which intends to open up chemistry to a wide user-base via digitization. This will allow chemical synthesis to be flexible and widely accessible irrespective of access to physical infrastructure and chemical knowledge. It is our aim that the number and synthetic scope of the molecules using the Chemputer™ will double each year and that it will enable chemistry to become more reproducible and readily scalable with progressively lower costs and increasing levels of complexity addressed by the system.

The first integrated functioning Chemputer™ systems are expected in 2016, building on a number of current prototype demonstrators we currently have in hand. We envisage future deployments of the Chemputer™ comprising three core components: Chemistry (a description of chemical reactions that is formalised, standardised and thus computer readable), Automation (a robotic platform that can produce compounds in a reliable and consistent fashion) and Intelligence (enabling search and discovery algorithms, spectral analysis and interpretation to be developed independently).

To date we have worked on a number of different Chemputer™ prototype systems, each of which demonstrates different capabilities. The construction of these systems is vital to explore the practical implementation of our vision. Aspects under development include a user software interface, artificial intelligence algorithms and a modular reactor system. The system will integrate reaction inputs, reaction processing, workup (separation and purification) and reaction outputs. Our efforts see us moving from the current modular and scalable concept to a framework that will aim towards a more portable and cheap format for bench top chemistry, but with the added ability to scale up.

An initial focus for Organic synthesis is digitizing drugs on the FDA drug shortages and the PSNC (Pharmaceutical Services Negotiating Committee) generic shortages list, both demonstrating synthetic scope but also having potential commercial application.

Financial Review

The Group incurred an operating loss on continuing operations for the year ended 31 December 2015 of £0.39 million (2014: loss of £0.40 million), which together with a £0.77 million loss from the discontinued operations of the demerged OASL business (2014: loss £0.60 million), resulted in an overall after tax loss for the year of £1.16 million compared to a loss of £0.99 million in the previous year.

The Group now benefits from a strong balance sheet with cash balances at 31 December 2015 of £5.42 million compared to £2.56 million at 31 December 2014. The £2.86 million increase in cash during the year is mainly attributable to the £3.30 million of cash raised under the share placing, as well as cash of £0.72 million included on acquisition of Cronin 3D, partially offset by cash of £0.89 million used in operating activities and cash of £0.26 million divested as part of the demerger of OASL.

Board Changes

Professor Lee Cronin and Mark Warne were appointed as directors of the Company at the time of the acquisition of Cronin 3D in September 2015, Lee as Founding Scientific Director and Mark as a Non-Executive Director. These appointments reflect the refocusing of the Company around the commercialisation of intellectual property and activities relating to the digitization of chemical space, coupled with innovative chemical drug discovery.

Philip Spinks has informed the board of his intention not to seek re-election at the 2016 annual general meeting. I would like to thank Philip for his contribution to the Group since 2007 and wish him every success in his continuing role as Chief Executive Officer of OASL. 

Advisory Committee

The Company has constituted an advisory committee of industry experts to review, evaluate and advise on the commercial and technical activities of the Group. We are pleased to announce the initial appointments of Riccardo Pigliucci and Laurence Ede to that committee.

Riccardo brings his vast experience as a life science business leader to Cronin Group Plc. He is currently Managing Partner of Aldwych Associates, a management and technology consulting partnership, and has held executive roles with Discovery Partners International, Life Sciences International and The Perkin-Elmer Corporation. Laurence brings specific experience of the chemicals industry to Cronin Group Plc. He was the Managing Director and co-owner of Tocris Bioscience, a company producing chemical compounds for pharmaceutical research, when it was sold to Techne Corporation for £75 million in 2011. Laurence is currently a non-executive director of Ubiquigent Ltd, a drug discovery services company using research tools and chemistry to pursue ubiquitin system-focused drug discovery programmes.

Outlook

Chemputing will allow the digitization of chemistry leading to bespoke molecule making, algorithm-driven discovery, reproducibility, manufacturing and cost reduction, which will open up chemical space exponentially.

We aim to have the first integrated functioning prototype Chemputer™ systems by the end of 2016, thereby starting the era of digital chemistry. The Group is continuing development of the Chemputer and with the support of its Scientific Advisory Committee, will review further opportunities to commercialise its platform technology and also identify potential new innovations from the Research Group as they arise.

James Ede-Golightly

Non-executive Chairman

13 April 2016

Consolidated Statement of Comprehensive Income

For the year ended 31 December 2015

\* The 2014 figures have been re-presented to reflect the income and expenses of discontinued operations as a separate single line item.

Consolidated Statement of Financial Position

As at 31 December 2015

The financial statements were approved by the Board of Directors on 13 April 2016 and were signed on its behalf by:

Michael Bretherton

Director

Consolidated Statement of Cash Flows

For the year ended 31 December 2015