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annual report
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Chairman’s Statement 02
Board of Directors and Advisors 07
Report of the Directors 08
Statement of Directors’ Responsibilities 13
Corporate Governance 14
Accountability and Audit 15
16 Report of the Remuneration Committee
19 Report of the Independent Auditor
21 Consolidated Income Statement
22 Consolidated Statement of Comprehensive Income
23 Consolidated Balance Sheet
24 Consolidated Cash Flow Statement
25 Consolidated Statement of Changes in Equity
26 Notes to the Financial Statements
45 Report of the Independent Auditor on the Parent Company Financial Statements
47 Parent Company Balance Sheet
48 Notes to the Parent Company Financial Statements
51 Notice of the Annual General Meeting
02
Chairman’s
Statement
I am pleased to
report to you on
another year
of progress
for the Group
Financial Review
During the year to 31 March 2010, Group revenue
increased by £0.1m over that achieved in the previous
financial year, rising to £1.4m. The majority of the
revenue was received during the second half of the
year, as I indicated in my interim report was likely to
be the case. Again this year, the Group revenue was
achieved through a combination of sales of bulk
material and components as well as through licencing
fees, royalty income and milestone payments.
Operating expenses increased from £3,032,000 to
£3,727,000, with much of this increase being directly
attributable to the strengthening over the course of the
period of the Australian Dollar, being the currency of
our manufacturing base, with Pounds Sterling being the
financial results reporting currency. Together with the
reduction in interest receivable, made inevitable by the
lower rates than those previously obtainable, the loss
before taxation was £1.9m as compared with £1.2m in
the previous year.
The net cash balances at 31 March 2010 were £2.9m,
which are expected to continue to provide sufficient
resources to support the Group’s ongoing operations
and our development plans.
Group revenue was
achieved through a
combination of sales of
bulk material and
components as well
as through licencing fees,
royalty income and
milestone payments.
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Shareholders who have
followed the Company’s
development in recent
years are aware of the
lengthy timescales for
commercialisation of
medical materials and
devices.
Operational Highlights of the
Financial Year
to
seems
always
Progress
be
frustratingly slow but I should like to
assure you that the past year has seen
substantial advances. Our range of
polymer materials in the Elast-Eon™ and
ECSil™ family are now in use, or in a
number of development programmes, in
the following areas:
The executive team, capable of realising
this opportunity, is largely in place.
Therefore subject to unforeseen events
the Company’s financial performance
will begin to show substantial reward
for the years of patient research and
development.
The polymer business has continued to
grow. Tonnage has more than doubled
over the prior year and composite
pricing has seen improvements related
to mix, new licences and price increases
programmed into existing licences. A
new licence has been announced in the
urology
in
ophthalmic and morbid obesity fields
are projected in the near term.
field; other
licences
_
_
_
_
_
_
_
_
_
Cardiac Rhythm management
Neurostimulation
Cardiac Surgery
Spinal Disc
Bilary Drainage
Urology Catheters
Urology Stents
Morbid Obesity
Blood Glucose Monitoring
By the end of this year we expect to
have more than six of these applications
in development programmes or in human
use. Our product is already in human use
in several million patients and additional
human use is gathering momentum.
It is also encouraging that a number of
medical device companies wish us to
augment material supply by actually
manufacturing components or complete
devices. Headers for cardiac rhythm
management and neurostimulation are
examples. Going beyond the simple
financial figures that have been reported,
the Board believes that your Company
has passed the evolutionary point, the
tipping point, with an established widely
applicable and respected material, which
has achieved regulatory approval, and
that this will now lead to rapidly rising
direct and indirect revenues.
04
Our new polymer product, ECSil™,
essentially a super silicone, is enjoying
early success in customer qualification
programmes for application areas which
include pacing and neurostimulation leads,
spinal disc and breast implant, amongst
others.
After suffering the unanticipated loss of a
key raw material supplier in the 2nd
quarter of 2010, the Company resumed
polymer shipments after a 5 week period
in which it successfully completed its long
term programme for producing this raw
this supply
material
disruption behind us, we expect a
resumption of our history of perfect
customer delivery and quality performance.
in-house. With
In general, prospects for the bulk polymer
business remain bright as a number of
customer qualification programmes continue
to mature into new licence agreements and
other existing agreements, some of which
are royalty bearing.
By the end of this
year we expect
to have more
than six of these
applications in
development
programmes or
in human use.
Our product is
already in human
use in several
million patients
and additional
human use is
gathering
momentum.
A O R T E C H I N T E R N A T I O N A L P L C
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Strategy and Current Trading
The greatest potential for
near term revenue growth
comes from our component
and device development
segments. The U.S. $32.8
million co-development
programme is continuing to
progress satisfactorily. The
final phase of the trial for
the polymer heart valve in
the previously announced
circulatory support
application is expected to
conclude in the current
financial year.
most
component
exciting
The
development in our portfolio is the use
of our polymers and proprietary reaction
injection molding (RIM) process for the
production of headers for cardiac rhythm
management (CRM) and neurostimulation
devices. Also in my next statement I
first
hope
successful human use of this technology
in a clinical setting.
to be celebrating
the
important device
I anticipate being able to inform you of a
projected date for the first human use of
this
in my next
statement. The state of this programme is
such that the internal valve development
and pilot manufacturing phases are
essentially complete and management is
evaluating other device opportunities,
some of them joint ventures in other areas.
In addition to new licensees who prefer
to source their Elast-Eon™ and ECSil™
components from the Company at the
outset of our business with them, we are
also seeing existing polymer accounts
responding favourably to our proposals
to manufacture
their components,
thereby facilitating the simplification of
their own supply chains.
Management foresee increasing revenue
streams over the short and medium term,
and with the Group’s infrastructure being
of sufficient capacity to enable increased
output without significant further capital
outlay. This anticipated increase is
expected to be reflected in an improved
bottom line and cash reserves position.
Finally, I should once again wish to take
this opportunity to thank each member
of our staff for their continued efforts
and commitment to the Company, and to
thank our shareholders for their ongoing
support during the year.
Your Board is confident that the Group
has the technology, resources and skills
that will fully capitalise upon the
opportunities that are now developing
and expanding from the efforts of the
past, and thereby to build shareholder
value.
Jon Pither
Chairman
06
The most exciting component development
in our portfolio is the use of our polymers and
proprietary reaction injection molding (RIM)
process for the production of headers for
cardiac rhythm management (CRM) and
neurostimulation devices.
A O R T E C H I N T E R N A T I O N A L P L C
07
Board of
Directors
& Advisors
Financial statements will be circulated to Shareholders and
copies of the announcement will be made available from the
Company’s registered office. Dealings permitted on Alternative
Investment Market (AIM) of the London Stock Exchange.
Directors
Jon Pither non-Executive Chairman
Frank Maguire Chief Executive
Eddie McDaid non-Executive Director
Dr Stuart Rollason non-Executive Director
Gordon Wright non-Executive Director
Company Secretary
David Parsons ACIS
Registered Office
C/o Brodies LLP
2 Blythswood Square
Glasgow G2 4AD
Head Office
Prestige Travel Suite
Barclays Bank House
81-83 Victoria Road
Surbiton
Surrey KT6 4NS
web: www.aortech.com
email: info@aortech.com
Nominated Adviser and Broker
Evolution Securities Limited
100 Wood Street
London EC2V 7AN
Registrars
Equniti Registrars Scotland
1st Floor
34 South Gyle Crescent
South Gyle Business Park
Edinburgh EH12 9EB
Independent Auditor
Grant Thornton UK LLP
Statutory Auditors
Chartered Accountants
Regent House
80 Regent Road
Leicester
LE1 7NH
Registered in Scotland, Company No.170071
Report of
the Directors
The Directors present their
report and the audited
financial statements for the
year ended 31 March 2010.
08
Principal Activities
The Company is the holding company of a Group whose principal activities are the development and exploitation of a range of
innovative biomaterials and medical devices.
Review of Business & Future Developments
During the financial year under review the Group continued to achieve key operational milestones in the use of its core product
Elast-Eon™ polymer, and to develop its new super silicone polymer product ECSil™. These milestones included the development and
refinement of the materials for the medical community with the aim of providing a wide range of high performance polymers in a
variety of application specific formulations and densities for use in medical devices. Looking forward, the business is increasingly
utilising the co-development of Elast-Eon™ components and the manufacture of these components to drive top line revenue. The
Group’s specific advantage is an ability to process Elast-Eon™ and ECSil™ polymers in ways that are unique and of high value to
numerous customer-based product development programmes.
During the year costs of £1,121,000 (2009: £1,040,000) were charged to the Income Statement as development expenditure. The
consolidated Income Statement is set out on page 21 indicating the Group’s loss for the financial year of £1,923,000 (2009: £1,249,000)
which will be added to the deficit on reserves.
On a Group basis the business review and future prospects are contained within the Chairman's Statement. The Directors consider
the Group financial key performance indicators to be revenue growth, control of operating expenses and the pre tax result. These
are summarised within the financial review section of the Chairman's Statement. In addition the Directors consider the Group non
financial key performance indicators to be the development of new application areas for its polymer products including components
and devices, trials and human use of the polymer heart valve and the signing of new licence agreements. These are summarised in
the operational highlights section of the Chairman's Statement.
The Directors consider the principal risks and uncertainties facing the Group at this stage of its development to be as follows: small
customer base; retention of key management and personnel; reliability of products in the event of undetected faults after shipment;
any adverse results which may arise during development phases; product liability risks; competitive markets with changing technology
and evolving industry standards, and foreign currency movements.
No dividends have been paid or proposed for the years ended 31 March 2010 and 31 March 2009.
Directors & Their Interests
At 31 March 2010 the Chairman of the Company was J Pither; the Executive Director was F Maguire and the non-Executive Directors
were E McDaid, Dr S Rollason and G Wright. No other Director served during the year ended 31 March 2010.
At each Annual General Meeting one third of the Directors shall be subject to retirement by rotation. F Maguire, J Pither and
Dr. S Rollason retire from the Board at the Annual General Meeting and, being eligible, offer themselves for re-election.
A O R T E C H I N T E R N A T I O N A L P L C
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The interests of the Directors at 31 March 2010 and 31 March 2009 in the ordinary share capital of the Company (all beneficially
held) were as follows:
31 March 2010 31 March 2009
Number of shares Number of shares
J Pither 15,050 -
F Maguire 81,050 1,200
E McDaid 333,383 363,383
S Rollason 11,825 8,825
G Wright 305,107 335,107
On 18 May 2010 J Pither purchased 5,000 ordinary shares at a price of 170 pence per ordinary share. G Wright’s shares are
held through Caricature Investments Limited.
Substantial Shareholders
With the exception of the following shareholdings the Directors have not been advised of any individual interest or group
of interests held by persons acting together which at 30 June 2010 exceeded 3% of the Company’s issued share capital:
Number of shares %
Chase Nominees Limited* 1,060,435 21.94%
6.90%
Mr Edward McDaid and Mrs Kathleen McDaid 333,383
Caricature Investments Limited** 305,107
6.31%
Pershing Nominees Limited LSCLT 270,000 5.59%
W B Nominees Limited 237,715 4.92%
Barclayshare Nominees Limited 207,684 4.30%
3.32%
L R Nominees Limited 160,660
3.07%
Pershing Nominees Limited PSL981 148,508
* the holding of Chase Nominees Limited includes 962,841 shares held by Bluehone Investors LLP which accounts for 19.9%
of the Company’s issued share capital. Dr S Rollason is also a Director of Bluehone Investors LLP. Dr S Rollason owns 11,825
shares in the Company at 30 June 2010.
**Caricature Investments Limited is a company wholly owned by Mr G Wright, a Director of the Company.
The percentage of shares not in public hands (as defined in the AIM rules) at 30 June 2010 was 37.4%.
Employees
The Group places considerable value on the involvement of its employees and they are regularly briefed on the Group’s
activities through consultative meetings.
Equal opportunities are given to all employees regardless of their gender, colour, race, religion or ethnic origin.
Applications for employment from disabled persons are always considered fully bearing in mind the aptitudes of the applicant
concerned. In the event of members of staff becoming disabled every effort is made to ensure that their employment within
the Group continues and that appropriate training is arranged. It is the policy of the Group that training, career development
and promotion of disabled persons should, as far as possible, be identical with that of other employees.
10
Market Risk
Market risk encompasses two types of risk, being currency risk and fair value interest rate risk. The Group’s policies for
managing fair value interest rate risk are considered along with those for managing cash flow interest rate risk and are set
out in the sub-section entitled “interest rate risk” below.
Currency Risk
The Group is exposed to translation and transaction foreign exchange risk.
The majority of the Group’s sales are to customers in the United States. These sales are priced and invoiced in US dollars.
The Group policy is to try and match the timing of the settling of these sales and purchase invoices so as to eliminate, as
far as possible, currency exposures.
The tables below show the extent to which the Group has residual financial assets and liabilities. Foreign exchange
differences on retranslation of these assets and liabilities are taken to the Income Statement of the Group, other than in
respect of the retranslation of foreign subsidiary balances arising on consolidation which are taken through the foreign
exchange reserve and shown in the Statement of Comprehensive Income.
Net foreign currency monetary assets
Australian dollar Euro US dollar Total
£000 £000 £000 £000
2010
Sterling 2,794 11 32 2,837
2009
Sterling 3,634 12 22 3,668
Liquidity Risk
The Group seeks to manage financial risk by ensuring sufficient liquidity is available to meet foreseeable needs and by
investing cash assets safely and profitably.
Interest Rate Risk
The Group finances its operations through retained cash reserves.
The interest rate exposure of the financial assets and liabilities of the Group as at 31 March 2010 is shown in the table
below. The table includes trade receivables and payables as these do not attract interest and are therefore subject to fair
value interest rate risk.
Fixed Floating Zero Total
£000 £000 £000 £000
Financial assets
Cash 2,631 36 218 2,885
Trade receivables - - 776 776
2,631 36 994 3,661
Interest rate
Financial liabilities
Trade payables - - 99 99
- - 99 99
A O R T E C H I N T E R N A T I O N A L P L C
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Credit Risk
The Group’s principal financial assets are cash and trade receivables. The credit risk associated with the cash is limited as the
counterparties have high credit ratings assigned by international credit-rating agencies. The principal credit risk arises therefore
from trade receivables.
Capital Management Objectives
The Directors’ capital management objectives are to ensure the Group’s ability to continue as a going concern and to provide an
adequate return to shareholders. The parent and subsidiary companies’ Boards meet regularly to review performance and discuss
future opportunities and threats with the aim of optimising sustainable returns and minimising risk.
Payables Payment Policy
The Group’s current policy concerning the payment of the majority of its trade payables is to follow the ‘Better Payment Practice
Code’ issued by the Better Payment Practice Group. For other suppliers, the Group policy is to:
a) Settle the terms of payment with those suppliers when agreeing the terms of each transaction;
b) Ensure that those suppliers are made aware of the terms of payment by inclusion of the relevant terms in contracts;
and
c) Pay in accordance with its contractual and other legal obligations.
The payment policy applies to all payables for revenue and capital supplies of goods and services without exception.
Wherever possible UK subsidiaries follow the same policy and the overseas subsidiaries are encouraged to adopt a similar policy
applying local best practice. The Company’s average payables payment period at 31 March 2010 was 30 days (2009: 16 days).
Charitable & Political Donations
During the year the Group made no charitable or political donations (2009: nil).
Annual General Meeting
The notice convening the Annual General Meeting for 12:00 noon on Monday, 27 September 2010 in the Staple and Gray’s Inn Room
of the Renaissance London Chancery Court Hotel, 252 High Holborn, London, WC1V 7EN is set out on page 51. There are a number
of resolutions to be passed and further information in relation to these resolutions is set out below.
Resolutions 1 to 8
Resolution 1 provides for the approval of the Company's financial statements for the year ended 31 March 2010.
Resolution 2 provides for approval of the Report of the Remuneration Committee for the year ended 31 March 2010. The vote is
advisory and the Directors entitlement to remuneration is not conditional on the resolution being passed.
Resolutions 3, 4 and 5 deal with the re-appointment of the Directors required by the Company's Articles of Association to retire this
year.
Resolution 6 deals with the re-appointment of Grant Thornton UK LLP as the Company's auditor. Following assessment by the Audit
Committee the Board considers the auditor to be effective and independent in their role.
Resolution 7 provides under the Companies Act 2006 (Section 551) the directors of a company may only allot unissued shares if
authorised to do so. Passing this Resolution will continue the Directors’ flexibility to act in the best interests of shareholders when
opportunities arise by issuing new shares. In Resolution 7 the Company is seeking authority to allot shares with a nominal value of
up to £4,027,315 which represents one third of the Company’s issued ordinary share capital. The Directors intend to use this
authority, which will lapse at the conclusion of the next Annual General Meeting of the Company, for general corporate purposes.
12
Resolution 8 provides if shares are to be alloted for cash, the Companies Act 2006 requires that those shares are offered first to
the existing shareholders in proportion to the number of shares they hold at the time of the offer. However, it may sometimes be
in the interests of the Company for the Directors to allot shares other than to shareholders in proportion to their existing holdings.
At last year’s Annual General Meeting shareholders authorised the Board, subject to specified limits:
_ to allot shares in connection with a rights issue, defined in summary as, an offer of equity securities to shareholders which
is open for a period decided by the Board subject to any limits or restrictions which the Board thinks are necessary or
appropriate.
_ to allot shares not in connection with a rights issue up to a specific amount so that the pre-emption requirement does not
apply to the allotments of shares for cash up to that amount.
This authority is required to be renewed annually. The Directors will be empowered by Resolution 8 to allot equity securities (within
the meaning of Section 560 of the Companies Act 2006) for cash without complying with the statutory pre-emption rights of
shareholders under section 561 of the Companies Act 2006, up to a maximum nominal amount of approximately £604,097. This
disapplication is limited to allotments made to ordinary shareholders and holders of any other class of equity security in proportion
(as nearly as may be) to their holdings and, otherwise, to allotments up to a maximum of 5% of the Company’s issued ordinary
share capital.
There are no current plans to allot shares except in connection with the employee share schemes.
Resolutions 1 to 6 are termed ordinary business. Resolutions 7 and 8 are termed special business.
J C D Parsons
Company Secretary
AorTech International plc
Company number SCO170071
Surbiton
30 July 2010
RECOMMENDATION:
An explanation of the the resolutions to be proposed is set out on pages 11 and 12 of this document. The Directors consider that all
the resolutions to be put to the meeting are in the best interests of the Company and its shareholders as a whole. Your Board will
be voting in favour of them and unanimously recommends that you do so as well.
A O R T E C H I N T E R N A T I O N A L P L C
13
Statement of
Directors’
Responsibilities
The Directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have elected to prepare
the parent company financial statements in accordance with United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting
Practice) and the Group financial statements in accordance with International Financial Reporting Standards as adopted by the European Union.
The financial statements are required by law to give a true and fair view of the state of affairs of the Group and parent company and of the profit
or loss of the Group for that period. In preparing these financial statements, the Directors are required to:
_
_
_
_
select suitable accounting policies and then apply them consistently;
make judgements and estimates that are reasonable and prudent;
state whether applicable UK Accounting Standards and International Financial Reporting Standards as adopted by the European
Union have been followed, subject to any material departures disclosed and explained in the financial statements; and
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group and the parent
company will continue in business.
The Directors are responsible for keeping adequate accounting records that disclose with reasonable accuracy at any time the financial position
of the Group and the parent company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are
also responsible for safeguarding the assets of both the Group and the parent company and hence for taking reasonable steps for the prevention
and detection of fraud and other irregularities.
In so far as the Directors are aware:
_
_
there is no relevant audit information of which the Company's auditors are unaware; and
the Directors have taken all steps that they ought to have taken to make themselves aware of any relevant audit information and to
establish that the auditors are aware of that information.
The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website.
Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other
jurisdictions.
Auditor
Grant Thornton UK LLP have expressed their willingness to continue in office as auditor and a resolution to reappoint them will be proposed at
the Annual General Meeting.
By Order of the board:
J C D Parsons
Company Secretary
Surbiton
30 July 2010
Corporate
Governance
14
The Group currently has a reduced Corporate Governance structure, reflecting the present stage of development, the size of the business and the
Directors’ assessment of the cost / benefit balance of full Corporate Governance. The situation will, however, continue to be kept under review in
the light of ongoing corporate developments and scaling up of activities.
Directors
The Company is controlled by the Board of Directors which, at 31 March 2010, comprised one Executive and three non-Executive Directors and a
non-Executive Chairman. All Directors are able to take independent advice in furtherance of their duties if necessary.
A O R T E C H I N T E R N A T I O N A L P L C
Accountability
& Audit
15
The Board includes a detailed review of the performance of the Group in the Chairman’s Statement on pages 2 to 6. Reading this
alongside the Report of the Directors on pages 8 to 12 the Board seeks to present a balanced and understandable assessment of the
Group’s position and prospects.
Internal Control
The Board has formalised the review and reporting of the main internal controls within the business. In previous periods, the Directors
commissioned a risk review exercise in the course of which the key risk factors facing the Group were identified. These areas included
regulatory, research and development, commercial, human resources and information technology. The Board will continue to review
the system of internal controls within the Group.
The Board of Directors is responsible for the Group’s system of financial controls. However, it should be recognised that such a system
can provide only reasonable and not absolute assurance against material misstatement or loss.
The principal elements of the system include:
_
_
_
_
A clearly defined structure which delegates authority, responsibility and accountability.
A comprehensive system for reporting financial results. Actual results are measured monthly against budget which
together with a commentary on variances and other unusual items allows the Board to monitor the Group’s performance
on a regular basis.
A comprehensive annual planning and budgeting programme.
A revision of annual forecasts on a periodic basis.
There is no independent internal audit function. The Directors believe that such a function would not be cost effective given the current
size of the Group but they will continue to monitor the situation as the Group goes forward. The Board has reviewed the effectiveness
of the system of internal controls as outlined above and considers the Group has an established system which the Directors believe to
be appropriate to the business.
Audit Committee
The Audit Committee, comprising the non-Executive Directors and chaired by E McDaid, meets at least twice per year and overviews
the monitoring of the Group’s internal controls, accounting policies, financial reporting and provides a forum through which the external
auditor reports, as well as ensuring the auditor remains independent of the Company. It meets at least once a year with the external
auditor without Executive Board members present.
Going Concern
After considering the strong year end cash position, making appropriate enquiries and reviewing budgets, profit and cash flow forecasts
and business plans for a period of at least 12 months from the date of signing these financial statements, the Directors have formed a
judgement at the time of approving the financial statements that there is a reasonable expectation that the Group has more than sufficient
resources to continue in operational existence for the foreseeable future. For this reason the Directors consider that the adoption of the
‘going concern’ basis in preparing the Group financial statements is appropriate.
16
Report of the
Remuneration
Committee
This report has been prepared in accordance with Schedule 8 of the Large and Medium-sized Companies and Groups (Accounts and
Reports) Regulations 2008, which introduced new statutory requirements for the disclosure of Directors’ remuneration in respect of
periods commencing on or after 6 April 2008. The report also meets the relevant requirements of the AIM Rules and describes how
the Board has applied the Principles of Good Governance relating to Directors’ remuneration. In accordance with best practice,
notwithstanding that these regulations do not strictly apply to AIM companies, a resolution to approve the report will be proposed at
the Annual General Meeting of the Company at which the financial statements will be approved.
Remuneration Committee
The Remuneration Committee comprises the non-Executive Directors as follows:
Dr S Rollason (Chairman)
E McDaid
J Pither
G Wright
As appropriate, the Committee may invite the Chief Executive to participate in some of its discussions. No Director plays a part in any
discussion about his own remuneration.
The Committee is responsible for determining the terms and conditions of employment of Executive Directors. It is also responsible
for considering management recommendations for remuneration and employment terms of the Group’s staff, including incentive
arrangements for bonus payments and grants of share options.
The constitution and operation of the Committee is in compliance with the provisions of the Combined Code 2008 on Corporate
Governance. When setting its remuneration policy the Committee gives full consideration to the provisions and principles of the
Combined Code. In setting the policy it considers a number of factors including:
_
_
_
The basic salaries and benefits available to executive Directors and senior management of comparable companies.
The need to attract and retain Directors and senior management of an appropriate calibre.
The need to ensure Executive Directors’ and senior management’s commitment to the future success of the Group by
means of incentive schemes.
Remuneration of non-Executive Directors
The remuneration of the non-Executive Directors is determined by the Board with reference to the annual survey of independent
Directors carried out by Independent Remuneration Solutions.
The non-Executive Directors do not receive any pension or other benefits from the Company, nor do they participate in any of the
bonus schemes.
The non-Executive Directors have service agreements, which are reviewed by the Board annually, and they are also included in the
one third of Directors subject to retirement by rotation at each Annual General Meeting.
A O R T E C H I N T E R N A T I O N A L P L C
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Remuneration of Executive Director
The Executive Director has a service contract, which can be terminated on one year’s notice by either party. The Remuneration
Committee will review each case of early termination individually in order to ensure compensation settlements are made which are
appropriate to the circumstances, taking care to ensure that poor performance is not rewarded. The most recent executed contract
for the Executive Director was for F Maguire on 6 December 2002. The Company’s remuneration policy for Executive Directors is
to:
_ Have regard to the individual’s experience and the nature and complexity of their work in order to pay a competitive
salary that attracts and retains management of the highest quality.
_ Link individual remuneration packages to the Group’s long term performance through the award of share options and
bonus schemes.
_ Provide post retirement benefits through defined contribution pension schemes.
_ Provide employment related benefits including the provision of a company car, life assurance, medical insurance and
insurance relating to the individual’s duties.
Salaries and Benefits
The Remuneration Committee meets twice each year to consider and set the annual salaries and benefits for the Executive Director,
having regard to personal performance and independent advice concerning comparable organisations.
Performance Related Bonuses
An annual performance related bonus scheme is operated by the Group. Under the scheme bonuses are payable to Executive Directors
subject to terms laid down by the Remuneration Committee from time to time.
Share Options
The Company operates an Approved Share Option Scheme and an Unapproved Share Option Scheme.
Only Executive Directors and employees of the Group resident in the UK are eligible to participate in the Share Option Scheme,
which has been approved by HM Revenue and Customs under the provisions of Schedule 9 to the Income and Corporation Taxes
Act 1988.
Any person who at the date of grant is approved by the Board is entitled to participate in the Unapproved Share Option Scheme.
The award of options under both schemes is at the discretion of the Remuneration Committee.
The options issued to date under both schemes will only be exercisable if the average mid market closing price of the Company’s
shares on the five business days prior to the date of exercise exceeds the option price by 15% or more and after the elapse of three
years from the date of grant of the option.
Pensions
The Group made contributions to a personal pension plan for F Maguire at the rate of 10% of pensionable salary.
18
Directors’ Emoluments - audited
Details of individual Director’s emoluments for the year are as follows:
2010 2009
Salary Benefits Pension
& fees in kind contributions Total Total
£ £ £ £ £
Executive
F Maguire 232,816 7,200 15,000 255,016 238,481
Non-executive
J Pither (Chairman) 30,000 - - 30,000 30,000
Dr S Rollason 18,000 - - 18,000 19,500
E McDaid 22,000 - - 22,000 18,000
G Wright 18,000 - - 18,000 18,000
320,816 7,200 15,000 343,016 323,981
Benefits in kind include the provision of a company car and medical insurance.
J Pither is employed by Surrey Management Services Limited (‘Surrey’) in the provision of services to the Company. All of
the emoluments of J Pither above are represented by payments made by the Company to Surrey in respect of those services.
Dr S Rollason is employed by Bluehone Investors LLP (Bluehone) in the provision of services to the Company. All of the
emoluments of Dr S Rollason above are represented by payments made by the Company to Bluehone in respect of
these services.
Directors’ Interests In Shares
The interests of Directors in shares of the Company are included in the Report of the Directors on page 9.
Directors’ Interests In Share Options
The details of options held by Directors are set out below:
Number of options
At 1 Granted At 31 Date
April /expired March Exercise from which Expiry
2009 during year 2010 price exercisable date
(i) Approved Share Option Scheme
F Maguire 12,000 - 12,000 £2.50 11/07/2005 11/07/2012
(ii) Unapproved Share Option Scheme
F Maguire 7,000 - 7,000 £2.50 11/07/2005 10/07/2012
19,000 - 19,000 £2.80 08/08/2005 07/08/2012
25,000 - 25,000 £2.50 14/07/2006 13/07/2013
200,000 - 200,000 £2.50 30/06/2007 29/06/2014
J Pither 20,000 - 20,000 £3.25 01/09/2009 01/09/2016
Dr S Rollason 13,000 - 13,000 £3.25 01/09/2009 01/09/2016
The range in the mid market price of the Company’s shares during the year ended 31 March 2010 was from £1.30 to £1.90.
The mid market price on 31 March 2010 was £1.355.
On behalf of the Board
Dr Stuart Rollason
Chairman of the Remuneration Committee
30 July 2010
A O R T E C H I N T E R N A T I O N A L P L C
Report of the
Independent
Auditor
19 To the Members of
AorTech International Plc
We have audited the Group financial statements of AorTech International Plc for the year ended 31 March 2010 which comprise the
consolidated income statement, the consolidated statement of comprehensive income, the consolidated balance sheet, the consolidated
cash flow statement, the consolidated statement of changes in equity and the related notes. The financial reporting framework that has
been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European
Union.
This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006.
Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to state to them
in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to
anyone other than the Company and the Company’s members as a body, for our audit work, for this report, or for the opinions we
have formed.
Respective responsibilities of Directors and auditors
As explained more fully in the Statement of Directors’ Responsibilities set out on page 13, the Directors are responsible for the preparation
of the Group financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit the Group
financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards
require us to comply with the Auditing Practices Board’s (APB’s) Ethical Standards for Auditors.
Scope of the audit of the financial statements
A description of the scope of an audit of financial statements is provided on the APB's website at www.frc.org.uk/apb/scope/UKNP.
20
Opinion on financial statements
In our opinion the Group financial statements:
_
_
_
give a true and fair view of the state of the Group's affairs as at 31 March 2010 and of its loss for the year then ended;
have been properly prepared in accordance with IFRS as adopted by the European Union; and
have been prepared in accordance with the requirements of the Companies Act 2006.
Opinion on other matter prescribed by the Companies Act 2006
In our opinion the information given in the Report of the Directors for the financial year for which the Group financial statements are
prepared is consistent with the Group financial statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our
opinion:
_
_
certain disclosures of directors’ remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
Other matter
We have reported separately on the Parent Company financial statements of AorTech International Plc for the year ended
31 March 2010.
John Bowler
Senior Statutory Auditor
For and on behalf of GRANT THORNTON UK LLP
STATUTORY AUDITOR, CHARTERED ACCOUNTANTS
East Midlands
30 July 2010
A O R T E C H I N T E R N A T I O N A L P L C
21
Consolidated
Income
Statement
Year ended Year ended
31 March 31 March
2010 2009
Notes £000 £000
Revenue 3 1,362 1,259
Other income - grants received 306 234
Cost of sales (382) (124)
Administrative expenses (2,082) (1,754)
Other expenses - development expenditure (1,121) (1,040)
Other expenses - amortisation of intangible assets 10 (142) (114)
Operating loss 3 (2,059) (1,539)
Finance income 7 136 290
Loss before taxation (1,923) (1,249)
Taxation 8 - -
Loss attributable to equity holders of the parent company (1,923) (1,249)
Loss per share
Basic and diluted – (pence per share) 9 (39.79) (25.84)
22
Consolidated
Statement of
Comprehensive
Income
31 March 31 March
2010 2009
Notes £000 £000
Loss for the year (1,923) (1,249)
Other comprehensive income:
267
Exchange differences on translating foreign operations
-
Income tax relating to other comprehensive income
-
1,204
Other comprehensive income for the year, net of tax
1,204
267
Total comprehensive income for the year, attributable
(982)
to equity holders of the parent (719)
A O R T E C H I N T E R N A T I O N A L P L C
Consolidated
Balance Sheet
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31 March 31 March
2010 2009
Notes £000 £000
Assets
Non current assets
Property, plant and equipment 11 718 702
Intangible assets 10 1,424 1,257
Total non current assets 2,142 1,959
Current assets
Inventories 12 150 150
Trade and other receivables 14 859 436
Cash and cash equivalents 15 2,885 4,178
Total current assets 3,894 4,764
Total assets 6,036 6,723
Liabilities
Current liabilities
Trade and other payables 16 (623) (512)
Total current liabilities (623) (512)
Non current liabilities
Other non current liabilities 16 - (79)
Total non current liabilities - (79)
Total liabilities (623) (591)
Net assets 5,413
6,132
Equity
Issued capital 19 12,082
12,082
2,340
2,340
Share premium 19
Other reserve (2,003) (2,003)
Foreign exchange reserve
658
Profit and loss account (8,868) (6,945)
1,862
Total equity attributable to equity holders of the parent
5,413
6,132
The Group financial statements were approved by the Board on 30 July 2010 and were signed on its behalf by
J Pither, Chairman
E McDaid, Director
24
Consolidated
Cash Flow
Statement
Year ended Year ended
31 March 31 March
2010 2009
£000 £000
Cash flows from operating activities
Group loss after tax (1,923) (1,249)
Adjustments for:
Depreciation of property, plant and equipment 258
207
114
Amortisation of intangible assets 142
Interest income (136) (290)
Deferred income released (79) (64)
Increase in trade and other receivables (423) (124)
Decrease in inventories - 90
(73)
Increase / (decrease) in trade and other payables 111
Net cash flow from operating activities (2,050) (1,389)
Cash flows from investing activities
Purchase of property, plant and equipment (102) (234)
136 290
Interest received
Net cash flow from investing activities
34 56
Net decrease in cash and cash equivalents
(2,016)
Foreign exchange differences 723
Cash and cash equivalents at beginning of year 4,178
(1,333)
163
5,348
Cash and cash equivalents at end of year 2,885
4,178
A O R T E C H I N T E R N A T I O N A L P L C
Consolidated
Statement of
Changes in
Equity
25
Share Foreign Profit
Share premium Other exchange and loss Total
capital account reserve reserve account equity
£000 £000 £000 £000 £000 £000
Balance at 31 March 2008 12,082 2,340 (2,003) 391 (5,696) 7,114
Transactions with owners - - - - - -
Loss for the year - - - - (1,249) (1,249)
Other comprehensive income
Exchange difference on translating
foreign operations - - - 267 - 267
Income tax relating to components
of other comprehensive income - - - - - -
Total comprehensive income for the year - - - 267 (1,249) (982)
Balance at 31 March 2009 12,082 2,340 (2,003) 658 (6,945) 6,132
Transactions with owners - - - - - -
Loss for the year - - - - (1,923) (1,923)
Other comprehensive income
Exchange difference on translating
foreign operations - - - 1,204 - 1,204
Income tax relating to components
of other comprehensive income - - - - - -
Total comprehensive income for the year - - - 1,204 (1,923) (719)
Balance at 31 March 2010 12,082 2,340 (2,003) 1,862 (8,868) 5,413
26
Notes
to the Financial
Statements
1
Basis of preparation
The Group financial statements are for the year ended 31 March 2010. They have been prepared in compliance with
International Financial Reporting Standards (IFRS) and International Financial Reporting Interpretations Committee (IFRIC)
interpretations as adopted by the European Union as at 31 March 2010.
The Group financial statements have been prepared under the historical cost convention.
After considering the year end cash position, making appropriate enquiries and reviewing budgets, profit and cash flow
forecasts and business plans, the Directors have formed a judgement at the time of approving the financial statements that
there is a reasonable expectation that the Group has more than sufficient resources to continue in operational existence
for the foreseeable future. For this reason the Directors consider that the adoption of the ‘going concern’ basis in preparing
the Group financial statements is appropriate.
The accounting policies remain unchanged from the previous year except for the adoption of IAS 1 ‘Presentation of Financial
Statements’ (Revised 2007) and the adoption of IFRS 8 ‘Operating Segments’’, both of which have been applied
retrospectively.
The adoption of IAS 1 (Revised) has resulted in the inclusion of the consolidated statement of comprehensive income as a
primary statement. Revised IAS 1 requires presentation of a comparative balance sheet as at the beginning of the first
period in some circumstances. The directors consider that this is not necessary this year because the March 2008 balance
sheet is the same as that previously published.
The adoption of IFRS 8 has required the disclosure of segmental information in line with the way the business is managed
(i.e. the operating segments disclosed are those whose results are regularly reviewed by the Chief Operating Decision
Maker). The Group has previously reported in this way and therefore the segments disclosed have not changed as a result
of adoption of IFRS 8. Segment information is set out in note 3.
Standards, amendments and interpretations to existing standards that are not yet effective and have not been early
adopted by the Group in the 31 March 2010 financial statements
At the date of authorisation of these consolidated financial statements, certain new standards, amendments and
interpretations to existing standards have been published but are not yet effective, and have not been adopted early by
the Group.
Management anticipates that all of the pronouncements will be adopted in the Group's accounting policies for the first
period beginning after the effective date of the pronouncement. Information on new standards, amendments and
interpretations that are expected to be relevant to the Group’s financial statements is provided below. Certain other new
standards and interpretations have been issued but are not expected to have a material impact on the Group's financial
statements.
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IFRS 3 Business Combinations (Revised 2008) (effective from 1 July 2009)
The standard is applicable for business combinations occurring in reporting periods beginning on or after 1 July 2009
and will be applied prospectively. The new standard introduces changes to the accounting requirements for business
combinations, but still requires use of the purchase method, and will have a significant effect on any business
combinations occurring in future reporting periods. In particular, transaction costs must be expensed in the Income
Statement rather than previously when these were capitalised and dealt with as part of the acquisition accounting.
IAS 27 Consolidated and Separate Financial Statements (Revised 2008) (effective from 1 July 2009)
The revised standard introduces changes to the accounting requirements for the loss of control of a subsidiary and
for changes in the Group's interest in subsidiaries. These changes will be applied prospectively in accordance with the
transitional provisions and so do not have an immediate effect on the Group's financial statements.
IFRS 5 (amendment) ‘Non current assets held for sale and discontinued operations’
Part of the IASB’s improvement project, this amendment will be applied in the Group’s financial statements for the
year to 31 March 2011 and clarifies the disclosure required for any non current assets held for sale or disposal Groups.
2
Principal accounting policies
Basis of consolidation
The Group financial statements consolidate those of the Company and all of its subsidiary undertakings. Subsidiaries
are entities over which the Group has the power to control the financial and operating policies so as to obtain benefits
from its activities. The Group obtains and exercises control through voting rights.
Unrealised gains on transactions between the Group and its subsidiaries are eliminated. Unrealised losses are also
eliminated unless the transaction provides evidence of an impairment of the asset transferred. Amounts reported in
the financial statements of subsidiaries have been adjusted where necessary to ensure consistency with the accounting
policies adopted by the Group.
Revenue
Revenue is measured by reference to the fair value of consideration received or receivable by the Group for goods
supplied and services provided, excluding VAT, sales between Group companies and trade discounts, as follows:
(a)
Supply of materials, services and finished goods: Revenue from the supply of materials and finished goods
is recognised when the significant risks and benefits of ownership of the product have transferred to the
buyer, which may be on shipment, receipt of the goods by the customer or upon completion of the product
and the product being ready for delivery, based on the specific contract terms. Revenue from the supply of
services is recognised upon completion of the service, based on the specific contract terms.
28
(b)
Licence fees: Upfront payments in respect of licence revenues for access by third parties to the Group’s
technology are recognised as revenue once a third party has a binding contractual obligation to the Group
based on the specific contract terms and the Group has no remaining obligations to perform.
(c)
Milestone payments: Milestone payments are recognised once the Group’s obligations for each milestone
have been met and the Group has achieved a right to be paid in return for their contractual performance.
(d)
Royalty revenues: Royalty revenues are recognised as earned in accordance with third parties’ sales of the
underlying products.
Government grants / assistance
Government grants in respect of capital expenditure are credited to a deferred income account and are released to the
income statement on a diminishing value basis over the expected useful lives of the relevant assets. As such, a
proportion of deferred income is shown on the balance sheet as a non current liability. Government grants which are
income in nature are credited to the income statement in the same period as the related expenditure so as to match
them with the related costs which they are intended to compensate, on a systematic basis.
Interest
Interest income is the interest earned on cash or cash equivalents held with the Group’s bankers and recognised within
the period earned, accrued on a time basis by reference to the principal outstanding and at the effective rate applicable.
Employee benefits
Defined contribution pension scheme: The pension costs charged against profits are the contributions payable to the
scheme in respect of the accounting period.
Intangible assets
(a) Patents and trademarks (intellectual property):
Patents and trademarks (intellectual property) are included at cost less estimated residual amount and are amortised
on a straight line basis over their useful economic lives of 20 years, which corresponds to the lives of the individual
patents.
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(b) Research and development:
Research costs are expensed as incurred. An intangible asset arising from development expenditure on an individual
project is recognised only when the Group can demonstrate all of the following:
_ the technical feasibility of the intangible asset so that it will be available for use or sale. In practice this will
be when the Group is satisfied that the appropriate regulatory hurdles have been or will be achieved.
_ its intention to complete and its ability to use or sell the asset.
_ how the asset will generate future economic benefits.
_ the availability of economic resources to complete the asset.
_ the ability to measure the expenditure during development.
The Group does not currently have any such internal or external development costs that qualify for capitalisation as
intangible assets.
Following the initial recognition of the development expenditure, the cost model is applied requiring the asset to be
carried at cost less any accumulated amortisation and accumulated impairment losses. Amortisation of the asset begins
when development is complete and the asset is available for use. It is amortised over the period of expected future
sales. Assets are tested for impairment on an annual basis.
Careful judgement by the Directors is applied when deciding whether the recognition requirements for development
costs have been met. This is necessary as the economic success of any product development is uncertain and may
be subject to future technical problems at the time of recognition. Judgements are based on the information available
at each balance sheet date.
Property, plant and equipment
Property, plant and equipment is stated at cost, including any incidental costs of acquisition, net of accumulated
depreciation and any accumulated provision for impairment. No depreciation is charged until the asset is brought into use.
Disposal of assets
The gain or loss arising on the disposal of an asset is determined as the difference between the disposal proceeds and
the carrying amount of the asset and is recognised in the income statement. The gain or loss arising from the sale or
revaluation of held for sale assets is included in "other income" or "other expense" in the income statement. Any
revaluation surplus remaining in equity on disposal of the asset is transferred to the profit and loss reserve.
30
Depreciation
Depreciation is calculated to write off the cost of all property, plant and equipment less estimated residual value by
the reducing balance method where it reflects the basis of consumption of the assets over their estimated useful
economic lives. The periods generally applicable are:
Leasehold property improvements: Period of lease
Plant and equipment 2½ years
Fixtures and fittings 2½ - 5 years
Material residual value estimates are updated as required, but at least annually.
Impairment testing of intangible assets and property, plant and equipment
For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately
identifiable cash flows (cash-generating units). As a result some assets are tested individually for impairment and
some are tested at a cash-generating unit level.
Individual assets or cash-generating units that include intangible assets with an indefinite useful life, and those
intangible assets not yet available for use are tested for impairment at least annually. All other individual assets or
cash-generating units are tested for impairment whenever events or changes in circumstances indicate that the carrying
amount may not be recoverable.
An impairment loss is recognised for the amount by which the asset's or cash-generating unit's carrying amount
exceeds its recoverable amount. The recoverable amount is the higher of fair value, reflecting market conditions less
costs to sell, and value in use based on an internal discounted cash flow evaluation. All assets are subsequently
reassessed for indications that an impairment loss previously recognised may no longer exist.
Leased assets
The Group has a property lease on its facility in Melbourne and an equipment lease on a photocopier/fax printer. Both
leases are regarded as operating leases and the payments made under them are charged to the income statement on
a straight line basis over the lease term.
Inventories
Inventories are stated at the lower of cost and net realisable value. Costs of ordinarily interchangeable items are
assigned using the first in, first out cost formula. Cost includes materials, direct labour and an attributable proportion
of manufacturing overheads based on normal levels of activity. Net realisable value is based on estimated selling
prices less any further costs expected to be incurred to completion and disposal.
31
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Financial assets
Financial assets fall into the following category: Loans and receivables.
All financial assets are recognised when the Group becomes a party to the contractual provisions of the instrument.
Financial assets are recognised at fair value plus transaction costs.
Trade and other receivables are non-derivative financial assets with fixed or determinable payments that are not quoted
in an active market. Trade and other receivables are measured subsequent to initial recognition at amortised cost
using the effective interest method, less provision for impairment. Any change in their value through impairment or
reversal of impairment is recognised in the income statement.
Provision against trade receivables is made when there is objective evidence that the Group will not be able to collect
all amounts due to it in accordance with the original terms of those receivables. The amount of the write-down is
determined as the difference between the asset's carrying amount and the present value of estimated future cash
flows. An assessment for impairment is undertaken at least at each balance sheet date.
Cash and cash equivalents comprise cash on hand and demand deposits together with other short-term, highly liquid
investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of
changes in value.
Financial liabilities
Financial liabilities fall into the following category: Other financial liabilities
Financial liabilities are obligations to pay cash or other financial assets and are recognised when the Group becomes
a party to the contractual provisions of the instrument. All financial liabilities are recorded initially at fair value, net
of direct issue costs.
All financial liabilities are subsequently recorded at amortised cost using the effective interest method, with interest
related charges recognised as an expense in finance cost in the income statement. Finance charges, including premiums
payable on settlement or redemption and direct issue costs, are charged to the income statement on an accruals basis
using the effective interest method and are added to the carrying amount of the instrument to the extent that they are
not settled in the period in which they arise.
A financial liability is derecognised only when the obligation is extinguished, that is, when the obligation is discharged
or cancelled or expires.
Taxation
Current tax is the tax currently payable based on taxable profit for the accounting period.
32
Deferred taxes are calculated using the liability method on temporary differences. Deferred tax is generally provided on
the difference between the carrying amounts of assets and liabilities and their tax bases. However, deferred tax is not
provided on the initial recognition of goodwill, nor on the initial recognition of an asset or liability unless the related
transaction is a business combination or affects tax or accounting profit. Deferred tax on temporary differences associated
with shares in subsidiaries is not provided if reversal of these temporary differences can be controlled by the Group and
it is probable that reversal will not occur in the foreseeable future. In addition, tax losses available to be carried forward
as well as other income tax credits to the Group are assessed for recognition as deferred tax assets.
Deferred tax liabilities are provided in full, with no discounting. Deferred tax assets are recognised to the extent that it is
probable that the underlying deductible temporary differences will be able to be offset against future taxable income.
Current and deferred tax assets and liabilities are calculated at tax rates that are expected to apply to their respective
period of realisation, provided they are enacted or substantively enacted at the balance sheet date.
Changes in deferred tax assets or liabilities are recognised as a component of tax expense in the income statement, except
where they relate to items that are charged or credited directly to equity in which case the related deferred tax is also
charged or credited directly to equity.
Equity
Equity comprises the following:
_ “Share capital” represents the nominal value of equity shares.
_ "Share premium" represents the excess over nominal value of the fair value of consideration received for equity
shares, net of expenses of the share issue.
_ "Other reserve" represents the difference arising on consolidation between the nominal value of AorTech
International Plc shares issued (£3,206,884) and the nominal value of AorTech Biomaterials Limited (formerly
AorTech Europe Limited) shares acquired (£1,001,884) and the associated share premium account (£201,857) in the
company. This acquisition was prior to the transition to IFRS.
_ "Foreign exchange reserve" represents the differences arising from translation of investments in overseas
subsidiaries.
_ "Profit and loss account" represents retained profits.
Share based employee compensation
The Group operates equity settled share based compensation plans for the remuneration of its employees.
All employee services received in exchange for the grant of any share based compensation are measured at their fair
values. These are indirectly determined by reference to the fair value of the share option awarded. Their value is appraised
at the grant date and excludes the impact of any non-market vesting conditions (e.g. profitability or sales growth targets).
All share based compensation, where material, is ultimately recognised as an expense in the income statement with a
corresponding credit to the other reserve, net of deferred tax where applicable. If vesting periods or other vesting conditions
33
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apply, the expense is allocated over the vesting period, based on the best available estimate of the number of shares
options expected to vest. Non market vesting conditions are included in assumptions about the number of options that are
expected to become exercisable. Estimates are subsequently revised if there is any indication that the number of share
options expected to vest differs from previous estimates. No adjustment to expense recognised in prior periods is made if
fewer share options ultimately are exercised than originally estimated.
Upon exercise of share options, the proceeds received, net of any directly attributable transaction costs, up to the nominal
value of the shares issued are allocated to share capital with any excess being recorded as share premium. At this time,
the appropriate balance in the other reserve relating to the share options exercised is transferred to retained earnings by
way of a transfer within reserves.
Foreign currencies
Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary
economic environment in which the entity operates (the functional currency). The Company’s functional currency and the
Group’s presentational currency is Sterling.
Transactions in foreign currencies are translated at the exchange rate ruling at the date of the transaction. Monetary assets
and liabilities in foreign currencies are translated at the rates of exchange ruling at the balance sheet date. Non-monetary
items that are measured at historical cost in a foreign currency are translated at the exchange rate at the date of the
transaction. Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange
rates at the date when the fair value was determined.
Any exchange differences arising on the settlement of monetary items or on translating monetary items at rates different
from those at which they were initially recorded are recognised in the income statement in the period in which they arise.
Exchange differences on non-monetary items are recognised in the statement of changes in equity to the extent that they
relate to a gain or loss on that non-monetary item taken to the statement of changes in equity, otherwise such gains and
losses are recognised in the income statement.
The assets and liabilities in the financial statements of foreign subsidiaries are translated at the rate of exchange ruling at
the balance sheet date. Income and expenses are translated at the average of exchange rates in force at the end of each
month of the reporting period. All resulting exchange differences are recognised as a separate component of equity. On
disposal of a foreign operation the cumulative translation differences (including, if applicable, gains and losses on related
hedges) are transferred to the income statement as part of the gain or loss on disposal.
The Group has taken advantage of the exemption in IFRS 1 and has deemed cumulative translation differences for all foreign
operations to be nil at the date of transition to IFRS. The gain or loss on disposal of these operations excludes translation
differences that arose before the date of transition to IFRS and includes later translation differences.
34
Use of accounting estimates and judgements
Many of the amounts included in the financial statements involve the use of judgement and/or estimation. These judgements
and estimates are based on management’s best knowledge of the relevant facts and circumstances, having regard to prior
experience, but actual results may differ from the amounts included in the financial statements. Information about such
judgements and estimation is contained in the accounting policies and/or the notes to the financial statements and the key
areas are summarised below:
Judgements in applying accounting policies:
(a)
(b)
Capitalisation of development costs requires detailed analysis of the technical feasibility and commercial viability
of the project.
Assessment of the impairment of assets is a judgement based on analysis of the likely future cash flows
from the relevant income generating unit and an estimate of value in use.
(c)
The Directors must judge whether future profitability is likely in making the decision whether or not to create a
deferred tax asset.
(d)
(e)
Identification of functional currencies requires analysis of the economic environments of the subsidiaries of the
Group and the selection of the presentational currency must reflect the requirements of the users of those
statements.
Revenue recognition requires the Directors to assess the terms of contracts and to determine whether specific
obligations have been met before recognising revenue in relation to licence fees and milestone payments.
Sources of estimation uncertainty:
(a)
(b)
Estimates are required as to intangible asset carrying values and impairment charges.
Estimates of future profitability are required for the decision whether or not to create a deferred tax asset.
(c)
Depreciation rates are based on estimates of the useful lives and residual values of the assets involved.
35
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3
Segmental reporting
The principal activity of the AorTech International Plc Group currently is the development and exploitation of a range of
innovative biomaterials and medical devices. This forms the Group’s only reporting segment and therefore no additional
information is given.
The Group’s reporting segments are based on geographical location of operations.
Year ended Year ended
31 March 31 March
2010 2009
£000 £000
Analysis of revenue by destination
United Kingdom
11
Supply of materials and finished goods 29
Australia
3
Supply of materials and finished goods 2
USA and Rest of the World
Supply of materials and finished goods 738 198
Milestone payments - services 12 26
Licence fees - services 574 1,020
Royalty revenue 7 1
1,362 1,259
During the year ended 31 March 2010, 77.8% of the Group’s revenues depended upon a single customer (2009: 73.1%).
Analysis of result - operating loss
United Kingdom (356) (583)
Australia (1,234) (557)
USA and Rest of the World (469) (399)
(2,059) (1,539)
Analysis of assets by location
United Kingdom 98 607
Australia 5,922 6,111
5
USA and Rest of the World 16
6,036 6,723
36
4
Remuneration of Directors and key management personnel
Key management personnel 2010 2009
£000 £000
Emoluments – short-term employee benefits 743 567
Pension costs – post-employment benefits 53 38
796 605
The key management personnel whose remuneration is included in the table above are a Director / Company Secretary of
AorTech Biomaterials Pty Limited; two Directors, AorTech Biomaterials Pty Limited; the Vice President of Research &
Development, AorTech Medical Devices (USA), Inc; the Chief Operating Officer and the five Directors of the parent company.
Please see the Report of the Remuneration Committee on pages 16 to 18 for full details of Directors’ emoluments.
Included in the aggregate emoluments for the year ended 31 March 2010 are payments of £48,000 (2009: £49,500) made
by the Company to third parties. The highest paid Director received total emoluments of £255,016 including pension
contributions of £15,000 (2009: total emoluments of £238,481 including pension contributions of £15,000).
5
Loss before tax
2010 2009
Loss before tax has been arrived at after charging/(crediting): £000 £000
Foreign exchange differences 42
(17)
Depreciation and amortisation:
Depreciation of property, plant and equipment 258 207
Amortisation of intangible assets 142 114
Employee benefits expense:
Employee costs (Note 6) 1,540 1,246
Land and buildings held under operating leases:
Other operating leases 163 148
Audit and non-audit services:
Fees payable to the Company’s auditor for the audit of the Group financial statements 25 23
Fees payable to the Company’s auditor and its associates for other services:
The audit of the company’s subsidiaries pursuant to legislation 16 13
Tax services 3 3
Other services 1 4
37
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6
7
Employees
2010 2009
£000 £000
Employee costs (including Directors):
Wages and salaries 1,430 1,166
Pension costs 110 80
1,540 1,246
The average number of employees (including Directors) during the year was made up as follows:
Numbers Numbers
Production 4 4
Sales 1 2
Development and quality control 11 11
Administration 12 11
28 28
Finance income
2010 2009
£000 £000
Bank interest receivable 136 290
8
Income tax expense
No current tax or deferred tax expense arises on the loss for the year.
The tax assessed for the year differs from the standard rate of corporation tax as applied in the respective trading domains
where the Group operates. The differences are explained below:
2010 2009
£000 £000
Loss for the year before tax (1,923) (1,249)
Loss for year multiplied by the respective standard rate
of corporation tax applicable in each domain (average 28%) (538) (350)
Effects of:
Depreciation for the year differs from capital allowances and other temporary differences (14) (10)
62
Expenses not deductible for tax purposes and other tax differences
81
300
Losses not utilised 471
(2)
Losses utilised -
Tax on loss for the year -
-
38
Unrelieved tax losses remain available to offset against future taxable profits. These losses have not been recognised as
deferred tax assets within the financial statements as they do not meet the conditions required in accordance with IAS 12.
Losses carried forward in the UK total £4,539,000 – tax effect is £1,271,000 (2009: £4,184,000 – tax effect £1,172,000).
Losses carried forward in Australia total £6,457,000 – tax effect £1,808,000 (2009: £4,394,000 – tax effect £1,230,000).
Losses in the USA total £931,000 – tax effect £261,000 (2009: £533,000 - tax effect £149,000).
On 1 April 2009 the standard UK rate of corporation tax was 28%.
9
Loss per share 2010 2009
£000 £000
Loss for the year attributable to equity shareholders (1,923) (1,249)
Loss per share
Basic and diluted (pence per share) (39.79) (25.84)
Shares Shares
Issued ordinary shares at start of the year 4,832,778 4,832,778
Ordinary shares issued in the year - -
Issued ordinary shares at end of the year 4,832,778 4,832,778
Weighted average number of shares in issue for the year 4,832,778 4,832,778
The diluted loss per share does not differ from the basic loss per share as the exercise of share options would
have the effect of reducing the loss per share and is therefore not dilutive under the terms of IAS 33.
10
Intangible assets Intellectual property
£000
Valuation
At 1 April 2008 2,171
Exchange differences 115
At 31 March 2009 2,286
Exchange differences 562
At 31 March 2010 2,848
Amortisation
At 1 April 2008 869
Exchange differences 46
Charge for the year 114
At 31 March 2009 1,029
Exchange differences 253
Charge for the year 142
At 31 March 2010 1,424
Net book value
At 1 April 2008 1,302
At 31 March 2009 1,257
At 31 March 2010 1,424
The intangible assets have been reviewed for impairment in the current year. The Directors have concluded
that no impairment loss is necessary, and therefore no adjustment has been made to the carrying amount.
39
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11
Property, plant and equipment
Property Plant Fixtures
improvements & equipment & fittings Total
£000 £000 £000 £000
Cost
At 1 April 2008 486 806 158 1,450
Additions 124 89 21 234
Exchange differences 25 45 8 78
At 31 March 2009 635 940 187 1,762
Additions 28 55 19 102
Exchange differences 156 231 46 433
At 31 March 2010 819 1,226 252 2,297
Depreciation
At 1 April 2008 122 575 113 810
Charge for the year 78 113 16 207
Exchange differences 6 31 6 43
At 31 March 2009 206 719 135 1,060
Charge for the year 108 128 22 258
Exchange differences 51 177 33 261
At 31 March 2010 365 1,024 190 1,579
Net book value
At 1 April 2008 364 231 45 640
At 31 March 2009 429 221 52 702
At 31 March 2010 454 202 62 718
12
Inventories
2010 2009
£000 £000
Raw materials 117 108
Finished goods 33 42
150 150
In 2010 a total of £344,000 of inventories was included in the income statement as an expense (2009: £53,000). There
was no amount resulting from writedowns of inventories in either 2010 or 2009. There were no reversals of previous
writedowns that were recognised in the income statement in either 2010 or 2009.
40
13
Financial instruments
Risk management
The Group’s financial instruments comprise cash and cash equivalents, trade and other receivables and trade and other
payables. These arise directly from the Group’s operations and it is the Group’s policy that no trading in financial instruments
shall be undertaken.
The Board reviews and agrees policies to manage risk to ensure that the entities within the Group will be able to continue
as a going concern whilst maximising the return to stakeholders through the effective management of liquid resources
raised through share issues.
Categories of financial instrument
2010 2009
£000 £000
Financial assets – loans and receivables
Cash and cash equivalents 2,885 4,178
Trade and other receivables 813 335
3,698 4,513
Financial liabilities
Liabilities at amortised cost (311) (273)
(311) (273)
Foreign currency risk
The Group has an Australian subsidiary whose functional currency is the Australian dollar and a US subsidiary whose
functional currency is the US dollar. The Board considers that the exposure to foreign currency risk is not currently
significant and no steps have yet been undertaken to minimise this risk. However, the Board will continue to monitor the
situation and review the exposure to this risk on a regular basis as activity in these subsidiaries increases.
Cash balances are carried within the Group in interest earning accounts, which comprise the following currency holdings:
2010 2009
£000 £000
Sterling 48 510
US dollars 32 22
Australian dollars 163 287
Euros 11 12
254 831
In addition to cash holdings the following short term deposits are placed for up to 7 months depending on the Group’s
funding requirements:
2010 2009
£000 £000
Australian dollars 2,631 3,347
2,631 3,347
41
_continued
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Interest rate risk
The Group finances its operations through equity fundraising and does not currently carry any borrowings. The cash
balances and short term deposits are held at both fixed and floating rates as follows:
Interest rate 2010 Interest rate 2009
% £000 % £000
Cash 0% 218 0% 66
0.5% 36 0.20% 227
0.81% 17
0.75% 11
0.50% 510
Short term deposits 5.80% 1,002 5.00% 896
4.75% 1,509 4.80% 920
3.76% 120 4.75% 1,211
4.30% 242
4.20% 78
2,885 4,178
Sensitivity analysis
If, for example, there had been a rise or fall of interest rates over the year of 1%, this would have resulted in an
increase/decrease in interest income of £34,000 (2009: £38,000), all other variables remaining constant.
Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the
Group. In order to minimise this risk the Group endeavours only to deal with companies which are demonstrably creditworthy
and this, together with the aggregate financial exposure, is continuously monitored. The maximum exposure to credit risk
in the case of both the cash and short term deposits is the value of the outstanding amount.
The Group has trade receivables resulting from sales and other receivables from provision of other services which the
management consider to be of low risk. The management do not consider that there is any concentration of risk within
either trade or other receivables.
Liquidity risk
The Group currently holds substantial cash balances and short term deposits in Sterling, US dollars and Australian dollars.
These balances provide funding for the Group’s trading activities. The Group relies on equity fundraising to provide any
additional liquid funds and management expects to continue this method successfully in the future.
There is no material difference between the fair values and the book values of these financial instruments.
42
14
15
16
Trade and other receivables
2010 2009
£000 £000
Current assets
Trade receivables 776 265
Other receivables 37 70
Prepayments 46 101
859 436
There were no financial assets overdue at 31 March 2010.
Cash and cash equivalents
2010 2009
£000 £000
Cash at bank and in hand 254 831
Short term deposits 2,631 3,347
2,885 4,178
Trade and other payables
2010 2009
£000 £000
Current liabilities
Trade payables 99 119
Other payables 212 154
Deferred income (government grants) 92 75
Accruals 220 164
623 512
Non-current liabilities
Deferred income (government grants) - 79
- 79
Government grants received towards capital expenditure are released to the income statement on a diminishing value basis
over a period equal to the useful economic life of the assets to which they relate. On average this period is five years.
17
Operating lease commitments
The Group had the following total commitments under non-cancellable operating leases at 31 March:
2010 2009
£000 £000
The following payments are due to be made on operating lease commitments:
Within one year 192 152
Two to five years 16 174
208 326
43
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18
Share based payments
The Group has an approved share option plan for the benefit of employees resident in the UK and Executive Directors.
Options in issue Exercise
Price (£)
12,000 2.50 10 July 2012
600 2.95 25 July 2012
Exercise period on or before:
Details of the number of share options and the weighted average exercise price (WAEP) outstanding during the year are
as follows:
2010 WAEP 2009 WAEP
Number £ Number £
Outstanding at the beginning of the year 12,600 £2.52 12,600 £2.52
Outstanding at the year end 12,600 £2.52 12,600 £2.52
Exercisable at the year end 12,600 £2.52 12,600 £2.52
The Group has an unapproved share option plan for the benefit of other employees.
Options in issue Exercise Exercise period on or before:
Price (£)
1,500 81.00 15 June 2010
4,500 74.25 10 July 2010
1,050 90.35 17 December 2010
1,600 41.75 28 May 2011
1,350 17.25 17 December 2011
7,000 2.50 10 July 2012
19,000 2.80 7 August 2012
25,000 2.50 13 July 2013
8,000 2.50 29 June 2014
200,000 2.50 29 June 2014
20,000 2.50 21 November 2014
73,000 3.25 1 September 2016
40,000 4.28 21 January 2018
Details of the number of share options and the weighted average exercise price (WAEP) outstanding during the year are as
follows:
2010 WAEP 2009 WAEP
Number £ Number £
Outstanding at the beginning of the year 414,500 £4.68 419,500 £4.67
Granted during the year - - - -
Exercised during the year - - - -
Forfeited during the year (10,500) £7.12 (5,000) £4.28
Expired during the year (2,000) £56.25 - -
Outstanding at the year end 402,000 £4.32 414,500 £4.68
Exercisable at the year end 402,000 £4.32 291,500 £5.12
The options issued to date under both schemes will only be exercisable if the average mid market closing price of the
Company’s shares on the five business days prior to the date of exercise exceeds the option price by 15% or more and
after the elapse of three years from date of Option Grant.
44
The fair value of options granted after 7 November 2002 but not vested at 1 April 2006 has been arrived at using an
appropriate model. The assumptions inherent in the use of this model are as follows:
_ The option life is assumed to be at the end of the allowed period
_ There are no vesting conditions
_ No variables change during the life of the option (e.g. dividend yield)
_ Volatility has been calculated over the three years prior to the balance sheet date.
Date of Vesting Date of Exercise Risk-free Share price Volatility Fair value Number
grant Period vesting Price(£) Rate at grant of Share (£000) outstanding
(years) (£) price
14.07.03 3 14.07.06 2.50 3.83% 1.32 63% 12 25,000
30.06.04 3 30.06.07 2.50 5.04% 1.62 63% 24 8,000
30.06.04 3 30.06.07 2.50 5.04% 1.62 63% 132 200,000
22.11.04 3 22.11.07 2.50 4.56% 1.89 63% 18 20,000
01.09.06 3 01.09.09 3.25 4.61% 3.18 63% 118 78,000
21.01.08 3 21.01.11 4.28 4.21% 4.02 45% 44 45,000
The Group has not recognised any expense related to equity-settled share based payment transactions during the year
(2009: nil), on the grounds that the charge is not significant. The Directors have also concluded that the cumulative
position to date is also not significant.
19
Share capital
Shares Nominal Premium Total
Number Value (£2.50) net of costs
£000 £000 £000
In issue at 1 April 2008 4,832,778 12,082 2,340 14,422
Exercise of share options - - - -
Issue of shares (net of issue costs) - - - -
31 March 2009 and 31 March 2010 4,832,778 12,082 2,340 14,422
At an EGM of Members held on 20 August 2007, the Company’s authorised share capital was increased from £14,000,000
comprising 5,600,000 Ordinary shares of £2.50 each to £17,500,000, comprising 7,000,000 shares of £2.50 each.
Contingent liabilities
There were no contingent liabilities at 31 March 2010 or at 31 March 2009.
A O R T E C H I N T E R N A T I O N A L P L C
Report of the
Independent
Auditor
To the Members of
AorTech International Plc
45
We have audited the Parent Company financial statements of AorTech International Plc for the year ended 31 March 2010 which comprise the
parent company balance sheet and the related notes. The financial reporting framework that has been applied in their preparation is applicable
law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice).
This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006.
Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to state to them
in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to
anyone other than the Company and the Company’s members as a body, for our audit work, for this report, or for the opinions we
have formed.
Respective responsibilities of Directors and auditors
As explained more fully in the Statement of Directors’ Responsibilities set out on page 13, the Directors are responsible for the preparation
of the Parent Company financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit
the Parent Company financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland).
Those standards require us to comply with the Auditing Practices Board’s (APB’s) Ethical Standards for Auditors.
Scope of the audit of the financial statements
A description of the scope of an audit of financial statements is provided on the APB's website at www.frc.org.uk/apb/scope/UKNP.
Opinion on financial statements
In our opinion the Parent Company financial statements:
_ give a true and fair view of the state of the Company’s affairs as at 31 March 2010
_ have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
_ have been prepared in accordance with the requirements of the Companies Act 2006.
Opinion on other matter prescribed by the Companies Act 2006
In our opinion the information given in the Report of the Directors for the financial year for which the financial statements are prepared
is consistent with the Parent Company financial statements.
46
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our
opinion:
_ adequate accounting records have not been kept by the Parent Company, or returns adequate for our audit have not
been received from branches not visited by us; or
_ the Parent Company financial statements are not in agreement with the accounting records and returns; or
_ certain disclosures of directors’ remuneration specified by law are not made; or
_ we have not received all the information and explanations we require for our audit.
Other matter
We have reported separately on the Group financial statements of AorTech International Plc for the year ended 31 March 2010.
John Bowler
Senior Statutory Auditor
For and on behalf of GRANT THORNTON UK LLP
STATUTORY AUDITOR, CHARTERED ACCOUNTANTS
East Midlands
30 July 2010
A O R T E C H I N T E R N A T I O N A L P L C
Parent Company
Balance Sheet
47
31 March 31 March
2010 2009
Notes £000 £000
Fixed assets
Investment in subsidiary undertakings 3 - -
Current assets
Debtors – amounts falling due within one year 4 22 68
Debtors – amounts falling due after one year 4 17,129 13,735
Cash at bank 46 509
17,197 14,312
Creditors: amounts falling due within one year 5 (194)
(122)
Net assets 17,003 14,190
Capital and reserves
Called up share capital 6 12,082 12,082
2,340
Share premium account 8 2,340
(232)
Profit and loss account 8 2,581
Equity shareholders' funds 8 17,003 14,190
The parent company financial statements were approved by the Board on 30 July 2010 and were signed on its behalf by
J Pither, Chairman E McDaid, Director
Notes to the Parent Company
Financial Statements
48
1
Accounting policies
Accounting convention
The parent company financial statements are prepared under the historical cost convention and in accordance with applicable
United Kingdom accounting standards (United Kingdom Generally Accepted Accounting Practice) A summary of the more
important accounting policies, which have been applied consistently, is set out below. The principal accounting policies represent
the most appropriate in accordance with FRS 18.
Going concern
After considering the year end cash position, making appropriate enquiries and reviewing budgets, profit and cash flow forecasts
and business plans, the Directors have formed a judgement at the time of approving the financial statements that there is a
reasonable expectation that the Company has more than sufficient resources to continue in operational existence for the
foreseeable future. For this reason the Directors consider that the adoption of the ‘going concern’ basis in preparing the
Company’s financial statements is appropriate.
Investments
Investments held as fixed assets are stated at the lower of cost and net realisable value, less provision for any impairment. In
the opinion of the Directors the value of such investments is not less than that shown at the balance sheet date.
Deferred tax
Deferred tax is recognised (on an undiscounted basis) on all timing differences where the transactions or events that give the
Company an obligation to pay more tax in the future, or a right to pay less tax in the future, have occurred by the balance sheet
date. Deferred tax assets are recognised when it is more likely than not that they will be recovered. Deferred tax is measured
using rates of tax that have been enacted or substantively enacted by the balance sheet date.
Foreign currencies
Assets and liabilities in foreign currencies are translated into sterling at the rates of exchange ruling at the balance sheet date.
Transactions in foreign currencies are translated into sterling at the rate of exchange ruling at the date of transaction. Exchange
differences are taken into account in arriving at the operating result.
Share based payments
All share based payment arrangements granted after 7 November 2002 that had not vested prior to 1 April 2006 are recognised
in the financial statements. All goods and services received in exchange for the grant of any share based payment are measured
at their fair values. Where employees are rewarded using share based payments the fair values of their services are determined
indirectly by reference to the fair value of the instrument granted to the employee. This fair value is appraised at the grant date
and excludes the impact of non-market vesting conditions (e.g. profitability and sales growth targets).
All equity settled share based payments are ultimately recognised as an expense in the profit and loss account with a
corresponding credit to ‘other reserves’.
Upon exercise of share options the proceeds received, net of attributable transaction costs, are credited to share capital and,
where appropriate, share premium.
Debtors
The amounts owed by Group undertakings are in respect of long term loans and have been treated as part of the net investment
in the foreign entities, and included within debtors due in greater than one year. Exchange differences arising on these loans
are taken into account in arriving at the operating result.
A O R T E C H I N T E R N A T I O N A L P L C
2
3
Company Profit and Loss Account
The parent company has taken advantage of section 408 of the Companies Act 2006 and has not included its own profit
and loss account in these financial statements. The parent company’s loss for the year ended 31 March 2010 was £355,000
(2009: £536,000) before foreign exchange credits of £3,168,000 (2009: £655,000).
Fixed Asset Investments
31 March 31 March
2010 2009
£000 £000
Investment in subsidiary undertakings
Cost
23,159
Historical cost 23,159
Provision for impairment
(23,159) (23,159)
Net book value at 31 March - -
Interest in subsidiary undertakings Proportion
Country of Description of nominal
registration of value of
Name of undertaking or incorporation shares held shares held
%
(i) AorTech Biomaterials Limited Scotland Ordinary £1 100
(ii) AorTech Critical Care Limited Scotland Ordinary £1 92
(iii) AorTech Biomaterials Pty Limited Australia Ordinary Aus. $1 100
(iv) AorTech Medical Devices (USA), Inc USA Common US $1 100
The principal business activities and country of operations of the above undertakings are:
(i) A non-trading company in the UK
(ii) A dormant company in the UK
(iii) The development of new biostable polyurethanes operating principally in Australia
(iv) Marketing in the Americas
4
Debtors
2010 2009
£000 £000
Amounts falling due within one year
Other debtors 15 41
Prepayments 7 27
22 68
Amounts falling due after more than one year
17,129 13,735
Amounts owed by Group undertakings*
17,151 13,803
* AorTech International Plc has agreed not to seek repayment of the amount owing by its subsidiary AorTech Biomaterials
Pty Limited within 12 months of the balance sheet date.
49
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5
Creditors: Amounts falling due within one year
2010 2009
£000 £000
Trade creditors 6 -
Accruals 188 122
194 122
6
7
8
9
10
Share Capital
See Note 19 in the Group financial statements.
Share based payments
See Note 18 in the Group financial statements.
Statement of movement in Shareholders’ Funds
Total
Share Share Profit and shareholders’
capital premium loss account funds
£000 £000 £000 £000
1 April 2008 12,082 2,340 (351)
Profit for the year - -
119
At 31 March 2009 12,082 2,340 (232)
Profit for the year - - 2,813
14,071
119
14,190
2,813
At 31 March 2010 12,082 2,340 2,581
17,003
Directors and Employees
The Directors are the only employees of the parent company. Disclosure of their emoluments is given in the Report of the
Remuneration Committee on pages 16 to 18.
Related Party Transactions
In accordance with FRS 8, “Related Party Disclosures”, AorTech International Plc has taken advantage of the exemption for
wholly owned subsidiaries not to disclose any transactions or balances between group entities including those that have
been eliminated on consolidation.
51
Notice of the
Annual General
Meeting
Notice is hereby given that the thirteenth Annual General Meeting of AorTech International Plc will be held in the Staple and Gray’s
Inn Room of the Renaissance London Chancery Court Hotel, 252 High Holborn, London, WC1V 7EN on Monday, 27 September 2010
at 12:00 noon for the following purposes:
AS ORDINARY BUSINESS
1. To receive and adopt the financial statements of the Company for the year ended 31 March 2010 together with the Reports of the
Directors and Auditor thereon.
2. To approve the Report of the Remuneration Committee for the year ended 31 March 2010.
3. To re-elect Mr Frank Maguire, who is retiring by rotation.
4. To re-elect Mr Jon Pither as a Director, who is retiring by rotation.
5. To re-elect Dr Stuart Rollason as a Director, who is retiring by rotation.
6. To re-appoint Grant Thornton UK LLP as auditor of the Company and to authorise the Directors to fix their remuneration.
AS SPECIAL BUSINESS
To consider, and if thought fit, pass the following resolution as an Ordinary Resolution:
7. That the Directors be hereby generally and unconditionally authorised for the purpose of section 551 of the Companies Act 2006
(“the Act”) to exercise all the powers of the Company to allot relevant securities (within the meaning of said Section 551) up to an
aggregate nominal amount of £4,027,315 which authority will expire at the conclusion of the next Annual General Meeting of the
Company save that the Company may, before such expiry, make an offer or agreement which would, or might, require relevant
securities to be allotted after such expiry and the Directors may allot such securities in pursuance of such offer or agreement as if
the authority so conferred had not expired.
To consider, and if thought fit, pass the following resolution as a Special Resolution:
8. That subject to the passing of Resolution 7 above as an Ordinary Resolution, in substitution for any existing power under Section
571 of the Act, the Directors be and are hereby empowered until the conclusion of the next Annual General Meeting of the Company
(“the period of the Section 571 power”), pursuant to Section 571 of the Act to allot equity securities (as defined by Section 560 of the
Act) pursuant to the authority granted by Resolution 5 above in accordance with Section 551 of the Act as if Section 561(1) of the Act
did not apply to such allotment, provided that this power shall be limited to:
(a) the allotment of equity securities in connection with or pursuant to an offer by way of rights issue, open offer or any other
pre-emptive offer in favour of ordinary shareholders and in favour of holders of any other class of equity security in accordance with
the rights attached to such class where the equity securities respectively attributable to the interests of such persons on a fixed
record date are proportionate (as nearly as may be) to the respective numbers of equity securities held by them or are otherwise
allotted in accordance with the rights attaching to such equity securities subject to such exclusions or arrangements as the Directors
may deem necessary or expedient to deal with fractional entitlements or legal or practical problems under the laws of any territories
or requirements of any recognized regulatory body or stock exchange in any territory; and
52
(b) the allotment (otherwise than pursuant to sub-paragraph (a) above) of equity securities consisting of or related to Ordinary
shares up to an aggregate nominal amount of £604,097, or if less, five percent of the issued Ordinary share capital of the Company
from time to time but so that this power shall allow the Company to make an offer or enter into an agreement before the expiry of
the period of the Section 571 power which would, or might, require equity securities to be allotted after such expiry and the Directors
may allot equity securities in pursuance of any such offer or agreement as if the power conferred thereby had not expired.
By order of the Board,
J C D Parsons
Company Secretary
Victoria Road, Surbiton
Surrey KT6 4NS
30 July 2010
1. Members will only be entitled to attend and vote at the meeting if they are registered on the Company’s register of members by
6.00 pm on 23 September 2010 or by 6.00 pm two days prior to the date of any adjournment of the meeting. Changes to entries
on the Register of Members after that time shall be disregarded in determining the rights of any person to attend and vote at the
meeting.
2. Any member of the Company who is entitled to attend and vote at the Annual General Meeting may appoint another person or
persons (whether a member or not) as their proxy to attend, speak and vote on their behalf. To be valid, Forms of Proxy must be
lodged with the Company's Registrars, Equiniti Limited, P O Box 4630, Aspect House, Spencer Road, Lancing, West Sussex, BN99
6QQ not later than 12:00 noon on 23 September 2010 or 48 hours before the time appointed for the holding any adjourned meeting
together with any documentation required. In the case of a corporation, the Form of Proxy should be executed under its common
seal or signed by a duly authorised officer or attorney of the corporation.
3. Completing and returning a Form of Proxy will not prevent any member from attending the meeting in person and voting should
they so wish.
4. A corporation which is a member can appoint one or more corporate representatives who may exercise, on its behalf, all its
powers as a member provided that no more than one corporate representative exercises powers over the same share.
5. As at noon on 30 June 2010 the Company’s issued share capital comprised 4,832,778 ordinary shares of £2.50 each. Each ordinary
share carries the right to one vote at a general meeting of the Company and, therefore, the total number of voting rights in the
Company as at noon on 30 June 2010 is 4,832,778.
6. The following documents will be available at the registered office of the Company on any weekday (except Saturday) during
normal business hours from the date of this notice until the date of the Annual General Meeting:
(a) A copy of the service agreements for the Executive Directors.
(b) A copy of the letters of appointment for the non-Executive Directors.
(c) The Memorandum and Articles of Association of the Company.
These documents will also be available for inspection during the Annual General Meeting and for at least fifteen minutes before it
begins.
Notes
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prestige Travel suite,
barclays bank House,
81-83 Victoria road,
surbiton, surrey,
england kT6 4ns
Tel: +44(0)870 850 8286
Fax: +44(0)208 399 3897
e-mail: info@aortech.com
Web: www.aortech.com
i n t e r n a t i o n a l p l c