AorTech International plc
ANNUAL REPORT
AND ACCOUNTS
FOR THE YEAR
TO 31 MARCH 2016
1
AorTech International plcCHAIRMAN’S STATEMENT ANNUAL REPORT AND ACCOUNTS 2016
AorTech International plc
CONTENTS
Board of Directors and Advisors
STRATEGIC REPORT
Chairman’s Statement
Definitions
Operating and Financial Review
Principal Risks and Uncertainties
GOVERNANCE
Corporate Governance
Accountability and Audit
Report of the Remuneration Committee
CONSOLIDATED FINANCIAL STATEMENTS
Report of the Directors
Directors’ Responsibilities Statement
Independent Auditor’s Report
Consolidated Income Statement
Consolidated Statement of Comprehensive Income
Consolidated Balance Sheet
Consolidated Cash Flow Statement
Consolidated Statement of Changes in Equity
Notes to the Consolidated Financial Statements
PARENT COMPANY FINANCIAL STATEMENTS
Independent Auditor’s Report on the Parent Company Financial Statements
Parent Company Balance Sheet
Parent Company Statement of Changes in Equity
Notes to the Parent Company Financial Statements
NOTICE OF THE ANNUAL GENERAL MEETING
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ANNUAL REPORT AND ACCOUNTS 2016
BOARD OF DIRECTORS AND ADVISORS
CHAIRMAN’S STATEMENT
DIRECTORS
W Brown
E McDaid
G Wright
......................... non-Executive Chairman and Finance Director
......................... Chief Executive
......................... non-Executive Director
COMPANY SECRETARY
J C D Parsons ACIS
REGISTERED OFFICE
c/o Kergan Stewart LLP
163 Bath Street Glasgow G2 4SQ
HEAD OFFICE
Level Two Springfield House 23 Oatlands Drive Weybridge Surrey KT13 9LZ
web:www.aortech.net • email: info@aortech.net
NOMINATED ADVISER AND BROKER
finnCap Ltd
60 New Broad Street London EC2M 1JJ
REGISTRARS
Equiniti Registrars Scotland
1st Floor 34 South Gyle Crescent South Gyle Business Park Edinburgh EH12 9EB
INDEPENDENT AUDITOR
Grant Thornton UK LLP
Statutory Auditor Chartered Accountants
Regent House 80 Regent Road Leicester LE1 7NH
Registered in Scotland, Company No.SC170071
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.
In the year to 31 March 2016, Revenue and Other Income increased from
$857,000 to $901,000, an increase of just over 5%.
Administrative expenses, before exceptional costs, foreign exchange differences
and bad debt provisions, were maintained in line with the prior year, $773,000
(2015: $761,000), resulting in a net trading profit of $128,000.
However, after bad debt provisions of $369,000 the net trading profit has been reduced to a net trading
loss of $241,000. The Company incurred an overall operating loss of $575,000 after amortisation of
intangible assets of $312,000 (2015: $332,000) after exceptional litigation costs of $80,000 (2015:
$204,000) and exchange rate differences of $58,000 (2015: $15,000). Operating losses increased
from $455,000 to $575,000 with the year-end cash balances reducing from $360,000 in 2015 to
$314,000. This reduction was mainly due to the significant bad debt provisions required in respect
of two major debtors. In addition, further investment was made in development costs of $168,000
during the year.
Your Board has, however, continued to maintain close control on all of its overheads, as is demonstrated
by maintaining the costs at the same level as the previous year.
BAD DEBT PROVISION
During the year, we had to provide for a
sum of $150,000 due from SynCardia and
$219,000 from iSense. The SynCardia debt
had been the subject of a mediated settlement
which was being repaid at the rate of $25,000
per month. Unfortunately, monthly payments
ceased from October 2015 and appropriate
legal action was immediately instigated for
recovery. AorTech achieved an arrestment
on the debtor’s bank account but then our
recovery was frustrated due to SynCardia
filing for bankruptcy under Chapter 11. The
other substantial debt of $219,000 was due
under the terms of a licence regarding the
continuous glucose monitoring business.
AorTech’s US attorneys, who were pursuing
this debt on our behalf, have recently informed
the Board that all of the assets of this company
have been transferred to another company of
a similar name, leaving the debtor company
with substantial liabilities, including its debt
obligations to AorTech. Your Board is taking
advice from its US attorneys to determine
what recovery options may be appropriate in
respect of this debt.
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ANNUAL REPORT AND ACCOUNTS 2016ANNUAL REPORT AND ACCOUNTS 2016STRATEGIC REPORTAorTech International plcAorTech International plcBOARD OF DIRECTORS AND ADVISORSCHAIRMAN’S STATEMENT
CHAIRMAN’S STATEMENT
(continued)
LITIGATION AGAINST FRANK
MAGUIRE AND OTHERS
One of the key tasks assigned to Mr Maguire
in the final two years of his employment at
AorTech, in addition to the management and
licensing of AorTech’s polymer intellectual
property, was to seek a partner or funding
for the polymer heart valve project. This was
always viewed as an important area of business
and of potential value to shareholders, and
indeed Mr Maguire often reported to the
Board the potential value of the heart valve IP
and know-how.
Mr Maguire tendered his resignation on 26
November 2013 providing the Company with
three days’ notice. Since his resignation, Mr
Maguire has worked with Foldax, Inc. as its
CEO.
LICENSES
HEART VALVE PROJECT
Shortly after his resignation, AorTech asked
Mr Maguire to confirm that he had returned
to the Company all files, data and confidential
information. AorTech understands that at
the time Mr Maguire possessed substantial
amounts of AorTech information related to
both its heart valve project and its polymers.
Mr Maguire did not respond to this request.
Given this lack of response and our growing
concern over other issues related to Mr
Inc.,
Maguire’s
AorTech asked its legal representatives to
write to Mr Maguire demanding return of all
Company property. As a result of Mr Maguire’s
lack of response, litigation ensued. To date,
AorTech’s information has not been fully
returned.
involvement with Foldax,
Our focus in the litigation is to ensure
that AorTech has returned to it all of the
confidential data misappropriated by Mr
Maguire, that Mr Maguire’s new business does
not use or benefit from that confidential
information and that the manufacturing trade
secrets for AorTech polymers and heart valve
remain secret and are not used or disclosed
in the future.
LOAN NOTE SHARE ISSUE
At last year’s AGM, shareholders authorised
the Directors to take all steps necessary to
allot shares to loan note holders in return for
the surrender of their remaining rights under
the notes issued in October 2012. These
rights were extinguished in January 2016 by
the issue of new shares in the Company. The
dilution to ordinary shareholders amounted
to 15% which, in the opinion of the Directors,
is a level substantially less than would have
been suffered if an equity issue had been
undertaken in October 2012.
Over the years, AorTech has made substantial
investment in the development of bio stable
polymers and medical device designs. The
objective is to capitalise on this investment
for the benefit of shareholders. The AorTech
polymers have significant benefits for medical
device companies and in certain cases facilitate
the underlying performance of the devices.
With our polymers being a critical component
in the supply chain, the device manufacturers
must have confidence in the long term supply
of material. AorTech was neither large enough
nor perceived as secure enough to allow a
greater acceptance of the material, particularly
by the larger device companies. AorTech
recognized this limitation and rather than seek
to continue as a small sub-scale supplier elected
to license the rights to manufacture polymer
to Biomerics. Biomerics is not only a polymer
manufacturer but is an added value extruder,
molder and sub-contract manufacturer of
medical device components and devices
itself. Over the past year, driven by customer
contracts and market
interest, Biomerics
has transferred the Elast-Eon™ manufacture
from a small scale set up into a fully validated,
commercial scale facility. In partnership with
Biomerics, AorTech has supported this scale
up with an additional investment during the
financial year of $168,000 paid from a share
of gross margin on product sales. Biomerics
have further developed upon the Elast-Eon™
family of materials and are now marketing a
lower cost, potentially higher volume version
of the material. Business development activities
continue and a growing list of companies
testing material is evidence of these efforts.
Although some of AorTech’s licencees continue
to experience delays in both the achievement
and the increased commercialisation of their
products, the performance of Elast-Eon™
is recognized as critical in our customers’
success. Significant funding has been achieved
by AorTech
in developing and
commercialising their products with AorTech’s
Elast-Eon™ seen as critical to their success.
In one instance, funds in excess of $100
million have been raised to achieve successful
commercialisation. We anticipate that with
the renewed interest in our material being
licencing partner,
generated through our
Biomerics, that additional licences may be
completed during the course of the next
twelve months.
licencees
We have previously announced a potential
transaction with a new business established
to commercialise the AorTech heart valve
technology. Fund raising for the new project
is continuing but is not yet finalised and any
license will be dependent upon the new
business being fully funded. The package of
data and information that AorTech is able
to deliver to the project is substantial. This
ranges from specific manufacturing know how
and trade secrets for the precise polymer best
suited to a heart valve, detailed design files for
a polymer valve with a stress/strain profile
substantially less than the material mechanical
properties, together with a fully documented
manufacturing process that allows a clinical
quality valve to be made on a repeatable basis.
All of these processes have been developed
over a number of years of trial and error and
experimentation at considerable investment
by AorTech.
NEW ACCOUNTING FRAMEWORK
APPLYING FOR THE YEAR ENDED 31
MARCH 2016
The Company has elected to adopt FRS 101
‘Reduced Disclosure Framework’ (FRS 101)
for its parent company financial statements
for the year ended 31 March 2016. Following
the application of FRS 101, the results, the
financial position of the parent company, and
disclosures are the same as, or follow closely,
those reported under previous UK GAAP.
The Company’s decision to adopt FRS 101
for its parent company’s financial statements
does not require shareholder approval and
therefore no resolution on this matter is being
put to the Annual General Meeting. However,
as stipulated in FRS 101, the Company is
required to notify all shareholders of this
election, and any shareholder or shareholders
holding in aggregate 5 per cent or more of
the total allotted shares in the Company
may serve an objection. Objections must
be served in writing and delivered to the
Company Secretary at Level Two, Springfield
House, 23 Oatlands Drive, Weybridge, Surrey,
KT13 9LZ no later than 2 September 2016.
This election will apply on an ongoing basis
until such time as the Company notifies its
shareholders of any change to its chosen
accounting framework for the parent company
financial statements.
CONCLUSION
The principal disappointment of the past
year has been the requirement to provide
for sums of money contractually due to
AorTech. The ongoing litigation has also been
a major consumption of management time
and is likely to continue to be so. AorTech
has sought to pursue an alternative dispute
resolution route with the objective being to
have our confidential information returned
to us, the defendants precluded from using
that information, and compensation for our
time and costs incurred. The defendants are
presently unwilling to engage in this process.
While disputed by defendants, our conclusion
is that the defendants have retained and are
using or intend to use AorTech information in
their business.
We are however comfortable with how
Biomerics
the polymer
manufacturing license and with the progress
from other licenses.
is developing
W BROWN, CHAIRMAN
12 August 2016
DEFINITIONS
“ARTICLES”
the Articles of Association of the Company as
at the date of this document;
“DEFERRED SHARES”
the 4,832,778 non voting deferred shares
of 245 pence each in the capital of the
Company created as part of the Share Capital
Reorganisation;
“EXISTING ORDINARY SHARES”
the 5,557,695 Ordinary Shares of 5 pence
each in issue as at the date of this document;
“LOAN NOTES”
the £1,210,000 Secured Loan Notes 2013
issued by the Company on 23 October 2012.
“LOAN NOTE HOLDERS”
the holders of the Secured Loan Notes;
“NEW ORDINARY SHARES”
the ordinary shares of 5 pence each in the
capital of the Company created by the Share
Capital Reorganisation;
“SHARE CAPITAL REORGANISATION”
the share capital reorganisation
(approved by Shareholders at the 2015 Annual
General Meeting)
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ANNUAL REPORT AND ACCOUNTS 2016ANNUAL REPORT AND ACCOUNTS 2016STRATEGIC REPORTSTRATEGIC REPORTAorTech International plc ANNUAL REPORT AND ACCOUNTS 2016
OPERATING AND FINANCIAL REVIEW
PRINCIPAL ACTIVITIES
The Company is an Intellectual Property (IP) holding company whose principal activitiy is exploiting
the value of its IP and know-how.
REVIEW OF BUSINESS AND FUTURE
PRINCIPAL RISKS AND
CURRENCY RISK
INTEREST RATE RISK
DEVELOPMENTS
UNCERTAINTIES
The consolidated Income Statement is set
out on page 17 indicating the Group’s loss for
the financial year of US$604,000 (2015: loss
of US$370,000) which will be deducted from
the reserves.
On a Group basis, the business review
and future prospects subsequent to the
discontinuation of US operations
are
contained within the Chairman's Statement
on pages 5 to 7. The Directors consider the
Group financial key performance indicators
to be revenue growth, control of operating
expenses and the pre tax result. In addition
the Directors consider the Group non
financial key performance indicators to be
the successful utilisation of patents and know-
how by existing licensees and the signing of
new licence agreements.
The Directors consider the principal risks and
uncertainties facing the Group at this stage of
its development to be as follows: the success
rate of several key customers utilising our
products in various medical device fields; small
customer base generating revenues; retention
of key management; any adverse results which
may arise during development and regulatory
phases; product liability risks; competitive
markets with changing technology and evolving
industry standards. All of the above risks and
uncertainties are considered fundamental to
the achievement of the Group’s strategy as
an IP focussed business and are being actively
managed at Board level through regular
review of progress, along with the internal
control environment detailed on page 10.
No dividends have been paid or proposed for
the years ended 31 March 2016 and 31 March
2015.
FINANCIAL RISKS
The financial risks faced by the Group are as
follows:
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.
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 to 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 in foreign currencies (GB Pounds).
Foreign exchange differences on retranslation
of these assets and liabilities are taken to profit
or loss of the Group, other than in respect of
the retranslation of foreign subsidiary balances
arising on consolidation and parent company
equity balances which are recognised in other
comprehensive income and accumulated in
the foreign exchange reserve.
2016
US Dollars
2015
US Dollars
GB Pounds
US$000
36
50
LIQUIDITY RISK
The Group seeks to manage liquidity risk by
ensuring sufficient liquidity is available to meet
foreseeable needs and by investing cash assets
safely and profitably. As disclosed within the
Report of the Directors, the Directors have
set out their assessment of why they believe
the Group continues to remain a going
concern, including the assumptions they have
made in this regard.
The Group finances its operations through retained cash reserves, and seeks to strike a balance between liquidity and maximising the return on
funds. Cash holdings are regularly reviewed by the Board.
The interest rate exposure of the financial assets and liabilities of the Group as at 31 March 2016 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.
Financial assets
Cash and cash equivalents
Trade and other receivables
Financial liabilities
Liabilities at amortised cost
Fair value through profit or loss
CREDIT RISK
Fixed
US$000
-
-
-
-
-
-
INTEREST RATE
Floating
US$000
Zero
US$000
Total
US$000
5
-
5
-
-
-
309
243
552
165
-
165
314
243
557
165
-
165
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. The Directors
regularly review the profile of trade receivables to minimise the Group’s exposure to bad debts.
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 company’s Board meets regularly to review performance and discuss future opportunities and threats with the aim
of optimising sustainable returns and minimising risk. Capital in the business is represented by the Company’s ordinary share capital. Success in
meeting the capital management objectives are assessed by reference to the Group’s profitability, and, in turn, its share price.
J C D PARSONS, ACIS
AorTech International plc
Company number SC170071
Weybridge
8
STRATEGIC REPORT
STRATEGIC REPORT
9
ANNUAL REPORT AND ACCOUNTS 2016AorTech International plc GOVERNANCE
AorTech International plc
REPORT OF THE REMUNERATION COMMITTEE
We do not comply with the UK Corporate Governance Code and we are not required to. However,
we have reported on our Corporate Governance arrangements by drawing upon best practice
available, including those aspects of the UK Corporate Governance Code we consider to be relevant
to the Company and best practice.
CORPORATE GOVERNANCE
ACCOUNTABILITY AND AUDIT
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.
The Board includes a detailed review of the
performance of the Group in the Chairman’s
Statement on pages 5 to 7. Reading this
alongside the Strategic Report and the Report
of the Directors on pages 5 to 9 and 13 to
14 the Board seeks to present a balanced and
understandable assessment of the Group’s
position and prospects.
Directors
The Company is controlled by the Board of
Directors which, at 31 March 2016, comprised
one Executive and
two non-Executive
Directors; one of whom is the non-Executive
Chairman. All Directors are able to take
independent advice in furtherance of their
duties if necessary.
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 annual planning and
budgeting programme.
• A revision of annual forecasts on a periodic
basis.
is no
There
internal audit
independent
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
Directors and chaired by W Brown, meets
at least twice per year and oversees 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.
for
• A
system
comprehensive
reporting
financial results. Actual results are measured
monthly against budget which together with
other
a commentary on variances
unusual items allows the Board to monitor
the Group’s performance on a regular basis.
and
This report 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 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
REMUNERATION OF
SALARIES AND BENEFITS
At 31 March 2016
the Remuneration
Committee comprised the non-Executive
Directors as follows:
G WRIGHT (CHAIRMAN)
W BROWN
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 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.
SHARE OPTIONS
The Company formerly operated an Approved
Share Option Scheme and an Unapproved
Share Option Scheme. These Schemes have
now been closed with the remaining Option
holders having agreed to waive their rights
under the Schemes.
PENSIONS
The Group made no contributions to a
personal or Company pension plan during the
year under review.
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 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 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,
incentive
arrangements for bonus payments and grants
of share options.
including
When setting its remuneration policy the
Committee gives full consideration to the
provisions and principles of the 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 of an
appropriate calibre.
• The need to ensure Executive Directors’
commitment to the future success of the
Group by means of incentive 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.
REMUNERATION OF
EXECUTIVE DIRECTORS
The Executive Director has a service contract,
which can be terminated on three months’
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 Directors was for
E McDaid on 10 May 2016. 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.
10
GOVERNANCE
GOVERNANCE
11
ANNUAL REPORT AND ACCOUNTS 2016ANNUAL REPORT AND ACCOUNTS 2016AorTech International plc
REPORT OF THE REMUNERATION COMMITTEE
(continued)
REPORT OF THE DIRECTORS
DIRECTORS’ EMOLUMENTS - AUDITED
Details of individual Director’s emoluments for the year are as follows:
Executive
E McDaid
Non-executive
W Brown
G Wright
R Mitchell
R Mitchell resigned as a Director on 31 May 2015.
GOVERNANCE
Salary
& fees
US$
90,044
60,029
25,512
9,004
184,589
Pension
contributions
US$
-
-
-
-
-
2016
Total
US$
2015
Total
US$
90,044
138,802
60,029
25,512
9,004
184,589
19,368
20,982
58,103
237,255
W Brown is employed by Bluehone Investors LLP (‘Bluehone’) in the provision of services to the Company. All of the emoluments of W Brown
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 13.
DIRECTORS’ INTERESTS IN SHARE OPTIONS
No Director holds share options.
On behalf of the Board
G WRIGHT, CHAIRMAN OF THE REMUNERATION COMMITTEE
The Directors present their report and the audited financial statements for the year ended 31 March 2016.
GOING CONCERN
After considering the year end cash position, making appropriate enquiries and reviewing budgets and profit and cash flow forecasts to 31 March
2022, the Directors have formed a judgement at the time of approving the financial statements that there is a reasonable expectation that the
Group has sufficient resources to continue in operational existence for the foreseeable future. For this reason the Directors consider the adoption
of the going concern basis in preparing the Consolidated financial statements is appropriate.
The future developments of the Group and an update on Research and Development activities are detailed in the Chairman’s Statement on pages
5 to 7.
DIRECTORS AND THEIR INTERESTS
At 31 March 2016 the Chairman of the Company was W Brown; the Chief Executive Director was E McDaid, and the non-Executive Director
was G Wright.
At each Annual General Meeting one third of the Directors shall be subject to retirement by rotation. G Wright retires from the Board at the
Annual General Meeting and, being eligible, offers himself for re-election.
The interests of the Directors at 31 March 2016 and 31 March 2015 in the ordinary share capital of the Company (all beneficially held) were as follows:
E McDaid
G Wright
W Brown
R Mitchell
R Mitchell resigned as a Director on 31 May 2015.
SUBSTANTIAL SHAREHOLDERS
31 March
2016
31 March
2015
Number of shares Number of shares
406,842
308,311
11,982
-
358,914
308,311
407
360,163
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 20 July 2016 exceeded 3% of the Company’s issued share capital:
Mr Richard I Griffiths
Mr Roy Mitchell and Mrs P Mitchell
Mr E McDaid
Mr Clive Titcomb
Caricature Investments Limited*
Mr Richard H Thomas
Charles Stanley Private Client Broker
Halifax Share Dealing Private Client Broker
Number of shares
%
812,294
14.62%
420,073
406,842
317,919
308,311
268,700
215,787
203,676
7.56%
7.32%
5.72%
5.55%
4.83%
3.88%
3.66%
*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 2016 was 13.08%.
12
GOVERNANCE
FINANCIAL STATEMENTS
13
ANNUAL REPORT AND ACCOUNTS 2016ANNUAL REPORT AND ACCOUNTS 2016AorTech International plcAorTech International plc
AorTech International plc
REPORT OF THE DIRECTORS
(continued)
AorTech International plc
DIRECTORS’ RESPONSIBILITIES STATEMENT
INFORMATION CONTAINED WITHIN THE STRATEGIC REPORT
The Directors have taken the option to include disclosures in relation to financial risk and dividends within the Strategic Report on pages 8 and 9
as these are deemed to have strategic importance to the Group.
DIRECTORS’ INDEMNITY
The Group maintains Directors and Officers liability insurance which gives appropriate cover against any legal action that may be brought against
them.
ANNUAL GENERAL MEETING
The notice convening the Annual General Meeting for 11:00am on Tuesday, 27 September 2016 in the offices of Kergan Stewart LLP, 163 Bath
Street, Glasgow G2 4SQ is set out on page 46. There are a number of resolutions to be passed and further information in relation to these
resolutions is set out below.
RESOLUTIONS 1 TO 6
Resolution 1 provides for the approval of
the Company’s financial statements for the
year ended 31 March 2016. Resolution 2
provides for approval of the Report of the
Remuneration Committee for the year ended
31 March 2016. The vote is advisory and the
Directors’ entitlement to remuneration is not
conditional on the resolution being passed.
Resolution 3 deals with the re-appointment
of the Director required by the Company’s
Articles of Association to retire this year.
Resolution 4 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 5 provides under the Companies
Act 2006 (Section 551) the Directors of a
company may only allot 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 5
the Company is seeking authority to allot
shares with a nominal value of up to £92,628
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.
Resolution 6 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 persuant to the rules of any
share scheme approved by the shareholders in
general meeting.
This authority is required to be renewed
annually. The Directors will be empowered by
Resolution 6 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 £13,894. 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.
Resolutions 1 to 4 are termed ordinary
business. Resolutions 5 and 6 are termed
special business.
J C D PARSONS, ACIS
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.
AorTech International plc
Company number SC170071
Weybridge
12 August 2016
RECOMMENDATION:
An explanation of the resolutions to be
proposed is set out on page 14 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.
The Directors are responsible for preparing the Strategic Report and Directors’ Report, 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 Generally Accepted Accounting Practice (United Kingdom
Accounting Standards and Applicable Laws including FRS 101 "Reduced Disclosure Framework") and to prepare the Group financial statements
in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union. Under company law the Directors
must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs and profit or loss of the
company and 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 accounting estimates that are reasonable and prudent;
• state whether applicable UK Accounting Standards and IFRSs 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 Company will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company’s transactions and
disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements and
the Remuneration Report comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence
for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The Directors confirm that:
• so far as each Director is aware, there is no relevant audit information of which the Company's auditor is unaware; and
•
the Directors have taken all the steps that they ought to have taken as Directors in order 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, ACIS
Weybridge
12 August 2016
14
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
15
ANNUAL REPORT AND ACCOUNTS 2016ANNUAL REPORT AND ACCOUNTS 2016
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF AORTECH INTERNATIONAL PLC
CONSOLIDATED INCOME STATEMENT
We have audited the Consolidated financial statements of AorTech International Plc for the year ended 31 March 2016 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 AUDITOR
As explained more fully in the Directors’ Responsibilities Statement set out on page 15, the Directors are responsible for the preparation of the
Consolidated financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on
the Consolidated 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 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 Financial Reporting Council's website at www.frc.org.uk/
auditscopeukprivate.
OPINION ON FINANCIAL STATEMENTS
In our opinion the Consolidated financial statements:
• give a true and fair view of the state of the Group's affairs as at 31 March 2016 and of its loss for the year then ended;
• have been properly prepared in accordance with IFRSs 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 Strategic Report and the Report of the Directors for the financial year for which the Consolidated
financial statements are prepared is consistent with the Consolidated 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 2016.
CHRISTOPHER FROSTWICK, SENIOR STATUTORY AUDITOR
For and on behalf of
GRANT THORNTON UK LLP
STATUTORY AUDITOR, CHARTERED ACCOUNTANTS
East Midlands
12 August 2016
YEAR ENDED 31 MARCH 2016
YEAR ENDED 31 MARCH 2015
Notes
3
Pre-
exceptional
items
US$000
Exceptional
items
US$000
751
150
-
-
Pre-
exceptional
items
US$000
Exceptional
items
US$000
844
13
-
-
Total
US$000
751
150
Total
US$000
844
13
Revenue
Other income
Administrative expenses
(1,084)
(80)
(1,164)
(776)
(204)
(980)
Other expenses - amortisation of
intangible assets
Operating loss
Finance (expense) / income
Loss from continuing
operations attributable to
owners of the parent company
Loss from discontinued
operations
Loss attributable to owners of the
parent company
Loss per share
Basic and diluted
(US cents per share)
11
(312)
-
(312)
(332)
-
(332)
3
8
5
(495)
(80)
(575)
(251)
(204)
(455)
-
(29)
(29)
-
129
129
(495)
(109)
(604)
(251)
(75)
(326)
16
-
-
-
(44)
-
(44)
(495)
(109)
(604)
(295)
(75)
(370)
10
(12.00)
(7.66)
16
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
17
ANNUAL REPORT AND ACCOUNTS 2016ANNUAL REPORT AND ACCOUNTS 2016AorTech International plcAorTech International plc CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
CONSOLIDATED BALANCE SHEET
Loss for the year
Other comprehensive income:
Exchange differences
Income tax relating to other comprehensive income
Other comprehensive income for the year, net of tax
Total comprehensive income for the year, attributable to owners of the parent company
No items of other comprehensive income can be subsequently reclassified to profit and loss.
Year ended
31 March 2016
US$000
Year ended
31 March 2015
US$000
(604)
(370)
(35)
-
(35)
(639)
17
-
17
(353)
Assets
Non current assets
Intangible assets
Total non current assets
Current assets
Trade and other receivables
Cash and cash equivalents
Total current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Total current liabilities
Non current liabilities
Change of control redemption premium
Total non current liabilities
Total liabilities
Net assets
Equity
Issued capital
Share premium
Other reserve
Foreign exchange reserve
Profit and loss account
Total equity attributable to equity holders of the parent
Year ended
31 March 2016
US$000
Year ended
31 March 2015
US$000
Notes
11
13
14
15
15
19
19
1,367
1,367
243
314
557
1,924
(165)
(165)
-
-
(165)
1,759
17,426
3,595
(2,881)
6,627
(23,008)
1,759
1,546
1,546
737
360
1,097
2,643
(192)
(192)
(53)
(53)
(245)
2,398
17,937
3,474
(2,974)
6,076
(22,115)
2,398
The Consolidated financial statements were approved by the Board on 12 August 2016 and were signed on its behalf by
W BROWN, CHAIRMAN
E MCDAID, DIRECTOR
Company number SC170071
18
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
19
ANNUAL REPORT AND ACCOUNTS 2016ANNUAL REPORT AND ACCOUNTS 2016AorTech International plcAorTech International plc
CONSOLIDATED CASH FLOW STATEMENT
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Cash flows from operating activities
Group loss after tax
Adjustments for:
Amortisation of intangible assets
Finance expense / (income)
Decrease / (increase) in trade and other receivables
Decrease in trade and other payables
Net cash flow from continuing operations
Net cash flow from discontinued operations
Net cash flow from operating activities
Cash flows from investing activities
Purchase of intangible assets
Net cash flow from continuing operations
Net cash flow from discontinued operations
Net cash flow from investing activities
Net cash flow from financing activities
Net decrease in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
Year ended
31 March 2016
US$000
Year ended
31 March 2015
US$000
(604)
(326)
312
29
494
(109)
122
-
122
(168)
(168)
-
(168)
-
(46)
360
314
332
(129)
(36)
(125)
(284)
2
(282)
-
-
-
-
-
(282)
642
360
Issued
Share
capital
US$000
Share
premium
US$000
Other
reserve
US$000
Foreign
exchange
reserve
US$000
Profit and
loss
account
US$000
Total
equity
US$000
Balance at 31 March 2014
20,144
3,901
(3,340)
3,791
(21,745)
2,751
Transactions with owners
Loss for the year
Other comprehensive income
-
-
-
-
-
-
-
-
-
-
(370)
(370)
Exchange difference on translating foreign operations
(2,207)
(427)
366
2,285
-
17
Total comprehensive income for the year
(2,207)
(427)
366
2,285
(370)
(353)
Balance at 31 March 2015
17,937
3,474
(2,974) 6,076
(22,115)
2,398
Changes in equity
Issue of equity share capital
Transactions with owners
Loss for the year
Other comprehensive income
54
54
-
235
235
-
Exchange difference on translating foreign operations
(565)
(114)
Total comprehensive income for the year
(565)
(114)
-
-
-
93
93
-
-
-
(289)
(289)
-
-
(604)
(604)
551
551
-
(35)
(604)
(639)
Balance at 31 March 2016
17,426
3,595
(2,881)
6,627
(23,008)
1,759
20
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
21
ANNUAL REPORT AND ACCOUNTS 2016ANNUAL REPORT AND ACCOUNTS 2016AorTech International plcAorTech International plc NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PREPARATION
General information
AorTech International plc is the ultimate parent company of the Group,
whose principal activities comprise exploiting the value of its IP and
know-how.
AorTech International plc is incorporated and domiciled in the UK
and its registered office is c/o Kergan Stewart LLP, 163 Bath Street,
Glasgow, G2 4SQ.
Basis of preparation
The Consolidated financial statements are for the year ended
31 March 2016. They have been prepared in compliance with
IFRS
International Financial Reporting Standards
Interpretations Committee (IFRIC) interpretations as adopted by the
European Union as at 31 March 2016.
(IFRS) and
The Consolidated financial statements have been prepared under the
historical cost convention.
The accounting policies remain unchanged from the previous year.
Going concern
After considering the year end cash position, making appropriate
enquiries and reviewing budgets and profit and cash flow forecasts
to 31 March 2022, the Directors have formed a judgement at the
time of approving the financial statements that there is a reasonable
expectation that the Group has sufficient resources to continue in
operational existence for the foreseeable future. For this reason the
Directors consider the adoption of the going concern basis in preparing
the Consolidated financial statements is appropriate.
Changes in accounting policies
New accounting standards issued but not adopted:
IFRS 9 Financial Instruments (2014) (effective date 1 January 2018)
IFRS 15 Revenues from contracts with customers
(change to IASB effective date 1 January 2018)
IFRS 16 Leases (effective date 1 January 2019)
Presentational currency
The Group’s revenues, profits and cash flows are primarily generated in
US dollars, and are expected to remain principally denominated in US
dollars in the future.
2. PRINCIPAL ACCOUNTING POLICIES
Basis of consolidation
The Consolidated 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 at the fair value of consideration received or
receivable by the Group for goods supplied and services provided,
excluding VAT and trade discounts, as follows:
Standards, amendments and interpretations to existing standards
that are not yet effective
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.
(a) 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.
(b) Royalty revenues: Royalty revenues are recognised as earned in
accordance with third parties’ sales of the underlying products.
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. None of these new standards,
amendments and interpretations are expected to have a significant
impact on the Group’s financial statements.
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.
Exceptional items
Intangible assets
Items considered significant by virtue of their size or nature are
separately disclosed on the face of the Income Statement to enable a
full understanding of the underlying performance of the Group.
Profit or loss from discontinued operations
A discontinued operation is a component of the Group that either has
been disposed of, or is classified as held for sale, and:
• represents a separate major line of business or geographical area of
operations
(a) Patents and trademarks (intellectual property):
Patents and trademarks (intellectual property) are included at cost 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.
(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:
•
is part of a single co-ordinated plan to dispose of a separate major line of
business or geographical area of operations or
• 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.
•
is a subsidiary acquired exclusively with a view to resale
•
its intention to complete and its ability to use or sell the asset.
Profit or loss from discontinued operations, including prior year
components of profit or loss, is presented as a single amount in the
income statement. This amount, which comprises the post-tax profit or
loss of discontinued operations and the post-tax gain or loss resulting
from the measurement and disposal of assets classified as held for sale,
is further analysed in note 16.
• 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 disclosures for discontinued operations in the year relate to all
operations that have been discontinued by the reporting date of the
latest period presented.
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 when an impairment
trigger occurs.
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.
Development costs capitalised during the year are being amortised
over their useful economic lives of five years.
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 profit or loss. 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.
22
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
23
ANNUAL REPORT AND ACCOUNTS 2016ANNUAL REPORT AND ACCOUNTS 2016AorTech International plc
AorTech International plc
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(continued)
Impairment testing of intangible assets
Financial liabilities
Taxation
Share based employee compensation
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.
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 initially measured at fair value
and subsequently 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 profit or loss.
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
discounted at the original effective interest rate. 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 fall into the following category: Financial liabilities at
amortised cost and fair value through profit or loss.
Current tax is the tax currently payable based on taxable profit for the
accounting period.
The Group operates equity settled share based compensation plans for
the remuneration of its employees.
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.
A financial liability is derecognised only when the obligation is
extinguished, that is, when the obligation is discharged or cancelled
or expires.
Financial liabilities at amortised cost (trade payables and accruals) 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
(the capital value of which have now been settled), 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.
In the comparative period, financial liabilities at fair value through profit
or loss represented the change of control redemption premium under
loan notes, the capital value of which have been settled, which was
considered to be an embedded derivative which is separable from the
loan notes and therefore was accounted for as a separate instrument.
Such financial liabilities were carried subsequently at fair value with
gains or losses recognised in profit or loss.
Fair value was determined by reference to the potential value of the
change in control premium to be paid at some time in the future, which
was estimated based on the Company’s market capitalisation at the
balance sheet date, with a discount applied to reflect the probability of
such a change of control happening (the effect of the liquidity restriction
and the change of control clause) and to reflect an estimate of likely
timescale. These estimates were reassessed at each balance sheet date.
All changes in the instrument’s fair value are reported in profit or loss
and included within finance costs. As explained more fully on page 42
the change of control redemption premium liability was settled during
the year by the issue of shares.
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 profit or loss, 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.
Tax which relates to items recognised in other comprehensive income
is recognised in other comprehensive income.
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 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.
Equity
Equity comprises the following:
•
•
•
•
“ISSUED CAPITAL” represents the nominal value of equity shares.
"SHARE PREMIUM" represents the excess over nominal value of the
fair value of cash consideration received for equity shares, net of
expenses of the share issue.
represents
the difference arising
on
"OTHER RESERVE"
consolidation between the nominal value of AorTech International
Plc shares issued (£3,206,884) and the nominal value of AorTech
Biomaterials Ltd (formerly AorTech Europe Ltd) 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 on consolidation and from the translation of the AorTech
International Plc balance sheet into US$.
24
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
25
•
"PROFIT AND LOSS ACCOUNT"represents retained profits.
ANNUAL REPORT AND ACCOUNTS 2016ANNUAL REPORT AND ACCOUNTS 2016
AorTech International plc
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(continued)
Foreign currencies
Judgements in applying accounting policies:
3. SEGMENTAL REPORTING
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 is Sterling and the Group’s presentational currency
is US Dollars.
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 profit or loss in the
period in which they arise. Exchange differences on non-monetary
items are recognised in other comprehensive income to the extent
that they relate to a gain or loss on that non-monetary item taken
to other comprehensive income, otherwise such gains and losses are
recognised in profit or loss.
The assets and liabilities in the financial statements of foreign subsidiaries
and retranslation of the parent to the presentational currency, including
equity items, 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 in other
comprehensive income and accumulated in 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 reclassified from equity to profit or loss as a reclassification
adjustment 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.
(a) Capitalisation of development costs requires detailed analysis of the
technical feasibility and commercial viability of the project. Prior to this
financial year, the Group had written off all such development costs
because the specific criteria for capitalisation had not been met. The
Board regularly reviews this judgement in respect of specific development
projects. During the prior year costs were incurred in relation to the
Biomerics project which met the specific criteria for capitalisation.
(b) The Directors must judge whether future profitability is likely in making
the decision whether or not to recognise a deferred tax asset. At this
stage the timing of future profits is insufficiently certain to warrant
inclusion of a deferred tax asset.
(c) Identification of functional currencies requires a judgement as to the
economic environments of the subsidiaries of the Group and the selection
of the presentational currency must reflect the requirements of the users
of the financial statements.
(d) 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. Specifically the Directors have assessed the restructured
licence agreement and ensured all contract milestones have been
met before recognising the relevant revenue in full in the March 2015
and March 2016 financial years. In addition, the Directors have assessed
whether any provision for impairment is necessary against receivables
through the estimation of future cash flows in both financial years.
Sources of estimation uncertainty:
(a) Estimates are required as to intangible asset carrying values and
impairment charges.
(b) Estimates of future profitability are required for the decision whether or
not to create a deferred tax asset.
(c( Amortisation rates are based on estimates of the useful lives and
residual values of the assets involved.
(d) The discount applied in determining the fair value of the change of
control redemption premium in the prior year constitutes an estimate.
Use of accounting estimates and judgements
(e) Estimates as to recoverability of receivables, including future expected
cash flows.
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:
The principal activity of the AorTech International Plc Group currently is exploiting the value of its IP and know-how. The Group’s operating
segment is based on geographical location of operations.
Analysis of revenue by products and services and by geographical area
On sales from United Kingdom
Supply of product
Licence fees – services
Royalty revenue
2016
2015
US$000 US$000
-
139
612
751
10
403
431
844
During the year ended 31 March 2016, 29.5% of the Group’s revenues depended upon a single customer (2015: 23.7%). The majority of the
Group’s revenues are earned in the United States in both years.
Analysis of result - operating loss
Continuing operations
United Kingdom
USA
Operating loss
Finance income / (expenses) – all UK
Loss on continuing operations before taxation
Discontinued operations
USA
Loss on discontinued operations
The operating loss disclosure above is after charging amortisation of $312,000 (all UK) (2015: $332,000 (all UK)).
Analysis of non current assets by location
United Kingdom
USA
2016
2015
US$000 US$000
(575)
(455)
-
-
(575)
(455)
(29)
129
(604)
(326)
-
-
(44)
(44)
2016
2015
US$000 US$000
1,367
1,546
-
-
1,367
1,546
26
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
27
ANNUAL REPORT AND ACCOUNTS 2016ANNUAL REPORT AND ACCOUNTS 2016
AorTech International plc
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(continued)
4. REMUNERATION OF DIRECTORS AND KEY MANAGEMENT PERSONNEL
7. EMPLOYEES
Key Management Personnel
Emoluments – short-term employee benefits
Pension costs – post-employment benefits
2016
US$000
2015
US$000
185
-
185
237
-
237
The key management personnel whose remuneration is included in the table above for the current year and prior year comprise the three current
Directors and one previous Director of the parent company.
Please see the Report of the Remuneration Committee on page 12 for full details of Directors’ emoluments which have been audited.
Included in the aggregate emoluments for the year ended 31 March 2016 are payments of $60,000 (2015: $19,000) made by the Company to third
parties. The highest paid Director’s total emoluments were $90,000. (2015: $139,000). No pension contributions were paid during either year.
5. LOSS BEFORE TAXATION
Loss before taxation has been arrived at after charging :
Foreign exchange differences
Amortisation of intangible assets
Employee benefits expense:
Employee costs (Note 7)
Audit and non-audit services:
Fees payable to the Company’s auditor and its associates for the audit of the
parent and Group financial statements
Fees payable to the Company’s auditor and its associates for other services :
Tax services
Other services
6. EXCEPTIONAL ITEMS
2016
US$000
2015
US$000
(58)
312
15
332
200
243
33
3
16
30
6
2
Exceptional items relate to the loan note redemption premium as explained in note 15, and legal fees incurred in relation to the departure of
Frank Maguire (former CEO).
Employee costs (including Directors):
Wages and salaries
Social security costs
Pension costs
The average number of employees (including Directors)
during the year was made up as follows:
Administration
8. FINANCE (EXPENSE) / INCOME
2016
US$000
2015
US$000
185
15
-
200
237
6
-
243
2016
Numbers
3
2015
Numbers
4
3
4
YEAR ENDED 31 MARCH 2016
YEAR ENDED 31 MARCH 2015
Pre-
exceptional
items
US$000
Exceptional
items
US$000
Change of control redemption premium
Credit / (charge)
-
-
(29)
(29)
Pre-
exceptional
items
US$000
Exceptional
items
US$000
-
-
129
129
Total
US$000
(29)
(29)
Total
US$000
129
129
28
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
29
ANNUAL REPORT AND ACCOUNTS 2016ANNUAL REPORT AND ACCOUNTS 2016
AorTech International plc
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(continued)
9. INCOME TAX EXPENSE
No current tax or deferred tax expense arises on the loss for the year (2015: $nil).
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:
Loss for the year before tax
Loss for year multiplied by the respective standard rate of corporation tax
applicable in each domain (average 20%; 2015 - 21%)
Effects of:
Expenses not deductible for tax purposes and other tax differences
Deferred tax not recognised
Adjust deferred tax to average rate
Tax on loss for the year
2016
US$000
2015
US$000
(604)
(370)
(121)
(78)
51
(68)
138
-
23
54
-
-
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 $6,589,000
– tax effect is $1,318,000 (2015: $6,858,000 – tax effect $1,440,000). Losses in the USA total $nil (2015: $nil).
10. LOSS PER SHARE
Loss for the year attributable to equity shareholders
Loss per share
Basic and diluted (US cents per share)
From continuing operations
From discontinued operations
Shares
Issued ordinary shares at start of the year
Issued ordinary shares at end of the year
Weighted average number of shares in issue for the year
2016
US$000
2015
US$000
(604)
(370)
(12.00)
(6.75)
-
(0.91)
(12.00)
(7.66)
4,832,778 4,832,778
5,557,695 4,832,778
5,032,823 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. There was no dilution in respect of the prior year.
11. INTANGIBLE ASSETS
Gross carrying amount
At 1 April 2014
Exchange differences
At 31 March 2015
Additions
Exchange differences
At 31 March 2016
Amortisation and impairment
At 1 April 2014
Exchange differences
Charge for the year
At 31 March 2015
Exchange differences
Charge for the year
At 31 March 2016
Net book value
At 31 March 2015
At 31 March 2016
Development
costs
US$000
Intellectual
property
US$000
319
(28)
291
168
4,603
126
4,729
-
Total
US$000
4,922
98
5,020
168
(8)
451
11
(6)
63
68
(5)
(148)
(156)
4,581
5,032
3,050
87
269
3,406
(116)
3,061
81
332
3,474
(121)
73
136
239
3,529
312
3,665
223
1,323
315
1,052
1,546
1,367
30
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
31
ANNUAL REPORT AND ACCOUNTS 2016ANNUAL REPORT AND ACCOUNTS 2016
AorTech International plc
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(continued)
12. FINANCIAL INSTRUMENTS
Risk management
The Group’s financial instruments comprise cash and cash equivalents, trade and other receivables, trade and other payables and a change of
control redemption premium. 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
Financial assets – loans and receivables
Cash and cash equivalents
Trade and other receivables
Financial liabilities
Liabilities at amortised cost
Fair value through profit or loss
2016
US$000
2015
US$000
314
42
356
(165)
-
(165)
360
619
979
(192)
(53)
(245)
All amounts are short-term (all payable within six months) with the exception of other payables greater than one year and their carrying values
are considered reasonable approximations of fair value.
Foreign currency risk
The Group has non-trading Australian and US subsidiaries whose functional currencies are the Australian and US dollars along with the UK parent
company whose functional currency is Sterling. Entities generally do not hold financial instruments in a currency other than their own functional
currency, other than the UK parent company which has a trade receivable denominated in US dollars.
Cash balances are carried within the Group in bank accounts, which comprise the following currency holdings:
Sterling
US dollars
2016
US$000
2015
US$000
36
278
314
50
310
360
The Group holds its cash balances in a mixture of Sterling and US dollars. As the Group reports in US dollars, there is translation risk in respect
of such Sterling balances. Based on year-end balances held in Sterling, a 10% movement in the $ / £ exchange rate would have had a $3,000 (2015:
$4,000) impact on net assets.
Interest rate risk
The Group finances its operations through equity fundraising and does not currently carry any borrowings, following the repayment of the loan
notes during the year ended 31 March 2013. The cash balances and short term deposits are held at both fixed and floating rates as follows:
Cash
Short-term deposits
Sensitivity analysis
Interest
rate %
0%
0.55%
2016
US$000
310
4
314
Interest
rate %
0%
0.51%
2015
US$000
355
5
360
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 profit and
equity of $nil (2015: $1,000), 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 other than the amounts due from two third parties where full provision has been made following a mediation and arbitration
process. The management do not consider that there is any concentration of risk within either trade or other receivables, other than the amounts
due from two third parties. The maximum exposure to credit risk on trade and other receivables is considered to be $25,000 (2015: $699,000).
Liquidity risk
The Group currently holds cash balances and short term deposits in Sterling and US dollars. These balances provide funding for the Group’s trading
activities. There is no material difference between the fair values and the book values of these financial instruments.
Details of the amount that was payable at an undetermined date in the future under the change of control clause on the loan notes are given in
note 15, along with further details of the terms in note 7 to the parent company financial statements.
32
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
33
ANNUAL REPORT AND ACCOUNTS 2016ANNUAL REPORT AND ACCOUNTS 2016
AorTech International plc
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(continued)
13. TRADE AND OTHER RECEIVABLES
Current
Trade receivables
Other receivables
Prepayments and accrued income
Non -current
Trade receivables
2016
US$000
2015
US$000
25
17
201
243
577
42
118
737
-
-
$nil (2015: $202,000) of net trade and other receivables were past due for payment but not impaired at 31 March 2016, of which $nil (2015:
$202,000) was over 30 days and $nil (2015: $150,000) was over 90 days. A provision of $369,000 (2015: $nil) was recognised against trade
receivables.
Included in the above is $191,000 (2015: $79,000) of accrued income.
14. CASH AND CASH EQUIVALENTS
Cash at bank and in hand
15. TRADE AND OTHER PAYABLES
Current liabilities
Trade payables
Accruals and deferred income
Non current liabilities
Change of control redemption premium
Included in the above is $9,000 (2015: $9,000) of deferred income.
2016
US$000
2015
US$000
314
314
360
360
2016
US$000
2015
US$000
12
153
165
-
-
-
192
192
53
53
Details of the loan notes issued and redeemed in the year ended 31 March 2013, the redemption premium paid, the change of control redemption
premium payable in the future and the final settlement of this obligation can be found in note 7 of the parent company accounts. Related party
disclosures are also provided in notes 7 and 11 of the parent company accounts as loan notes were issued in previous years to certain Directors.
In accordance with IFRS, the Directors have included a financial liability for this derivative financial instrument totalling $nil (2015: $53,000) in the
Consolidated accounts at 31 March 2016. In prior years this was based on the market capitalisation of the Group at each year end and an estimate
by the Directors of the likelihood of the change of control and consideration of possible timescales. These estimates were reviewed and updated
every six months for the purpose of the interim and year end accounts.
In the year to 31 March 2016, shareholders approved by special resolution the Company’s approach to loan note holders with the intention of
converting their right to a further redemption premium into ordinary shares. This was accepted by the loan note holders and ordinary shares were
issued in full and final settlement of any future liability. As such, no liability remained at 31 March 2016.
The change of control redemption premium constitutes a financial instrument measured at fair value under IFRS 13 “Fair value measurement”.
The fair value at each balance sheet date was calculated by reference to 15% of the market capitalisation of the Group multiplied by a discount
factor to reflect the Directors’ assessment of the likelihood and timing of any change of control of the Group. The Group’s market capitalisation
constitutes a Level 1 input under the hierarchy in IFRS 13 (a quoted price in an active market). The discount factor is a Level 3 input (not based
on observable data). The overall instrument is a Level 3 input due to the significance of the discount factor.
Relevant inputs were:
- Market capitalisation
- Discount factor
2016
n/a
n/a
2015
$1.78m
20%
A discount factor of 10% or 30% would decrease / increase the prior year credit by $65,000.
16. Discontinued operations
On 1 October 2013, the Group signed an agreement with Biomerics LLC for the manufacture and distribution of our patented materials, including
to our existing licensees. In the opinion of the Directors, the Biomerics transaction transformed the Group into a pure intellectual property
company. As a consequence, results attributable to manufacturing activity constitute a discontinued operation, and have been presented as such
in the prior year figures in the Income Statement.
The results of the discontinued manufacturing operations are shown in more detail below.
Pre-
exceptional
items
2016
$000
Exceptional
items
2016
$000
-
-
-
-
-
-
Total
2016
$000
-
-
-
Revenue
Other income
Cost of sales
Administrative expenses
-
-
-
Profit on disposal of property, plant and
equipment
Operating loss
-
-
-
-
-
-
Pre-
exceptional
items
2015
$000
Exceptional
items
2015
$000
-
-
(44)
-
-
(44)
-
-
-
-
-
-
Total
2015
$000
-
-
(44)
-
-
(44)
34
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
35
ANNUAL REPORT AND ACCOUNTS 2016ANNUAL REPORT AND ACCOUNTS 2016
AorTech International plc
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(continued)
17. OPERATING LEASE COMMITMENTS
The Group had no commitments under non-cancellable operating leases at 31 March 2016 or 31 March 2015.
18. SHARE BASED PAYMENTS
The Group has an approved share option plan for the benefit of employees resident in the UK and Executive Directors. All share options are
denominated in Sterling and converted for disclosure purposes at £1 = $1.44 at 31 March 2016 (£1 = $1.48 at 31 March 2015). There were no
options in issue at 31 March 2016 (31 March 2015: no options)
The Group has an unapproved share option plan for the benefit of other employees. All share options are denominated in Sterling and converted
for disclosure purposes at £1 = $1.44 at 31 March 2016 (£1 = $1.48 at 31 March 2015). There were no options in issue at 31 March 2016 (31
March 2015: 30,000 options)
Details of the number of share options and the weighted average exercise price (WAEP) outstanding during the year are as follows:
2016 WAEP
2015 WAEP
Number
US$
Number
US$
Outstanding at the beginning of the year
Forfeited during the year
Outstanding at the year end
Exercisable at the year end
30,000
(30,000)
-
-
$4.58
$4.44
-
-
34,000
(4,000)
30,000
30,000
$5.25
$5.39
$4.58
$4.83
The options issued to date under both schemes will only be exercisable if the average mid market closing price of the Company’s shares on the five
business days prior to the date of exercise exceeds the option price by 15% or more and after the elapse of three years from date of Option Grant.
The fair value of options granted after 7 November 2002 but not vested at 1 April 2006 has been arrived at using an appropriate Black Scholes
model. The assumptions inherent in the use of this model are as follows:
• The option life is assumed to be at the end of the allowed period
• There are no non-market vesting conditions
• No variables change during the life of the option (e.g. dividend yield)
• Volatility of share price has been calculated over the three years prior to the balance sheet date.
Date of
grant
01.09.06
16.12.11
Vesting
Period
(years)
3
3
Date of
vesting
01.09.09
16.12.14
Exercise
Price
(US$)
5.42
5.00
Risk-free
rate
Share price
at grant
(US$)
Volatility of
Share price
Fair value
(US$000)
Number
outstanding
4.61%
4.00%
6.06
4.55
63%
31%
118
52
nil
nil
The Group has not recognised any expense related to equity-settled share based payment transactions during the year (2015: nil), on the grounds
that the charge is not material. The Directors have also concluded that the cumulative position to date is also not material.
19. SHARE CAPITAL
Ordinary shares of 250 pence each
In issue at 1 April 2015
In issue at 31 March 2016
Ordinary shares of 5 pence each
In issue at 1 April 2015
In issue at 31 March 2016
Deferred shares of 245 pence each
In issue at 1 April 2015
In issue at 31 March 2016
Shares
Number
4,832,778
-
Shares
Number
-
5,557,695
Shares
Number
-
4,832,778
Nominal
Value
US$000
17,937
-
Nominal
Value
US$000
-
400
Nominal
Value
US$000
-
17,026
Premium
Net of costs
US$000
3,474
-
Premium
Net of costs
US$000
-
296
Premium
Net of costs
US$000
-
3,299
Total
US$000
21,411
-
Total
US$000
-
696
Total
US$000
-
20,325
At an EGM of Members held on 20 August 2007, the Company’s authorised share capital was increased from £14,000,000 (US$27,762,000)
comprising 5,600,000 Ordinary shares of £2.50 (US$4.96) each to £17,500,000 (US$34,702,500), comprising 7,000,000 shares of £2.50 (US$4.96)
each.
At the AGM of Members held on 24 September 2015, the Members approved the Reorganisation of the Company’s share capital by sub-dividing
the existing 250 pence ordinary shares into 5 pence ordinary shares and 245 pence deferred shares. The share premium attached to the existing
shares has followed the new shares. The deferred shares have limited rights including no voting rights. The deferred shares are not admitted or
listed on any stock exchange.
At the same meeting the Directors were authorised to negotiate final settlement terms with Loan Note Holders. This resulted in a 15 per cent
(724,917) increase in the issued share capital of the Company.
Capital management objectives are set out in the Strategic Report on page 9.
20. CONTINGENT LIABILITIES
There were no contingent liabilities at 31 March 2016 or at 31 March 2015.
21. RELATED PARTY TRANSACTIONS
Related party transaction disclosures are included within note 7 to the parent company financial statements in
respect of loan note holders, and within the Report of the Remuneration Committee.
36
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
37
ANNUAL REPORT AND ACCOUNTS 2016ANNUAL REPORT AND ACCOUNTS 2016
AorTech International plc
INDEPENDENT AUDITOR’S REPORT
ON THE PARENT COMPANY FINANCIAL STATEMENTS
AorTech International plc
PARENT COMPANY BALANCE SHEET
We have audited the parent company financial statements of AorTech International Plc for the year ended 31 March 2016 which comprise the
parent company balance sheet, the parent company statement of changes in equity 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), including FRS 101 ‘Reduced Disclosure Framework’.
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 auditor
As explained more fully in the Directors’ Responsibilities Statement set out on page 15. 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 and express an opinion
on 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 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 Financial Reporting Council’s website at www.frc.org.uk/
auditscopeukprivate.
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 2016;
• 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 Strategic Report and the Report of the Directors for the financial year for which the financial
statements are prepared is consistent with the parent company 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:
• 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 Consolidated financial statements of AorTech International Plc for the year ended 31 March 2016.
CHRISTOPHER FROSTWICK, SENIOR STATUTORY AUDITOR
For and on behalf of
GRANT THORNTON UK LLP
STATUTORY AUDITOR, CHARTERED ACCOUNTANTS
East Midlands
12 August 2016
Assets
Non current assets
intangible assets
Investment in subsidiary undertakings
Total non current assets
Current assets
Trade and other receivables
Cash and cash equivalents
Total current assets
Total assets
Liabilities
Current Liabilities
Trade and other payables
Total current liabilities
Non current liabilities
Change of control redemption premium
Total non current liabilities
Total liabilites
Net assets
Equity
Issued Capital
Share Premium
Profit and loss account
Total equity attributable to equity holders of the parent
Notes
31 March
2016
£000
31 March
2015
£000
3
4
5
6
7
8
1,888
-
1,888
169
218
2,362
-
2,362
497
243
387
740
2,275
3,102
(115)
(115)
-
-
(115)
2,160
12,118
2,500
(12,458)
2,160
(129)
(129)
(179)
(179)
(308)
2,794
12,082
2,340
(11,628)
2,794
The parent company financial statements were approved by the Board on 12 August 2016 and were signed on its behalf by
W BROWN, CHAIRMAN
E MCDAID, DIRECTOR
Company number SC170071
38
PARENT COMPANY FINANCIAL STATEMENTS
PARENT COMPANY FINANCIAL STATEMENTS
39
ANNUAL REPORT AND ACCOUNTS 2016ANNUAL REPORT AND ACCOUNTS 2016
PARENT COMPANY STATEMENT OF CHANGES IN EQUITY
AorTech International plc
NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS
Share
Retained
Shareholders’
Total
1. ACCOUNTING POLICIES
At 1 April 2014
Transactions with owners
Loss and total comprehensive income for the year
At 31 March 2015
Changes in equity
Issues of equity share capital
Transactions with owners
Loss and total comprehensive income for the year
At 31 March 2016
12,118
2,500
Share
capital
£000
12,082
-
-
premium
£000
2,340
-
-
earnings
£000
(10,802)
-
(826)
12,082
2,340
(11,628)
36
36
-
160
160
-
-
-
(830)
(12,458)
funds
£000
3,620
-
(826)
2,794
196
196
(830)
2,160
Statement of compliance
The financial statements were prepared in accordance with FRS 101 ‘Reduced Disclosure Framework’. The company has elected to adopt the
standard for the year ended 31 March 2016 for the first time.
Basis of preparation
These financial statements are the first financial statements in which the Company has adopted FRS 101 ‘Reduced Disclosure Framework’. The
Company meets the definition of a qualifying entity under FRS 101. Accordingly, in the year ended 31 March 2016 the Company has undergone
transition from reporting under UK GAAP to FRS 101 as issued by the Financial Reporting Council. The financial statements have therefore been
prepared in accordance with FRS 101 as issued by the Financial Reporting Council.
As permitted by FRS 101, for both periods presented, the Company has taken advantage of the disclosure exemptions available under that standard
in relation to financial instruments, capital management, presentation of a cash flow statement, share based payments, fair value measurements,
comparative reconciliations for tangible and intangible assets, standards not yet effective, related party transactions with other wholly-owned
members of the Group and key management personnel compensation. Equivalent disclosures are, where required, given in the Group accounts of
AorTech International plc. The Group accounts of AorTech International plc are available to the public.
The financial statements have been prepared on the historical cost basis.
Going concern
After considering the year end cash position, making appropriate enquiries and reviewing budgets and profit and cash flow forecasts for a period
to 31 March 2022, the Directors have formed a judgement at the time of approving the financial statements that there is a reasonable expectation
that the parent company has sufficient resources to continue in operational existence for the foreseeable future. For this reason the Directors
consider the adoption of the going concern basis in preparing the parent company financial statements is appropriate.
Use of key 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:
Sources of estimation uncertainty
• amortisation rates are based on estimates of the useful lives and residual values of the assets involved
• bad debt provisions are based on the likely recoverability of such balances.
Investments
Investments held as fixed assets are stated at cost less provision for 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.
40
PARENT COMPANY FINANCIAL STATEMENTS
PARENT COMPANY FINANCIAL STATEMENTS
41
ANNUAL REPORT AND ACCOUNTS 2016ANNUAL REPORT AND ACCOUNTS 2016AorTech International plc
AorTech International plc
NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS
Foreign currencies
3. INTANGIBLE ASSETS
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.
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. These balances have been treated as monetary assets and retranslated at the
rate of exchange ruling at the balance sheet date. Exchange differences arising on these loans are taken into account in arriving at the operating
result. The recoverability of these balances is reassessed at each balance sheet date, with an impairment provision recorded when considered
necessary.
Intangible assets
Patents and trademarks (intellectual property) are included at cost less estimated residual amount and are amortised on a straight line basis over
their remaining useful economic lives of 20 years, which corresponds to the lives of the individual patents. Some of these assets were transferred
from the Australian subsidiary in 2011 at an independent valuation of £4,777,000 which has been used as deemed cost for these assets in the UK.
Costs incurred in validating the Company’s polymers for manufacture on the Company’s behalf by Biomerics LLC are being amortised over 5 years.
Loan notes & Redemption Premium policy
The loan notes issued and redeemed during the year ended 31 March 2013 and redemption premium thereon are considered to be a single capital
instrument in accordance with FRS 4. The loan notes issued and redeemed in the year ended 31 March 2013 and the redemption premium paid
in the year ended 31 March 2013 have been accounted for based on the terms of the loan note trust deed (see note 7), with the redemption
premium paid expensed as a finance cost in that year. During the year end 31 March 2016, shareholders approved by special resolution the
Company’s approach to loan note holders with the intention of converting their right to a further redemption premium into ordinary shares.
This was accepted by the loan notes holders and as such ordinary shares were issued in full and final settlement of any future liability. As such, no
liability remains at 31 March 2016.
2. 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 2016 was £830,000 (2015: loss of £826,000).
Cost
At 31 March 2015
Additions for the year
At 31 March 2016
Amortisation
At 31 March 2015
Charge for the year
At 31 March 2016
Net book value
At 31 March 2015
At 31 March 2016
Impairment of £600,000 was recognised in the prior year
4. FIXED ASSET INVESTMENTS
Investment in subsidiary undertakings
Cost
Historical Cost
Provision for Impairment
Net book value at 31 March
Interest in subsidiary undertakings
Name of undertaking
(i) AorTech Biomaterials Ltd
(ii) AorTech Critical Care Limited
(iii) AorTech Heart Valve Technologies Ltd
(iv) AorTech Biomaterials Pty Limited
(v) AorTech Polymers & Medical Devices, Inc
(vi) River Clyde Marine, Inc
Intellectual
property
Development
costs
£000
4,929
-
4,929
2,717
543
3,260
2,212
1,669
£000
196
118
314
46
49
95
150
219
Total
£000
5,125
118
5,243
2,763
592
3,355
2,362
1,888
2016
US$000
2015
US$000
23,159
23,159
(23,159)
(23,159)
-
-
Country of
registration or
incorporation
Description
of shares
held
Ordinary £1
Scotland
Ordinary £1
Scotland
Ordinary £1
Scotland
Australia Ordinary Aus. $1
USA Common US $1
USA Common US $1
Proportion
of nominal
value of
shares held
%
100
92
100
100
100
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) A non-trading company in the UK
(iv) Ceased operations and placed into voluntary liquidation during year ended 31 March 2013
(v) Ceased operations and placed into voluntary liquidation during year ended 31 March 2014
(vi) Research into marine applications for biostable polyurethanes
42
PARENT COMPANY FINANCIAL STATEMENTS
PARENT COMPANY FINANCIAL STATEMENTS
43
ANNUAL REPORT AND ACCOUNTS 2016ANNUAL REPORT AND ACCOUNTS 2016
AorTech International plc
NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS
(continued)
5. TRADE AND OTHER RECEIVABLES
5. TRADE AND OTHER RECEIVABLES
Current
Current
Trade receivables
Trade receivables
Other receivables
Other receivables
Prepayments and accrued income
Prepayments and accrued income
Non -current
Non -current
Amounts owed by Group undertakings
Amounts owed by Group undertakings
Less: Provision*
Less: Provision*
2016
2016
£000
£000
17
17
12
12
140
140
169
169
2015
2015
£000
£000
389
389
28
28
80
80
497
497
3,955
3,955
3,955
3,955
(3,955)
(3,955)
-
-
(3,955)
(3,955)
-
-
*A cumulative impairment charge of £3,955,000 as at 31 March 2016 (31 March 2015: £3,955,000) has been made to fully provide against the
*A cumulative impairment charge of £3,955,000 as at 31 March 2016 (31 March 2015: £3,955,000) has been made to fully provide against the
remaining amount of the inter-company loan account due as at 31 March 2016 to AorTech International plc by its American subsidiary, AorTech
remaining amount of the inter-company loan account due as at 31 March 2016 to AorTech International plc by its American subsidiary, AorTech
Polymers & Medical Devices, Inc. A provision of £322,000 (2015: £nil) was recognied against trade receivables.
Polymers & Medical Devices, Inc. A provision of £322,000 (2015: £nil) was recognied against trade receivables.
Included in the above is £133,000 (2015: £53,000) of accrued income.
Included in the above is £133,000 (2015: £53,000) of accrued income.
6. TRADE AND OTHER PAYABLES
6. TRADE AND OTHER PAYABLES
Trade payables
Trade payables
Accruals and deferred income
Accruals and deferred income
Included in the above is £6,000 (2015: £6,000) of deferred income.
Included in the above is £6,000 (2015: £6,000) of deferred income.
7. NON CURRENT LIABILITIES
7. NON CURRENT LIABILITIES
Change of control redemption premium
Change of control redemption premium
2016
2016
£000
£000
8
8
107
107
115
115
2016
2016
£000
£000
-
-
-
-
2015
2015
£000
£000
-
-
129
129
129
129
2015
2015
£000
£000
179
179
179
179
On 26 October 2012 AorTech International plc created £1,250,000 of Secured Loan Notes (“the Notes”) and issued £1,210,000 ($1,914,000)
On 26 October 2012 AorTech International plc created £1,250,000 of Secured Loan Notes (“the Notes”) and issued £1,210,000 ($1,914,000)
of the Notes to existing investors including certain Directors (or members of their families). The Notes were repayable on or before 1 October
of the Notes to existing investors including certain Directors (or members of their families). The Notes were repayable on or before 1 October
2013. The Notes did not bear any interest but were subject to a redemption premium of 100 per cent of the nominal value of the Notes if
2013. The Notes did not bear any interest but were subject to a redemption premium of 100 per cent of the nominal value of the Notes if
repayment was made prior to 31 March 2013 and 150 per cent. if thereafter.
repayment was made prior to 31 March 2013 and 150 per cent. if thereafter.
The Notes attracted an additional redemption premium of 15 per cent. of the equity value on a change of control of AorTech at any time in the
future, 15 per cent. of the value of a sale of any of its intellectual property rights while the Notes were outstanding, and 15 per cent. of the value
of the net proceeds of any settlement of the dispute with St. Jude Medical or restructuring of the License and Supply Agreement with St. Jude
Medical, after having taken into account the costs of settlement and the value of the notes redeemed and redemption premium paid. The Notes
were secured by a floating charge over all of AorTech’s assets.
The initial loan note subscriptions by Directors W Brown and E McDaid (or members of their families) and Active Capital Trust PLC which
amounted to, in aggregate, £270,000, along with the 100 per cent redemption premiums paid of £270,000, and their share of any change of control
redemption premiums payable in the future were deemed to be related party transactions for the purposes of Rule 13 of the AIM Rules and IAS 24.
The Directors of AorTech (excluding W Brown and E McDaid) considered, having consulted with finnCap Limited, that the terms of the transaction
were fair and reasonable so far as shareholders are concerned.
The original sum subscribed in October 2012 for the Notes, together with an initial 100% premium due, was re-paid to the loan note holders prior
to 31 March 2013. As no sale of intellectual property rights had occurred while the Notes were outstanding, no additional redemption premium
under this clause was due. In addition, based on the value of the net proceeds of the settlement of the dispute with St Jude Medical, having taken
into account the legal and other costs incurred, and the value of the loan notes redeemed and redemption premium paid, then no additional
redemption premium was due under this clause.
On change of control of the Company whether by means of a general offer to acquire the entire issued share capital of the Company or a scheme
of arrangement, or on a return of capital to shareholders as part of a winding up of the Company, an additional premium became payable to
noteholders equal to 15% of the sums payable to shareholders in relation to that event. Following agreement between the Company and the
Loan Note Holders, authority for which negotiations had been granted by the Shareholders at the 2015 Annual General Meeting, this liability to
the Company was extinguished following the issue of Ordinary shares equal to 15 per cent of the 4,832,778 Ordinary shares in issue at that time.
8. SHARE CAPITAL
See Note 19 in the Consolidated financial statements which details the number of shares in issue at each period end and movements in the period.
The nominal value of all shares in issue at 31 March 2016 is £12,118,000 (2015: £12,082,000).
9. SHARE BASED PAYMENTS
See Note 18 in the Consolidated financial statements.
10. DIRECTORS AND EMPLOYEES
The Directors are the only employees of the parent company. Disclosure of their emoluments is given in the audited section of the Report of the
Remuneration Committee on page 12.
11. RELATED PARTY TRANSACTIONS
The Company is exempt under the terms of FRS 101.8 from disclosing transactions with its wholly owned subsidiaries. There were no related
party transactions during the year with non fully owned subsidiaries. Other related party transaction disclosures are included within note 7 to the
parent company accounts in respect of loan note holders and within the Report of the Remuneration Committee.
12. FIRST TIME ADOPTION OF FRS101
The policies applied under the Company’s previous accounting framework are not materially different to FRS 101 and the adoption of the new
framework has not impacted on equity or profit or loss.
44
PARENT COMPANY FINANCIAL STATEMENTS
PARENT COMPANY FINANCIAL STATEMENTS
45
ANNUAL REPORT AND ACCOUNTS 2016ANNUAL REPORT AND ACCOUNTS 2016
AorTech International plc
NOTICE OF THE ANNUAL GENERAL MEETING
1.
2.
3.
4.
5.
6.
Notice is hereby given that the nineteenth Annual General Meeting of AorTech International Plc will be held in the offices of Kergan Stewart
LLP, 163 Bath Street, Glasgow G2 4SQ on Tuesday, 27 September 2016 at 11:00am for the purpose of considering and if thought fit passing the
following resolutions, numbers 1 to 5 as Ordinary Resolutions and number 6 as a Special Resolution:
AS ORDINARY BUSINESS
To receive and adopt the financial statements of the Company for the year ended 31 March 2016 together with the Strategic Report and the
Reports of the Directors and Auditor thereon.
To approve the Report of the Remuneration Committee for the year ended 31 March 2016.
To re-elect G Wright, who is retiring by rotation.
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:
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 shares in the Company or to grant rights to subscribe for or convert any security into
shares in the Company (“Rights”) up to an aggregate nominal amount of £92,628 (representing approximately one third of the Company’s
issued ordinary share capital) 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.
This authority is in substitution for all previous authorities conferred on the Directors in accordance with section 80 of the Companies
Act 1985 or section 551 of the Act but without prejudice to any allotment of shares or grant of Rights already made or agreed to be made
pursuant to such authorities.
To consider, and if thought fit, pass the following resolution as a Special Resolution:
That subject to the passing of Resolution 5 above as an Ordinary Resolution, the Directors be and are hereby empowered until the
conclusion of the next Annual General Meeting of the Company (“the period of the Section 570 power”), pursuant to Section 570 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 recognised regulatory
body or stock exchange in any territory;
(b) the allotment of equity securities pursuant to the terms of any share scheme for Directors and employees of the Company and/or its
subsidiaries approved by the shareholders of the Company in general meeting; and
(c) the allotment (otherwise than pursuant to sub-paragraphs (a) and (b) above) of equity securities having a nominal amount or giving
the right to subscribe for or convert into relevant shares having a nominal amount, not exceeding in aggregate £13,894 (representing
approximately five per cent of the issued ordinary share capital of the Company), 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 570 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. This
resolution revokes and replaces all unexcercised powers previously granted to the Directors to allot equity securities as if either section
89(1) of the Companies Act 1985 or section 561(1) of the Act did not apply but without prejudice to any such allotment of equity securities
made or agreed to be made pursuant to such authorities.
By order of the Board,
J C D PARSONS, ACIS
COMPANY SECRETARY,
Weybridge,
Surrey KT13 9LZ
1.
2.
3.
4.
5.
6.
7.
8.
9.
Members will only be entitled to attend and vote at the meeting if they are registered on the Company’s register of members at 6:30pm on
23 September 2016 or by 6.30pm two business 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. If the meeting is
adjourned, the time by which a person must be entered on the register of members of the Company in order to have the right to attend and
vote at the adjourned meeting is 6:30pm on the day preceding the date fixed for the adjourned meeting. Changes to the register of members
after the relevant times shall be disregarded in determining the rights of any person to attend and vote at the meeting.
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 or proxies to attend, speak and vote on their behalf. To be valid, Forms of Proxy must be lodged
with the Company’s Registrars, Equiniti Limited, Aspect House, Lancing, West Sussex, BN99 6DA not later than 48 hours (excluding non-
working days) before the time appointed for the holding of the meeting or 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. Details of how to appoint the Chairman of the Meeting or another person as your proxy or proxies using the proxy form
are set out in the notes to the proxy form together with details as to how to change or teminate proxy appointments. A vote withheld is not
a vote in law which means that the vote will not be counted in the calculation of votes for or againsat a resolution. If no voting indication is
given your proxy will vote (or abstain from voting) as he or she thinks fit in relation to any other matter put before the meeting.
Completing and returning a Form of Proxy will not prevent any member from attending the meeting in person and voting should they so
wish. Any member or his proxy attending the meeting has a right to ask any question at the meeting relating to the business of the meeting.
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.
CREST members who wish to appoint a proxy or proxies through the CREST electronic proxy appointment service may do so by using the
procedures described in the CREST Manual (available at https://www.euroclear.com). CREST personal members or other CREST sponsored
members, and those CREST members who have appointed a voting service provider should refer to their CREST sponsors or voting service
provider(s), who will be able to take the appropriate action on their behalf. In order for a proxy appointment or instruction made by means
of CREST to be valid, the appropriate CREST message (a “CREST Proxy Instruction”) must be properly authenticated in accordance with
Euroclear UK & Ireland Limited’s specifications and must contain the information required for such instructions, as described in the CREST
Manual. The message must be transmitted so as to be received by the Company’s agent, Equiniti Limited (CREST Participant ID RA19), no later
than 48 hours before the time appointed for the meeting. For this purpose, the time of receipt will be taken to be the time (as determined by
the time stamp applied to the message by the CREST Application Host) from which the Company’s agent is able to retrieve the message by
enquiry to CREST in the manner prescribed by CREST.
CREST members and, where applicable, their CREST sponsor or voting service provider should note that Euroclear UK & Ireland Limited
does not make available special procedures in CREST for any particular messages. Normal system timings and limitations will therefore apply
in relation to the input of CREST Proxy Instructions. It is the responsibility of the CREST member concerned to take (or, if the CREST
member is a CREST personal member or sponsored member or has appointed a voting service provider, to procure that his CREST sponsor
or voting service provider takes) such action as shall be necessary to ensure that a message is transmitted by means of the CREST system by
any particular time. In this connection, CREST members and, where applicable, their CREST sponsor or voting service provider are referred
in particular to those sections of the CREST Manual concerning particular limitations of the CREST system and timings.
The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in Regulation 35(5)(a) of the Uncertificated
Securities Regulations 2001.
As at noon on 5 August 2016 the Company’s issued share capital comprised 5,557,695 ordinary shares of £0.05 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 5 August 2016 is 5,557,695.
The following documents will be available at the 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 copy of the service agreement for the Executive Director.
(a)
A copy of the letters of appointment for the Non-Executive Directors.
(b)
(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.
Any member attending the meeting has the right to ask questions. The Company must cause to be answered any such question relating to the
business being dealt with at the meeting but no such answer need be given if (a) to do so would interfere unduly with the preparation for the
meeting or involve the disclosure of confidential information,(b) the answer has already been given on a website in the form of an answer to
a question, or (c) it is undesirable in the interests of the Company or the good order of the meeting that the question be answered.
If you have any general queries about the meeting please contact the Company Secretary at david@aortech.net or by calling on 01932 252123.
You may not use any electronic address provided either in this notice of meeting or any related documents (including the Form of Proxy) to
communicate for any purposes other than those expressly stated.
46
PARENT COMPANY FINANCIAL STATEMENTS
PARENT COMPANY FINANCIAL STATEMENTS
47
ANNUAL REPORT AND ACCOUNTS 2016ANNUAL REPORT AND ACCOUNTS 2016 AorTech International plc
Level Two Springfield House 23 Oatlands Drive
Weybridge Surrey KT13 9LZ
tel: +44 (0) 1932 252 123
fax: +44 (0)1932 251 113
web: www.aortech.com
email: info@aortech.com
48
ANNUAL REPORT AND ACCOUNTS 2016STRATEGIC REPORTAorTech International plcBOARD OF DIRECTORS AND ADVISORS