FOR THE YEAR TO 31 MARCH 2017
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Aortech International Plc.CHAIRMAN’S STATEMENT Aortech International Plc.
CONTENTS
STRATEGIC REPORT
GOVERNANCE
3
4
6
6
8
8
9
11
13
CONSOLIDATED FINANCIAL STATEMENTS
Board of Directors and Advisors
Chairman’s Statement
Operating and financial review
Principal risks and uncertainties
Corporate Governance
Accountability and Audit
Report of the Remuneration Committee
Report of the Directors
Directors’ Responsibilities Statement
14
15
16
17
18
19
20
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
32
33
34
35
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
40
Notice of the Annual General Meeting
2
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Aortech International Plc.
BOARD OF DIRECTORS AND ADVISORS
DIRECTORS
W Brown
J McKenna
G Wright
COMPANY SECRETARY
J C D Parsons ACIS
Chairman
non-Executive Director
non-Executive Director
REGISTERED OFFICE
HEAD OFFICE
c/o Kergan Stewart LLP
163 Bath Street Glasgow G2 4SQ
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 Limited
INDEPENDENT AUDITOR
Grant Thornton UK LLP
Aspect House
Lancing West Sussex BN99 6DA
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.
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Aortech International Plc.
CHAIRMAN’S STATEMENT
In the year to 31 March 2017, AorTech’s revenues were reduced to $614,000
(2016: $901,000) over the full year; however the second half year witnessed sales which
were approximately 50% higher than those achieved at the interim stage. AorTech
generated a profit of $55,000 before the amortisation of intangible assets
(2016: loss of $263,000). After amortisation of intangible assets (depreciation of
Intellectual Property) of $292,000, the Company incurred an operating loss of $237,000
- less than half that incurred during the previous year (2016: $575,000).
The Board continued to maintain a close control over costs with administration expenses for the year being less than
half those incurred during the previous year, although the change in the Sterling/US Dollar exchange rate contributed
to that reduction.
The net current assets (total current assets less total current liabilities) remained relatively stable at $404,000
compared to $392,000 last year. Within this figure however there was a fall of $200,000 in the cash position which
stood at $114,000 at the year end. The fall in cash was mostly offset by an increase in receivables and as expected,
the cash position has increased since the year end.
LICENSEES
licences
Over the years, AorTech has signed a number
of
to allow AorTech polymer
intellectual property to be incorporated into
medical devices. A number of devices are
marketed which utilise the benefits of Elast-
Eon™ polymers; these include cardiac rhythm
management pacing leads, coronary artery
stents, neuro stimulation devices, catheters
and urology stents. In all applications, the
material is performing well and delivering
the bio-stability of silicone together with
the mechanical properties of urethane. Our
manufacturing licensee, Biomerics concluded
a licence for Elast-Eon™ earlier this year
together with a long term supply agreement.
There are currently a number of companies
evaluating Elast-Eon™ which if succesful may
lead to other licences. Biomerics adopts
a different approach to licensing to that
which AorTech has historically pursued.
AorTech signed a number of licences with
very
long
small/development companies
before products were ready for market
launch. As a result, other than annual
maintenance fees, the revenues from those
licences depended upon
future product
launches. By contrast, Biomerics is focussed
on volume supply and near term success.
Some historic licences signed by the Company
have not generated value
for AorTech
and have only resulted in the Elast-Eon™
material not being exploited in the field
of the licence. An example of this was the
licence for breast implants signed in 2011.
Since that time, AorTech’s technology has not
been incorporated into any new device nor
generated any revenue for AorTech despite
maintaining an IP portfolio in this arena. Your
Board still believes there to be substantial
benefits in utilising Elast-Eon™ technology in
cosmetic and reconstructive surgery and as a
result recently terminated this licence in order
to pursue other opportunities in the field.
In a similar manner, we have sought to
licences.
from non-performing
withdraw
We recently served notice of termination
on CardioSolutions, Inc which had licenced
polymer for use in heart valve repair, as two
annual minimum payments had been missed.
4
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ONGOING LITIGATION
DEFINITIONS
As shareholders are aware, AorTech has been
embroiled in long-running litigation against
its former CEO and related parties. The
Court recently heard four motions for partial
summary judgement. One of these motions
was brought by AorTech against Mr Frank
Maguire seeking judgement on Mr Maguire’s
breach of his service agreement. The other
three motions for partial summary judgement
were brought by defendants after the AorTech
motion was briefed. These motions included
a cross motion seeking denial of AorTech’s
motion on Mr Maguire’s breach of contract;
a motion seeking summary judgement on an
alleged breach by AorTech of a consulting
agreement with Mr Maguire, and a motion
seeking summary
judgement on alleged
non-payment of travel expenses incurred by
Mr Maguire a number of years prior to his
resignation. At the time of writing, the Court
has still to issue its rulings on these motions
together with two other motions for partial
summary judgement heard nearly two years ago.
“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;
“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)
A significant amount of work has been
undertaken, yet due to the confidentiality of
the process and the materials shared with the
Court, very little detail can be reported to
shareholders.
AorTech remains confident in its position and
is committed to pursuing justice on behalf of
shareholders.
BOARD CHANGES
Mr Eddie McDaid retired as Chief Executive
Officer and a Director last October. Your
Board wishes to express its gratitude to Mr
McDaid for his dedication and hard work and
to wish him a long and happy retirement.
The vacancy on the Board created by Eddie’s
retirement was filled by the appointment of
John McKenna as a Non-executive Director.
CONCLUSION
Despite the fall in revenue over the year, the
overall quality and maintainability of sales is
much better year on year. A new revenue-
generating
licence has been signed and
enquiries have increased markedly. We have
taken back control of our breast implant IP
and are actively pursuing opportunities to
exploit this alongside our other intellectual
property, including heart valves and polymers.
W BROWN
Chairman
15 August 2017
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Aortech International Plc.
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 DEVELOPMENTS
PRINCIPAL RISKS AND
UNCERTAINTIES
CURRENCY RISK
Income
The
consolidated
Statement
is set out on page 18
indicating the
Group’s
for the financial year of
loss of US$604,000)
US$237,000 (2016:
which will be deducted from the reserves.
loss
On a Group basis, the business review and
future prospects are contained within the
Chairman's Statement on pages 4 and 5. The
Directors consider the Group’s financial key
performance indicators to be revenue growth,
control of operating expenses and the pre
tax result. In addition the Directors consider
the Group’s 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. Along with
the internal control environment process
as detailed on page 8, mitigation of these
risks include: regular review of new market
opportunities; active management of licensees;
review of Board skills and remuneration
packages (as explained in the Remuneration
Report) and appropriate structuring of licence
agreements to mitigate product liability risk.
No dividends have been paid or proposed for the
years ended 31 March 2017 and 31 March 2016.
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,
far as possible, currency exposures.
as
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
and
in other
accumulated in the foreign exchange reserve.
comprehensive
income
GB Pounds
US$000
69
36
2017
US Dollars
2016
US Dollars
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.
6
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INTEREST RATE RISK
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 2017 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
Zero
US$000
Floating
US$000
Total
US$000
5
-
5
-
-
-
109
392
501
102
-
102
114
392
506
102
-
102
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
Company Secretary
AorTech International plc
Company number SC170071
Weybridge
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Aortech International Plc.
GOVERNANCE
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
INTERNAL CONTROL
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.
The Group currently has a reduced Corporate
Governance structure, reflecting the present
stage of development, the size of the business
and the Directors’ assessment of the cost /
benefit balance of full Corporate Governance.
The situation will, however, continue to be kept
under review in the light of ongoing corporate
developments and scaling up of activities.
DIRECTORS
The Board has formalised the review and
internal controls
reporting of the main
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
human
resources and information technology. The
Board will continue to review the system
internal controls within the Group.
of
development,
commercial,
The Company is controlled by the Board
of Directors which, at 31 March 2017,
comprised one Executive and two non-
Executive Directors.
All Directors
are able to take independent advice in
furtherance of their duties if necessary.
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.
ACCOUNTABILITY AND AUDIT
The principal elements of the system
include:
The Board includes a detailed review of the
performance of the Group in the Chairman’s
Statement on pages 4 and 5. Reading this
alongside the Strategic Report and the
Report of the Directors on pages 6 to 7
and 12 to 14 the Board seeks to present a
balanced and understandable assessment
of the Group’s position and prospects.
• A clearly defined structure which
delegates authority, responsibility and
accountability.
• A comprehensive system for reporting
financial results. Actual results are
measured monthly against budget
which together with a commentary
on variances and other unusual items
allows the Board to monitor the
Group’s performance on a regular
basis.
• A comprehensive annual planning
and budgeting programme.
• A revision of annual forecasts on a
periodic basis.
8
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Aortech International Plc.
REPORT OF THE REMUNERATION COMMITTEE
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
NON-EXECUTIVE DIRECTORS
SALARIES AND BENEFITS
At 31 March 2017 the Remuneration
Committee comprised the non-Executive
Directors as follows:
G WRIGHT (CHAIRMAN)
J MCKENNA
As appropriate, the Committee may invite the
Chief Executive to participate in some of its
discussions. No Director plays a part in any
discussion about his own remuneration.
The Committee is responsible for determining
the terms and conditions of employment of
Executive Directors. It is also responsible for
considering management recommendations
for remuneration and employment terms
of the Group’s staff,
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 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
formerly operated
The Company
an
Approved Share Option Scheme and an
Unapproved Share Option Scheme. These
schemes were closed in the prior year with
the remaining Option holders having agreed
to waive their rights under the Schemes.
The Group had not recognised any expense
share based
related
payment transactions in prior years on the
grounds that the charge was not material.
to equity-settled
PENSIONS
The Group made no contributions to a
personal or Company pension plan during the
year under review.
The remuneration of the non-Executive
Directors is determined by the Board with
reference to the annual survey of independent
Directors carried out by
Independent
Remuneration Solutions.
The non-Executive Directors do not receive
any pension or other benefits from the
Company, nor do they participate in any of
the bonus schemes.
The non-Executive Directors have service
agreements, which are reviewed by the Board
annually, and they are also included in the one
third of Directors subject to retirement by
rotation at each Annual General Meeting.
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; Mr McDaid has
since resigned. 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.
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REPORT OF THE REMUNERATION COMMITTEE CONTINUED
DIRECTORS’ EMOLUMENTS - AUDITED
Details of individual Director’s emoluments for the year are as follows:
Executive
E McDaid
W Brown
Non-executive
W Brown
E McDaid
G Wright
J McKenna
R Mitchell
Salary
Pension
&fees contributions
US$
US$
13,132
65,658
7,879
19,697
23,63
9,849
-
139,852
-
7,879
-
-
-
2017
Total
US$
13,132
65,658
60,029
19,697
23,637
9,849
-
139,852
2016
Total
US$
90,044
-
25,512
9,004
184,589
R Mitchell resigned as a Director on 31 May 2015. E McDaid resigned as a Director on 31 October 2016.
J McKenna was appointed as a Director on 31 October 2016.
GOVERNANCE
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.
J McKenna is employed by John McKenna (1953) Ltd in the provision of services to the Company. All of the emoluments of J McKenna above are
represented by payments made by the Company to John McKenna (1953) Ltd 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 11.
DIRECTORS’ INTERESTS IN SHARE OPTIONS
No Director holds share options.
On behalf of the Board
G WRIGHT
Chairman of the Remuneration Committee
10
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Aortech International Plc.
Aortech International Plc.
REPORT OF THE DIRECTORS
REPORT OF THE DIRECTORS
The Directors present their report and the audited financial statements for the year ended 31 March 2017.
GOING CONCERN
After considering the year end cash position, making appropriate enquiries and reviewing budgets and profit and cash flow forecasts to 31 March
2023, 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 are detailed in the Chairman’s Statement on pages 4 and 5.
DIRECTORS AND THEIR INTERESTS
At 31 March 2017 the Chairman and Chief Executive Officer of the Company was W Brown, and the non-Executive Directors were J McKenna
and G Wright.
At each Annual General Meeting one third of the Directors shall be subject to retirement by rotation. W Brown 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 2017 and 31 March 2016 in the ordinary share capital of the Company (all beneficially held)
were as follows:
E McDaid
G Wright
W Brown
J McKenna
31 March
2017
Number of shares
31March
2016
Number of shares
308,311
11,982
8,785
406,842
308,311
11,982
-
E McDaid resigned as a Director on 31 October 2016. J McKenna was appointed as a Director on 31 October 2016.
SUBSTANTIAL SHAREHOLDERS
With the exception of the following shareholdings the Directors have not been advised of any individual interest or group of interests held by
persons acting together which at 24 July 2017 exceeded 3% of the Company’s issued share capital:
Mr Richard I Griffiths
Mr Edward McDaid
Halifax Share Dealing Private Client Broker
Caricature Investments Limited*
Mr Roy Mitchell
Mr James Ede-Golightly
Mr Clive Titcomb
Charles Stanley Private Client Broker
Number of shares
812,294
381,842
339,913
308,311
304,419
280,956
263,919
212,651
%
14.62%
6.87%
6.12%
5.55%
5.48%
5.06%
4.75%
3.83%
*Caricature Investments Limited is a company wholly owned by G Wright, a Director of the Company.
The percentage of shares not in public hands (as defined in the AIM rules) at 24 July 2017 was 5.92%
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Aortech International Plc.
REPORT OF THE DIRECTORS CONTINUED
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 6 and 7
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 Wednesday, 27 September 2017 in the offices of Kergan Stewart LLP, 163 Bath
Street, Glasgow G2 4SQ is set out on page 40. 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 2017. Resolution 2
provides for approval of the Report of the
Remuneration Committee for the year ended
31 March 2017. 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
formal
appointment of John McKenna to the Board,
as required by Article 100 of the Company’s
Articles of Association. Resolution 5 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.
the
Resolution 6 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 6
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 7 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.
• to allot shares not in connection with
a rights issue up to a specific amount
so that the pre-emption requirement
does not apply to the allotments of
shares for cash up to that amount.
This authority is required to be renewed
annually. The Directors will be empowered by
Resolution 7 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 5 are termed ordinary
business. Resolutions 6 and 7 are termed
special business.
J C D PARSONS ACIS
Company Secretary
AorTech International plc
Company number SC170071
Weybridge
15 August 2017
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.
12
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Aortech International Plc.
DIRECTORS’ RESPONSIBILITIES STATEMENT
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
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
Company Secretary
Weybridge
15 August 2017
152918 TRU DES-Aortech Annual Report [7].indd 13
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Aortech International Plc.
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF AORTECH INTERNATIONAL PLC
We have audited the Consolidated financial statements of AorTech International Plc for the year ended 31 March 2017 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 2017 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 MATTERS PRESCRIBED BY THE COMPANIES ACT 2006
In our opinion, based on the work undertaken in the course of the audit:
• 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.
• The Strategic Report and the Report of the Directors has been prepared in accordance with applicable legal requirements.
MATTER ON WHICH WE ARE REQUIRED TO REPORT UNDER THE COMPANIES ACT 2006
In the light of the knowledge and understanding of the Group and its environment obtained in the course of the audit, we have not identified any
material misstatements in the Strategic Report and the Report of the Directors.
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 2017.
CHRISTOPHER FROSTWICK, SENIOR STATUTORY AUDITOR
For and on behalf of
GRANT THORNTON UK LLP
STATUTORY AUDITOR, CHARTERED ACCOUNTANTS
East Midlands
15 August 2017
14
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Aortech International Plc.
CONSOLIDATED INCOME STATEMENT
YEAR ENDED 31 MARCH 2017
YEAR ENDED 31 MARCH 2016
Notes
Pre-
exceptional
items
US$000
Exceptional
items
US$000
Revenue
Other income
Administrative expenses
Other expenses - amortisation
of intangible assets
Operating loss
Finance (expense) / income
Loss from continuing operations
attributable to owners of
the parent company
Loss attributable to owners
of the parent company
Loss per share
Basic and diluted
(US cents per share)
3
11
3
8
5
10
614
-
(571)
(292)
(249)
-
(249)
(249)
-
-
12
-
12
-
12
12
Pre-
exceptional
items
US$000
Exceptional
items
US$000
751
150
-
-
Total
US$000
614
-
Total
US$000
751
150
(559)
(1,084)
(80)
(1,164)
(292)
(237)
-
(312)
(495)
-
-
(80)
(29)
(312)
(575)
(29)
(237)
(495)
(109)
(604)
(237)
(495)
(109)
(604)
(4.27)
(12.00)
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Aortech International Plc.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Loss for the year
Other comprehensive income:
Items that will not be reclassified subsequently to profit and loss
Exchange differences
Items that will be reclassified subsequently to profit and loss
Exchange differences
Other comprehensive income for the year, net of tax
Total comprehensive income for the year, attributable to owners of the parent company
Year ended
31 March 2017
US$000
Year ended
31 March 2016
US$000
(237)
(604)
(2,329)
(586)
2,125
(204)
(441)
551
(35)
(639)
16
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Aortech International Plc.
CONSOLIDATED BALANCE SHEET
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
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
31 March 2017
US$000
31 March 2016
US$000
Notes
11
13
14
15
17
17
914
914
392
114
506
1,420
(102)
(102)
(102)
1,318
15,189
3,133
(2,511)
1,367
1,367
243
314
557
1,924
(165)
(165)
(165)
1,759
17,426
3,595
(2,881)
8,752
6,627
(23,245)
(23,008)
1,318
1,759
The Consolidated financial statements were approved by the Board on 15 August 2017 and were signed on its behalf by
W BROWN, Chairman
G WRIGHT, Director
Company number SC170071
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Aortech International Plc.
CONSOLIDATED CASH FLOW STATEMENT
Cash flows from operating activities
Group loss after tax
Adjustments for:
Amortisation of intangible assets
Finance expense / (income)
(Increase) / decrease in trade and other receivables
Decrease in trade and other payables
Net cash flow from continuing 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 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 2017
Year ended
31 March 2016
US$000
US$000
(237)
292
-
(149)
(106)
(200)
(200)
-
-
-
-
(200)
314
114
(604)
312
29
494
(109)
122
122
(168)
(168)
(168)
-
(46)
360
314
18
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Aortech International Plc.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Balance at 31 March 2015
Changes in equity
Issue of equity share capital
Transactions with owners
Loss for the year
Other comprehensive income
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
17,937
3,474
(2,974)
6,076
(22,115)
2,398
54
54
-
235
235
-
-
-
-
-
-
-
(289)
(289)
-
-
(604)
(604)
Exchange difference on translating foreign operations
Total comprehensive income for the year
(565)
(565)
(114)
(114)
93
93
551
-
(35)
551
(604)
(639)
Balance at 31 March 2016
17,426
3,595
(2,881) 6,627
(23,008)
1,759
Transactions with owners
Loss for the year
Other comprehensive income
-
-
-
-
-
-
-
-
-
-
(237)
(237)
Exchange difference on translating foreign operations
Total comprehensive income for the year
(2,237)
(2,237)
(462)
(462)
370
370
2,125
2,125
-
(237)
(204)
(441)
Balance at 31 March 2017
15,189
3,133
(2,511)
8,752
(23,245)
1,318
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Aortech 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.
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)
Basis of preparation
The Consolidated financial statements are for the year ended
31 March 2017. They have been prepared in compliance with
International Financial Reporting Standards
IFRS
Interpretations Committee (IFRIC) interpretations as adopted by the
European Union as at 31 March 2017.
(IFRS) and
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.
The Consolidated financial statements have been prepared under the
historical cost convention.
2. PRINCIPAL ACCOUNTING POLICIES
Basis of consolidation
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 2023, 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 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.
Changes in accounting policies
Revenue
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.
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, based on an initial analysis
are expected to have a significant impact on the Group’s financial
statements based on current agreements in place and activity. The
Group will continue to monitor the impact of those new standards,
particularly IFRS 15 if new customer agreements are entered into or
Group activity changes.
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:
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. Where revenue recognised
is based on minimum royalty levels, such revenue is treated as
being inherent in the licence, disclosed as licence fee income and
recognised consistent with royalty income as detailed below.
Royalty revenues: Royalty revenues are recognised as earned in
accordance with third parties’ sales of the underlying products.
20
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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
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.
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.
Intangible assets
Disposal of assets
(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.
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.
(b) Research and development:
Research costs are expensed as incurred. An intangible asset arising
from development expenditure on an individual project is recognised
only when the Group can demonstrate all of the following:
•
the technical feasibility of the intangible asset so that it will be
available for use or sale. In practice this will be when the
Group is satisfied that the appropriate regulatory hurdles have
been or will be achieved.
•
its intention to complete and its ability to use or sell the asset.
• how the asset will generate future economic benefits.
•
•
the availability of economic resources to complete the asset.
the ability to measure the expenditure during development.
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.
Impairment testing of intangible assets
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.
152918 TRU DES-Aortech Annual Report [7].indd 21
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Aortech International Plc.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
Financial assets
Taxation
Financial assets fall into the following category: Loans and receivables.
Current tax is the tax currently payable based on taxable profit for the
accounting period.
All financial assets are recognised when the Group becomes a
party to the contractual provisions of the instrument. Financial
transaction costs.
assets are recognised at
fair value plus
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
Financial liabilities fall into the following category: Financial liabilities at
amortised cost.
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 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.
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.
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.
"Other reserve" represents the difference arising on consolidation
between the nominal value of AorTech International Plc shares issued
(£3,206,884) and the nominal value of AorTech Biomaterials 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$.
"Profit and loss account" represents retained profits.
22
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Foreign currencies
Use of accounting estimates and judgements
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) which is the UK
on the basis of where the cost base of the business is. 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.
Many of the amounts included in the financial statements involve the
use of judgement and/or estimation. These judgements and estimates
are based on management’s best knowledge of the relevant facts and
circumstances, having regard to prior experience, but actual results
may differ from the amounts included in the financial statements.
Information about such judgements and estimation is contained in the
accounting policies and/or the notes to the financial statements and the
key areas are summarised below:
Judgements in applying accounting policies:
(a)
(b)
(c)
(d)
Capitalisation of development costs requires detailed analysis
of the technical feasibility and commercial viability of the
project. The Board regularly reviews this judgement in respect
of specific development projects.
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.
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.
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. 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)
(b)
(c)
(d)
Estimates are required as to intangible asset carrying values
and impairment charges.
Estimates of future profitability are required for the decision
whether or not to create a deferred tax asset.
Amortisation rates are based on estimates of the useful lives
and residual values of the assets involved.
Estimates as to recoverability of receivables, including future
expected cash flows.
152918 TRU DES-Aortech Annual Report [7].indd 23
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Aortech International Plc.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
3. SEGMENTAL REPORTING
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
Licence fees – services
Royalty revenue
2017
US$000
2016
US$000
125
489
614
139
612
751
During the year ended 31 March 2017, 28.0% of the Group’s revenues depended upon a single customer (2016: 29.5%).
The majority of the Group’s revenues are earned in the United States in both years.
2017
US$000
2016
US$000
Analysis of result - operating loss
Continuing operations
United Kingdom
USA
Operating loss
Finance (expense) / income – all UK
Loss on continuing operations before taxation
(237)
-
(237)
-
(237)
The operating loss disclosure above is after charging amortisation of $292,000 (all UK) (2016: $312,000 (all UK)).
Analysis of non current assets by location
United Kingdom
USA
2017
US$000
914
-
914
(575)
-
(575)
(29)
(604)
2016
US$000
1,367
-
1,367
24
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4. REMUNERATION OF DIRECTORS AND KEY MANAGEMENT PERSONNEL
Key management personnel
Emoluments – short-term employee benefits
Pension costs – post-employment benefits
2017
US$000
140
-
140
2016
US$000
185
-
185
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 10 for full details of Directors’ emoluments which have been audited.
Included in the aggregate emoluments for the year ended 31 March 2017 are payments of $83,000 (2016: $60,000) made by the Company to third
parties. The highest paid Director’s total emoluments were $73,000. (2016: $90,000). 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:
Audit of the Accounts of any associate of the Company
Audit related assurance services
Taxation compliance services
All other taxation advisory services
All other assurance services
6. EXCEPTIONAL ITEMS
Exceptional items relate to the legal fees in relation to the departure of Frank Maguire (former CEO).
2017
US$000
(24)
292
2016
US$000
(58)
312
143
200
28
3
3
1
2
33
3
3
11
2
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Aortech International Plc.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
7. EMPLOYEES
Employee costs (including Directors):
Wages and salaries
Social security costs
The average number of employees (including
Directors) during the year was made up as follows:
Administration
8. FINANCE (EXPENSE) / INCOME
2017
US$000
140
3
143
2017
Numbers
3
3
2016
US$000
185
15
200
2016
Numbers
3
3
YEAR ENDED 31 MARCH 2017
YEAR ENDED 31 MARCH 2016
Pre-
exceptional
items
US$000
Exceptional
items
US$000
-
-
-
-
Pre-
exceptional
items
US$000
Exceptional
tems
US$000
-
-
(29)
(29)
Total
US$000
(29)
(29)
Total
US$000
-
-
Change of control
redemption premium
(Charge) / credit
9. INCOME TAX EXPENSE
No current tax or deferred tax expense arises on the loss for the year (2016: $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%) (2016: 20%)
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
2017
US$000
(237)
(47)
25
(42)
64
-
2016
US$000
(604)
(121)
51
(68)
138
-
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 $5,899,000
– tax effect is $1,003,000 (2016: $6,589,000 – tax effect $1,318,000). Losses in the USA total $nil (2016: $nil).
26
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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
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
11. INTANGIBLE ASSETS
Gross carrying amount
At 1 April 2015
Additions
Exchange differences
At 31 March 2016
Additions
Exchange differences
At 31 March 2017
Amortisation and impairment
At 1 April 2015
Exchange differences
Charge for the year
At 31 March 2016
Exchange differences
Charge for the year
At 31 March 2017
Net book value
At 31 March 2016
At 31 March 2017
2017
US$000
(237)
(4.27)
(4.27)
5,557,695
5,557,695
5,557,695
Intellectual
property
US$000
2016
US$000
(604)
(12.00)
(12.00)
4,832,778
5,557,695
5,032,823
Total
US$000
4,729
5,020
-
(148)
168
(156)
4,581
5,032
-
(588)
3,993
-
(646)
4,386
Development
costs
US$000
291
168
(8)
451
-
(58)
393
68
3,406
3,474
(5)
73
136
(22)
83
197
315
196
(116)
239
(121)
312
3,529
3,665
(463)
209
3,275
1,052
718
(485)
292
3,472
1,367
914
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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
2017
US$000
2016
US$000
114
143
257
(102)
-
(102)
314
42
356
(165)
-
(165)
All amounts are short-term (all payable within six months) 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
2017
US$000
69
45
114
2016
US$000
36
278
314
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 $7,000 (2016:
$3,000) impact on net assets.
28
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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
Interest
rate %
2017
US$000
0%
0.25%
109
5
114
Interest
rate %
0%
0.25%
2016
US$000
310
4
314
Sensitivity analysis
If, for example, there had been a rise or fall of interest rates over the year of 1%, this would have resulted in an increase/decrease in profit and
equity of $nil (2016: $nil), 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 $30,000 (2016: $25,000).
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.
13. TRADE AND OTHER RECEIVABLES
Current
Trade receivables
Other receivables
Prepayments and accrued income
Non-current
Trade receivables
2017
US$000
2016
US$000
129
14
249
392
-
25
17
201
243
-
$60,000 (2016: $nil) of net trade and other receivables were past due for payment but not impaired at 31 March 2017, of which $nil (2015: $nil)
was over 30 days and $60,000 (2016: $nil) was over 90 days. A provision of $449,000 (2016: $369,000) was recognised against trade receivables.
Included in the above is $221,000 (2016: $191,000) of accrued income.
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Aortech International Plc.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
14. CASH AND CASH EQUIVALENTS
Cash at bank and in hand
15. TRADE AND OTHER PAYABLES
Current liabilities
Trade payables
Accruals and deferred income
2017
US$000
114
114
2017
US$000
8
94
102
2016
US$000
314
314
2016
US$000
12
153
165
Included in the above is $8,000 (2016: $9,000) of deferred income.
16. OPERATING LEASE COMMITMENTS
The Group had no commitments under non-cancellable operating leases at 31 March 2017 or 31 March 2016.
30
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17. SHARE CAPITAL
Ordinary shares of 250 pence each
In issue at 1 April 2016
In issue at 31 March 2017
Ordinary shares of 5 pence each
In issue at 1 April 2016
In issue at 31 March 2017
Deferred shares of 245 pence each
In issue at 1 April 2016
In issue at 31 March 2017
Shares
Number
-
-
Shares
Number
5,557,695
5,557,695
Shares
Number
4,832,778
4,832,778
Nominal
Value
US$000
-
-
Nominal
Value
US$000
400
348
Nominal
Value
US$000
17,026
14,841
Premium
net of costs
US$000
-
-
Premium
net of costs
US$000
296
258
Premium
net of costs
US$000
3,299
2,875
Total
US$000
-
-
Total
US$000
696
606
Total
US$000
20,325
17,716
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.
Capital management objectives are set out in the Strategic Report on page 7.
18. CONTINGENT LIABILITIES
There were no contingent liabilities at 31 March 2017 or at 31 March 2016.
19. RELATED PARTY TRANSACTIONS
Related party transaction disclosures are included within the Report of the Remuneration Committee.
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Aortech International Plc.
INDEPENDENT AUDITOR’S REPORT
ON THE PARENT COMPANY FINANCIAL STATEMENTS
We have audited the parent company financial statements of AorTech International Plc for the year ended 31 March 2017 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 2017;
• 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 matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
• 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 financial statements.
• The Strategic Report and the Report of the Directors has been prepared in accordance with applicable legal requirements
Matter on which we are required to report under the Companies Act 2006
In the light of the knowledge and understanding of the parent company and its environment obtained in the course of the audit, we have not
identified any material misstatements in the Strategic Report and the Report of the Directors
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 2017.
CHRISTOPHER FROSTWICK, SENIOR STATUTORY AUDITOR
For and on behalf of
GRANT THORNTON UK LLP
STATUTORY AUDITOR, CHARTERED ACCOUNTANTS
East Midlands
15 August 2017
32
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Aortech International Plc.
PARENT COMPANY BALANCE SHEET
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
Liabilties
Current liabilities
Trade and other payables
Total current liabilties
Total liabilities
Net assets
Equity
Issued capital
Share premium
Profit and loss account
Total equity attributable to equity holders of the parent
Notes
31 March
2017
£00
31 March
2016
£000
2
3
4
5
6
1,283
-
1,283
1,888
-
1,888
312
169
91
403
1,686
(82)
(82)
(82)
1,604
12,118
2,500
(13,014)
1,604
218
387
2,275
(115)
(115)
(115)
2,160
12,118
2,500
(12,458)
2,160
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 2017 was £556,000 (2016: loss of £830,000).
The parent company financial statements were approved by the Board on 15 August 2017 and were signed on its behalf by
W BROWN, Chairman
G WRIGHT, Director
Company number SC17007
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Aortech International Plc.
PARENT COMPANY STATEMENT OF CHANGES IN EQUITY
At 1 April 2015
Changes in equity
Issues of equity share capital
Transactions with owners
Loss and total comprehensive income for the year
Share
capital
£000
12,082
Share
premium
£000
2,340
Retained
earnings
£000
(11,628)
36
36
-
160
160
-
-
-
(830)
At 31 March 2016
12,118
2,500
(12,458)
Loss and total comprehensive income for the year
-
-
(556)
At 31 March 2017
12,118
2,500
(13,014)
Total
Shareholders’
funds
£000
2,794
196
196
(830)
2,160
(556)
1,604
34
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Aortech International Plc.
NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS
1. ACCOUNTING POLICIES
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 2017.
Basis of preparation
The Company meets the definition of a qualifying entity under FRS 101. The financial statements have therefore been prepared in accordance with FRS
101 as issued by the Financial Reporting Council.
As permitted by FRS 101, 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 2023, 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.
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Aortech International Plc.
NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS
(CONTINUED)
Foreign currencies
Assets and liabilities in foreign currencies are translated into sterling at the rates of exchange ruling at the balance sheet date. Transactions in
foreign currencies are translated into sterling at the rate of exchange ruling at the date of transaction. Exchange differences are taken into account
in arriving at the operating result.
Share based payments
All share based payment arrangements granted after 7 November 2002 that had not vested prior to 1 April 2006 are recognised in the financial
statements.
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.
2. INTANGIBLE ASSETS
Cost
At 31 March 2016
Additions for the year
At 31 March 2017
Amortisation
At 31 March 2016
Charge for the year
At 31 March 2017
Net book value
At 31 March 2016
At 31 March 2017
36
Intellectual
Property
£000
Development
costs
£000
4,929
-
4,929
3,260
543
3,803
1,669
1,126
314
-
314
95
62
157
219
157
Total
£000
5,243
-
5,243
3,355
605
3,960
1,888
1,283
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3. 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
2017
£000
2016
£000
23,159
23,159
(23,159)
(23,159)
-
-
Country of
registration
or incorporation
Description
of shares held
Proportion of
nominal value of
shares held %
Scotland
Ordinary £1
Scotland
Ordinary £1
Scotland
Ordinary £1
Australia
Ordinary Aus $1
USA
USA
Common US $1
Common US $1
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
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Aortech International Plc.
NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS
(CONTINUED)
4. TRADE AND OTHER RECEIVABLES
Current
Trade receivables
Other receivables
Prepayments and accrued income
Non current
Amounts owed by Group undertakings
Less: Provision*
2017
£000
102
11
199
312
3,955
(3,955)
-
2016
£000
17
12
140
169
3,955
(3,955)
-
*A cumulative impairment charge of £3,955,000 as at 31 March 2017 (31 March 2016: £3,955,000) has been made to fully provide against the
remaining amount of the inter-company loan account due as at 31 March 2017 to AorTech International plc by its American subsidiary, AorTech
Polymers & Medical Devices, Inc. A provision of £359,000 (2016: £322,000) was recognied against trade receivables.
Included in the above is £176,000 (2016: £133,000) of accrued income.
38
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5. TRADE AND OTHER PAYABLES
Trade payables
Accruals and deferred income
Included in the above is £6,000 (2016: £6,000) of deferred income.
6. SHARE CAPITAL
2017
£000
7
75
82
2016
£000
8
107
115
See Note 17 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 2017 is £12,118,000 (2016: £12,118,000).
7. 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 10.
8. 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.
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Aortech International Plc.
NOTICE OF THE ANNUAL GENERAL MEETING
Notice is hereby given that the twentieth Annual General Meeting of AorTech International Plc will be held in the offices of Kergan Stewart LLP,
163 Bath Street, Glasgow G2 4SQ on Wednesday, 27 September 2017 at 11:00am for the purpose of considering and if thought fit passing the
following resolutions, numbers 1 to 6 as Ordinary Resolutions and number 7 as a Special Resolution:
AS ORDINARY BUSINESS
1. To receive and adopt the financial statements of the Company for the year ended 31 March 2017 together with the Strategic Report and
the Reports of the Directors and Auditor thereon.
2. To approve the Report of the Remuneration Committee for the year ended 31 March 2017.
3. To re-elect W Brown, who is retiring by rotation.
4. To elect as a Director John McKenna, who was appointed a Director on 31 October 2016.
5. 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:
6. 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:
7. That subject to the passing of Resolution 6 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 6 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
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1.
2.
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 25
September 2017 or by 6.30pm two days prior to the date of any adjournment of the meeting. Changes to entries on the Register of Members
after that time shall be disregarded in determining the rights of any person to attend and vote at the meeting. 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 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.
3.
Completing and returning a Form of Proxy will not prevent any member from attending the meeting in person and voting should they so wish. 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.
4.
5.
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/site/public/EUI). 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.
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Aortech International Plc.
NOTICE OF THE ANNUAL GENERAL MEETING
6.
7.
8.
As at noon on 5 August 2017 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 2017 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) A copy of the service agreement for the Executive Director.
(b) A copy of the letters of appointment for the Non-Executive Directors.
(c) The Memorandum and Articles of Association of the Company.
These documents will also be available for inspection during the Annual General Meeting and for at least fifteen minutes before it begins.
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.
9.
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.
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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.net
email: info@aortech.net
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