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Perivan 263432
Polarean Imaging Plc
Group Annual Report & Accounts 2021
Company Number 10442853
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Group Annual Report and Financial Statements
for the year ended 31 December 2021
Contents
Company Information
Company Information
Chairman’s Statement
Chairman’s Statement
Chief Executive Officer’s Statement
Chief Executive Officer’s Statement
Strategic Report
Strategic Report
Directors’ Report
Directors’ Report
Corporate Governance Statement
Corporate Governance Statement
Remuneration Committee Report
Remuneration Committee Report
Independent Auditors’ report to the members of Polarean Imaging plc
Independent Auditors’ report to the members of Polarean Imaging plc
Consolidated Statement of Comprehensive Income
Consolidated Statement of Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Financial Position
Company Statement of Financial Position
Company Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Changes in Equity
Company Statement of Changes in Equity
Company Statement of Changes in Equity
Consolidated Statement of Cash Flows
Consolidated Statement of Cash Flows
Company Statement of Cash Flows
Company Statement of Cash Flows
Notes to the Financial Statements
Notes to the Financial Statements
Notice of the Annual General Meeting
Notice of the Annual General Meeting
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Directors
Group Annual Report and Financial Statements
for the year ended 31 December 2021
Company Information
Kenneth West Non-Executive Chairman
Richard Hullihen Chief Executive Officer
Charles Osborne Chief Financial Officer
Bastiaan Driehuys, PH.D. Chief Technology Officer
Jonathan Allis, PH.D. Non-Executive Director
(resigned 4 May 2022)
Daniel Brague Non-Executive Director
(appointed 4 May 2022)
Juergen Laucht Non-Executive Director
Cyrille Petit Non-Executive Director
Frank Schulkes Non-Executive Director
(appointed 13 April 2022)
Company Secretary
Stephen Austin
Registered Office
27-28 Eastcastle Street
London, W1W 8DH
Company Number
Registered in England and Wales Number 10442853
Nominated Adviser and Broker
Stifel Nicolaus Europe Limited
150 Cheapside
EC2V 6ET
London
Independent Auditor
Registrars
Principal Banker
Legal Advisers to the Company
Financial Public Relations
and Investor Relations
Independent Expert
Crowe U.K. LLP
55 Ludgate Hill
London
EC4M 7JW
Share Registrars Limited
3 The Millennium Centre
Crosby Way
Farnham
Surrey
GU9 7XX
Silicon Valley Bank
Alphabeta Building
14-18 Finsbury Square
London
EC2A 1BR
Reed Smith LLP
The Broadgate Tower
20 Primrose Street
London
EC2A 2RS
Walbrook PR
4 Lombard Street
London
EC3V 9HD
Pharma Ventures Limited
1300 Parkway Court
John Smith Drive
Oxford Business Park South
Oxford
OX4 2JY
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Group Annual Report and Financial Statements
for the year ended 31 December 2021
Chairman’s Statement
I am pleased to report on a year of considerable progress for Polarean particularly in light of the ongoing
global challenges. We have continued to build momentum in our strategy to advance our powerful Xenon
MRI lung imaging technology towards commercialisation. The COVID pandemic, and the challenges that
are growing with long COVID, have further accentuated the urgent global need for improved ways to
diagnose and manage pulmonary disease. Polarean is poised to offer a solution to the gaps that exist
with current diagnostic imaging to directly measure and visualise lung function.
Our efforts in 2021 focused on preparation for commercialisation, following the Company’s October 2020
New Drug Application (“NDA”) submission to the United States Food & Drug Administration (“FDA”). To
fund these commercialisation efforts, in April 2021, the Company completed an oversubscribed £27
million placing, subscription and open offer. This financing round put the Company into a strong financial
position and brought in several new top-tier investors into the Polarean shareholder base.
The market research and physician advisory boards that were conducted in 2021 thoroughly advanced
our understanding of the unmet needs our technology seeks to address and highlighted the market
opportunities that exist in several clinical applications at commercial launch. Through scientific
engagement between our medical affairs team and pulmonary disease thought-leaders undertaken in
2021, it is clear that awareness, interest, and enthusiasm is building for the potential of hyperpolarised
xenon MRI to improve the care of patients with pulmonary disease. The interest in Polarean’s technology
is also growing amongst several pharmaceutical companies that are seeking novel approaches to use
quantitative, functional lung imaging in the development of their investigational drugs. Finally, Polarean
has also been in close contact with reimbursement entities in the US market, developing pathways to
ensure that reimbursement for the use of Polarean’s products is established, and at a level that
acceptable to insurers and providers
We were disappointed in early October 2021 to have received a Complete Response Letter (“CRL”) from
the FDA in response to Polarean’s NDA submission. The Company worked diligently to comprehensively
respond to the questions raised in the CRL, which were mostly technical and manufacturing related. The
Company resubmitted the NDA to the FDA on 30 March 2022 and on 20 April 2022, the Company
announced that the FDA had accepted the resubmission of the NDA and established a user fee goal
date of 30 September 2022.
Our primary focus for the remainder of 2022 will be working with the FDA to obtain final approval for our
drug-device combination product and continuing the planning and preparation for commercial launch.
We are also looking forward to generating new clinical data evidence to support a strong value proposition
and indication and geographical expansion in subsequent regulatory filings over the next several years.
On behalf of the Board, I thank the employees, stakeholders and shareholders for their support, without
which none of this would have been possible.
Kenneth West
Non-Executive Chairman
17 May 2022
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Group Annual Report and Financial Statements
for the year ended 31 December 2021
Chief Executive Officer’s Statement
2021 – Year of Preparation and Response
We spent the first nine months of 2021 preparing for the launch of our drug-device combination product
in anticipation of receiving FDA approval in the fourth quarter of 2021. On 5 October 2021, we were
surprised to receive a CRL from the FDA, indicating that they were unable to approve the NDA in its
current form. The CRL and subsequent Type A meeting with the FDA provided the Company with the list
of issues that needed to be addressed to obtain approval. The issues were mostly technical or
manufacturing-related in nature and centred around the xenon hyperpolariser system. The Company
worked with its consultants and collaborators to address the items identified in the CRL. On 30 March
2022, the Company refiled the NDA with the FDA. The resubmission addressed the items identified in
the CRL. On 20 April 2022, the Company announced that the FDA had accepted the resubmission of
the NDA and established a user fee goal date of 30 September 2022, designating it Type 2.
The Opportunity
Pulmonary disease places a significant burden on the US and global healthcare systems. In addition,
the COVID-19 pandemic has resulted in millions of additional patients who could potentially benefit from
improvements in the quantitative assessment of pulmonary function via non-invasive imaging. The
Company sees a tremendous opportunity to bring our technology’s quantitative, reproducible, non-
invasive method for diagnostic and therapeutic guidance to medicine. Researchers around the world are
receiving grants to study long COVID patients using the Company’s technologies. Promising preliminary
results are already emerging and being published and we anticipate additional studies being published
over the next 12 months. Researchers are currently conducting clinical trials and pharmaceutical
company sponsored investigations in multiple areas of pulmonary disease using our technology. The
Company continues to do market research and work with key opinion leaders through its advisory board
process to refine and extend our understanding of current standards of care and refine the development
of the healthcare economic analyses of our technology to support the adoption of hyperpolarised noble
gas imaging by healthcare providers. The business plan continues to focus initially on addressing the
high end of the US academic and teaching hospital market segment, which comprises approximately
the top 1000 institutions nationally having coincident multiple Centres of Excellence in Pulmonary
Medicine and Radiology. The combined addressable capital equipment market there for our products
approaches US$500 million in equipment sales alone, with the consequent drug sales following, as laid
out in recently published research. We also see a parallel opportunity supporting the pharmaceutical
industry in improving the velocity and reducing the scale and cost of their pulmonary drug clinical trials
by providing quantitative, reproducible image-based data.
Polarean continues to serve the medical imaging research market by providing xenon polarisers to enable
functional MRI of the pulmonary system to institutions and researchers. This brings dynamic,
reproducible, three-dimensional, high-resolution, regional, quantitative, image-based information to
pulmonary physicians and researchers whose best alternative tool is spirometry, with its limitations in
use for measurement of expired breath. We expanded our installed bases with two new polariser
installations during 2021, including one at high profile academic research centre, MD Anderson.
Our Organisation
In anticipation of FDA approval, the Company has been involved in preparing the organisation for
commercialisation of our products. The Company recently named Alexander Dusek as its Chief
Commercial Officer. Mr. Dusek brings an extensive background in pharmaceutical industry
commercialisation and is building our commercial organisation to support a successful launch upon FDA
approval.
Our Operations
In 2021, the Company focused on working with its drug and system contract manufacturing partners to
ensure that they are prepared for the launch of the Company’s product. In addition, we made planned
advances in our quality systems and engineering infrastructure as we move toward maturing in our new
regulated environment.
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Group Annual Report and Financial Statements
for the year ended 31 December 2021
Chief Executive Officer’s Statement (continued)
During the year, we completed installations of two model 9820 xenon polariser systems at BC Children’s
Hospital, Vancouver BC, and at the University of Texas MD Anderson Cancer Center, to support their
pulmonary research programmes.
R&D
We continued to invest in our intellectual property portfolio and future development of our technology.
Intellectual property continues to be developed in the areas of gas exchange and pulmonary vascular
disease. Our group has continued to push the design of the polariser systems forward. We have also
made key advances in exciting new display and analysis software focused on providing an intuitive,
colour encoded three-dimensional display for use across all stakeholders in the healthcare process
focused on providing care to pulmonary patients.
Financials
Sales for 2021 were below our original expectations, as we did not receive FDA approval in the final
quarter as anticipated in the plan. We were able to adjust our spending plans following receipt of the
CRL from the FDA, which allowed us to finish 2021 with a higher than anticipated cash balance of
US$28.9 million. We continued to sell our polariser systems into the research market and completed two
installations during 2021. The financing we completed in the first half of 2021 has put the Company in a
solid financial position with the ability to fund the Company well into 2023.
Advisers
The Company appointed Stifel as joint broker in December 2020 and followed that up by appointing them
as the Company’s nominated adviser and sole broker early in 2021. Stifel guided the Company through
an oversubscribed round of financing, securing important new and larger funds participation in the first
half of 2021 that allowed the Company to prepare for the anticipated US launch of its product.
2022 and Beyond
We spent the first quarter of 2022 finalising our NDA resubmission focusing on execution of near-term
objectives. We announced on 20 April 2022 that the FDA had accepted the resubmission of the NDA as
a complete response and has established a user fee goal date of 30 September 2022. In the meantime,
we continue to sell our systems to the research market, including the recently announced order and
installation from McMaster University in Canada, and an order for an additional system at Cincinnati
Children’s Hospital Medical Center.
We continue to identify exciting opportunities in the areas of long COVID, cardiology and pulmonary
vascular disease and these prospects should expand the use of the Company’s technology in the future.
We recently announced a research collaboration in long COVID with Oxford University Hospitals NHS
Trust, whereby we will evaluate the underlying causes of persistent breathlessness in patients with long
COVID using our xenon polariser. We are utilising the delay in obtaining FDA approval to work on the
commercialisation and launch programmes and explore initiation of follow-on trials for potential future
applications of our technology. We have begun evaluation of geographic market exploration and
expansion, and the pursuit of early engagement with respiratory drug developers as we develop scale
sufficient to prove our value proposition with regard to reducing the costs of their drug development
process.
Polarean has a dedicated team of employees, consultants and advisers working to bring our much-
needed technology to the healthcare market.
Richard Hullihen
Chief Executive Officer
17 May 2022
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Group Annual Report and Financial Statements
for the year ended 31 December 2021
Strategic Report
1. Introduction
The Group comprises medical drug-device combination companies operating in the high-resolution
medical imaging market. The Group develops equipment that enables existing MRI systems to achieve
an improved level of pulmonary functional imaging and specialises in the use of polarised xenon gas
(129Xe ) as an imaging agent to visualise ventilation (the ability of air to reach the alveoli) and gas
exchange (the ability of oxygen to diffuse through the alveolar membrane into the pulmonary vasculature)
regionally down to the smallest airways of the lungs, the tissue barrier between the lung and the
bloodstream and in the pulmonary vasculature; and now also microvascular haemodynamics within the
lung, a novel diagnostic approach. The Group will also register and sell the high-performance MRI
radiofrequency (RF) coils which are a required component for imaging 129Xe in the MRI system. Providing
access to these coils facilitates the adoption of the Xenon technology by providing application-specific
RF coils which optimise the imaging of 129Xe in MRI equipment.
The Group was formed on 31 May 2017 when the Company acquired Polarean, Inc (the “Subsidiary”).
The Subsidiary was formed as a result of two mergers: the first between Polarean Merger-Sub Inc. and
m2m, a company that the Subsidiary had developed a relationship with during the course of previous
research and commercialisation programmes in the US and the second between m2m and the
Subsidiary. m2m was previously a portfolio company of Amphion Innovations plc (“Amphion”), a
developer of medical, life science, and technology businesses, which is itself currently listed on AIM.
2. Investment Case
Pulmonary disease currently affects hundreds of millions of people globally, including approximately 174
million people who suffer from Chronic Obstructive Pulmonary Disease (“COPD”), which is responsible
for approximately 6% of such deaths globally each year. In the US more than 30 million people suffer
from a chronic lung disease such as COPD, which includes emphysema, chronic bronchitis and asthma.
In addition to its significant human toll, pulmonary disease also represents an economic burden in excess
of US$150 billion annually in the US alone.
Every type of pulmonary disease involves some combination of ventilation and/or gas exchange
impairment, yet the successful and cost-effective treatment of lung disease is hampered by sub-optimal
methods for quantifying pulmonary ventilation and gas exchange. Current diagnostic techniques are
either imprecise (such as spirometry) and/or expose the patient to potentially dangerous radiation (such
as x-rays, CT scans and nuclear scintigraphy). While spirometry has benefits as a screening tool, none
of these current methods can visualise ventilation or gas exchange regionally in the smallest airways,
where lung disease typically begins and where improvements from new pharmaceutical therapies can
first be detected.
As such, the Group operates in an area of significant unmet medical need and is pursuing approval by
the US Food & Drug Administration (“FDA”) for the Group’s drug-device combination product using
hyperpolarised xenon-129 gas to enhance MRI in pulmonary medicine. The Company submitted a new
drug application (“NDA”) to the FDA on 5 October 2020 after the successful completion of the FDA Phase
III clinical trials in the US for the Group’s technology. The 80-patient equivalence clinical trials were
conducted at Duke University Medical Center, the University of Virginia and The University of Cincinnati
– three leading US research hospitals. Enrolment of the clinical trials was completed in November 2019.
In January 2020, the Company announced that both clinical trials met their primary endpoints, within the
prospectively defined equivalence margin (+/-14.7%) when compared to the FDA-approved reference
standard, 133Xenon scintigraphy imaging. On 5 October 2021, the Company received a Complete
Response Letter (“CRL”) from the FDA requesting that the Company to address approvability issues
identified by the FDA ahead of NDA resubmission. On 30 March 2022, the Company filed the
resubmission of the NDA with the FDA. On 20 April 2022, the Company announced that the FDA had
accepted the resubmission of the NDA and established a user fee goal date of 30 September 2022. The
Directors anticipate receiving a broad indication for use from the FDA following the FDA’s review period.
The Group’s technology overcomes important limitations of current lung diagnostic methods, providing
the ability to visualise, quantify and monitor both the structure and function of the smallest airways and
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Group Annual Report and Financial Statements
for the year ended 31 December 2021
Strategic Report (continued)
alveolar spaces with enhanced sensitivity and without harmful radiation. This provides a unique, valuable
and more precise tool to help diagnose disease earlier, identify the type of intervention likely to benefit
a patient, monitor the efficacy of treatment and facilitate developing new therapies for pulmonary
diseases.
3. Group Structure and History
The Company was incorporated in England and Wales on 24 October 2016 with company registration
number 10442853. The Company’s registered office is 27-28 Eastcastle Street, London, W1W 8DH.
On 31 May 2017, m2m, a company formed in the US State of Delaware on 18 February 1999, was
merged into the Company.
On 29 March 2018, the Company’s shares were admitted to trading on the AIM market of the London
Stock Exchange
4. Information on Polarean, m2m and Strategy of Group
4.1 Polarean, Inc. – Background
The Subsidiary was co-founded by Dr Bastiaan Driehuys, a current Director of the Company, and
John Sudol, a former director of the Subsidiary, in 2011. Prior to co-founding the Subsidiary,
Dr Driehuys was a member of a research team at Princeton University in the early 1990s which
was amongst the first research teams to focus on hyperpolarised gas MRI technology; in particular
isotopically enriched helium (3He). The team developed and held key patents relating to the
technology. The technology was acquired in 1999 by Amersham, Inc. (“Amersham”), with the goal
of commercialising hyperpolarised helium products to be marketed and distributed alongside
Amersham’s full line of contrast agent products. Dr Driehuys led the development efforts for
Amersham, which continued the development of these hyperpolarised helium products throughout
the early 2000s until GE Healthcare (“GE”) acquired Amersham in 2004.
GE continued the research and development of hyperpolarised gas MRI after the acquisition of
Amersham, focusing on 129Xe as a more effective substitute for 3He in visualising ventilation. GE
also began to explore ways in which 129Xe could be used to image gas exchange within the lung in
addition to ventilation. These work programmes culminated in the conduct of a Phase I/II clinical
trial at Duke University in 2008-2009. GE also filed Investigational New Drug Applications (‘INDs”)
with the FDA for both 3He and 129Xe. By 2010, after an investment of approximately US$40 million
in the technology and with the regulatory path for hyperpolarised gas remaining unclear, GE decided
to out-license the hyperpolarised gas technology and the related patent families that it had
developed and/or maintained to the Subsidiary, due to the scale at the time and the early-stage
nature of the technology’s development.
In December 2011, the Subsidiary negotiated the acquisition of all of GE’s assets related to the
hyperpolarised MRI project, including an inventory of polarisers and parts and the licenses (or
outright ownership) of the related patent families.
Following the acquisition of GE’s hyperpolarisation assets, the Subsidiary focused on three key
objectives:
l building and selling polarisers to research users to generate operating revenue and to
disseminate the technology to academic research institutions that generate clinical data in
order to build additional interest in the technology;
l further developing the xenon hyperpolarisation technology in order to meet clinical use
specification requirements; and
l liaising with the FDA in order to clarify the FDA regulatory path under which the product could
achieve clearance to market for clinical use.
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Group Annual Report and Financial Statements
for the year ended 31 December 2021
Strategic Report (continued)
In July 2012, the US Congress passed the FDA Safety and Innovation Act and the Medical Gas
Act, which clarified and simplified the path under which hyperpolarised gas MRI technology could
be approved for clinical use by the FDA.
As a result of discussions between the Group and the FDA, the Directors believe that a clearer path
towards regulatory approval now exists. As such, following listing our shares on the AIM market the
Group began conducting the clinical studies required for FDA approval to market.
Between January 2012 and May 2017, the Subsidiary generated over US$3.7 million of revenue
from selling polarisers to customers in Canada, Germany, the UK and the US for research use,
relating to both clinical (human) and pre-clinical (animal) applications. In addition, the Subsidiary
received additional funding of approximately US$2.5 million from Nukem and other Series A
investors. Prior to the m2m merger, the Subsidiary was also successful in receiving grant funding,
including a US$3 million grant awarded in April 2017 by the US National Heart, Lung and Blood
Institute (NHLBI) following a competitive application process (for which the research will be
conducted with its clinical collaborator, the Cincinnati Children’s Hospital) and a US$250,000 small
business research loan from the North Carolina Biotech Center in March 2017, which was also
awarded following a competitive application process.
4.2 The Group’s Technology and Products
The Subsidiary’s lead product has been designated as a drug-device combination by the FDA. The
Subsidiary’s product enables the visualisation of hyperpolarised 129Xe (“HPX”) through MRI
technology to help diagnose lung disease earlier, identify the type of intervention likely to benefit a
patient and to monitor the efficacy of treatment. As a result of the FDA’s drug-device designation,
the Subsidiary’s products will be approved and sold only for use with each other. The products are
currently being used at a number of research sites on a pre-FDA clearance basis to facilitate the
research and evaluation of lung function, to assist in making improved disease progression
assessment and to clearly visualise the effectiveness of several therapeutics which are under
development. The Group currently generates revenue from the sale of products within its 129Xe gas
hyperpolarisation platform.
Implementing the Group’s technology in a clinical setting is straightforward: prior to the MRI scan a
patient breathes in a small amount of inert HPX to provide an extremely strong MRI signal. This
transforms the MRI from a technology that is not applicable to the lungs into one that is able to
provide multiple images of the lung structure and function in one 10-20 second breath-hold. HPX
MRI overcomes the limitations of traditional pulmonary function testing as HPX MRI:
l is more accurate and reproducible than spirometry and other traditional pulmonary function
tests, enabling the detection and mapping of small and localised changes in lung ventilation
and gas exchange over time;
l provides regional information about lung disease without exposure to ionising radiation or
radioactivity; and
l assesses ventilation and gas exchange in the smallest airways, where disease often begins.
The Group’s technology works in conjunction with traditional MRI, transforming it into a powerful
diagnostic modality for the lung. The Group’s approach is to take 129Xe, an inert gas, and
hyperpolarise the nucleus to create an MRI signal which is approximately 100,000 times stronger
than a conventional MRI signal. When the MRI scan is undertaken, the HPX resonates at different
frequencies: (i) in the bronchioles and alveoli of the lung; (ii) in the barrier tissue of the lung; and
(iii) when dissolved in arterial blood in the pulmonary vasculature, thus providing information on
ventilation (the ability of air to reach the alveoli) and gas exchange (the ability of air to diffuse through
the alveolar membrane into the pulmonary vasculature). As all pulmonary diseases result from
impairments to the free flow of air through bronchioles, or from abnormal gas exchange between
the lung alveoli and the pulmonary vasculature, the images that result from HPX MRI scans which
have been executed using the Group’s technology can aid diagnosis, by enhancing the physician’s
ability to clearly identify issues with ventilation and gas exchange on a regional basis, down to the
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Group Annual Report and Financial Statements
for the year ended 31 December 2021
Strategic Report (continued)
smallest of airways. Hyperpolarisation of the 129Xe is accomplished by placing a non-radioactive
isotope of Xenon (129Xe) into a beam of circularly polarised laser light in the presence of very small
concentration of the alkali metal Rubidium, which acts as a physical catalyst in the hyperpolarisation
process. The result is 129Xe whose nuclear magnetic spin is highly aligned but not chemically or
biologically different than unpolarised 129Xe, an inert gas. This hyperpolarised state persists for
around 2 hours allowing ample time to administer the HPX to the patient.
The Group’s products include:
l the 129Xe gas, blended and made under GMP at high purity, to be polarised within the polariser;
l the polariser itself, of which the latest model, the Polarean 9820 Xenon Hyperpolariser, has
been designed to deliver up to 3 litres of HPX per hour (approximately 5-10 doses) of which
each dose is to be used within 30 minutes of its production in order to retain sufficient
polarisation to create a strong image;
l the dose delivery inhalation bag, made of HPX-compatible impermeable plastic materials and
a mouthpiece for ease of inhalation; and
l the Polarean 2881 Polarisation Measurement Station, which provides a calibrated
measurement of the polarisation of hyperpolarised gas within the dose delivery inhalation bag.
The Group currently designs and builds the polariser equipment at a contract manufacturer and
has relationships with GMP gas producers to supply the Group with high purity 129Xe according to
the Group’s specifications.
In order to take advantage of the Group’s current products, an MRI machine is required to be
outfitted with hardware and software capable of operating at 129Xe frequency to detect the HPX
signal. In addition, the patient will need to wear a 129Xe RF chest coil to allow for detecting the HPX
MR signal in the lungs. Approximately 35,000 MRI machines are currently in use worldwide and
technically many of these can be easily adapted to be used with 129Xe frequency. The Group’s
products can be placed near the MRI scanner for ease of radiology workflow and, following the
m2m merger, the Group has continued to explore ways to further integrate the Group’s existing
technology with the coils which had previously been the focus of m2m.
4.3 Location
The Group is based at the Meridian Corporate Center, located in the Research Triangle Park area
of North Carolina, which provides a favourable location at which to further develop the core
technology and product range. The Group’s facilities consist of more than 6,900 square feet of
combined offices, laboratory space, inventory warehouse and assembly and testing areas. The
Group benefits from facilities that were originally purpose-built by GE for the design and manufacture
of hyperpolarisation equipment and components, pursuant to FDA-mandated guidelines.
Within these facilities are a dedicated research and development laboratory equipped with 3-phase
power, central compressed air, specialty gas handling and distribution and separate heating,
ventilation and air conditioning. The laboratory area also includes optical cell production equipment
capable of simultaneous processing of four optical cells for Xenon applications. The laboratory is
designed for safe operation of class 4 lasers and is equipped with laser power and spectral testing
apparatus.
The Group also maintains a dedicated polariser test bed that is used for product development and
a dedicated NMR system capable of delivering available electromagnetic field strength, utilised for
calibrating absolute polarisation measurements of hyperpolarised gas samples.
4.4 The Regulatory Environment
At present, prior to the receipt of any approvals for clinical use, the Group sells its polarisers and
disposables for research use only to academic medical centres with their research being subject to
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Group Annual Report and Financial Statements
for the year ended 31 December 2021
Strategic Report (continued)
oversight by their respective institutional review boards and conducted under IND from the FDA or
equivalent regulatory body.
The Group has held regular meetings with the FDA to develop a path towards approval for clinical
use and the FDA has indicated its willingness to accept a very broad indication for use for the
Group’s technology – for the evaluation of pulmonary function – as opposed to its use being limited
to any particular pulmonary disease or condition. The FDA accepted the Group’s NDA for review in
December 2020 after the completion of Phase III trials. The Phase III trials included a total of 80
patients and met their primary endpoints. The FDA has indicated that it will also accept existing
literature-based data in fulfilment of certain safety and toxicology requirements. The Directors
believe that this broad indication provides the Group with a sizeable, addressable market.
4.5 The Group’s Customers
The Group’s existing customer base already comprises some of the world’s luminary medical
imaging research institutions. Indeed, there are numerous research institutions worldwide utilising
the Group’s system and products, including Cincinnati Children’s Hospital, the University of Virginia,
University of Wisconsin – Madison, Duke University, University of Kansas and the University of
Iowa in the US, Robarts Research Institute and Hospital for Sick Children (SickKids) in Canada,
the University of Oxford and the University of Nottingham in the UK and the Fraunhofer Institute for
Toxicology and Experimental Medicine in Germany. At the date of this report, there are currently 23
xenon hyperpolariser units installed at these and several other leading research hospitals and the
Group anticipates selling further units for research purposes during the course of the NDA review.
4.6 The Group’s Suppliers
The Group has entered into Master Service Agreements with two CROs in relation to the Phase III
trial. Pharma Start LLC, doing business as Firma Clinical Research, managed the trials and oversaw
the recruitment of patients for the trial. In addition, Icon Clinical Research Limited assisted with the
medical imaging aspects of the trial.
The Group has a long-standing relationship with its strategic investor Nukem Isotopes GmbH
(“Nukem”), a leading global supplier of 129Xe, the isotope of xenon which is provided to the various
gas blenders that in turn supply gas to the Group. It has a supply agreement with Nukem for 129Xe.
In June 2020 the Group signed an agreement with Linde Gas North America LLC (“Linde”), in
relation to the supply of the Group’s drug product, a 129Xenon gas blend. This agreement contains
provision for the supply of bulk 129Xe to be manufactured into the Active Pharmaceutical Product
(API), 129Xe, and for the blending, packaging, and distribution of its drug product under GMP.
The Group has an arrangement with the Blur Product Development (“Blur”) to build its polariser
systems in Blur’s GMP facilities.
4.7 Current Trading and Prospects
Trading of the Group since the Company’s IPO continues to be in line with the Directors’
expectations. The potential of the Group’s technology enables the Directors to view the future with
confidence ahead of receipt of the anticipated FDA-approval for its drug-device combination product
and the exploitation of the addressable markets for the Group’s technology.
4.8 Growth Strategy
The Group estimates that in the short term it will generate additional revenue from the sale of
hyperpolarisers to global research institutions and the Directors believe that the market for polarisers
will grow as the technology gains wider acceptance as a tool for studying lung disease and for
monitoring the effectiveness of therapeutics. At present, a number of major pharmaceutical
companies are working with universities that are well known to the Group, regarding the use of
HPX MRI technology to help guide clinical trials of developmental pharmaceutical products, which
is raising awareness of the Group’s technology and product range.
Polarean Imaging plc
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Group Annual Report and Financial Statements
for the year ended 31 December 2021
Strategic Report (continued)
Upon receipt of FDA approval, the Group will adopt a traditional market entry strategy of building
market awareness for its technology through key opinion leaders and a direct sales force to reach
the key decision makers within its initial target market of large academic medical centres. In
implementing this strategy, the Group benefits from approximately 1,000 journal articles on the use
of hyperpolarised gas MRI that are currently published in peer-reviewed journals. Over time, as
more research centres purchase the Group’s equipment and begin clinical studies, an increasing
number of peer reviewed scientific articles are likely to be published, further enhancing the Group’s
credibility and raising awareness of the Group’s technology. The Group also intends to continue
patenting and in-licensing hyperpolarised gas technology IP to protect its current position.
Following receipt of FDA clearance to market the technology, the Group’s initial sales targets will
be the radiology and pulmonary medicine departments of top academic hospital organisations in
the US, who are opinion leaders in the use of new diagnostic technologies and their application in
a clinical setting.
Subsequently, the Group will seek to expand its sales and marketing teams. Because of the
specialty nature of the Group’s products in the pulmonary specialist market, which is concentrated
in approximately 1,000 medical centres, the Directors believe that a small specialty sales force can
be deployed effectively at reasonable cost.
The Group may also choose to partner with companies that offer complementary products.
Furthermore, the Directors believe that the Group’s products will benefit a number of clinical
applications. While the Group’s HPX MRI technology provides more specific information than
currently available from existing lung diagnostic procedures (especially spirometry), the Group will
focus its use on specific clinical conditions where the high accuracy of HPX MRI and greater cost
are justified. The Directors do not believe that HPX MRI will replace low-cost spirometry as a general
screening tool but believe that it should add value in more demanding clinical applications where
HPX MRI addresses unmet diagnostic needs. These applications could include, but are not limited
to, the following:
l the monitoring of COPD therapy, especially for the most severe cases;
l the management of cystic fibrosis;
l determining the optimal use of biologic therapy in chronic asthma
l a more efficient diagnosis of dyspnoea and the chronic cough;
l providing guidance for radiation therapy planning of lung cancer treatment;
l providing guidance for interventional pulmonology procedures including ablation and the
placement of valves and stents;
l surgical procedure planning for lung transplant and volume reduction surgery;
l diagnosis of ILD and monitoring of ILD therapy;
l diagnosis of pulmonary vascular disease (PVD) including pulmonary arterial hypertension
(PAH) and monitoring of therapy; and
l diagnosis and monitoring of long COVID patients.
The Directors have begun to develop relationships with a range of strategic partners and will
evaluate opportunities which will enable the Group to address its target markets globally, either
alone or in collaboration with a partner.
5. Intellectual Property (“IP”)
The Group’s technology has been developed in four areas: (i) hyperpolarising gas; (ii) assuring the quality
of the hyperpolarised gas; (iii) using the polarised gas in MRI applications; and (iv) developing and
producing specialised RF coils to improve signal-to-noise ratios (“SNR”). GE had put a comprehensive
patent policy in place to protect its technology from potential competitors. The Group is now the sole
Polarean Imaging plc
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Group Annual Report and Financial Statements
for the year ended 31 December 2021
Strategic Report (continued)
owner of this IP portfolio, which is based on 10 patent families, and when combined with the 7 patents
that were previously owned by m2m, that were transferred to the Group following the m2m Merger, the
Group’s portfolio covers four broad types of patents:
l imaging methods – these cover the imaging of a subject, or patient, who has inhaled a
hyperpolarised noble gas and the functionality of the gas as a contrast agent. Newly licensed
technology from Duke University extends the protection over these patents through to the early
2030s;
l hyperpolarisation methods – these are polarimetry patents covering the methods by which noble
gases are polarised and the methods by which the resulting polarised gas is isolated and delivered
to patients. The latest of these patents expire in the early 2020s;
l hyperpolarisation equipment – these patents cover the multiple preferred mechanical design and
automation elements of hyperpolarised equipment; and
l RF coil patents – these patents cover the use of cryogenics to improve RF coils SNR and image
quality and may play an important part in the next generation of applications such as neurological,
cardiac and oncology imaging.
Polarean is committed to proactively developing further IP, both internally and through licensing
arrangements with third parties, as part of the Group’s overall growth strategy. The third parties are likely
to include the Group’s key collaborative academic sites, such as Duke University, that are seeking to
develop emerging applications and technologies. Because of the Group’s extensive patent portfolio and
leading market position, the Directors believe the Group is an attractive licensing partner for academic
research institutions that are interested in out-licensing such IP. One such patent application
(US15/120013), which is currently pending, relates to improving the overall efficiency of the
hyperpolarisation process. This patent has also been exclusively licensed to the Group by Duke
University. The Directors believe that this patent, now having been prosecuted successfully to issuance
in a number of geographic jurisdictions worldwide, would enable the Group to protect methods for
increasing the level of hyperpolarisation significantly, which could improve the competitive economics of
the Group’s products.
6. Principal Risks and Uncertainties
The principal risks and uncertainties facing the Group are detailed below:
Early stage of operations
The Group’s operations are at an early stage of development and there can be no guarantee that the
Group will be able to, or that it will be commercially advantageous for the Group to, develop its proprietary
technology. Further, the Group currently has no positive operating cash flow and its ultimate success will
depend on the Directors’ ability to implement the Group’s strategy, generate cash flow and access capital
markets.
Principal mitigation
The Group has successfully advanced the 129Xe technology for several years, including selling polarisers
for the research market. The Group has been able to access capital required to continue to advance the
technology.
Regulatory approvals and compliance
The Group will need to obtain various regulatory approvals (including FDA and European Medicines
Agency (“EMA”) approvals) and otherwise comply with extensive regulations regarding safety, quality
and efficacy standards in order to market its future products. These regulations, including the time
required for regulatory review, vary from country to country and can be lengthy, expensive and uncertain.
Polarean Imaging plc
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Group Annual Report and Financial Statements
for the year ended 31 December 2021
Strategic Report (continued)
Principal mitigation
The Group utilises external specialists in regulatory affairs who consult with other experts to ensure that
internal control processes and clinical trial designs meet current regulatory requirements. The Group
also engages directly with regulatory authorities when appropriate.
Future funding requirements
The Group will need to raise additional funding or enter into a strategic partnership with industry partners
to undertake work beyond that being funded by the £27 million (before expenses) 2021 fundraising.
There is no certainty that this will be possible at all or on acceptable terms.
Principal mitigation
The Group successfully engaged with investors to generate significant cash resources to date, including
the 2021 financing that raised £27 million, before expenses. The Group’s management team expects
that continued access to capital markets, or other access to capital, will be required to support the Group
through regulatory approval and initial commercialisation efforts in the US. See Going Concern discussion
below.
Dependence on key personnel
The success of the Group, in common with other businesses of a similar size, will be highly dependent
on the expertise and experience of the Directors and key employees. However, the retention of such key
personnel cannot be guaranteed. Should key personnel leave the Group’s business, prospects, financial
condition or results of operations may be materially adversely affected.
Principal mitigation
The Group’s recruitment processes are designed to identify and attract the best candidates for specific
roles. The Group aims to provide competitive rewards and incentives to staff and directors.
Intellectual property and proprietary technology
No assurance can be given that any current or future patent applications will result in granted patents,
that the scope of any patent protection will exclude competitors or provide competitive advantages to
the Group, that any of the Group’s patents will be held valid if challenged or that third parties will not
claim rights in or ownership of the patents and other proprietary rights held by the Group.
Principal mitigation
The Group has a long-standing track record of IP generation and successful applications and has a long-
standing relationship with our patent attorney who has a deep understanding of our technology. The
Group actively manages its IP, engaging with specialists to apply for and defend IP rights in appropriate
territories.
Technology and products
The Group is a developer and service provider for noble gas 129Xe devices and ancillary instruments with
a special focus on pulmonary imaging. The development and commercialisation of its proprietary
technology and future products, which are in early stages of development, will require multiple series of
clinical trials and there is a risk that safety and efficacy issues may arise when the products are tested.
There is also a risk that there will be delays to the development of the products or that unforeseen
technical problems arise as the Group’s technology becomes increasingly automated. These risks are
common to all new medical products and there is also a risk that the clinical trials may not be successful.
Principal mitigation
The Group has a depth of knowledge and experience in the area of medical devices development for
the high-resolution medical imaging market. The Group also utilises external experts to supplement their
knowledge in critical areas such as safety, manufacturing and software development.
Polarean Imaging plc
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Group Annual Report and Financial Statements
for the year ended 31 December 2021
Strategic Report (continued)
Research and development risk
The Group will be operating in the life sciences and medical device development sector and will look to
exploit opportunities within that sector. The Group will therefore be involved in complex scientific research
and industry experience indicates that there may be a very high incidence of delay or failure to produce
results. The Group may not be able to develop new products or to identify specific market needs that
can be addressed by technology solutions developed by the Group.
Principal mitigation
The Group has a depth of knowledge and experience in the area of medical devices development for
the high-resolution medical imaging market. The Group also utilises external experts to supplement their
knowledge in critical areas such as conducting clinical trials and regulatory affairs.
Competition
The Group notes that several start-ups operating in the CT software space have begun efforts to
commercialise products which represent to characterise lung ventilation. These technologies use ionising
radiation, whereas the Group’s technology does not. In addition, these technologies are unable to further
assess gas exchange, red blood cell transport, nor microvascular haemodynamics.
Principal mitigation
The Group believes that these emerging technologies validate the unmet need for the use of imaging in
assessing pulmonary function. However, their use of ionising radiation, combined with their inability to
assess comprehensive pulmonary function will render their utility limited and the Directors see no effect
on the current market expectations of Polarean.
Reliance on third parties
The business model for the Group anticipates that it will have limited internal resources over the next
few years and that it will use third party providers wherever possible to conduct the research,
development, registration, manufacture, marketing and sales of its proposed products. The commercial
success of the Group’s products will depend upon the performance of these third parties.
Principal mitigation
The Group seeks experts in the areas where it utilises outsourcing. Wherever possible, the Group seeks
to have duplicate suppliers to lessen the reliance on a particular vendor.
Manufacturing
There can be no assurance that the Group’s proposed products will be capable of being manufactured
in commercial quantities, in compliance with regulatory requirements and at an acceptable cost. The
Group outsources the manufacture of the raw materials and finished products required in connection
with the research, development and commercial manufacture of its proposed products and, as such, is
wholly dependent upon third parties for the provision of adequate facilities and raw material supplies.
129Xe, the specific isotope of xenon which is the active ingredient in the Group’s drug-device product, is
available from a limited number of suppliers and there can be no assurance that adequate supplies of
this material at acceptable cost can be obtained. In addition, where the Group is dependent upon third
parties for manufacture, its ability to procure the manufacture of the drug-device in a manner which
complies with regulatory requirements may be constrained, and its ability to develop and deliver such
products on a timely and competitive basis may be adversely affected.
Principal mitigation
The Group has designed the manufacturing process to be scalable and has internal experts who train
the outside vendors. The Group has established relationships with two 129Xe suppliers to mitigate the
risk that 129Xe supply will be a limitation to the development and commercialisation of its products. In
addition, the Group has established a relationship with a GMP outside polariser manufacturer.
Polarean Imaging plc
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Group Annual Report and Financial Statements
for the year ended 31 December 2021
Strategic Report (continued)
Product development timelines
Product development timelines are at risk of delay, particularly since it is not always possible to predict
what the FDA will require for approval of the NDA. There is a risk therefore that product development
could take longer than presently expected by the Directors. If such delays occur the Group may require
further working capital. The Directors shall seek to minimise the risk of delays by careful management
of projects.
Principal mitigation
The Group utilises consultants who are experts in preparing and filing NDAs in the US. The Group
continues to utilise these experts as the FDA reviews the NDA resubmission.
General legal and regulatory issues
The Group’s operations are subject to laws, regulatory restrictions and certain governmental directives,
recommendations and guidelines relating to, amongst other things, occupational safety, laboratory
practice, the use and handling of hazardous materials, prevention of illness and injury, environmental
protection and animal and human testing. There can be no assurance that future legislation will not
impose further government regulation, which may adversely affect the business or financial condition of
the Group.
Principal mitigation
The Group consults experts for advice in areas such as occupational safety, laboratory practice and
human testing.
Healthcare pricing environment
In common with other healthcare products companies, the ability of the Group and any of its licensees
or collaborators to market its products successfully depends in part on the extent to which reimbursement
for the cost of such products and related treatment will be available from government health
administration authorities, private health coverage insurers and other organisations.
Principal mitigation
The Group is consulting with several experts in the field of reimbursement for healthcare products in the
US to determine the best strategy for accessing adequate reimbursement for its products.
7. Section 172 statement
As required by section 172 of the Companies Act 2006 (the “Act”), a director of a company must act in
the way he or she considers, in good faith, would likely promote the success of the company for the
benefit of the shareholders. In doing so, the director must have regard, amongst other matters, to the
following issues:
l the likely consequences of any decisions in the long term;
l the interests of the company’s employees;
l the need to foster the company’s business relationships with suppliers/customers and others;
l the impact of the company’s operations on the community and environment;
l the company’s reputation for high standards of business conduct; and
l the need to act fairly between members of the company.
The information required by section 172 of the Act is included in the Strategic Report on page 11, the
Directors Report on pages 17 to 21 and the Corporate Governance Statement on pages 22 to 28.
Kenneth West
Non-Executive Chairman
17 May 2022
Polarean Imaging plc
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Group Annual Report and Financial Statements
for the year ended 31 December 2021
Directors’ Report
The Directors present their report on the affairs of Polarean Imaging plc (the “Company”) and its
subsidiaries, referred to as the Group, together with the audited Financial Statements and Independent
Auditors’ Report for the year ended 31 December 2021.
Principal activities
The main activity of the Group is a drug-device manufacturer and service provider for noble gas polariser
devices, its proprietary 129Xe drug and ancillary instruments with a special focus on pulmonary imaging.
Results and dividends
During the year ended 31 December 2021 the Group recorded a loss after tax of US$14,016,004 (2020:
US$6,534,523) and a net cash outflow from operating activities of US$12,250,468 (2020: US$5,794,698).
The Directors do not recommend the payment of a dividend (2020: US$Nil).
Going concern
In considering the appropriateness of this basis of preparation, the Directors have reviewed the Group’s
working capital forecasts for a minimum of 12 months from the date of the approval of this financial
information. Based on their consideration the Directors have reasonable expectation that the Group has
adequate resources to continue for the foreseeable future and that carrying values of intangible assets
are supported. Thus, they continue to adopt the going concern basis of accounting in preparing this
financial information.
Future developments
The Company’s future developments are outlined in the Strategic Report on page 7.
Research design & development
Research and development (“R&D”) is performed by employees of the company and through
collaborative efforts with academic researchers. The Group is committed to increasing its R&D budget
to meet anticipated market demands for additional technology. In addition, the company also in-licenses
technology from collaborative academic institutions. Details of R&D carried out during the year are
contained in the Strategic Report.
Financial risk management
Financial risk management policies and objectives for capital management are outlined in the principal
risks and uncertainties section of the Strategic Report on pages 7 to 16 and in note 26 to the financial
statements.
Directors’ indemnities
The Group has made qualifying third-party indemnity provisions for the benefit of its Directors, which
were made during the year and remain in force at the date of this report.
Events after the reporting period
Details of significant events since the reporting period are contained in note 29 of the financial statements.
Polarean Imaging plc
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263432 Polarean_pp017-pp035.qxp 17/05/2022 14:13 Page 18
Group Annual Report and Financial Statements
for the year ended 31 December 2021
Directors’ Report (continued)
Directors Resigned/Appointed
Kenneth West Non-Executive Chairman –
Richard Hullihen Chief Executive Officer –
Charles Osborne Chief Financial Officer Appointed 22 February 2021
Bastiaan Driehuys, PH.D. Chief Technology Officer –
Jonathan Allis, PH.D. Non-Executive Director Resigned 4 May 2022
Daniel Brague Non-Executive Director Appointed 4 May 2022
Jurgen Laucht Non-Executive Director –
Cyrille Petit Non-Executive Director –
Frank Schulkes Non-Executive Director Appointed 13 April 2022
Kenneth West was a Non-Executive Director until 4 May 2022, when he assumed the responsibilities of
Non-Executive Chairman. Jonathan Allis was Non-Executive Chairman until 4 May 2022, when he
resigned from the Board.
Frank Schulkes was also appointed as Chair of the Audit Committee on 13 April 2022.
Daniel Brague was also appointed as Chair of the Remuneration Committee on 4 May 2022.
Directors’ emoluments
2021
Executive Directors
Bastiaan Driehuys
Richard Hullihen
Charles Osborne
Non-Executive Directors
Jonathan Allis
Juergen Laucht
Cyrille Petit
Kenneth West (Note A)
Total
Salary, Fees
& Bonus
US$
Benefits
US$
Share-Based
Payments
US$
Total
US$
43,250
334,248
301,007
–
14,270
14,408
69,406
209,488
100,512
112,656
558,006
415,927
85,000
48.250
43,250
38,250
––––––––––––
893,255
––––––––––––
––––––––––––
–
–
–
–
––––––––––––
28,678
––––––––––––
––––––––––––
94,943
69,406
85,122
89,835
––––––––––––
718,712
––––––––––––
––––––––––––
179,943
117,656
128,372
128,085
––––––––––––
1,640,645
––––––––––––
––––––––––––
Note A: Kenneth West was appointed a Non-Executive Director on 23 December 2020.
2020
Executive directors
Bastiaan Driehuys
Richard Hullihen
Kenneth West
Non-Executive Directors
Richard Morgan (Note B)
Jonathan Allis
Robert Bertoldi (Note B)
Juergen Laucht
Cyrille Petit
Total
Salary, Fees
& Bonus
US$
Benefits
US$
Share-Based
Payments
US$
Total
US$
50,000
281,187
115,031
–
12,363
8,901
9,043
36,136
34,826
59,043
329,686
158,758
9,583
77,083
4,583
55,000
29,167
––––––––––––
621,634
––––––––––––
––––––––––––
–
–
–
–
–
––––––––––––
21,264
––––––––––––
––––––––––––
9,043
9,043
9,043
9,043
–
––––––––––––
116,177
––––––––––––
––––––––––––
18,626
86,126
13,626
64,043
29,167
––––––––––––
759,075
––––––––––––
––––––––––––
Note B: Mr. Morgan and Mr. Bertoldi resigned from the Board in February 2020.
Polarean Imaging plc
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Group Annual Report and Financial Statements
for the year ended 31 December 2021
Directors’ Report (continued)
Directors’ interests
The Directors who held office at 31 December 2021 had the following direct interest in the ordinary shares
of the Company at 31 December 2021.
Directors’ beneficial interests in shares of the Company:
2021
Number
Richard Hullihen
Kenneth West
Bastiaan Driehuys
Jonathan Allis
Cyrille Petit
3,201,959
475,594
12,267,503
2,743,129
584,000
2021
%
2020
Number
2,928,899
1.5
0.2
475,594
5.9 12,267,503
2,433,129
1.3
350,000
0.3
2020
%
1.8
0.3
7.5
1.5
0.0
The shareholdings noted above include those shares held by connected persons of the individual director.
Directors’ beneficial interests in options to subscribe for additional shares of the Company:
Richard Hullihen
Kenneth West
Bastiaan Driehuys
Jonathan Allis
Juergen Laucht
Cyrille Petit
Charles Osborne
2021
Number
2020
Number
3,135,440
2,263,218
1,686,000
1,034,400
884,400
500,000
1,700,000
2,135,440
1,913,218
1,336,000
534,400
534,400
–
–
Directors’ beneficial interests in warrants to subscribe for additional shares of the Company:
Bastiaan Driehuys
Kenneth West
2021
Number
148,456
2,801,084
2020
Number
148,456
–
The warrants issued to Bastiaan Driehuys have an exercise price of US$0.00037. The warrants issued
to Kenneth West have an exercise price of between US$0.0041 and US$0.0075. The warrant holdings
noted above include those warrants held by connected persons of the individual director.
The options and warrants holdings noted above include those shares held by connected persons of the
individual director.
(On a fully diluted basis)
Richard Hullihen
Kenneth West
Bastiaan Driehuys
Jonathon Allis
Cyrille Petit
Number of
shares at
% held at
31 December 31 December
2021
2021
3,201,959
475,594
12,267,503
2,743,129
584,000
1.5
0.2
5.9
1.3
0.3
Polarean Imaging plc
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Group Annual Report and Financial Statements
for the year ended 31 December 2021
Directors’ Report (continued)
Share option schemes
In order to provide incentive for the management and key employees of the Group, the Company awards
share options. The Directors defined a new plan in 2018 and implemented it. The existing options granted
prior to the merger were converted to options in Polarean Imaging plc.
Substantial Shareholders
As well as the Directors’ interests reported above, the following interests of 3.0% and above as at
28 February 2022 were as follows:
Name
Amati AIM VCT plc
Bracco Imaging S.p.A.
Hargreaves Lansdown
Bastiaan Driehuys
NUKEM Isotopes GmbH
Chelverton UK Equity Growth Fund
Tyndall Investment Management
Canaccord Genuity Wealth Management (Inst)
No of issued
Ordinary Shares
25,114,469
16,388,888
13,434,964
12,267,503
11,523,462
9,425,000
8,189,478
7,111,877
% held
11.98
7.82
6.41
5.85
5.50
4.50
3.91
3.39
Corporate Responsibility
The Board recognises its employment, environmental and health and safety responsibilities. It devotes
appropriate resources towards monitoring and improving compliance with existing standards. The
Executive Directors are responsible for these areas at Board level, ensuring that the Group’s policies
are upheld and providing the necessary resources.
Employees
The Group is committed to achieving equal opportunities and to complying with relevant anti-
discrimination legislation. It is established Group policy to offer employees and job applicants the
opportunity to benefit from fair employment, without regard to their sex, sexual orientation, marital status,
race, religion or belief, age or disability. Employees are encouraged to train and develop their careers.
The Group has continued its policy of informing all employees of matters of concern to them as
employees, both in their immediate work situation and in the wider context of the Group’s well-being.
Communication with employees is affected through the Board, the Group’s management briefing’s
structure, formal and informal meetings and through the Group’s information systems.
The Directors are responsible for preparing the Strategic Report, the Directors’ Report and the Financial
Statements in accordance with applicable law and regulations.
The Act requires the directors to prepare financial statements for each financial year. Under that law the
directors have elected to prepare the financial statements in accordance with UK-adopted International
Accounting Standards (IFRS) and applicable law.
Polarean Imaging plc
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Group Annual Report and Financial Statements
for the year ended 31 December 2021
Directors’ Report (continued)
In accordance with the Act, 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 of the Company and the Group and of
the profit or loss of the Group for that period. In preparing these financial statements, the Directors are
required to:
l select suitable accounting policies and then apply them consistently;
l make judgements and accounting estimates that are reasonable and prudent;
l state whether applicable accounting standards have been followed, subject to any material
departures disclosed and explained in the financial statements; and
l prepare the financial statements on the going concern basis unless it is inappropriate to presume
that the Group 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 Group and enable them to ensure that the financial statements comply with the Act. They
are also responsible for safeguarding the assets of the Group and hence for taking reasonable steps for
the prevention and detection of fraud and other irregularities.
They are further responsible for ensuring that the Strategic Report and the Directors’ Report and other
information included in the Annual Report and Financial Statements is prepared in accordance with
applicable law in the United Kingdom.
The maintenance and integrity of the Polarean Imaging plc website is the responsibility of the Directors.
Legislation in the United Kingdom governing the preparation and dissemination of the accounts and the
other information included in annual reports may differ from legislation in other jurisdictions.
Auditors
Each of the persons who are Directors at the time when this Directors’ Report is approved has
confirmed that:
l so far as that Director is aware, there is no relevant audit information of which the Group and the
Group’s auditor is unaware; and
l that Director has taken all the steps that ought to have been taken as a director in order to be aware
of any relevant audit information and to establish that the Company and the Group’s auditor is aware
of that information.
Crowe U.K. LLP has expressed its willingness to continue in office and a resolution to re-appoint the firm
as Auditor and authorising the Directors to set their remuneration will be proposed at the forthcoming
Annual General Meeting.
Kenneth West
Non-Executive Chairman
17 May 2022
Polarean Imaging plc
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Group Annual Report and Financial Statements
for the year ended 31 December 2021
Corporate Governance Statement
As Chairman of the Board of Directors of Polarean Imaging Plc (“Polarean”, or the “Company/Group” as
the context requires), it is my responsibility to ensure that Polarean has both sound corporate governance
and an effective board of directors (“Board”). As Chairman of the Company, my responsibilities include
leading the Board effectively, overseeing the Company’s corporate governance model, communicating
with shareholders, and ensuring that good information flows freely between the Executive and Non-
Executive Directors in a timely manner. My leadership of the Board is undertaken in a manner which
ensures that the Board retains integrity and effectiveness and includes creating the right Board dynamic
and ensuring that all important matters, in particular strategic decisions, receive adequate time and
attention at Board meetings.
It is the Board’s job to ensure that Polarean is managed for the long-term benefit of all shareholders,
with effective and efficient decision-making. Corporate governance is an important part of that role,
reducing risk and adding value to our business.
The Directors of Polarean recognise the value of good corporate governance in every part of its business.
As Polarean is an AIM-listed company, it is required to adopt a recognised corporate governance code
and disclose how it complies with that code and, to the extent Polarean departs from the corporate
governance provisions outlined by that code, it must explain its reasons for doing so. The Directors have
adopted the requirements of the Quoted Companies Alliance's Corporate Governance Code (the "QCA
Code"), to the extent that they consider it appropriate having regard to the Company's size, board
structure, stage of development and resources.
The Board considers that compliance with the QCA Code will enable us to serve the interests of all our
key stakeholders, including our shareholders, and will promote the maintenance and creation of long-
term value in the Company. This report describes our approach to governance, including information on
relevant policies, practices and the operation of the Board and its Committees. Additional detail on how
the company has applied the QCA code is also provided in the corporate governance section of our
website http://www.polarean-ir.com/content/investors/governance.asp. Any areas of non-compliance with
the QCA Code are also explained.
Polarean seeks to constantly improve its corporate governance practices. Prior to the Company listing
in March 2018, the Company implemented certain governance related measures including the formation
of the Company’s Audit and Remuneration Committees, and the adoption of a Share Dealing Code.
Key governance changes that occurred in the year included the appointment of Cyrille Petit as Audit
Committee Interim Chairman and Stifel Nicolaus Europe Limited being appointed as nominated advisor
and broker. Since the period end, Kenneth West assumed the responsibilities of Non-Executive Chairman
of the Board. Frank Schulkes and Daniel Brague were appointed to the Board of Directors. Frank
Schulkes has been appointed as the Chair of the Audit Committee and Daniel Brague has also been
appointed as Chair of the Remuneration Committee.
Strategy, Risk Management and Responsibility
A description of the Company’s business model and strategy can be found on pages 7 to 12 in the
Strategic Report, and the key challenges in their execution can be found on pages 13 to 16 under
“Principal Risks and Uncertainties”.
The Board is responsible for the monitoring of financial performance against budget and forecast and
the formulation of the Group’s risk appetite including the identification, assessment and monitoring of
Polarean’s principal risks. The Board recognises the need for an effective and well-defined risk
management process and it oversees and regularly reviews the current risk management and internal
control mechanisms.
Polarean Imaging plc
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Group Annual Report and Financial Statements
for the year ended 31 December 2021
Corporate Governance Statement (continued)
The Board has overall responsibility for identifying, monitoring and reviewing the Company’s risks, and
assessing the systems of external control for effectiveness. The Executive Directors report any new or
changed risks, and any changes in risk management or control to the Board. The Board discusses all
business matters having regard to the risks for the Group and to the extent that risks inherent in a
particular activity are considered significant, appropriate action is taken and steps taken to mitigate the
issue. The overall objective of the Board is to set policies that seek to reduce risk as far as possible
without unduly affecting the Company’s competitiveness and flexibility.
The Board is satisfied that the procedures in place meet the particular needs of the Group in managing
the risks to which it is exposed. The Board is satisfied with the effectiveness of the system of internal
controls, but by their very nature, these procedures can provide reasonable, not absolute, assurance
against material misstatement or loss. During the review period, the Board delegated responsibility to
the Audit Committee for ensuring that the Company’s management reviews, monitors and reports on the
integrity of the consolidated financial statements of the Company and related financial information. During
the review period, the Audit Committee comprised Juergen Laucht and Cyrille Petit.
It meets as required and specifically to review the Interim Report and Annual Report, and to consider
the suitability and monitor the effectiveness of internal control processes. Subsequent to the review
period, Frank Schulkes was appointed as the Chairman of the Audit Committee following his appointment
to the Board. Following Mr Schulkes’ appointment, the Board now considers the Company to have a
fully constituted Audit Committee.
The Audit Committee reviews the findings of the external auditor and reviews accounting policies and
material accounting judgements. The independence and effectiveness of the external auditor is reviewed
annually. The possibility of undertaking an audit tender process is considered on a regular basis. In
addition, the Audit Committee meets at least once year with the auditor to discuss their independence
and objectivity, the Annual Report, any audit issues arising, internal control processes, appointment and
fee levels and any other appropriate matters. Based on the above, there will be no Audit Committee
Report outlined in this Annual Report. The Company has strict segregation of duties and authority controls
which are reviewed annually by the auditors.
The Board currently takes the view that an internal audit function is not considered necessary or practical
due to the size of the Group, its business and assets, and the close day-to-day control exercised by the
executive directors. The Board is satisfied that the systems and procedures currently employed provide
sufficient assurance that a sound system of internal controls are in place, which safeguards the
shareholders’ investment and the Group’s assets. However, the Board will continue to monitor the need
for an internal audit function.
The Board is responsible for the Group’s system of internal control and for reviewing its effectiveness.
Such a system is designed to manage rather than eliminate risk of failure to achieve the business
objectives and can only provide reasonable and not absolute assurance against material misstatement
or loss. The Company’s current system of internal financial control comprises those controls established
to provide reasonable assurance of:
l The safeguarding of assets against unauthorised use or disposal; and
l The maintenance of proper accounting records and the reliability of financial information used within
the business and for publication.
The key procedures of internal financial control of the Group are as follows:
l The Board reviews and approves budgets and monitors performance against those budgets on a
monthly basis; and
l The Group has clearly defined reporting and authorisation on procedures relating to the key financial
areas.
The recent global COVID-19 pandemic has resulted in increased risks within the global economy. The
extent of the effect of the virus, including its long-term impact, remains uncertain and the Company
continues to monitor the situation.
Polarean Imaging plc
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Group Annual Report and Financial Statements
for the year ended 31 December 2021
Corporate Governance Statement (continued)
The Board
During the review period, the Board comprised of Jonathan Allis (Non-Executive Chairman), Richard
Hullihen (CEO), Charles Osborne (CFO) Bastiaan Driehuys (CTO), Juergen Laucht (NED), Cyrille Petit
(NED) and Kenneth West (NED). The Board is supported by the Company Secretary, Stephen Austin.
Subsequent to the review period, Kenneth West has been appointed as the Non-Executive Chairman of
the Board with Jonathan Allis stepping down from the Board. Frank Schulkes and Daniel Brague have
been appointed as NEDs. The biographical details of the Directors of the Company are set out on the
Company’s website: http://www.polarean-ir.com/content/investors/board.asp.
The Board meets regularly and is responsible for the Group’s corporate strategy, monitoring financial
performance, approval of capital expenditure, treasury and risk management policies. Board papers are
sent out to all Directors in advance of each Board meeting including management accounts and
accompanying reports from those responsible.
The Directors believe that the Board, as a whole, has a broad range of commercial and professional
skills, enabling it to discharge its duties and responsibilities effectively and that the Non-Executive
Directors, together, have a sufficient range of experience and skills to enable them to provide the
necessary guidance, oversight and advice for the Board to operate effectively. All Directors are
encouraged to use their independent judgement and to challenge all matters, whether strategic or
operational.
Frank Schulkes and Daniel Brague are the Company’s two independent Non-Executive Directors. The
guidance in the QCA Code is for a company to have at least two independent Non-Executive Directors.
The Board will seek to take into account any Board imbalances for future nominations. The Company is
committed to a culture of equal opportunities for all employees regardless of gender. The Board aims to
be diverse in terms of its range of culture, nationality and international experience.
Given the current phase of Polarean’s life cycle, the Board has determined that it is not practicable to
set measurable objectives for achieving gender diversity. It is the Board’s intention as the size and
complexity of the Company grows, to set and aim to achieve gender diversity objectives pursuant to a
defined diversity policy.
All of the Executive Directors work full time for the Company. The Chairman is expected to devote the
necessary amount of time to comprehensively fulfil the duties of the role, and in any case not less than
52 days per annum, and the Non-Executive Directors are each expected to dedicate not less than 15
days per annum to the Company’s affairs. The time commitment required by the Group is an overriding
principle that each Director will devote as much time as is required to carry out the roles and
responsibilities that the Director has agreed to take on.
The Non-Executive Directors receive a fee for their services as a director which is approved by the Board,
being mindful of the time commitment and responsibilities of their roles and of current market rates for
comparable organisations and appointments. In addition, Non-Executive Directors are also reimbursed
for travelling and other incidental expenses incurred on Group business.
Executive and Non-Executive Directors are subject to re-election intervals as prescribed in the
Company’s articles of association. At each Annual General Meeting one-third of the Directors, who are
subject to retirement by rotation shall retire from office. They can then offer themselves for re-election.
The letters of appointment of all Non-Executive Directors are available for inspection at the Company’s
registered office during normal business hours. The Executive Directors are employed under service
contracts requiring six months’ notice by either party. Non-Executive Directors and the Chairman receive
payments under appointment letters which are terminable by three months’ notice by either party.
Polarean Imaging plc
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Group Annual Report and Financial Statements
for the year ended 31 December 2021
Corporate Governance Statement (continued)
There were nine scheduled board meetings held during 2021. The table below sets out attendance statistics
for each Director at Board and, where relevant, Committee meetings held during the financial year.
Audit
Board Committee
(9 meetings held) (2 meetings held)
Director
Remuneration
Committee
(1 meeting held)
Richard Hullihen 9/9
Kenneth West 8/9
Bastiaan Driehuys 8/9
Jonathan Allis 6/9
Juergen Laucht 9/9 2/2
Cyrille Petit 9/9 2/2
Charles Osborne 9/9
1/1
1/1
1/1
The Board, as a whole, is responsible for the overall management of the Group and for its strategic
direction, including approval of the Group’s strategy, its annual business plans and budgets, the interim
and full year financial statements and reports, any dividend proposals, the accounting policies, major
capital projects, any investments or disposals, its succession plans and the monitoring of financial
performance against budget and forecast and the formulation of the Group’s risk appetite including the
identification, assessment and monitoring of the Group’s principal risks. In accordance with best practice,
Polarean has adopted a formal schedule of Matters Reserved for the Board. These are reviewed annually,
and any items not included within the schedule are delegated to the management team.
In order to discharge their duties effectively, the Board uses third parties to advise the Directors of their
responsibilities including receiving advice from the Company’s external lawyers. The Board reviews the
appropriateness and opportunity for continuing professional development in order to keep each Director’s
skillset up-to-date. In addition to their general Board responsibilities, Non-Executive Directors are
encouraged to be involved in specific workshops or meetings, in line with their individual areas of
expertise. The Board shall review annually the appropriateness and opportunity for continuing
professional development, whether formal or informal. All Directors have received AIM Rules and
Directors Responsibilities training provided by the nominated advisor and are encouraged to undertake
any ongoing training they feel they require to assist with the commission of their role on the Board.
Polarean’s Company Secretary, Stephen Austin, is responsible for ensuring that Board procedures are
followed and that the Company complies with all applicable rules, regulations and obligations governing
its operation, as well as helping the Chairman maintain excellent standards of corporate governance.
There are processes in place enabling Directors to take independent advice at the Company’s expense
in the furtherance of their duties, and to have access to the advice and services of the Company
Secretary.
Board Committees
Certain Board responsibilities are delegated to committees who fulfil these functions in line with the terms
of references established by the Board.
Audit Committee
During the review period the Audit Committee comprised Juergen Laucht and Cyrille Petit (Interim Chairman).
The Audit Committee’s responsibilities during the review period included ensuring that the financial
performance, position and prospects for the Group were properly monitored, controlled and reported and
specifically to review the Interim Report and Annual Report, and to consider the suitability and monitor the
effectiveness of internal control processes. The Committee held 2 meetings during the year.
As outlined above, subsequent to the review period, Frank Schulkes was appointed as the Chairman of
the Audit Committee following his appointment to the Board. Following Mr Schulkes’ appointment, the
Board now considers the Company to have a fully constituted Audit Committee.
Polarean Imaging plc
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Group Annual Report and Financial Statements
for the year ended 31 December 2021
Corporate Governance Statement (continued)
Remuneration Committee
During the review period, the remuneration committee comprised Bastiaan Driehuys and Juergen Laucht
and was chaired by Jonathan Allis. The purpose of the Remuneration Committee is to ensure that the
Executive Directors and other employees are fairly rewarded for their individual contribution to the overall
performance of the Group. The Committee considers and recommends to the Board the remuneration
of the Executive Directors and is kept informed of the remuneration packages of senior staff and invited
to comment on these. There was one meeting during 2021. The Board retains responsibility for overall
remuneration policy. Executive remuneration packages are designed to attract and retain executives of
the necessary skill and calibre to run the Group. The Remuneration Committee recommends to the Board
the remuneration packages by reference to individual performance and uses the knowledge and
experience of the Committee members, published surveys relating to AIM companies, the medical
imaging and contrast agents’ industries and market changes generally. The Remuneration Committee
has responsibility for recommending any long-term incentive schemes. No Director is responsible for
setting their own remuneration. A report by the Chairman of the Remuneration Committee is included on
pages 29 and 30.
As outlined above, subsequent to the review period, Daniel Brague was appointed as the Chairman of
the Remuneration Committee following his appointment to the Board. As such, the Remuneration
Committee now comprises Daniel Brague (Chairman), Bastiaan Driehuys and Juergen Laucht.
Nomination Committee
The Company does not currently have a Nomination Committee, as the Board does not consider it
appropriate to establish such a committee at this stage of the Company’s development. Decisions which
would usually be taken by the nomination committee, such as appointments to the Board, will be taken
by the Board as a whole. The Board will monitor on an ongoing basis the need for a formal Nominations
Committee. The Chairman and the Board continue to monitor and evolve the Company’s corporate
governance structures and processes, and maintain that these will evolve over time, in line with the
Company’s growth and development.
Advisors
The Board has regular contact with its advisors to ensure that it is aware of changes to generally accepted
corporate governance procedures and requirements and that the Group remains, at all times, compliant
with applicable rules and regulations. The Company holds appropriate insurance cover in respect of
possible legal action against its Directors. The Company’s nominated advisor supports the Board’s
development, specifically providing guidance on corporate governance and other regulatory matters, as
required. All Directors may receive independent professional advice at the Group’s expense, if necessary,
for the performance of their duties.
Board Performance Evaluation
Formal internal evaluation of the Board, its Committees and individual directors is seen as an important
next step in the development of the board. Going forward, this will be undertaken on annual basis in the
form of peer appraisal, questionnaires and discussions to determine the effectiveness and performance
in various areas as well as the directors’ continued independence. The criteria against which effectiveness
is considered will be aligned to the strategy of the Group and management forecasts and budgets that
are already in place.
The purpose of such an evaluation will be to ensure that its members collectively function in an efficient
manner, focusing more closely on defined objectives and targets for improving performance, as well as
reviewing the effectiveness of each Committee.
During frequent Board meetings/calls, the Directors discuss areas where they feel a change would be
beneficial for the Company, and the Company Secretary remains on hand to provide advice.
Polarean Imaging plc
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Group Annual Report and Financial Statements
for the year ended 31 December 2021
Corporate Governance Statement (continued)
Culture
The Board recognises that their decisions regarding strategy and risk will impact the corporate culture
of the Group as a whole and that this will impact the performance of the Group. The Board is very aware
that the tone and culture set by the Board will greatly impact all aspects of the Group as a whole and the
way that employees behave. A large part of the Group’s activities are centered upon addressing customer
and market needs. Therefore, the importance of sound ethical values and behaviour is crucial to the
ability of the Group to successfully achieve its corporate objectives.
The Board places great importance on this aspect of corporate life and seeks to ensure that this flows
through all that the Group does. The Board assessment of the culture within the Group at the present
time is one where there is respect for all individuals, there is open dialogue within the Group and there
is a commitment to provide the best service possible to all the Group’s key customers.
The Company operates in a manner that encourages an open and respectful dialogue with employees,
customers and other stakeholders and the Board considers that sound ethical values and behaviour are
crucial to the ability of the Company to achieve its corporate objectives. The Group is committed to the
highest standards of personal and professional ethical behaviour, and this must be reflected in every
aspect of the way in which the Company operates. The Board places great importance on this aspect of
corporate life and seeks to ensure that this flows through all that the Company does.
The Directors consider that at present the Group has an open culture facilitating comprehensive dialogue
and feedback and enabling positive and constructive challenge. The Executive Directors regularly meet
with senior management and discuss staff well-being, development and staff feedback. Employees are
encouraged to engage directly with Directors, and the Group seeks to promote Group values and
behaviour through a top-down approach.
The Board understands that the nature of its market, including high-end academic research universities
and hospitals, brings with it a level of public scrutiny in procurement. As such, the Board ensures there
is the utmost transparency and accessibility from the Board and external advisors that oversee the
Group’s activities.
Anti-Bribery Policy
The Group takes a zero-tolerance approach to bribery and corruption and is committed to acting
professionally, fairly and with integrity in all business dealings and relationships wherever they occur.
The Group implements effective systems to counter bribery and corruption and as part of this it has
adopted an anti-bribery and anti-corruption policy. The policy provides guidance to those working for the
Group on how to recognise and deal with bribery and corruption issues and the potential consequences
and applies to all persons working for the Group or on its behalf in any capacity, including employees at
all levels, directors, officers, consultants and agents.
Share Dealing
The Group has a Share Dealing Code, which will apply to any person discharging management
responsibility, including the Directors and members of the senior management team and any closely
associated persons and applicable employees.
The Share Dealing Code imposes restrictions beyond those that are imposed by law (including by
Financial Services and Markets Act 2000 and the Market Abuse Regulation (EU) No.596/2014 as it forms
part of United Kingdom domestic law by virtue of the European Union (Withdrawal) Act 2018 and other
relevant legislation) and its purpose is to ensure that persons discharging managerial responsibility and
persons connected with them do not abuse, and do not place themselves under suspicion of abusing,
price-sensitive information that they may have or be thought to have, especially in periods leading up to
an announcement of both financial results and the results of the Group’s clinical trials. The Share Dealing
Code sets out a notification procedure which is required to be followed prior to any dealing in the
Company’s securities.
Polarean Imaging plc
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Group Annual Report and Financial Statements
for the year ended 31 December 2021
Corporate Governance Statement (continued)
Communication with Shareholders
The Board is committed to maintaining good communication and having constructive dialogue with its
shareholders in order to maintain good investor relations and seeks, wherever possible to attain a
relationship of mutual understanding with both institutional and private client investors.
As such, Polarean takes a proactive approach to investor relations initiatives with ongoing support from
Walbrook PR Limited, the Group’s financial PR advisors. These investor relations initiatives include (but
are not limited to):
l shareholder events in London and elsewhere;
l the use of social media, in accordance with the Group’s Social Media Policy, and the Company’s
website; and
l interviews with platforms such as Proactive Investors around key developments.
Institutional shareholders and analysts have the opportunity to discuss issues and provide feedback at
meetings with the Company. In normal circumstances, attendance is actively encouraged for the
Company’s Annual General Meeting and any other General Meetings which are held throughout the
year.
The corporate governance arrangements that the Board has adopted are designed to ensure that the
Company delivers long-term value to its shareholders and that shareholders are able to express their
views and expectations for the Company in a manner that encourages open dialogue with the Board.
Polarean Imaging plc
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Group Annual Report and Financial Statements
for the year ended 31 December 2021
Remuneration Committee Report
Dear Shareholder,
As the Chairman of Polarean’s Remuneration Committee, I present my Remuneration Committee Report
for the year ended 31 December 2021, which has been prepared by the Committee and approved by
the Board.
The Remuneration Committee is responsible for determining the remuneration policy for the Executive
Directors, and for overseeing the Company’s long-term incentive plans. The Board as a whole is
responsible for determining Non-Executive Directors’ remuneration. The Committee will continue to
monitor market trends and developments in order to assess those relevant for the Group’s future
remuneration policy.
Remuneration policy for 2021 and future years
The Remuneration Committee determines the Company’s policy on the structure of Executive Directors’
and if required, senior management’s remuneration. The objectives of this policy are to:
l Reward Executive Directors and senior management in a manner that ensures that they are properly
incentivised and motivated to perform in the best interests of shareholders;
l Provide a level of remuneration required to attract and motivate high-calibre Executive Directors
and senior management of appropriate calibre;
l Encourage value creation through consistent and transparent alignment of incentive arrangements
with the agreed company strategy over the long term; and
l Ensure the total remuneration packages awarded to Executive Directors, comprising both
performance-related and non-performance-related remuneration, is designed to motivate the
individual, align interests with shareholders and comply with corporate governance best practice.
Objectives and Responsibilities
The Remuneration Committee’s main responsibilities can be summarised as follows:
l To determine the framework or broad policy for the remuneration of the Chairman, the Executive
Directors, and such other senior executives as it is requested by the Board to consider. The
remuneration of Non-Executive Directors shall be a matter for the Chairman and the Executive
Directors of the Board. No Director shall be involved in any decisions as to their own remuneration;
l To determine such remuneration policy, taking into account all factors which it deems necessary
(including relevant legal and regulatory requirements);
l To review the ongoing appropriateness and relevance of the remuneration policy, including policy
comparisons with market competitors;
l To design and determine targets for any performance related pay schemes operated by the
Company and approving the total annual payments made under such schemes;
l To review the design of, and any changes to, all share incentive plans;
l To advise on any major changes in employee benefits structures throughout the Company;
l To review the structure, size and composition of the Board, including the skills, knowledge and
experience;
l To give full consideration to succession planning;
l To recommend new Board appointments; and
l To consider any matter specifically referred to the Committee by the Board.
Polarean Imaging plc
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Group Annual Report and Financial Statements
for the year ended 31 December 2021
Remuneration Committee Report (continued)
Remuneration Policy for Non-Executive Directors
During the reporting period, Cyrille Petit, Juergen Laucht, Kenneth West and I each received a fee for
our services as Directors, which had been approved by the Board, and takes into account the time
commitment and responsibilities of our roles and the current market rates for comparable organisations
and appointments.
Remuneration decisions for 2021
Bonuses payable for the year ended 31 December 2021 totalled US$375,861 (2020: US$204,382).
Remuneration Committee Effectiveness
The Committee is due to perform a self-assessment of its effectiveness during the second half of 2022.
Further information on Directors’ remuneration, including Directors’ emoluments, share options and
warrants holdings can be found in the Directors’ Report on pages 17 to 21.
Jonathan Allis
Chairman of the Remuneration Committee
17 May 2022
Polarean Imaging plc
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Group Annual Report and Financial Statements
for the year ended 31 December 2021
Independent Auditors’ report to the members of Polarean Imaging plc
Opinion
We have audited the financial statements of Polarean Imaging plc (the “Parent Company”) and its
subsidiaries (the “Group”) for the year ended 31 December 2021, which comprise:
l the Group statement of comprehensive income for the year ended 31 December 2021;
l the Group and parent company statements of financial position as at 31 December 2021;
l the Group and parent company statements of changes in equity for the year then ended;
l the Group and parent company statements of cash flows for the year then ended; and
l the notes to the financial statements, including a summary of significant accounting policies.
The financial reporting framework that has been applied in the preparation of the financial statements is
applicable law and UK adopted International Accounting Standards (IFRS) and, as regards the parent
company, as applied in accordance with the provisions of the Companies Act 2006.
In our opinion:
l the financial statements give a true and fair view of the state of the Group’s and of Parent Company’s
affairs as at 31 December 2021 and of the Group’s loss for the year then ended;
l the Group’s financial statements have been properly prepared in accordance with IFRS;
l the Parent Company financial statements have been properly prepared in accordance with IFRS
as applied in accordance with the provisions of the Companies Act 2006; and
l the financial statements have been prepared in accordance with the requirements of the Companies
Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and
applicable law. Our responsibilities under those standards are further described in the ‘Auditor’s
responsibilities for the audit of the financial statements’ section of our report. We are independent of the
Group in accordance with the ethical requirements that are relevant to our audit of the financial
statements in the UK, including the FRC’s Ethical Standard as applied to listed entities, and we have
fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the Directors’ use of the going concern basis
of accounting in the preparation of the financial statements is appropriate.
Our evaluation of the Directors’ assessment of the Group’s and Parent Company’s ability to continue to
adopt the going concern basis of accounting included an assessment of the appropriateness of the
approach, assumptions and arithmetic accuracy of the model used by management when performing
their going concern assessment for a period of at least 12 months from the date of the approval of the
financial statements. We challenged the underlying data and key assumptions used to make the
assessment and the results of management’s stress testing, to assess the reasonableness of economic
assumptions.
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Group Annual Report and Financial Statements
for the year ended 31 December 2021
Independent Auditors’ report to the members of Polarean Imaging plc (continued)
Based on the work we have performed, we have not identified any material uncertainties relating to
events or conditions that, individually or collectively, may cast significant doubt on the ability of the Group
or Parent Company to continue as a going concern for a period of at least twelve months from when the
financial statements are authorised for issue.
Our responsibilities and the responsibilities of the Directors with respect to going concern are described
in the relevant sections of this report.
Overview of our audit approach
Materiality
In planning and performing our audit we applied the concept of materiality. An item is considered material
if it could reasonably be expected to change the economic decisions of a user of the financial statements.
We used the concept of materiality to both focus our testing and to evaluate the impact of misstatements
identified. Based on our professional judgement, we determined overall materiality for the Group financial
statements as a whole to be US$420,000 (2020: US$320,000), which represents approximately 3%
(2020: 5%) of the Group’s operating loss. We use a different level of materiality (‘performance materiality’)
to determine the extent of our testing for the audit of the financial statements. Performance materiality is
set based on the audit materiality as adjusted for the judgements made as to the entity risk and our
evaluation of the specific risk of each audit area having regard to the internal control environment. We
determined performance materiality to be US$295,000 (2020: US$225,000).
Where considered appropriate performance materiality may be reduced to a lower level, such as, for
related party transactions and directors’ remuneration.
We determined materiality for the Company financial statements as a whole was set at US$200,000
(2020: US$160,000) and its performance materiality to be US$140,000 (2020: US$112,000).
We agreed with the Audit Committee to report to it all identified errors in excess of US$13,000 (2020:
US$10,000). Errors below that threshold would also be reported to it if, in our opinion as auditor,
disclosure was required on qualitative grounds.
Overview of the scope of our audit
Polarean Imaging plc and its subsidiaries are accounted for from one operating location in North Carolina,
USA. Our audit was conducted from the UK and the USA using a local sub-contractor as part of our audit
team under our direction and supervision. All Group companies were within the scope of our audit testing.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our
audit of the financial statements of the current period and include the most significant assessed risks of
material misstatement (whether or not due to fraud) that we identified. These matters included those
which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and
directing the efforts of the engagement team. These matters were addressed in the context of our audit
of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a
separate opinion on these matters.
This is not a complete list of all risks identified by our audit.
Polarean Imaging plc
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Group Annual Report and Financial Statements
for the year ended 31 December 2021
Independent Auditors’ report to the members of Polarean Imaging plc (continued)
Key audit matter – financial statements How the scope of our audit addressed
of the Group the key audit matter
Carrying value of intangible assets
At the reporting date the carrying value of
intangible assets, comprising patents, in the
financial statements of the Group was US$2million
(2020: US$2.4million).
represented
approximately 6% of the assets of the Group at that
date.
This
Our audit risk focuses on the risk that intangible
assets may be impaired.
Intangible assets are detailed in note 12. The
accounting policy is documented in note 3
We considered with management whether any
indications of impairment existed. This includes
considering the remaining lives of patents, the
existence of any
technical
obsolescence of technology and manufacturing
processes, management’s future plans for the
business, the ability of the business to continue to
raise new investment and the market capitalisation
of the Group.
indication of
in subsidiaries
Carrying value of investments in subsidiaries
and amounts receivable from subsidiaries
At the reporting date the carrying value of
investments
financial
in
the parent company was
statements of
US$4.3million (2020: US$4.3million) and amounts
receivable from subsidiaries was US$53.8million
(2020: US$20.4million). This
represented
approximately 96% of the assets of the parent
company at that date.
the
We considered with management whether any
indications of impairment existed. This includes
considering the remaining lives of patents, the
existence of any
technical
obsolescence of technology and manufacturing
processes, management’s future plans for the
business, the ability of the business to continue to
raise new investment and the market capitalisation
of the Group.
indication of
Our audit risk focuses on the risk that these
balances may be impaired.
in, and amounts due
Investments
from,
subsidiaries are detailed in notes 13 and 14. The
relevant accounting policies are documented in
note 3
Our audit procedures in relation to the above matter was designed in the context of our audit opinion as
a whole. They were not designed to enable us to express an opinion on these matters individually and
we express no such opinion.
Other information
The Directors are responsible for the other information. The other information comprises the information
included in the annual report, other than the financial statements and our auditor’s report thereon. Our
opinion on the financial statements does not cover the other information and, except to the extent
otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If
we identify such material inconsistencies or apparent material misstatements, we are required to
determine whether there is a material misstatement in the financial statements or a material misstatement
of the other information. If, based on the work we have performed, we conclude that there is a material
misstatement of this other information, we are required to report that fact.
Polarean Imaging plc
33
263432 Polarean_pp017-pp035.qxp 17/05/2022 14:13 Page 34
Group Annual Report and Financial Statements
for the year ended 31 December 2021
Independent Auditors’ report to the members of Polarean Imaging plc (continued)
We have nothing to report in this regard.
Opinion on other matter prescribed by the Companies Act 2006
In our opinion based on the work undertaken in the course of our audit
l the information given in the Strategic Report and the Directors' Report for the financial year for
which the financial statements are prepared is consistent with the financial statements; and
l the Strategic Report and the Directors’ Report have been prepared in accordance with applicable
legal requirements.
Matters on which we are required to report by exception
In light of the knowledge and understanding of the Group and Parent Company and their environment
obtained in the course of the audit, we have not identified material misstatements in the Strategic Report
or the Directors’ Report.
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:
l 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
l the parent company financial statements are not in agreement with the accounting records and
returns; or
l certain disclosures of directors' remuneration specified by law are not made; or
l we have not received all the information and explanations we require for our audit.
Responsibilities of the directors for the financial statements
As explained more fully in the directors’ responsibilities statement set out on page 21, the Directors are
responsible for the preparation of the financial statements and for being satisfied that they give a true
and fair view, and for such internal control as the Directors determine is necessary to enable the
preparation of financial statements that are free from material misstatement, whether due to fraud or
error.
In preparing the financial statements, the Directors are responsible for assessing the Group’s and
Polarean Imaging plc’s ability to continue as a going concern, disclosing, as applicable, matters related
to going concern and using the going concern basis of accounting unless the Directors either intend to
liquidate the group or the parent company or to cease operations, or have no realistic alternative but to
do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole
are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an
audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on
the basis of these financial statements.
Polarean Imaging plc
34
263432 Polarean_pp017-pp035.qxp 17/05/2022 14:13 Page 35
Group Annual Report and Financial Statements
for the year ended 31 December 2021
Independent Auditors’ report to the members of Polarean Imaging plc (continued)
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design
procedures in line with our responsibilities, outlined above, to detect material misstatements in respect
of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities,
including fraud is detailed below:
We obtained an understanding of the legal and regulatory frameworks within which the Company
operates, focusing on those laws and regulations that have a direct effect on the determination of material
amounts and disclosures in the financial statements. The laws and regulations we considered in this
context were the Companies Act 2006 and taxation legislation. Technical, clinical or regulatory laws and
regulations which are inherent risks in the development of clinical drugs and devices are mitigated and
managed by the Chief Technology Officer and management generally in conjunction with expert
regulatory consultants in order to monitor the latest regulations and planned changes to the regulatory
environment.
We identified the greatest risk of material impact on the financial statements from irregularities, including
fraud, to be the override of controls by management. Our audit procedures to respond to these risks
included enquiries of management about their own identification and assessment of the risks of
irregularities, sample testing on the posting of journals and reviewing accounting estimates for biases.
Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected
some material misstatements in the financial statements, even though we have properly planned and
performed our audit in accordance with auditing standards. We are not responsible for preventing non-
compliance and cannot be expected to detect non-compliance with all laws and regulations.
These inherent limitations are particularly significant in the case of misstatement resulting from fraud as
this may involve sophisticated schemes designed to avoid detection, including deliberate failure to record
transactions, collusion or the provision of intentional misrepresentations.
A further description of our responsibilities for the audit of the financial statements is located on the
Financial Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms
part of our auditor’s report.
Use of our report
This report is made solely to the Parent 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
Parent 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 Group and the Group's members as a body, for our audit work, for this report, or
for the opinions we have formed.
Matthew Stallabrass (Senior Statutory Auditor)
for and on behalf of
Crowe U.K. LLP
Statutory Auditor
London
17 May 2022
Polarean Imaging plc
35
263432 Polarean_pp036-pp042.qxp 17/05/2022 14:14 Page 36
Group Annual Report and Financial Statements
for the year ended 31 December 2021
Consolidated Statement of Comprehensive Income
Notes
2021
US$
2020
US$
Revenue
Cost of sales
Gross profit
Administrative expenses
Depreciation
Amortisation
Selling and distribution expenses
Share-based payment expense
Total administrative expenses
Operating loss
Finance income
Finance expense
Loss before tax
Taxation
Loss for the year and total other comprehensive expense
Loss per share
Basic and diluted (US$)
The results reflected above relate to continuing activities.
11
12
19
4
1,185,427
(677,402)
––––––––––––
508,025
––––––––––––
(6,517,396)
(177,349)
(757,016)
(5,557,829)
(1,814,882)
––––––––––––
(14,824,472)
––––––––––––
6 (14,316,447)
321,544
7
(21,101)
7
––––––––––––
(14,016,004)
–
––––––––––––
(14,016,004)
10
1,056,766
(346,300)
––––––––––––
710,466
––––––––––––
(5,049,246)
(150,224)
(734,058)
(917,783)
(474,716)
––––––––––––
(7,326,027)
––––––––––––
(6,615,562)
100,769
(19,730)
––––––––––––
(6,534,523)
–
––––––––––––
(6,534,523)
9
––––––––––––
(0.071)
––––––––––––
––––––––––––
(0.044)
––––––––––––
There are no items of Other Comprehensive Income (“OCI”) for the year other than the loss above and
therefore no separate statement of other comprehensive income has been presented.
The accompanying notes on pages 43 to 65 are an integral part of these financial statements.
Polarean Imaging plc
36
263432 Polarean_pp036-pp042.qxp 17/05/2022 14:14 Page 37
Group Annual Report and Financial Statements
for the year ended 31 December 2021
Consolidated Statement of Financial Position
ASSETS
Non-current assets
Property, plant and equipment
Intangible assets
Right-of-use assets
Trade and other receivables
Current assets
Inventories
Trade and other receivables
Cash and cash equivalents
TOTAL ASSETS
EQUITY AND LIABILITIES
Equity attributable to holders of the parent
Share capital
Share premium
Group re-organisation reserve
Share-based payment reserve
Accumulated losses
Non-current liabilities
Deferred income
Lease liability
Contingent consideration
Current liabilities
Trade and other payables
Lease liability
Deferred income
TOTAL EQUITY AND LIABILITIES
Notes
2021
US$
2020
US$
11
12
24
14
634,779
2,193,843
422,816
5,539
––––––––––––
3,256,977
––––––––––––
271,264
2,810,694
184,213
5,539
––––––––––––
3,271,710
––––––––––––
977,924
1,426,810
15
348,067
14
970,968
6,282,665
16 28,874,908
––––––––––––
––––––––––––
7,608,656
31,272,686
––––––––––––
––––––––––––
34,529,663 10,880,366
––––––––––––
––––––––––––
101,642
7,813,337
3,660,332
17
78,200
18 59,022,919 23,840,571
7,813,337
18
19
1,845,450
18 (38,860,208) (24,844,204)
––––––––––––
8,733,354
––––––––––––
––––––––––––
31,738,022
––––––––––––
21
24
20
22
24
21
145,747
358,837
316,000
––––––––––––
820,584
––––––––––––
219,954
91,609
316,000
––––––––––––
627,563
––––––––––––
1,731,114
1,348,867
130,949
129,819
108,994
40,763
––––––––––––
––––––––––––
1,971,057
1,519,449
––––––––––––
––––––––––––
34,529,663 10,880,366
––––––––––––
––––––––––––
––––––––––––
––––––––––––
These Financial Statements were approved and authorised for issue by the Board of Directors on 17 May
2022 and were signed on its behalf by:
Kenneth West
Non-Executive Chairman
Company number: 10442853
The accompanying notes on pages 43 to 65 are an integral part of these financial statements.
Polarean Imaging plc
37
263432 Polarean_pp036-pp042.qxp 17/05/2022 14:14 Page 38
Group Annual Report and Financial Statements
for the year ended 31 December 2021
Company Statement of Financial Position
ASSETS
Non-current assets
Investment in subsidiary
Current assets
Trade and other receivables
Cash and cash equivalents
TOTAL ASSETS
EQUITY AND LIABILITIES
Equity attributable to holders of the parent
Share capital
Share premium
Merger reserve
Share-based payment reserve
Accumulated losses
Notes
2021
US$
2020
US$
13 58,180,314 24,735,727
––––––––––––– –––––––––––––
58,180,314 24,735,727
––––––––––––– –––––––––––––
14
16
22,410
2,454,491
61,304
911,271
––––––––––––– –––––––––––––
972,575
––––––––––––– –––––––––––––
60,657,215 25,708,302
––––––––––––– –––––––––––––
––––––––––––– –––––––––––––
2,476,901
101,642
17
78,200
18 59,022,919 23,840,571
4,322,527
18
4,322,527
1,540,419
19
3,355,301
(6,251,190)
(4,122,345)
18
––––––––––––– –––––––––––––
60,551,199 25,659,372
––––––––––––– –––––––––––––
Current liabilities
Trade and other payables
22
TOTAL EQUITY AND LIABILITIES
106,016
106,016
48,930
––––––––––––– –––––––––––––
48,930
––––––––––––– –––––––––––––
60,657,215 25,708,302
––––––––––––– –––––––––––––
––––––––––––– –––––––––––––
For the year under review, the amount due from subsidiary undertaking is regarded as net investment
and is therefore reclassified from trade and other receivable to investment in subsidiary, and their
respective comparatives were also restated.
As permitted by section 408 of the Companies Act 2006, no separate statement of Comprehensive
Income is presented in respect of the parent Company. The loss for the financial year dealt with in the
financial statements of the parent Company was US$2,128,845 (2020: US$908,895).
These financial statements were approved and authorised for issue by the Board of Directors on 17 May
2022 and were signed on its behalf by:
Kenneth West
Non-Executive Chairman
Company number: 10442853
The accompanying notes on pages 43 to 65 are an integral part of these financial statements.
Polarean Imaging plc
38
263432 Polarean_pp036-pp042.qxp 17/05/2022 14:14 Page 39
Group Annual Report and Financial Statements
for the year ended 31 December 2021
Consolidated Statement of Changes in Equity
Share
capital
US$
Share
premium
US$
Share-
based
payment
reserve
US$
Group
re-org Accumulated
losses
US$
reserve
US$
Total
equity
US$
As at 1 January 2020
55,776
––––––––––––
13,659,912
––––––––––––
1,370,734
––––––––––––
7,813,337
––––––––––––
(18,309,681)
––––––––––––
4,590,078
––––––––––––
Comprehensive income
Loss for the year
Transactions with owners
Issue of shares
Share issue costs
Share-based payment
expense
As at 31 December 2020
(audited)
Comprehensive income
Loss for the year
Transactions with owners
Issue of shares
Share issue costs
Share-based payment
expense
As at 31 December 2021
–
–
22,424
–
10,703,373
(522,714)
–
–
–
–
–
–
(6,534,523)
(6,534,523)
–
–
10,725,797
(522,714)
–
––––––––––––
–
––––––––––––
474,716
––––––––––––
–
––––––––––––
–
––––––––––––
414,716
––––––––––––
78,200
––––––––––––
––––––––––––
23,840,571
––––––––––––
––––––––––––
1,845,450
––––––––––––
––––––––––––
7,813,337
––––––––––––
––––––––––––
(24,844,204)
––––––––––––
––––––––––––
8,733,354
––––––––––––
––––––––––––
–
–
23,442
–
37,284,454
(2,102,106)
–
–
–
–
–
–
(14,016,004)
(14,016,004)
–
–
37,307,896
(2,102,106)
–
––––––––––––
101,642
––––––––––––
––––––––––––
–
––––––––––––
59,022,919
––––––––––––
––––––––––––
1,814,882
––––––––––––
3,660,332
––––––––––––
––––––––––––
–
––––––––––––
7,813,337
––––––––––––
––––––––––––
–
––––––––––––
(38,860,208)
––––––––––––
––––––––––––
1,814,882
––––––––––––
31,738,022
––––––––––––
––––––––––––
The accompanying notes on pages 43 to 65 are an integral part of these financial statements.
Polarean Imaging plc
39
263432 Polarean_pp036-pp042.qxp 17/05/2022 14:14 Page 40
Group Annual Report and Financial Statements
for the year ended 31 December 2021
Company Statement of Changes in Equity
Share
capital
US$
Share
premium
US$
Share-
based
payment
reserve
US$
Merger Accumulated
losses
reserve
US$
US$
Total
equity
US$
As at 1 January 2020
55,776
––––––––––––
13,659,912
––––––––––––
1,065,703
––––––––––––
4,322,527
––––––––––––
(3,213,450)
––––––––––––
15,890,468
––––––––––––
Comprehensive income
Loss for the year
Transactions with owners
Issue of shares
Share issue costs
Share-based payment
expense
As at 31 December 2020
Comprehensive income
Loss for the year
Transactions with owners
Issue of shares
Share issue costs
Share-based payment
expense
As at 31 December 2021
–
–
22,424
–
10,703,373
(522,714)
–
–
–
–
–
–
(908,895)
(908,895)
–
–
10,725,797
(522,714)
–
––––––––––––
78,200
––––––––––––
–––––––––––
–
––––––––––––
23,840,571
––––––––––––
–––––––––––
474,716
––––––––––––
1,540,419
––––––––––––
–––––––––––
–
––––––––––––
4,322,527
––––––––––––
–––––––––––
–
––––––––––––
(4,122,345)
––––––––––––
–––––––––––
474,716
––––––––––––
25,659,372
––––––––––––
–––––––––––
–
–
23,442
–
37,284,454
(2,102,106)
–
–
–
–
–
–
(2,128,845)
(2,128,845)
–
–
37,307,896
(2,102,106)
–
––––––––––––
101,642
––––––––––––
––––––––––––
–
––––––––––––
59,022,919
––––––––––––
––––––––––––
1,814,882
––––––––––––
3,355,301
––––––––––––
––––––––––––
–
––––––––––––
4,322,527
––––––––––––
––––––––––––
–
––––––––––––
(6,251,190)
––––––––––––
––––––––––––
1,814,882
––––––––––––
60,551,199
––––––––––––
––––––––––––
The accompanying notes on pages 43 to 65 are an integral part of these financial statements.
Polarean Imaging plc
40
263432 Polarean_pp036-pp042.qxp 17/05/2022 14:14 Page 41
Group Annual Report and Financial Statements
for the year ended 31 December 2021
Consolidated Statement of Cash Flows
Cash flows from operating activities
Loss before tax
Adjustments for non-cash/non-operating items:
Depreciation of plant and equipment
Amortisation of intangible assets and right-of use-assets
Loss on disposal of property, plant and equipment
Loss on remeasurement of right-of-use assets
Share-based payment expense
Finance expense
Finance income
Operating cash outflows before movements in working capital
Increase in inventories
(Increase)/decrease in trade and other receivables
Increase/(decrease) in trade and other payables
(Decrease)/increase in deferred income
Net cash used in operations
Cash flows from investing activities
Purchase of plant and equipment
Net cash used in investing activities
Cash flows from financing activities
Issue of shares
Cost of issue
Interest paid on lease liabilities
Interest received
Principal elements of lease payments
Net cash generated by financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at the beginning of year
Cash and cash equivalents at end of year
2021
US$
2020
US$
(14,016,004)
(6,534,522)
177,349
757,015
590
11,660
1,814,882
21,101
(321,544)
150,224
734,058
–
–
474,716
19,730
(100,769)
––––––––––––– –––––––––––––
(11,554,951)
(5,256,563)
––––––––––––– –––––––––––––
(423,093)
288,096
(424,714)
21,576
––––––––––––– –––––––––––––
(12,250,467)
(5,794,698)
––––––––––––– –––––––––––––
(448,886)
(622,901)
382,247
(5,976)
(541,454)
(65,531)
––––––––––––– –––––––––––––
(65,531)
––––––––––––– –––––––––––––
(541,454)
37,307,896 10,725,797
(522,714)
(2,102,106)
(19,730)
(21,101)
100,769
321,544
(103,097)
(122,069)
––––––––––––– –––––––––––––
35,384,164 10,181,025
––––––––––––– –––––––––––––
22,592,243
4,320,796
––––––––––––– –––––––––––––
1,961,869
––––––––––––– –––––––––––––
28,874,908
6,282,665
––––––––––––– –––––––––––––
––––––––––––– –––––––––––––
6,282,665
The accompanying notes on pages 43 to 65 are an integral part of these financial statements
Polarean Imaging plc
41
263432 Polarean_pp036-pp042.qxp 17/05/2022 14:14 Page 42
Group Annual Report and Financial Statements
for the year ended 31 December 2021
Company Statement of Cash Flows
Cash flows from operating activities
Loss before tax
Adjustments for non-cash/non-operating items:
Share-based payment expense
Interest received
Operating cash outflows before movements in working capital
Increase in trade and other receivables
Increase/(decrease) in trade and other payables
Net cash used by operations
Cash flows from financing activities
Issue of shares
Cost of issue
Interest received
Loans to the Subsidiary
Net cash generated by financing activities
Year ended Year ended
31 December 31 December
2020
US$
2021
US$
(2,128,845)
(908,895)
1,814,882
(319,564)
––––––––––––
(633,527)
––––––––––––
38,894
57,086
––––––––––––
(537,547)
––––––––––––
474,716
(100,358)
––––––––––––
(534,537)
––––––––––––
42,372
(4,068)
––––––––––––
(496,233)
––––––––––––
37,307,896 10,725,797
(522,714)
(2,102,106)
100,358
319,564
(8,952,702)
(33,444,587)
––––––––––––
––––––––––––
1,350,739
––––––––––––
2,080,767
––––––––––––
Increase in cash and cash equivalents
Cash and cash equivalents at the beginning of period
Cash and cash equivalents at end of period
1,543,220
––––––––––––
911,271
––––––––––––
2,454,491
––––––––––––
––––––––––––
848,506
––––––––––––
56,765
––––––––––––
911,271
––––––––––––
––––––––––––
The accompanying notes on pages 43 to 65 are an integral part of these financial statements.
Polarean Imaging plc
42
263432 Polarean_pp043-pp065.qxp 17/05/2022 14:23 Page 43
Group Annual Report and Financial Statements
for the year ended 31 December 2021
Notes to the Financial Statements
1. General information
The Company is incorporated in England and Wales under the Companies Act 2006. The registered
number is 10442853 and its registered office is at 27-28 Eastcastle Street, London, W1W 8DH. The
Company is listed on the AIM market of the London Stock Exchange.
The Company is the parent company of Polarean, Inc (the “Subsidiary”, together the “Group”). The
principal activity of the Group is developing next generation medical imaging technology. The Subsidiary
is incorporated in the United States of America and has a registered office of 2500 Meridian Parkway
#175, Durham, NC 27713, USA.
2. Adoption of new and revised International Financial Reporting Standards
Standards and interpretations adopted during the year
Information on new standards, amendments and interpretations that are relevant to the Group’s annual
report and accounts is provided below:
l Interest Rate Benchmark Reform (IBOR) reform Phase 2 (Amendments to IFRS 9, IAS 39 and IFRS
7); and
l COVID-19-Related Rent Concessions beyond 30 June 2021 (Amendments to IFRS 16).
These standards have no material impact on the Group.
Standards, amendments and interpretations that are not yet effective
There are a number of standards, amendments to standards, and interpretations which have been issued
by the IASB that are effective in future accounting periods that the Company has decided not to adopt
early. The most significant of these are as follows, which are all effective for the period beginning
1 January 2022:
l Onerous Contracts – Cost of Fulfilling a Contract (Amendments to IAS 37);
l Property, Plant and Equipment: Proceeds before Intended Use (Amendments to IAS 16);
l Annual Improvements to IFRS Standards 2018-2020 (Amendments to IFRS 1, IFRS 9, IFRS 16
and IAS 41); and
l References to Conceptual Framework (Amendments to IFRS 3).
The following amendments are effective for the period beginning 1 January 2023:
l Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2);
l Definition of Accounting Estimates (Amendments to IAS 8); and
l Deferred Tax Related to Assets and Liabilities arising from a Single Transaction (Amendments to
IAS 12).
The Group is currently assessing the impact of these new accounting standards and amendments.
Polarean Imaging plc
43
263432 Polarean_pp043-pp065.qxp 17/05/2022 14:23 Page 44
Group Annual Report and Financial Statements
for the year ended 31 December 2021
Notes to the Financial Statements (continued)
3. Significant accounting policies
Basis of preparation
These financial statements have been prepared in accordance with UK adopted International Accounting
Standards (“IFRS”) and under the historical cost convention. The financial statements are presented in
United States Dollars (“US$”) except where otherwise indicated.
The principal accounting policies adopted in the preparation of the financial statements are set out below.
The policies have been consistently applied to all the years presented, unless otherwise stated.
Going concern
The Directors consider the going concern basis of preparation to be appropriate in preparing the financial
statements.
The Group is in its development stage and has not yet moved to full commercial exploitation of its IP.
During the year ended 31 December 2021 the Group recorded a loss after tax of US$14,016,004 (2020:
loss of US$6,534,523) and a net cash outflow from operating activities of US $12,250,467 (2020:
US$5,794,698).
During the year, the Group raised approximately US$37.3 million from the placement of new shares. At
the reporting the Group’s cash balance was US$28.9 million (2020: US$6.3 million). In considering the
appropriateness of this basis of preparation, the Directors have reviewed the Group’s working capital
forecasts for a minimum of 12 months from the date of the approval of this financial information. Based
on their consideration the Directors have reasonable expectation that the Group has adequate resources
to continue for the foreseeable future and that carrying values of intangible assets are supported. Thus,
they continue to adopt the going concern basis of accounting in preparing this financial information.
Management has implemented logistical and organisational changes to underpin the Group’s resilience
to COVID-19, with the key focus being protecting all personnel, minimising the impact on critical work
streams and ensuring business continuity. COVID-19 may impact the Group in varying ways, which could
lead to a direct bearing on the Group’s ability to generate future cash flows for working capital purposes.
Management is closely monitoring commercial and technical aspects of the Group’s operations to mitigate
the impact from the COVID-19 pandemic. The inability to gauge the length of such disruption further
adds to this uncertainty. For these reasons the generation of sufficient operating cash flows remain a
risk. Management believes the Group will generate sufficient working capital and cash flows to continue
in operational existence and will have the ongoing support of its shareholders, if required, for the
foreseeable future.
Share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares
are shown in share premium as a deduction from the proceeds.
Government and other grants
Grants are not recognised until there is a reasonable assurance that the Group will comply with the
conditions attaching to them and that the grants will be received. Grants are treated as deferred income
and released to the income statement on the achievement of the relevant performance criteria.
Inventory
Inventories are measured at the lower of cost and net realisable value. The cost of inventories is based
on the weighted average cost principle and includes expenditure incurred in inventories, adjusted for
rebates, and other costs incurred in bringing them to their existing location.
Polarean Imaging plc
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Group Annual Report and Financial Statements
for the year ended 31 December 2021
Notes to the Financial Statements (continued)
3. Significant accounting policies continued
Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call deposits with an original maturity of three
months or less.
Functional and presentation currency
Items included in the financial statements of the Group are measured using the currency of the primary
economic environment in which the Group operates (“the functional currency”). The financial statements
are presented in United States Dollars (US$) which is also the Group’s functional currency.
Foreign currencies
Transactions in foreign currencies are initially recorded by the Group’s entities at their respective
functional currency spot rates at the date the transaction first qualifies for recognition.
Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency
spot rates of exchange at the reporting date.
Differences arising on settlement or translation of monetary items are recognised in profit or loss.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated
using the exchange rates at the dates of the initial transactions. Non-monetary items measured at fair
value in a foreign currency are translated using the exchange rates at the date when the fair value is
determined. The gain or loss arising on translation of non-monetary items measured at fair value is
treated in line with the recognition of the gain or loss on the change in fair value of the item (i.e., translation
differences on items whose fair value gain or loss is recognised in OCI or profit or loss are also recognised
in OCI or profit or loss, respectively).
Basis of consolidation
The consolidated financial statements are for the year ended 31 December 2021. The measurement
bases and principal accounting policies of the Group are set out below.
On 30 May 2017 Polarean Merger-Sub, Inc., a Subsidiary of the Subsidiary, completed a merger process
under which it acquired substantially all of the assets of m2m Imaging Corp (“m2m”), a portfolio company
of Amphion Innovations plc engaged in the development of high-performance MRI RF coils for the global
research market, primarily in micro-imaging. By 2016 m2m had been inactive for several years due to
an inability to raise funds. At the date of the merger the assets of m2m were its technology and patents.
The merger was affected by way of court sanction in the process of which the Subsidiary acquired,
through a special purpose entity, Polarean Merger Sub, Inc. the assets of another special purpose entity,
m2m Merger Sub, Inc., with m2m Merger Sub, Inc. being the surviving entity. After the reporting date, on
1 September 2017, m2m Merger Sub, Inc. was merged into the Subsidiary with the Subsidiary being the
surviving entity, the effect being that m2m Merger Sub, Inc. was collapsed, and the Subsidiary had
acquired the m2m assets.
As part of the arrangements for the merger 576,430 shares in the Subsidiary were issued to the former
shareholders in m2m with the intention that all parties would exchange their stock in Polarean, Inc. for
shares in the Group on a pro rata basis as soon as practicable.
The Directors consider the merger between the Subsidiary and m2m Acquisition, Inc. as a consequence
of which the group acquired the exclusive worldwide rights to m2m’s technology and patents does not
meet the definition of an acquisition of a business as set out in IFRS3 and has therefore been accounted
for as the acquisition of an asset or a group of assets that does not constitute a business.
Polarean Imaging plc
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Group Annual Report and Financial Statements
for the year ended 31 December 2021
Notes to the Financial Statements (continued)
3. Significant accounting policies continued
IFRS 3 requires that in such cases the acquirer shall identify and recognise the individual identifiable
assets acquired (including those assets that meet the definition of, and recognition criteria for, intangible
assets in IAS 38 Intangible assets) and to allocate the cost of the individual identifiable assets and
liabilities on the basis of their relative fair values at the date of purchase. Such a transaction or event
does not give rise to goodwill.
The fair value of the assets acquired under the merger arrangement of US$4,999,996 represents the
aggregate estimated value of the financial obligations of the former m2m shareholders which were
converted into equity in m2m prior to the merger agreement.
The Directors consider the acquisition of the entire issued common stock of the Subsidiary by the
Company in exchange for equivalent equity participation in the Company to be a group re-organisation
and not a business combination and to fall outside the scope of IFRS 3. Having considered the
requirements of IAS 8 and the relevant UK and US guidance, the transaction has been accounted for on
a merger or pooling of interest basis as if both entities had always been combined, using book values,
with no fair value adjustments made nor goodwill recognised.
Revenue recognition
Revenue comprises the fair value of the sale of goods and rendering of services to external customers,
net of applicable sales tax, rebates, promotions and returns.
Contracts and obligation
The majority of customer contracts have three main elements that the Group provides to the customer:
l Sale of polarisers;
l Sale of parts and upgrades; and
l Provision of service.
The sale of polarisers is seen as a distinct performance obligation and revenue is recognised at a point
in time. The customer can benefit from the use of the polarisers when supplied and is not reliant on the
Group to provide the parts and upgrades or service, and therefore revenue from the sale of polarisers is
recognised in full when the goods are delivered to the customer.
The second performance obligation is the sale of parts and upgrades. The customer can benefit from
the use of the parts and upgrade when supplied and is not reliant on the Group to provide the service,
and therefore revenue from the sale of parts and upgrades is recognised in full when the goods are
delivered to the customer.
The third performance obligation is the provision of preventive maintenance service. Revenue from the
provision of preventive maintenance service is recognised over the period when the services are
rendered. A contract liability represents the obligation of the Group to render services to a customer for
which consideration has been received (or the amount is due) from the customer.
Determining the transaction price
The transaction price is determined as the fair value of the Group expects to receive over the course of
the contract.
There are no incentives given to customers that would have a material effect on the financial statements.
Polarean Imaging plc
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Group Annual Report and Financial Statements
for the year ended 31 December 2021
Notes to the Financial Statements (continued)
3. Significant accounting policies continued
Allocate the transaction price to the performance obligations in the contract
The allocation of the transaction price to the performance obligations in the contract is non-complex for
the Group. There is a fixed unit price for each product or service sold. Therefore, there is limited
judgement involved in allocating the contract price to each unit ordered.
Recognise revenue when or as the entity satisfies its performance obligations
The overarching terms are consistent in each contract.
The sale of polarisers is seen as a distinct performance obligation and revenue is recognised at a point
in time, when title of the goods transferred to the customer, as the customer can benefit from the use of
the polarisers when supplied.
The sale of parts and upgrades is seen as a distinct performance obligation and revenue is recognised
at a point in time, when supplied to the customer, as the customer can benefit from the use of the parts
and upgrade when supplied.
The provision of service is seen as a distinct performance obligation and revenue is recognised as the
Group provides these services for the duration of the contract, i.e. over time. Any unexpired portion of a
service contract or payment received in advance in respect of service contracts either partially completed
or not started, are included in deferred income and released over their remaining term.
Property, plant and equipment
Owned assets
Items of property, plant and equipment are stated at cost or deemed cost less accumulated depreciation
and impairment losses. Cost includes the original purchase price of the asset and the costs attributable
to bringing the asset to its working condition for its intended use. When parts of an item of property, plant
and equipment have different useful lives, those components are accounted for as separate items of
property, plant and equipment.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as
appropriate, only when it is probable that future economic benefits associated with the item will flow to
the Group and the cost of the item can be measured reliably.
Depreciation
Depreciation is charged to profit or loss on a straight-line basis over the estimated useful lives of each
part of an item of property, plant and equipment. The estimated useful lives are as follows:
l Computer and IT equipment – 33% straight line
l Leasehold improvements – 20% straight line
l Laboratory equipment – 20% straight line
The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, or
if there is an indication of a significant change since the last reporting date.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and
are recognised within administrative expenses in the statement of comprehensive income.
Intangible Assets
Patents and related rights which are acquired through a business combination, are assessed by reviewing
their net present value of future cash flows. Patents are currently amortised over their useful life, not
exceeding 10 years.
Polarean Imaging plc
47
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Group Annual Report and Financial Statements
for the year ended 31 December 2021
Notes to the Financial Statements (continued)
3. Significant accounting policies continued
Internally generated intangible assets – research costs are costs incurred in research activities and are
recognised as an expense in the period in which they are incurred. An internally generated intangible
asset arising from the development of commercial technologies is recognised only if all of the following
conditions are met:
l it is probable that the asset will create future economic benefits;
l the development costs can be measured reliably;
l technical feasibility of completing the intangible asset can be demonstrated;
l there is the intention to complete the asset and use or sell it;
l there is the ability to use or sell the asset; and
l adequate technical, financial and other resources to complete the development and to use or sell
the asset are available.
At this time the Directors consider that the Group does not meet all of those conditions and development
costs are therefore recorded as expense in the period in which the cost is incurred.
Impairment of non-financial assets
Non-financial assets are reviewed 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 carrying amount exceeds its recoverable amount. The recoverable amount is the higher
of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment,
assets are reviewed at the lowest levels for which there are separately identifiable cash flows (cash-
generating units).
Non-financial assets other than goodwill that suffered impairment are reviewed for possible reversal of
the impairment at each reporting date.
Provisions
A provision is recognised in the statement of financial position when the Group has a present legal or
constructive obligation as a result of a past event, and it is probable that an outflow of economic benefits
will be required to settle the obligation. If the effect is material, provisions are determined by discounting
the expected future cash flows at a pre-tax rate that reflects current market assessments of the time
value of money and, when appropriate, the risks specific to the liability. The increase in the provision
due to the passage of time is recognised in finance costs.
Financial assets
The Group classifies all of its financial assets at amortised cost. Financial assets do not comprise
prepayments. Management determines the classification of its financial assets at initial recognition.
These assets arise principally from the provision of goods and services to customers (e.g. trade
receivables), but also incorporate other types of financial assets where the objective is to hold their assets
in order to collect contractual cash flows and the contractual cash flows are solely payments of the
principal and interest. They are initially recognised at fair value plus transaction costs that are directly
attributable to their acquisition or issue and are subsequently carried at amortised cost using the effective
interest rate method, less provision for impairment.
Polarean Imaging plc
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Group Annual Report and Financial Statements
for the year ended 31 December 2021
Notes to the Financial Statements (continued)
3. Significant accounting policies continued
Amortised Cost
The Group's financial assets held at amortised cost comprise trade and other receivables and cash and
cash equivalents in the consolidated statement of financial position.
Impairment provisions for trade receivables are recognised based on the simplified approach within IFRS
9 using the lifetime expected credit losses. During this process the probability of the non-payment of the
trade receivables is assessed. This probability is then multiplied by the amount of the expected loss
arising from default to determine the lifetime expected credit loss for the trade receivables. For trade
receivables, which are reported net; such provisions are recorded in a separate provision account with
the loss being recognised within administrative expenses in the consolidated statement of comprehensive
income. On confirmation that the trade receivable will not be collectable, the gross carrying value of the
asset is written off against the associated provision.
Impairment provisions for other receivables are recognised based on the general impairment model
within IFRS 9. In doing so, the Company follows the 3-stage approach to expected credit losses. Step 1
is to estimate the probability that the debtor will default over the next 12 months. Step 2 considers if the
credit risk has increased significantly since initial recognition of the debtor. Finally, Step 3 considers if
the debtor is credit impaired, following the criteria under IAS 39.
Financial liabilities
The Group classifies its financial liabilities in the category of financial liabilities at amortised cost. All
financial liabilities are recognised in the statement of financial position when the Group becomes a party
to the contractual provision of the instrument.
Financial liabilities measured at amortised cost comprise trade payables and other short-dated monetary
liabilities, which are initially recognised at fair value and subsequently carried at amortised cost using
the effective interest rate method.
Unless otherwise indicated, the carrying values of the Group’s financial liabilities measured at amortised
cost represents a reasonable approximation of their fair values.
Employee benefits: pension obligations
The Group operates a defined contribution plan. A defined contribution plan is a pension plan under
which the Group pays fixed contributions into a separate entity. The Group has no legal or constructive
obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees
the benefits relating to employee service in the current and prior periods.
The Group has no further payment obligations once the contributions have been paid. The contributions
are recognised as employee benefit expense when they are due. Prepaid contributions are recognised
as an asset to the extent that a cash refund or a reduction in the future payments is available.
Net finance costs
Finance costs
Finance costs comprise direct issue costs and foreign exchange losses; and are expensed using the
effective interest method in the period in which they are incurred.
Finance income
Finance income comprises interest receivable on funds invested, and foreign exchange gains.
Interest income is recognised in the income statement as it accrues using the effective interest method.
Polarean Imaging plc
49
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Group Annual Report and Financial Statements
for the year ended 31 December 2021
Notes to the Financial Statements (continued)
3. Significant accounting policies continued
Leases
Definition of a lease
The Group assesses whether a contract is or contains a lease. A contract is or contains a lease if the
contract conveys a right to control the use of an identified asset for a period of time in exchange for
consideration.
The Group recognises a right-of-use asset and a lease liability at the lease commencement date. The
right-of-use asset is initially measured at cost, and subsequently at cost less any accumulated
amortisation and impairment losses and adjusted for certain measurements of the lease liability. Right-
of-use assets are amortised on a straight-line basis over the remaining term of the lease or over the
remaining economic life of the asset if, rarely, this is judged to be shorter than the lease term.
The lease liability is initially measured at the present value of the lease payments that are not paid at the
commencement date, discounted using the interest rate implicit or, if that rate cannot be readily
determined, the Group’s incremental borrowing rate. Generally, the Group uses its incremental borrowing
rate as the discount rate.
The lease liability is subsequently increased by the interest cost on the lease liability and decreased by
lease payments made. It is remeasured when there is a change in future lease payments arising from a
change in an index or rate, a change in estimate of the amount expected to be payable under a residual
value guarantee, or as appropriate, changes in the assessment of whether a purchase or extension
option is reasonably certain to be exercised or a termination option is reasonably certain not to be
exercised.
The Group has applied judgement to determine the lease term for some lease contracts in which it is a
lease that include renewal options. The assessment of whether the Group is reasonably certain to
exercise such options impacts the lease term, which significantly affects the amount of lease liabilities
ad right-of-use assets recognised.
Income tax
Income tax for the years presented comprises current and deferred tax. Income tax is recognised in the
income statement except to the extent that it relates to items recognised directly in equity, in which case
it is recognised in equity. Current tax is the expected tax payable on the taxable income for the year,
using tax rates enacted or substantively enacted at the statement of financial position date, and any
adjustment to tax payable in respect of previous years.
Deferred tax is recognised on temporary differences arising between the tax bases of assets and liabilities
and their carrying amounts.
The following temporary differences are not recognised if they arise from a) the initial recognition of
goodwill, and b) for the initial recognition of other assets or liabilities in a transaction other than a business
combination that at the time of the transaction affects neither accounting nor taxable profit or loss.
Deferred tax is determined using tax rates and laws that have been enacted or substantially enacted by
the balance sheet date and are expected to apply when the related deferred tax asset is realised, or the
deferred income tax liability is settled.
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be
available against which the asset can be utilised. Deferred tax assets are reduced to the extent that it is
no longer probable that the related tax benefit will be realised.
Polarean Imaging plc
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Group Annual Report and Financial Statements
for the year ended 31 December 2021
Notes to the Financial Statements (continued)
3. Significant accounting policies continued
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset
current tax assets against current tax liabilities and when the deferred income taxes assets and liabilities
relate to income taxes levied by the same taxation authority on either the taxable entity or different taxable
entities where there is an intention to settle the balances on a net basis.
Critical accounting estimates and judgements
The preparation of the Group’s financial statements under IFRS requires the directors to make estimates
and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent
assets and liabilities. Estimates and judgements are continually evaluated and are based on historical
experience and other factors including expectations of future events that are believed to be reasonable
under the circumstances. Actual results may differ from these estimates.
The directors consider that the following judgements are likely to have the most significant effect on the
amounts recognised in the financial statements.
Carrying value of intangible assets – Group
In determining whether there are indicators of impairment of the Group’s intangible assets, the directors
take into consideration various factors including the economic viability and expected future financial
performance of the asset and when it relates to the intangible assets arising on a business combination,
the expected future performance of the business acquired.
Carrying value of investments in and amounts receivable from subsidiaries – Company
In determining whether there are indicators of impairment of the Company’s investments in, and amounts
receivable from, its subsidiary undertakings, the directors take into consideration various factors including
the economic viability and expected future financial performance of the business of the subsidiary
undertakings.
4. Segmental information
IFRS 8 requires operating segments to be identified on the basis of internal reports about components
of the Group that are regularly reviewed by the chief operating decision maker (which takes the form of
the Board of Directors) as defined in IFRS 8, in order to allocate resources to the segment and to assess
its performance.
The chief operating decision maker has determined that the Group has one operating segment, the
development and commercialisation of gas polariser devices and ancillary instruments. Revenues are
reviewed based on the products and services provided: Polarisers, Parts and Upgrades, Service and
Other revenue.
The Group operates in Canada, Germany, the United Kingdom and the United States of America.
Revenue by origin of geographical segment for all entities in the Group is as follows:
Revenue
Canada
Germany
United Kingdom
United States of America
Total
2021
US$
2020
US$
529,824
6,750
25,183
623,670
––––––––––––
1,185,427
––––––––––––
––––––––––––
85,728
–
34,304
936,734
––––––––––––
1,056,766
––––––––––––
––––––––––––
Polarean Imaging plc
51
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Group Annual Report and Financial Statements
for the year ended 31 December 2021
Notes to the Financial Statements (continued)
4. Segmental information continued
Non-current assets
United States of America
Total
Product and services revenue analysis
Revenue
2021
US$
2020
US$
3,256,977
––––––––––––
3,256,977
––––––––––––
––––––––––––
3,271,710
––––––––––––
3,271,710
––––––––––––
––––––––––––
2021
US$
2020
US$
Polarisers
Parts and Upgrades
Service
Grants
536,350
158,275
61,991
300,151
––––––––––––
1,056,766
––––––––––––
––––––––––––
Management measures revenues by reference to the Group’s core services and products and related
services, which underpin such income.
826,059
275,789
83,579
–
––––––––––––
1,185,427
––––––––––––
––––––––––––
Total
5. Employees and Directors
Staff costs for the Group and the Company during the year:
Wages and salaries
Healthcare benefits
Social Security costs
Average monthly number of people (including directors) employed by activity:
Senior management including directors
R&D and clinical trial
Administration
Total
2021
US$
2020
US$
3,604,758
220,476
248,063
––––––––––––
4,073,297
––––––––––––
––––––––––––
2,265,077
142,942
132,941
––––––––––––
2,540,959
––––––––––––
––––––––––––
2021
No.
2020
No.
10
11
7
––––––––––––
28
––––––––––––
––––––––––––
10
8
3
––––––––––––
21
––––––––––––
––––––––––––
Polarean Imaging plc
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Group Annual Report and Financial Statements
for the year ended 31 December 2021
Notes to the Financial Statements (continued)
5. Employees and Directors continued
Key management compensation:
The following table details the aggregate compensation paid to key management personnel.
Salaries and fees
Healthcare benefits
Social security costs
2021
US$
2020
US$
1,394,235
85,830
69,465
––––––––––––
1,549,530
––––––––––––
––––––––––––
1,242,468
78,065
70,968
––––––––––––
1,391,501
––––––––––––
––––––––––––
Key management personnel include all directors who together have authority and responsibility for
planning, directing, and controlling the activities of the Group and senior divisional managers.
6. Operating loss
Depreciation
– Owned property, plant and equipment
Amortisation of right-of-use assets
Amortisation of intangible assets
Subtotal Amortisation
Research expenses
Auditors’ remuneration (note 8)
Clinical trial costs
Regulatory consulting costs
Legal and professional fees
Brand development and market research
Medical affairs and congress/symposia
7. Net finance expense
Foreign exchange gain
Sundry income
Total finance income
Finance expense
Total finance expense
8. Auditor remuneration
Auditors’ remuneration
Fees payable to the Group’s auditor for audit of Parent Company
and Consolidated Financial Statements
Polarean Imaging plc
53
2021
US$
2020
US$
177,349
140,164
616,851
757,015
649,695
55,664
(52,599)
1,126,675
494,688
2,091,921
916,238
––––––––––––
150,224
117,206
616,852
734,058
451,129
49,000
427,155
788,903
298,850
348,510
23,625
––––––––––––
2021
US$
2020
US$
318,957
2,587
––––––––––––
321,544
––––––––––––
21,101
––––––––––––
21,101
––––––––––––
100,358
411
––––––––––––
100,769
––––––––––––
19,730
––––––––––––
19,730
––––––––––––
2021
US$
2020
US$
55,664
––––––––––––
––––––––––––
49,000
––––––––––––
––––––––––––
263432 Polarean_pp043-pp065.qxp 17/05/2022 14:23 Page 54
Group Annual Report and Financial Statements
for the year ended 31 December 2021
Notes to the Financial Statements (continued)
9. Loss per share
The loss per share has been calculated using the loss for the year and the weighted average number of
ordinary shares outstanding during the year, as follows:
Loss for the year attributable to shareholders of the Group (US$)
Weighted average number of ordinary shares
Basic and diluted loss per share
2021
US$
2020
US$
(14,016,004)
(6,534,523)
196,961,274 149,985,929
––––––––––––– –––––––––––––
(0.044)
––––––––––––– –––––––––––––
(0.071)
For diluted loss per share, the weighted average number of ordinary shares in issue is adjusted to
assume conversion of all potential dilutive warrants, options and convertible loans over ordinary shares.
Potential ordinary shares resulting from the exercise of warrants, options and the conversion of
convertible loans have an anti-dilutive effect due to the Group being in a loss position. As a result, diluted
loss per share is disclosed as the same value as basic loss per share.
10. Taxation
There were no charges to current corporate taxation due to the losses incurred by the Group in the
period.
Income taxes computed at the statutory federal income tax of 21% (2020: 21%) and the state income
tax of 2.50% (2020: 2.50%) UK corporation tax is calculated at 19% of the estimated assessable profits
for the year.
Loss on ordinary activities before tax
Loss on ordinary activities multiplied by the rate of corporation tax
in the US as above
Effects of:
Adjustments for rate of tax in other jurisdictions
Unrelieved tax losses carried forward
Total taxation charge
2021
US$
2020
US$
(14,016,004)
––––––––––––
(6,534,523)
––––––––––––
(2,943,361)
(1,372,250)
42,577
2,900,784
––––––––––––
–
––––––––––––
26,611
1,345,639
––––––––––––
–
––––––––––––
The tax reform act of 1986 contains provisions which limit the ability to utilise the net operating loss carry
forwards in the case of certain events including significant changes in ownership interests. If the Group’s
net operating loss carry forward, the Group would incur a federal income tax liability even though net
operating loss carry forwards would be available in future years.
The Company has tax losses carried forward of US$33,391,842 (2020: $19,375,838). The unutilised tax
losses have not been recognised as a deferred tax asset due to uncertainty over the timing of future
profits and gains. In addition, there are approximately $531,000 (2020: $227,000) of unrecognised
deferred tax assets in respect of the share-based payment.
Polarean Imaging plc
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Group Annual Report and Financial Statements
for the year ended 31 December 2021
Notes to the Financial Statements (continued)
11. Property, plant and equipment
Cost
At 1 January 2020
Additions
Disposals
At 31 December 2020
Additions
Disposals
At 31 December 2021
Accumulated depreciation
At 1 January 2020
Depreciation expense
Disposals
At 31 December 2020
Depreciation expense
Disposals
At 31 December 2021
Carrying amount
At 31 December 2020
At 31 December 2021
12. Intangible assets
Cost
At 1 January 2020
Additions
At 31 December 2020
Additions
At 31 December 2021
Accumulated amortisation
At 1 January 2020
Amortisation expense
At 31 December 2020
Amortisation expense
At 31 December 2021
Carrying amount
At 31 December 2020
At 31 December 2021
Leasehold
improvements
US$
Furniture Computers
and IT
equipment
US$
and
equipment
US$
2,695
10,963
13,658
––––––––––––
17,050
–
30,708
––––––––––––
1,977
4,091
6,068
––––––––––––
7,934
–
––––––––––––
14,002
––––––––––––
––––––––––––
433,950
14,252
(7,412)
440,790
––––––––––––
464,585
–
905,375
––––––––––––
82,109
138,314
(7,412)
213,012
––––––––––––
146,656
–
––––––––––––
359,668
––––––––––––
––––––––––––
26,665
40,316
(7,708)
59,273
––––––––––––
59,819
(1,328)
117,764
––––––––––––
23,266
7,820
(7,708)
23,377
––––––––––––
22,759
(738)
––––––––––––
45,398
––––––––––––
––––––––––––
Total
US$
463,310
65,531
(15,120)
513,721
––––––––––––
541,454
(1,328)
1,053,847
––––––––––––
107,352
150,225
(15,120)
242,457
––––––––––––
177,349
(738)
––––––––––––
419,068
––––––––––––
––––––––––––
7,590
––––––––––––
––––––––––––
227,778
––––––––––––
––––––––––––
35,896
––––––––––––
––––––––––––
16,706
––––––––––––
––––––––––––
545,707
––––––––––––
––––––––––––
72,366
––––––––––––
––––––––––––
271,264
––––––––––––
––––––––––––
634,779
––––––––––––
––––––––––––
Patents
US$
Total
US$
5,045,996
–
––––––––––––
––––––––––––
5,045,996
–
5,045,996
––––––––––––
1,618,450
616,852
––––––––––––
2,235,302
––––––––––––
616,851
––––––––––––
2,852,153
––––––––––––
––––––––––––
5,045,996
–
––––––––––––
––––––––––––
5,045,996
–
5,045,996
––––––––––––
1,618,450
616,852
––––––––––––
2,235,302
––––––––––––
616,851
––––––––––––
2,852,153
––––––––––––
––––––––––––
2,810,694
––––––––––––
––––––––––––
2,193,843
––––––––––––
––––––––––––
2,810,694
––––––––––––
––––––––––––
2,193,843
––––––––––––
––––––––––––
Polarean Imaging plc
55
263432 Polarean_pp043-pp065.qxp 17/05/2022 14:23 Page 56
Group Annual Report and Financial Statements
for the year ended 31 December 2021
Notes to the Financial Statements (continued)
13. Investment in subsidiary undertaking
Amount due
Investment from
in subsidiary subsidiary
undertaking undertaking
Company US$ US$
Cost
At 31 December 2020 4,342,848 20,392,879
At 31 December 2021 4,342,848 53,837,466
–––––––––––– ––––––––––––
Carrying amount
At 31 December 2020 4,342,848 20,392,879
–––––––––––– ––––––––––––
At 31 December 2021 4,342,848 53,837,466
–––––––––––– ––––––––––––
Total
US$
24,735,727
58,180,314
––––––––––––
24,735,727
––––––––––––
58,180,314
––––––––––––
The investment in subsidiary undertaking is stated at cost less provision for impairment. The amount
due from subsidiary undertaking are regarded as net investment which is subject to the impairment
assessment whenever events or changes in circumstance indicate that the carrying value of the
investment and the amount due from subsidiary undertakings may not be recoverable. For the year under
review, there is no such indicator for impairment.
The net carrying amounts noted above relates to the Subsidiary. The subsidiary undertaking during the
year were as follows:
Country of Interest held
Registered office address incorporation %
Polarean Inc. 2500 Meridian Parkway #175, USA 100
Durham, NC 27713, USA
14. Trade and other receivables
Amounts falling due after one year
Rental deposit
Amounts falling due within one year
Trade receivables
Other receivables
Prepayments
Group
2021
US$
2020
US$
Company
2021
US$
2020
US$
5,539
––––––––––––
5,539
––––––––––––
–
––––––––––––
–
––––––––––––
Group
2021
US$
2020
US$
Company
2021
US$
2020
US$
119,096
–
851,872
––––––––––––
970,968
––––––––––––
––––––––––––
185,473
51,184
111,410
––––––––––––
348,067
––––––––––––
––––––––––––
–
–
22,410
––––––––––––
22,410
––––––––––––
––––––––––––
–
51,184
10,120
––––––––––––
61,304
––––––––––––
––––––––––––
Analysis of trade receivables based on age of invoices
< 30 31 – 60
$’000
$’000
2021 73,500
–
2020 27,116 155,785
61 – 90
$’000
45,097
2,572
> 90 Total Gross
$’000
$’000
499
–
119,096
185,473
ECL
$’000
–
–
Total Net
$’000
119,096
185,473
Polarean Imaging plc
56
263432 Polarean_pp043-pp065.qxp 17/05/2022 14:23 Page 57
Group Annual Report and Financial Statements
for the year ended 31 December 2021
Notes to the Financial Statements (continued)
14. Trade and other receivables continued
The Group applies the IFRS 9 simplified approach to measuring expected credit losses (ECL) which
uses a lifetime expected loss allowance for all trade receivables. The ECL balance has been determined
based on historical data available to management in addition to forward looking information utilising
management knowledge. The Company applies a similar approach to measuring ECL for the amounts
due from group undertakings.
Trade receivables are amounts due from customers for goods sold or services performed in the ordinary
course of business. They are generally due for settlement within 30 days and therefore are all classified
as current. The majority of trade and other receivables are non-interest bearing. Where the effect is
material, trade and other receivables are discounted using discount rates which reflect the relevant costs
of financing. The carrying amount of trade and other receivables approximates fair value.
The group trade receivables include governments grants which amounted to US$Nil (2020: US$42,735)
in which there are no unfulfilled conditions or contingencies attached to these grants as of 31 December
2021.
15. Inventory
Component parts
Group
2021
US$
2020
US$
1,426,810
––––––––––––
977,924
––––––––––––
During the year ended 31 December 2021, a total of $677,402 of inventories was included in the
statement of comprehensive income as an expense (2020: $346,300).
16. Cash and cash equivalents
Group
2021
US$
2020
US$
Company
2021
US$
2020
US$
Cash at bank and in hand
28,874,908
––––––––––––
6,282,665
––––––––––––
2,454,491
––––––––––––
911,271
––––––––––––
17. Share capital
The issued share capital of the Company was as follows:
Allotted and called up – Ordinary shares
of 0.037p each
2021
No.
2021
US$
2020
No.
2020
US$
At beginning of period
Issue of shares upon warrant exercise
Issue of shares to investors
Issue of shares upon option exercise
At end of year
474
163,212,935
928,089
44,932,142
176,800
55,776
386
21,386
652
––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––
209,249,966
78,200
––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––
78,200 114,438,600
830,538
22,881 46,624,997
1,318,800
101,642 163,212,935
87
Polarean Imaging plc
57
263432 Polarean_pp043-pp065.qxp 17/05/2022 14:23 Page 58
Group Annual Report and Financial Statements
for the year ended 31 December 2021
Notes to the Financial Statements (continued)
17. Share capital continued
On 2 March 2020, the Company issued 232,010 new ordinary shares upon the exercise of share warrants
with an exercise price of £0.15 each.
On 1 April 2020, the Company issued 46,624,997 new ordinary shares at a price of £0.18 each.
On 1 June 2020, the Company issued 534,400 new ordinary shares upon the exercise of share warrants
with an exercise price of £0.00003 each.
On 20 October 2020, the Company issued 64,128 new ordinary shares upon the exercise of share
warrants with an exercise price of £0.15 each.
On 23 December 2020, the Company issued 1,318,800 new ordinary shares upon the exercise of share
options with an exercise price of £0.15 each.
On 24 February 2021, the Company issued 61,563 new ordinary shares upon the exercise of share
warrants with an exercise price of £0.15 each.
On 25 March 2021, the Company issued 358,713 new ordinary shares upon the exercise of share
warrants with an exercise price of £0.00037 each.
On 31 March 2021, 7 April 2021 and 8 April 2021 the Company issued a total of 44,932,142 new ordinary
shares of £0.00037 each in the capital of the Company at the issue price of 60 pence per share in a
Placing, Subscription and Open Offer for total proceeds of £27 million (before expenses).
On 16 April 2021, the Company issued 467,733 new ordinary shares upon the exercise of share warrants
with an exercise price of £0.00037 each.
On 17 May 2021, the Company issued 40,080 new ordinary shares upon the exercise of share warrants
with an exercise price of £0.00037 each.
On 23 November 2021, the Company issued 66,800 new ordinary shares upon the exercise of share
options with an exercise price of £0.025358 each.
On 9 December 2021, the Company issued 110,000 new ordinary shares upon the exercise of share
options with an exercise price of £0.15 each.
18. Reserves
Share premium
Share premium represents the excess of subscription amounts for the issue of shares over nominal value
of shares issued, less any attributable share issue costs.
Group re-organisation reserve
The group re-organisation reserve arose on the transaction under which the Group acquired the
Subsidiary by way of a group re-organisation.
Share based payment reserve
Cumulative fair value of options charged to the consolidated income statement net of transfers to the
profit or loss reserve on exercised and cancelled/lapsed options.
Polarean Imaging plc
58
263432 Polarean_pp043-pp065.qxp 17/05/2022 14:23 Page 59
Group Annual Report and Financial Statements
for the year ended 31 December 2021
Notes to the Financial Statements (continued)
18. Reserves continued
Accumulated losses
Includes all current and prior year retained profits and losses.
Merger reserve
The balance on the merger reserve represents the fair value of the consideration given in excess of the
nominal value of the ordinary shares issued in an acquisition made by the issue of shares where the
transaction qualifies for merger relief under the Companies Act 2006.
19. Share-based payments
Share options
The Company grants share options at its discretion to Directors, management and employees. These
are accounted for as equity settled transactions. Should the options remain unexercised after a period
of ten years from the date of grant the options will expire unless an extension is agreed to by the board.
Options are exercisable at a price equal to the Company’s quoted market price on the date of grant or
an exercise price to be determined by the board.
Details of share options granted, exercised, lapsed and outstanding at the year-end are as follows:
Outstanding at beginning of year
Granted during the year
Exercised during the year
Forfeited/lapsed during the year
Outstanding at end of the year
Exercisable at end of the year
Number of
share options
2021
16,884,322
8,580,000
(176,800)
(844,210)
––––––––––––
24,443,312
––––––––––––
13,055,517
––––––––––––
Weighted
average
exercise
price
(US$)
2021
Number
of share
options
2020
0.19 17,436,722
900,000
1.11
(1,318,800)
0.14
(133,600)
1.01
––––––––––––
––––––––––––
0.50 16,884,322
––––––––––––
0.14 10,239,882
––––––––––––
––––––––––––
––––––––––––
Weighted
average
exercise
price
(US$)
2020
0.13
0.99
0.19
0.00
––––––––––––
0.19
––––––––––––
0.12
––––––––––––
On 23 December 2020, 900,000 options were granted, with an exercise price of 73 pence per share.
25 per cent. of the options shall vest on the one year anniversary of the employee’s date of hire with the
remaining 75 per cent. vesting in equal portions over the 36 months following the one year anniversary
of the employee’s date of hire.
On 27 April 2021, 1,000,000 options were granted, with an exercise price of 77 pence per share. 25 per
cent. of the options shall vest on the one-year anniversary of the employee’s date of hire with the
remaining 75 per cent. vesting in equal portions over the 36 months following the one year anniversary
of the employee’s date of hire.
On 24 June 2021, 250,000 options were granted, with an exercise price of 95 pence per share. 25 per
cent. of the options shall vest on the one-year anniversary of the employee’s date of hire with the
remaining 75 per cent. vesting in equal portions over the 36 months following the one year anniversary
of the employee’s date of hire.
On 07 July 2021, 5,250,000 options were granted, with an exercise price of 93 pence per share. 25 per
cent. of the options shall vest on the one-year anniversary of the employee’s date of hire with the
remaining 75 per cent. vesting in equal portions over the 36 months following the one year anniversary
of the employee’s date of hire.
Polarean Imaging plc
59
263432 Polarean_pp043-pp065.qxp 17/05/2022 14:23 Page 60
Group Annual Report and Financial Statements
for the year ended 31 December 2021
Notes to the Financial Statements (continued)
19. Share-based payments continued
On 26 August 2021, 1,300,000 options were granted, with an exercise price of 87 pence per share.
25 per cent. of the options shall vest on one-year anniversary of the employee’s date of hire with the
remaining 75 per cent. vesting in equal portions over the 36 months following the one year anniversary
of the employee’s date of hire.
On 08 September 2021, 430,000 options were granted, with an exercise price of 89 pence per share.
25 per cent. of the options shall vest on the one-year anniversary of the employee’s date of hire with the
remaining 75 per cent. vesting in equal portions over the 36 months following the one year anniversary
of the employee’s date of hire.
On 21 October 2021, 150,000 options were granted, with an exercise price of 63 pence per share. 25 per
cent. of the options shall vest on the one-year anniversary of the employee’s date of hire with the
remaining 75 per cent. vesting in equal portions over the 36 months following the one year anniversary
of the employee’s date of hire.
On 14 December 2021, 200,000 options were granted, with an exercise price of 57 pence per share.
25 per cent. of the options shall vest on the one-year anniversary of the date of hire with the remaining
75 per cent. vesting in equal portions over the 36 months following the one year anniversary of the
employee’s date of hire. The options outstanding as at 31 December 2021 have an exercise price in the
range of US$0.0041 to US$1.19 (2020: US$0.0041 to US$0.99).
The fair value of options granted during the year has been calculated using the Black Scholes model
which has given rise to fair values per share of between US$0.43 and US$0.60. This is based on risk-
free rates of between 0.60 per cent. and 1.20 per cent. and volatility of between 57 per cent. and 80
per cent..
The Black Scholes calculations for the options resulted in a charge of US$1,814,882 (2020: US$474,716)
which has been expensed in the year. The weighted average remaining contractual life of the share
options is 6.85 years (2020: 6.47 years). The weighted average share price at the date of exercise for
all share options exercised during the period was US$0.58 (2020: $0.73). All share options are equity
settled on exercise.
Share warrants
The Company grants share warrants at its discretion to Directors, management, employees, advisors
and lenders. These are accounted for as equity settled transactions. Terms of warrants vary from
agreement to agreement.
Details for the warrants granted, exercised, lapsed and outstanding at the year-end are as follows:
Outstanding at beginning of year
Exercised during the year
Forfeited/lapsed during the year
Outstanding at end of the year
Exercisable at end of the year
Weighted
average
exercise
price
(US$)
2021
Weighted
average
exercise
price
(US$)
2020
Number
of share
warrants
2020
Number
of share
warrants
2021
3,994,165
(928,089)
(11,947)
––––––––––––
3,054,129
––––––––––––
3,054,129
––––––––––––
0.09
0.34
0.34
––––––––––––
0.01
––––––––––––
0.01
––––––––––––
4,824,703
(830,538)
–
––––––––––––
3,994,165
––––––––––––
3,994,165
––––––––––––
0.09
0.13
–
––––––––––––
0.09
––––––––––––
0.09
––––––––––––
Polarean Imaging plc
60
263432 Polarean_pp043-pp065.qxp 17/05/2022 14:23 Page 61
Group Annual Report and Financial Statements
for the year ended 31 December 2021
Notes to the Financial Statements (continued)
19. Share-based payments continued
The weighted average remaining contractual life of the share warrants is 2.55 years (2020: 2.81 years).
The weighted average share price at the date of exercise for all share warrants exercised during the
period was US$0.68 (2020: $0.31).
20. Provision for contingent consideration
Group
2021
US$
2020
US$
Company
2021
US$
2020
US$
Provision for contingent consideration 316,000 316,000 – –
––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––
On 19 December 2011, the Subsidiary entered into an agreement with a third party to purchase various
assets, including patents, trademarks, a license agreement and physical inventory. As consideration for
this transaction, the Subsidiary agreed to pay 5 per cent. of gross revenue on clinical sales of products
that are sold related to the patents purchased, for seven years from the date of the commercial sale. As
of 31 December 2021, the fair value of this contingent consideration was US$316,000 (2020:
US$316,000). This liability is valued based on a probability weighted expected return method using
projected future cash flows. There were no significant events in the year ended 31 December 2021
necessitating revision of the probability weighted expected value of the contingent consideration.
There was therefore US$Nil profit or loss arising on revaluation of contingent consideration during the
year ended 31 December 2021 (2020: US$Nil).
21. Deferred income
Arising from service contracts
Balance brought forward
Movement for the year
Balance carried forward
Current
Non-current
Total
22. Trade and other payables
Trade payables
Accruals and other payables
Group
2021
US$
2020
US$
Company
2021
US$
2020
US$
239,141
21,576
260,717
(5,976)
–
–
––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––
–
––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––
254,741
260,717
–
–
–
108,994
145,747
40,763
219,954
–
–
––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––
–
––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––
254,741
260,717
–
–
–
Group
2021
US$
2020
US$
Company
2021
US$
2020
US$
405,953
1,325,161
––––––––––––
––––––––––––
388,030
960,837
––––––––––––
––––––––––––
40,887
65,129
––––––––––––
––––––––––––
1,731,114
––––––––––––
––––––––––––
1,348,867
––––––––––––
––––––––––––
106,016
––––––––––––
––––––––––––
4,930
44,000
––––––––––––
––––––––––––
48,930
––––––––––––
––––––––––––
Trade payables and accruals principally comprise amounts outstanding for trade purchases and ongoing
costs and are payable within 1 year.
The Directors consider the carrying value of all financial liabilities to be equivalent to their fair value.
Polarean Imaging plc
61
263432 Polarean_pp043-pp065.qxp 17/05/2022 14:23 Page 62
Group Annual Report and Financial Statements
for the year ended 31 December 2021
Notes to the Financial Statements (continued)
23. Changes in liabilities from financing activities
Group
1 January
2020 Cash flows
US$
US$
Non-cash 31 December
2020
changes
US$
US$
Lease liability 121,369 (122,827) 222,886 221,428
––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––
Total liabilities from financing activities 121,369 (122,827) 222,886 221,428
––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––
1 January
2021 Cash flows
US$
US$
Non-cash 31 December
2021
changes
US$
US$
Lease liability 221,428 (143,170) 411,528 489,786
––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––
Total liabilities from financing activities 221,428 (143,170) 411,528 489,786
––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––
24. Leases
Nature of leasing activities
The group leases properties in the jurisdiction in which it operates with all lease payments fixed over the
lease term.
Number of active leases
2021
US$
2020
US$
2
––––––––––––
2
––––––––––––
The Group discounts the lease payments using its incremental borrowing rate at the commencement
date of the lease. The weighted-average rate applied is 10%.
Right-of-use assets
At 1 January 2020
Additions
Amortisation expense
At 31 December 2020
At 1 January 2021
Additions
Amortisation expense
At 31 December 2021
Land and
Buildings
US$
98,263
203,156
(117,206)
––––––––––––
––––––––––––
184,213
––––––––––––
184,213
378,767
(140,164)
––––––––––––
422,816
––––––––––––
Polarean Imaging plc
62
263432 Polarean_pp043-pp065.qxp 17/05/2022 14:23 Page 63
Group Annual Report and Financial Statements
for the year ended 31 December 2021
Notes to the Financial Statements (continued)
24. Leases continued
Lease Liabilities
At 1 January 2020
Additions
Interest expense
Lease payments
At 31 December 2020
At 1 January 2021
Additions
Interest expense
Lease payments
At 31 December 2021
Analysis of lease liabilities
Maturity of the lease liabilities is analysed as follows:
Within 1 year
Later than 1 year and less than 5 years
25. Commitments
Land and
Buildings
US$
121,369
203,156
19,730
(122,827)
––––––––––––
221,428
––––––––––––
221,428
390,427
21,101
(143,170)
––––––––––––
489,786
––––––––––––
2021
US$
2020
US$
130,949
358,837
––––––––––––
489,786
––––––––––––
129,819
91,609
––––––––––––
221,428
––––––––––––
Royalty commitments
The Subsidiary has entered into three agreements requiring royalty payments. One agreement is
conditional and requires a payment of 5 per cent. of gross revenue on clinical sales during the payment
period beginning on the date a product is first commercially sold, contingent on receiving FDA approval,
and ending seven years from that date. A separate agreement requires payments of 0.25 per cent of net
sales of machines, and 20 per cent of any sublicensing income for a specific method of use of patent
beginning in 2016. Additionally, beginning five years after the effective date of 1 February 2021, there
are minimum yearly royalties of US$5,000. The third agreement requires a fixed payment of US$250,000
for use of patents.
26. Financial instruments
The Group has exposure to the following key risks related to financial instruments:
i. Market risk
ii. Credit risk
iii. Liquidity risk
This note presents information about the Group’s exposure to each of the above risks, the Group’s
objectives, policies and processes for measuring and managing risk, and the Group’s management of
capital. Further quantitative disclosures are included throughout these consolidated Financial Statements.
Polarean Imaging plc
63
263432 Polarean_pp043-pp065.qxp 17/05/2022 14:23 Page 64
Group Annual Report and Financial Statements
for the year ended 31 December 2021
Notes to the Financial Statements (continued)
26. Financial instruments continued
The Group uses financial instruments including cash, loans, as well as trade receivables and payables
that arise directly from operations.
Due to the simple nature of these financial instruments, there is no material difference between book
and fair values, discounting would not give a material difference to the results of the Group and the
Directors believe that there are no material sensitivities that require additional disclosure.
(a) Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in
financial loss to the Subsidiary. In order to minimise the risk, the Subsidiary 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 is the value of
the outstanding amount. The Group considers the banks and financial institutions have low credit
risks. Therefore, the Group is of the view that the loss allowance is immaterial and hence no
provision is required.
The Directors do not consider that there is any concentration of risk within either trade or other
receivables. There are no impairments to trade or other receivables in each of the years presented.
Categories of financial instruments
Financial assets measured at amortised cost
Group
2021
US$
2020
US$
Company
2021
US$
2020
US$
Cash and cash equivalents 28,874,908 6,282,665 2,454,491 911,271
Loans and receivables
Trade and other receivables – current 119,096 236,657 – 51,184
Trade and other receivables – non-current 5,539 5,539 – –
––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––
Financial liabilities measured at
amortised cost
Trade and other payables 1,731,114 1,348,867 106,016 48,930
––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––
Capital risk management
The Group manages its capital to ensure that it will be able to continue as a going concern while
maximising returns to shareholders through the optimisation of capital structure. The Group is
funded by equity. Equity comprises share capital, share premium, share-based payment reserves,
group re-org reserves and accumulated losses and is presented in the statement of financial
position. In order to maintain or adjust the capital structure, the Group may adjust the amount of
dividends paid to shareholders, return capital to shareholders or issue new shares.
The Group manages the capital structure and makes adjustments to it in the light of changes to
economic conditions and risks.
(b) Market risk
There is no interest risk exposure to the group or the company. The Company made unsecured
interest-free loans to its subsidiary and are expected to be repaid in the future as the subsidiary is
revenue generative.
Polarean Imaging plc
64
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Group Annual Report and Financial Statements
for the year ended 31 December 2021
Notes to the Financial Statements (continued)
26. Financial instruments continued
(c) Liquidity risk
A maturity analysis of the Group’s financial liabilities is shown below:
Contractual
Carrying undiscounted
cashflow
amounts
US$
US$
Less than One to two Two to five
years
one year
US$
US$
years
US$
2021
Trade and other payables 1,731,114
Lease liabilities 489,786
–––––––––––––
2,220,900
–––––––––––––
2020
Trade and other payables 1,348,867
Lease liabilities 221,428
–––––––––––––
1,570,295
–––––––––––––
1,731,114
154,710
1,731,114
539,145
–
226,300
––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––
226,300
––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––
–
158,135
1,885,824
2,270,259
158,135
1,348,867
237,631
1,348,867
143,410
–
82,670
––––––––––––– ––––––––––––– –––––––––––––
82,670
1,492,277
–
11,551
–––––––––––
11,551
––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––
1,586,498
Derivatives
The Group and Company have no derivative financial instruments.
27. Contingent liabilities
The Directors are not aware of any material contingent liabilities, except for the contingent consideration
detailed in note 20.
28. Related party transactions
Remuneration of the key management personnel has been disclosed in Note 5.
29. Events after the reporting period
Between 1 January 2022 and 30 April 2022, the Company issued a total of 3,190,024 new ordinary
shares of £0.00037 each in the capital of Company upon the exercise of share options.
Between 1 January 2022 and 4 May 2022, the Company granted options over a total of 1,070,000
ordinary shares of £0.00037 each in the capital of Company to a new employee and two new Directors.
The options vest over a four-year period and have an exercise price equal to the closing price on the
date of grant.
On 13 April 2022 and 4 May 2022, the Company appointed Frank Schulkes, Non-Executive Director and
Daniel Brague, Non-Executive Director to the Board of Directors, respectively.
On 4 May 2022, Jonathan Allis resigned as Non-Executive Director from the Board of Directors.
On 4 May 2022, Kenneth West assumed the role of Non-Executive Chairman of the Board of Directors.
Polarean Imaging plc
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Group Annual Report and Financial Statements
for the year ended 31 December 2021
Notice of the Annual General Meeting
(Incorporated in England and Wales under the Companies Act 2006 with company number 10442853)
POLAREAN IMAGING PLC
NOTICE OF ANNUAL GENERAL MEETING
THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION
If you are in any doubt as to what action you should take, you are recommended to seek your
own financial advice from your stockbroker or other independent adviser authorised under the
Financial Services and Markets Act 2000.
If you have recently sold or transferred all of your shares in Polarean Imaging plc, please forward
this document, together with the accompanying documents, as soon as possible either to the
purchaser or transferee or to the person who arranged the sale or transfer so they can pass these
documents to the person who now holds the shares.
It is intended that the Annual General Meeting (the “AGM”) of Polarean Imaging plc (the “Company”) will
be held at the Company’s office at 2500 Meridian Parkway, Suite 175, Durham, NC 27713 USA at
2:00 p.m. BST (9:00 a.m. EST) on 29 June 2022. However, it is possible that there may be government
restrictions imposed as a result of the COVID-19 pandemic at that time and therefore the arrangements
for the AGM may be subject to change, possibly at short notice.
In light of this, we strongly encourage you to vote on all resolutions by completing an online proxy
form in advance of the meeting, appointing the Chair of the meeting as your proxy, whether or
not you are ultimately able to attend in person. Details of how to do this are set out below. Please
note that if you appoint a person other than the Chair of the meeting as your proxy, in the event that
measures are put in place by the US government which prevent attendance at the meeting, your proxy
may not be able to attend the AGM and, if this is the case, your votes will not be counted.
NOTICE IS HEREBY GIVEN that the annual general meeting of Polarean Imaging plc (the
“Company”) will be held at the Company’s office at 2500 Meridian Parkway, Suite 175, Durham,
NC 27713 USA at 2:00 p.m. BST (9:00 a.m. EST) on 29 June 2022 for the purpose of considering
and, if thought fit, transacting the following business:
ORDINARY BUSINESS
To consider and, if thought fit, pass the following resolutions which will be proposed as ordinary
resolutions:
1. To receive and consider the Company's audited accounts for the year ended 31 December 2021
and the Directors' of the Company (the “Director(s)”) and auditors' reports thereon.
2. To consider and approve the remuneration report as detailed in the Company’s annual report and
accounts.
3. To re-appoint Crowe UK LLP as auditor of the Company (the “Auditor”) to hold office until the
conclusion of the next general meeting at which accounts are laid and to authorise the Directors to
fix the Auditor’s remuneration.
4. To re-elect Richard Hullihen as a Director, who retires in accordance with article 78 of the Articles,
and who, being eligible, offers himself for re-election.
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Group Annual Report and Financial Statements
for the year ended 31 December 2021
Notice of the Annual General Meeting (continued)
5. To re-elect Bastiaan Driehuys as a Director, who retires in accordance with article 78 of the Articles,
and who, being eligible, offers himself for re-election.
6. To re-elect Frank Schulkes as a Director, who retires in accordance with article 83 of the Articles,
and who, being eligible, offers himself for re-election.
7. To re-elect Daniel Brague as a Director, who retires in accordance with article 83 of the Articles,
and who, being eligible, offers himself for re-election.
8. To generally and unconditionally authorise the Directors for the purpose of section 551 of the
Companies Act 2006 (the “Act”), in substitution for all existing authorities to the extent unused, to
exercise all the powers of the Company to allot or grant rights to subscribe for or to convert any
security into shares in the Company up to an aggregate number of 31,865,998 ordinary shares of
£0.00037 each (“Ordinary Shares”) (being 15 per cent. of the total number of Ordinary Shares in
issue as at the date of this notice) provided that this authority shall expire on the earlier of 15 months
after the date of passing of this resolution or the conclusion of the annual general meeting of the
Company next following the passing of this resolution, save that the Company may, before such
expiry, make an offer or agreement which would or might require shares or equity securities, as the
case may be, to be allotted or such rights granted after such expiry and the Directors may allot
shares or equity securities or grant such rights, as the case may be, in pursuance of such offer or
agreement notwithstanding that the authority conferred by this resolution has expired.
SPECIAL BUSINESS
To consider and, if thought fit, pass the following resolution as a special resolution:
9. Subject to the passing of resolution 8 above, to empower the Directors, pursuant to the general
authority conferred on them and section 570 of the Act, to allot equity securities (within the meaning
of section 560 of the Act) for cash as if section 561 of the Act did not apply to any such allotment,
provided that this power shall be limited to the allotment of equity securities:
9.1. made in connection with an offer of securities, open for acceptance for a fixed period, to holders
of Ordinary Shares of the Company on the register on a fixed record date in proportion (as
nearly as may be) to their then holdings of such Ordinary Shares (but subject to such
exclusions or other arrangements as the Directors may deem necessary or expedient to deal
with any legal or practical problems under the laws or requirements of any recognised
regulatory body or any stock exchange in any overseas territory or in connection with fractional
entitlements); and/or
9.2. wholly for cash (otherwise than pursuant to paragraph 7.1 above) up to an aggregate number
of 31,865,998 Ordinary Shares.
This authority shall expire on the earlier of 15 months after the date of passing of this resolution and the
conclusion of the annual general meeting of the Company next following the passing of this resolution but
the Company may, before such expiry, make an offer or agreement which would or might require shares
or equity securities, as the case may be, to be allotted or such rights granted after such expiry and the
Directors may allot shares or equity securities or grant such rights, as the case may be, in pursuance of
such an offer or agreement notwithstanding that the power conferred by this resolution has expired.
By Order of the Board
Stephen Austin Registered Office:
Company Secretary 27-28 Eastcastle Street
London
W1Q 8DH
17 May 2022
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Group Annual Report and Financial Statements
for the year ended 31 December 2021
Notice of the Annual General Meeting (continued)
NOTES
A shareholder entitled to attend and vote at the meeting convened by this notice is entitled to appoint one or more proxies to
exercise all or any of their rights to attend, speak and vote on their behalf at the AGM. A proxy need not be a shareholder.
(1) Arrangements for the meeting – COVID-19 outbreak
The continuing coronavirus (COVID-19) pandemic has previously led to the imposition of severe restrictions on public gatherings.
Although it appears as at the date of this Notice that these will not apply on the date of the AGM, this remains subject to change.
In the event that the AGM venue is closed on the date of the AGM, physical attendance in person at the AGM will not be possible,
in which case the meeting will take place with the minimum necessary quorum of two shareholders which will be facilitated by the
Company in line with the Government’s social distancing advice as at that time.
On this basis, to safeguard Shareholders' and employees' health and to make the meeting as safe and as efficient as possible,
the Board:
l encourages Shareholders to submit their votes by proxy as early as possible, and Shareholders should appoint the Chairman
of the meeting as their proxy. If a Shareholder appoints someone else as their proxy, that proxy may not be able to attend
the AGM in person or cast the Shareholder's vote. All proxy appointments should be received by no later than 2:00 p.m.
BST on 27 June 2022;
l strongly recommends CREST members to vote electronically through the CREST electronic proxy appointment service as
your vote will automatically be counted. In addition, the Company has also decided that Forms of Proxy can also be submitted
by Shareholders electronically (even outside CREST) by emailing a scanned copy of the signed personalised Form of Proxy
to voting@shareregistrars.uk.com. Please contact Share Registrars Limited contact number on +44 (0) 1252 821390 for
any further guidance. Dealing with paper proxies requires physical interaction such as post sorting and delivery, evaluation
and manual input. Given the current situation, any task that requires a physical presence may be subject to disruption and
sending a paper proxy is no guarantee of having your vote counted;
l proposes that voting at the meeting will be conducted by means of a poll on all resolutions, with each Shareholder having
one vote for each share held, thereby allowing all those proxy votes submitted and received prior to the meeting to be
counted;
l encourages you to submit any question that you would like to be answered at the meeting by sending it, together with your
name as shown on the Company's register of members and the number of shares held, to the following email address:
polarean@walbrookpr.com so that it is received by no later than 2:00 p.m. BST on 24 June 2022. Please insert “AGM –
Shareholder Questions” in the subject header box of your email. The Company will endeavour to respond to all questions
received from Shareholders at the AGM or within seven days following the AGM; and
l will continue to closely monitor the COVID-19 situation in the lead up to the meeting and make further updates about the
meeting on the Company's website at https://www.polarean-ir.com/content/news/corporate-news as necessary. Please
ensure that you regularly check this page for updates.
(2) To appoint a proxy, shareholders should use the form of proxy enclosed with this notice of AGM. Please carefully read the
instructions on how to complete the form of proxy. For a proxy to be effective, the instrument appointing a proxy together
with the power of attorney or such other authority (if any) under which it is signed or a notarised certified copy of the same
must be deposited with the Company’s registrars, Share Registrars Limited of 3 The Millennium Centre, Crosby Way,
Farnham, Surrey, GU9 7XX, United Kingdom (the “Registrars”) or by e-mail to voting@shareregistrars.uk.com, by 2:00 p.m.
BST on 27 June 2022, or, if the AGM is adjourned, 48 hours before the time fixed for the adjourned meeting (excluding any
part of a day that is not a business day). The completion and return of a form of proxy does not preclude a shareholder from
subsequently attending and voting at the AGM in person if he or she so wishes. If a shareholder has appointed a proxy and
attends the AGM in person, such proxy appointment will automatically be terminated.
(3) Pursuant to Regulation 41 of Uncertificated Securities Regulations 2001, the Company specifies that only those shareholders
on the register of members at 2:00 p.m. BST on 27 June 2022 or, if the meeting is adjourned, 48 hours before the time of
the adjourned meeting (excluding any part of a day that is not a business day), shall be entitled to attend or vote at the AGM
in respect of the number of ordinary shares of £0.00037 each (the “Ordinary Shares”) registered in their name at that time.
Changes to the register of members after that time shall be disregarded in determining the rights of any person to attend or
vote at the AGM.
(4) Any Shareholder may insert the full name of a proxy or the full names of two alternative proxies of the Shareholder’s choice
in the space provided with or without deleting ‘the Chairman of the meeting.’ A proxy need not be a Shareholder but must
attend the meeting to represent the relevant Shareholder. The person whose name appears first on the Form of Proxy and
has not been deleted will be entitled to act as proxy to the exclusion of those whose names follow. If this proxy form is signed
and returned with no name inserted in the space provided for that purpose, the Chairman of the meeting will be deemed to
be the appointed proxy. Where a Shareholder appoints as his/her proxy someone other than the Chairman, the relevant
Shareholder is responsible for ensuring that the proxy attends the meeting and is aware of the Shareholder’s voting
intentions. Any alteration, deletion or correction made in the Form of Proxy must be initialled by the signatory/ies.
Polarean Imaging plc
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Group Annual Report and Financial Statements
for the year ended 31 December 2021
Notice of the Annual General Meeting (continued)
(5) A shareholder may appoint more than one proxy provided that each proxy is appointed to exercise the rights attached to a
different Ordinary Share or Ordinary Shares held by that shareholder. A shareholder may not appoint more than one proxy
to exercise rights attached to any one Ordinary Share. If a shareholder wishes to appoint more than one proxy, they should
contact the Registrars on 01252 821390, +44 1252 821390 from overseas. Lines are open from 9.00 a.m. to 5.30 p.m.
Monday to Friday, excluding public holidays. Alternatively, you may write to the Registrars at Share Registrars Limited, 3 The
Millennium Centre, Crosby Way, Farnham, Surrey, GU9 7XX, United Kingdom for additional proxy forms and for assistance.
(6) Any corporation which is a shareholder can appoint one or more corporate representatives who may exercise on its behalf
all of its powers as a shareholder provided that they do not do so in relation to the same Ordinary Share.
(7) As at the close of business on the date immediately preceding this notice, the Company's issued share capital comprised
212,439,990 Ordinary Shares. Each Ordinary Share carries the right to vote at the AGM and, therefore, the total number of
voting rights in the Company as at close of business on the date immediately preceding this notice is 212,439,990.
(8) A shareholder’s instructions to the proxy must be indicated in the appropriate space provided. To abstain from voting on a
resolution, select the relevant ‘Vote withheld’ box. 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 against the resolution. If no voting indication is given, your proxy will vote or abstain
from voting at his or her discretion. Your proxy will vote (or abstain from voting) as he or she thinks fit in relation to any other
matter which is put before the meeting.
(9) This form of proxy must be signed by the appointor, or his attorney duly authorised in writing. The power of attorney or other
authority (if any) under which the form of proxy is signed, or a notarised certified copy of the power or authority, must be
received by the Registrars with the form of proxy. If the appointor is a corporation, the form of proxy should be signed on its
behalf by an attorney or duly authorised officer or executed as a deed or executed under common seal. In the case of joint
holders, the signature of any one of them will suffice, but the names of all joint holders should be stated.
(10) CREST members who wish to appoint a proxy or proxies through the CREST Electronic Proxy Appointment Service may
do so for the AGM to be held at 2:00 p.m. BST on 29 June 2022 and any adjournment(s) thereof by following the procedures
described in the CREST manual. All messages relating to the appointment of a proxy or an instruction to a previously
appointed proxy, which are to be transmitted through CREST, must be received by the Registrars (ID 7RA36) no later than
2:00 p.m. BST on 27 June 2022, or, if the AGM is adjourned, 48 hours before the time fixed for the adjourned meeting
(excluding any part of a day that is not a business day).
(11) In order to revoke a proxy instruction, you will need to inform the Company by sending a signed hard copy notice clearly
stating your intention to revoke your proxy appointment to the Registrars. In the case of a shareholder which is a company,
the revocation notice must be executed in accordance with note 12 below. Any power of attorney or any other authority
under which the revocation notice is signed (or a duly certified copy of such power or authority) must be included with the
revocation notice and must be received by the Registrars not less than 48 hours (excluding any part of a day that is not a
business day) before the time fixed for the holding of the AGM or any adjourned meeting (or in the case of a poll before the
time appointed for taking the poll) at which the proxy is to attend, speak and to vote. If you attempt to revoke your proxy
appointment but the revocation is received after the time specified then, subject to the paragraph directly below, your proxy
appointment will remain valid.
(12) A corporation’s form of proxy must be executed under either its common seal, if any, or under the hand of a duly authorised
officer or attorney, in each case as required under the laws of its relevant jurisdiction.
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Perivan 263432
Polarean Imaging Plc
Group Annual Report & Accounts 2021
Company Number 10442853