LIFE
SCIENCES
ANNUAL REPORT
FO R TH E YE AR TO 3 1 MARCH 2023
OUR GROUP’S MISSION
Enhancing patients’ lives through the development of pioneering
innovative cardiovascular medical devices using Elast-Eon™, the
world leading long-term implantable biostable polyurethane,
through licensing, contract manufacturing and developing next
generation medical devices.
BOARD OF DIRECTORS AND ADVISORS ...................................................................................... 2
STRATEGIC REPORT
CHAIRMAN’S STATEMENT ...................................................................................................................... 4
GROUP MANAGING DIRECTOR’S REPORT ................................................................................... 7
STRATEGY .....................................................................................................................................................11
OUR PEOPLE ...............................................................................................................................................12
DIRECTORS ..................................................................................................................................................15
SECTION 172(1) STATEMENT .............................................................................................................18
FINANCIAL REVIEW ................................................................................................................................20
PRINCIPAL RISKS AND UNCERTAINTIES .....................................................................................24
GOVERNANCE
CORPORATE GOVERNANCE STATEMENT ..................................................................................28
AUDIT COMMITTEE REPORT ..............................................................................................................34
DIRECTORS’ REMUNERATION REPORT ......................................................................................36
CONSOLIDATED FINANCIAL STATEMENTS
REPORT OF THE DIRECTORS ............................................................................................................40
DIRECTORS’ RESPONSIBILITIES STATEMENT ..........................................................................42
INDEPENDENT AUDITOR’S REPORT .............................................................................................43
CONSOLIDATED INCOME STATEMENT ........................................................................................54
CONSOLIDATED STATEMENT OF FINANCIAL POSITION ..................................................55
CONSOLIDATED CASH FLOW STATEMENT ................................................................................56
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY ...................................................57
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ............................................58
PARENT COMPANY FINANCIAL STATEMENTS
PARENT COMPANY STATEMENT OF FINANCIAL POSITION ...........................................84
PARENT COMPANY STATEMENT OF CHANGES IN EQUITY ............................................85
NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS .....................................86
LETTER TO SHAREHOLDERS ............................................................................................................92
NOTICE OF THE ANNUAL GENERAL MEETING ......................................................................96
OUR GROUP’S VISION
To position Elast-Eon to de-risk
the future of all animal-based
cardiovascular medical devices.
BOARD OF DIRECTORS AND ADVISORS
DIRECTORS
W Brown – Executive Chairman
C Stretton – Group Managing Director
I Anthony – Director of Vascular R&D, Quality,
Clinical and Regulatory Affairs
L Smith – Chief Financial Officer
J McKenna – Director of Clinical Marketing
I Ardill – Non-Executive Director
G Berg – Non-Executive Director
J Ely – Non-Executive Director
NOMINATED ADVISER AND
STOCKBROKER
Cenkos Securities plc
6,7,8 Tokenhouse Yard
London
EC2R 7AS
LAWYERS
Davidson Chalmers Stewart
163 Bath Street
Glasgow
G2 4SQ
COMPANY SECRETARY
K M Full FCCA
REGISTERED OFFICE
Davidson Chalmers Stewart
163 Bath Street
Glasgow
G2 4SQ
HEAD OFFICE
2 Drummond Crescent
Irvine
Ayrshire
KA11 5AN
web: www.rualifesciences.com
email: info@rualifesciences.com
Burness Paull LLP
50 Lothian Road
Festival Square
Edinburgh
EH3 9WJ
REGISTRARS
Equiniti Limited
Aspect House
Spencer Road
Lancing
West Sussex
BN99 6DA
INDEPENDENT AUDITOR
Grant Thornton UK LLP
Statutory Auditor
Chartered Accountants
110 Queen Street
Glasgow
G1 3BX
Registered in Scotland, Company No. SC170071
Financial statements will be circulated to Shareholders and copies of the announcement will be made
available from the Company’s registered office. Dealings permitted on Alternative Investment Market
(AIM) of the London Stock Exchange.
2
RUA Life Sciences plc
STRATEGIC
REPORT
STRATEGIC
REPORT
CHAIRMAN’S
STATEMENT
“RUA has a portfolio of four businesses, all
of which have made good progress during
the period. The mature businesses of
Biomaterials and Contract Manufacture are
growing revenue and generating attractive
net margins and the development business
segments of Vascular and Structural Heart
have made good regulatory and
technological progress respectively on
relatively low levels of investment”.
On behalf of the Board, I am pleased to present
the Company’s results for the year ended
31 March 2023.
TRADING FOR YEAR
Trading during the period was positive with
strong revenue growth of 34% year on year
resulting in revenue for the year of £2,179k
(2022: £1,625k).
We have continued to invest in the growth and
development of the business as demonstrated by
the 26% increase in the average in employee
numbers from 38 last year to 48 in the current
year. Despite this investment in people during the
development stages of the Group, it is pleasing
that Group loss before tax reduced marginally
from £2,360k to £2,322k. At the post tax level,
the reduction in loss was greater as R&D tax
credits increased.
Cash was tightly controlled with total cash burn
of £1,479k resulting in a halving of cash balances
from £2,963k to £1,484k.
OUR PORTFOLIO
The RUA Group has a portfolio of four medical
device businesses and during the year, we
changed the basis of reporting on these
businesses as part of a review of segmental
reporting and analysis. The four businesses are
Biomaterials, Contract Manufacture, Vascular and
Structural Heart. The Group Managing Director’s
Report provides detailed analysis on each of the
businesses, but I am pleased to set out below the
key valuation metrics and opportunities for the
constituent parts.
RUA Biomaterials is the owner of our biostable
polymer technology being exploited through a
licensing model. Revenues for the year amounted
to £554k (2022: £487k) and due to the limited
costs associated with the business it enjoys an
operating profit margin of 89% (2022: 86%) and
contributed £493k (2022: £418k) to the Group
operating loss. RUA considers the cash flows
from the business segment as a “growing
perpetuity” which at a discount rate of 12% and
growth rate of 5% would value this business
segment at around £7 million.
4
RUA Life Sciences plc
XXXXX STRATEGIC
REPORT
CHAIRMAN’S
STATEMENT
RUA Contract Manufacture was acquired as part
of the £2.45million acquisition of RUA Medical in
April 2020. During the year the business grew
revenues strongly to £1,625k (2022: 1,138k) and
has an operating margin of 49% (2022: 39%)
contributing £794k (2022: 447k) to the Group
operating loss. New and existing customers are
actively reviewing projects with RUA that could
double the current scale of the business over a
two-year period. The purchase of RUA Contract
Manufacture represents a multiple of contribution
of around 3 times which is proving to be
attractive when compared to revenue multiples
of 7 times paid in the sector. Given the growth
opportunities available to the business and the
potential for multiple expansion, the contract
manufacturing business has the potential to add
significant value.
Subsequent to the financial year end we
announced that the Group had undertaken a
reorganisation of its R&D development activities
with the hive down of the vascular graft business
to RUA Vascular Limited (a 100% subsidiary of
the Company) and the hive down of the heart
valve business to RUA Structural Heart Limited
(also a 100% subsidiary).
RUA Vascular is the business unit developing the
large bore vascular graft range. This part of the
business disappointed by failing to meet the KPI’s
set for it at the start of the period. The pre-sub
process with the FDA took much longer than
expected with more detailed agreements not just
on clinical evaluation but additional data on pre-
clinical work. As a result, there have been further
delays to the commencement of studies and the
resultant impact on completion and application
for approvals. Despite this set back, a review of
the project demonstrates how much has been
achieved to date with the development of the
polymerically sealed graft range, a regulatory
pathway agreed with regulators, pilot scale
commercial manufacturing established, and
agreement reached to ensure global distribution.
These not inconsiderable achievements have
been done on a relatively small budget with
investment of around £4.4million. Further
investment will be required for RUA Vascular to
reach its potential, including the clinical trials
agreed with the FDA as part of the pre-sub 510k
process, and plans to facilitate this funding are
being explored.
As part of the review of the holding values for
RUA Vascular, financial forecasts have been
prepared. This demonstrates that the pilot plant
has the capacity to generate revenues of over £6
million and a net contribution of over 70%.
Valuation metrics in the vascular graft sector
would appear to be based on revenue multiples.
Comparative transactions have been at revenue
multiples of 4 and above. Applying these
multiples to RUA Vascular based on pilot plant
capacity values the business at £25 million
representing an EBITDA multiple of 5.4 times.
After factoring in the anticipated costs of
completing the project, the Internal Rate of
Return is a very attractive 43%.
RUA Structural Heart, the business unit
developing next generation heart valves and
materials is estimated to have had around
£3.1million of investment since the business was
restarted in financial year 2019. The key objective
for the period was to evaluate heart valve leaflet
material and compare the performance of 100%
polymeric valves with a novel composite
developed by the Group. The computational
modelling of the composite material at the
design stage suggested that its mechanical
properties would be ideal for heart valve leaflets
and that there should not be a risk of
delamination. The team within the Structural
Heart business segment has very recently
achieved the initial milestones set for the
composite material. We are delighted to report
that after 200 million cycles the material shows
no signs of delamination and cut edges remain
unchanged as a result of flex fatigue testing
undertaken in house. From a performance
perspective, the composite material is very thin
and flexible and little energy is required to open a
valve and once opened does not restrict blood
flow with a good EOA (Effective Orifice Area).
Comparing the EOA with published data on
Annual Report & Accounts 2023
5
STRATEGIC
REPORT
GROWING SHAREHOLDER VALUE BY:
International growth from Licensing and Contract Manufacturing
businesses - RUA Biomaterials, and RUA Contract Manufacture;
Product development and launches of RUA Vascular’s graft pipeline;
Product Innovation from RUA Structural Heart’s polymeric heart valve
technology platform
CONCLUSION
RUA has a portfolio of four businesses, all of
which have made good substantial progress
during the period. The mature businesses are
growing revenue and generating attractive
operating margins and the development business
segments of Vascular and Structural Heart have
made good regulatory and technological
progress respectively on relatively low levels of
investment. The stability of Biomaterials coupled
with the long term contractual but growth
opportunities of Contract Manufacture more than
support the valuation of the Group and still
provide attractive upside. The developing
businesses of Vascular and Structural Heart both
require further investment to achieve their
considerable potential and funding options are
currently being explored to provide this
investment. The progress of Structural Heart over
the past year has more than compensated for the
delay to the Vascular clinical trial.
WILLIAM BROWN
Chairman
25 July 2023
CHAIRMAN’S
STATEMENT
current biological valves suggests that the EOA
of the RUA design is up to two times greater for
equivalent valve size. Testing has also
demonstrated that the properties of the
composite restrict crack propagation.
100% polymeric valves rely in part on the leaflet
design to reduce stress and operate within the
performance window of the polymer, meaning
that the polymer would not work in all designs.
The composite material retains the blood
contacting properties of Elast-EonTM but is
significantly stronger. Suture retention testing
shows the composite is highly resistant to pull
through. Given these properties the RUA
composite may be appropriate for valve designs
that 100% polymer would not be appropriate for,
allowing a like for like swap of RUA composite for
the biological tissue used in currently marketed
designs. This creates the opportunity for RUA
Structural Heart to become a supplier of heart
valve leaflets to other companies to incorporate
in current designs.
The opportunity to broaden the business model
for the Structural Heart business not only
increases the potential value of the business unit
but reduces the timeframe to be able to realise
this value. The Structural Heart business has
always had the potential to generate substantial
value for the Group but with recent
developments has increased the chances of
achieving its potential. The major medical device
companies have always been prepared to buy in
novel technology and we believe we are getting
much closer to having a commercialisable
offering.
6
RUA Life Sciences plc
STRATEGIC
REPORT
GROUP MANAGING
DIRECTOR’S REPORT
“This period has seen continuing sales growth
from our two highly profitable and cash
generative business units, RUA Biomaterials
and RUA Contract Manufacture, which
underpin current Group valuation. We have
continued to de-risk the regulatory process
and formalised the route to market for RUA
Vascular’s large bore graft range, and
identified additional positive properties within
RUA Structural Heart’s polymeric heart valve
technology platform”.
SALES PERFORMANCE HAS
SURPASSED EXPECTATIONS
Contract manufacturing and polymer licensing
business units are performing ahead of
expectations. Total revenue of £2,179,000 (2022:
£1,625,000) represents an increase of 34% over
the same period in the previous year (2022: 6%).
The strategic changes that we made to business
processes and working practices during the
period have transitioned the business from a
narrowly focused contract developer and
manufacturer to a fully-fledged medical device
manufacturing business that is focused on
bringing our pipeline products to market. Key to
this is our continuing investment and
commitment to Research and Development
activities, with R&D spend increasing 19% to
£1,072,000 (2022: £903,000). Loss before tax for
the period has decreased marginally to
£2,322,000 (2022: £2,360,000) as a result of
increased growth from our two cash generative
businesses.
RUA BIOMATERIALS
The Group’s platform technology is based upon
Elast-Eon, and RUA Biomaterials owns all the
Elast-Eon IP, and licenses use of Elast-Eon to
medical device companies. Elast-Eon has been
proven to have all of the characteristics
necessary for a long-term implantable
biomaterial, and has been the enabling
technology behind over 8 million life-sustaining
devices over the last 15 years. Elast-Eon
polymer licence and royalty income of £554,000
(£2022: £487,000) represents growth of 14%
during the period. This increased uptake is due
to successfully promoting the Elast-Eon polymer
as a world leading material to the medical
device industry. RUA Biomaterials is akin to an
annuity business, and maintains a high operating
profit margin (89%) (2022: 86%), since its only
real outlays are IP costs. The Group continues to
use the Elast-Eon polymer within its vascular
and heart valve product pipelines, with the aim
of improving device performance and
eliminating the risks of animal-derived material
in cardiovascular devices.
Annual Report & Accounts 2023
7
STRATEGIC
REPORT
GROUP MANAGING
DIRECTOR’S REPORT
RUA CONTRACT MANUFACTURE
Third party contract manufacturing revenue
surpassed expectations by increasing 43% to
£1,625,000 (2022: £1,138,000). This was due to
our continued focus on quality and delivery
leading to increased demand from existing
customers and the onboarding of a new global
medical technology company and resultant long
term manufacturing and supply contract.
Significant process efficiencies and effective cost
control measures have been realised during the
period, resulting in an attractive operating profit
margin of 49% (2022: 39%) 100% on-time-in-full
(OTIF) service levels were maintained during the
entire period, and a recent customer satisfaction
survey scored an average of 98%, which reflects
the organisation’s commitment to quality and
service.
All business development activities during the
period have focused on long term high value
strategic opportunities, and significant headway
has been made with plans to increase Original
Equipment Manufacturer (OEM) customer
demand to create a high growth business. As
well as onboarding the new global medical
technology customer during the period, an
opportunity pipeline with Request for Quote
(RFQ) values of c£2m in annualised revenue over
the next 2-3 years is in place.
RUA VASCULAR
RUA Vascular is focused on the $1billion global
vascular graft market, where polyester vascular
grafts have been available on the market for over
50 years with little innovation. Many of these
grafts contain animal-derived sealants. RUA
Vascular’s Elast-Eon-enabled products for open
surgical repair are an innovative solution
addressing the many risks associated with
animal-derived tissue (supply chain constraints,
cross-species contamination, environmental
concerns, and ethical/patient choice). With a
growing acceptance in the surgical community of
an inevitable switch away from animal-sourced
products, RUA Vascular has a real opportunity to
become a significant player in the open surgical
graft market.
During this period, all R&D efforts have been
focused on the first launch from the vascular
pipeline, a large bore straight graft, which will
also be the enabler for the development of more
complex products in the vascular graft portfolio.
Whilst the regulatory pathway was being
addressed, we also took the opportunity to
further improve the product and significant
progress has been made on product
development activities, as well as the necessary
precursor activities required for market launch.
Data collection on the large bore graft continues
with in-vivo and in-vitro trials, which has
provided a level of certainty around graft design,
bench performance and biocompatibility. A
number of pre-submissions, or Q-subs, have
allowed interactive discussions between the
Group and FDA to determine the regulatory path
to approval in the US, which will increase the
certainty of market clearance through the less
onerous 510K route. During these discussions, a
Good Laboratory Practice (GLP) in-vivo study
design and a clinical trial design was agreed for
demonstration of the safety and efficacy of Elast-
Eon as a graft sealant, and which aligns with the
FDA’s expectations. The clinical trial is a
performance goal study rather than a complex
randomised trial, and will involve 121 patients,
with a primary end point at 6 months post
operation to study graft performance, safety, and
clinical efficacy. With the trial being non-blinded,
we will have sight of early clinical results well
before the end point. Recruitment of the first
patient is anticipated in 2024, with regulatory
submissions planned to allow entry into the US
market upon completion. The data generated in
the trial will be utilised to support further
marketing applications in multiple geographic
regions including Europe.
Significant work has been completed on
manufacturing process refinements and
efficiencies of the existing pilot production line.
Manufacturing methodology has ensured
consistent batch to batch sealing of the graft by
machines, eliminating the use of toxic chemicals
used during the manufacturing process. Initial
production capacity plans indicate that this pilot
line is capable of meeting the volumes and
margins required for the launch of the large bore
vascular grafts. The new facility purchased in
November 2021 to accommodate a high output
cleanroom facility to support scale up
8
RUA Life Sciences plc
STRATEGIC
REPORT
manufacturing of the vascular graft range and
associated support functions, will further allow
for future growth but will require further
investment.
To be a leading player in the vascular graft
market, it was felt that a route to market would
be much more efficient and cost effective
through a distribution model where existing and
experienced sales teams would be leveraged. The
Group was therefore delighted to sign an
agreement in January 2023 with Corcym, a
global medical device company focused on the
structural heart area, which provides a clear path
to a global market for the range of large bore
vascular grafts. Corcym have an excellent sales
network in place, currently selling to
cardiothoracic surgeons in over 100 countries,
and RUA Vascular’s grafts are complementary to
their existing product portfolio. To allow Corcym
the necessary flexibility to maximise market
penetration, a novel pricing model was agreed
whereby rather than agree specific price points
by territory, the partnership ethos of the
agreement will see RUA and Corcym share the
gross principal margin achieved on global sales
on a 50:50 basis. This agreement validates not
only the design benefits of RUA’s product
offering but also the regulatory pathway that has
been adopted, and first revenues through the
Corcym sales outlet are expected upon clearance
to market from the FDA.
In parallel with the Corcym distribution route to
market, interest continues to be strong for OEM
component supply of the RUA vascular graft to
be used as part of another device. These
additional opportunities are also being advanced
and discussions will continue within the coming
year.
RUA STRUCTURAL HEART
Through incorporation of Elast-Eon polymer
technology into a novel leaflet system, the Group
believes both valve failure and the need for
lifetime anticoagulant treatment (associated with
currently marketed aortic heart valves) will be
avoided.
Alternative leaflet material is becoming much
more important to the industry, and polymeric
valves are being talked about as the future. The
heart valve market is dominated by a small
number of very large companies, but much of the
recent innovation in the sector has been
undertaken by start-ups. RUA recognises that a
route to market which involves a partnership/
license for future regulatory testing, clinical trial
and launch to be more realistic than seeking to
compete directly. A second route to market,
namely OEM component supply of the
proprietary composite material to major Heart
Valve companies as a replacement for biologic
material in their transcatheter aortic valves, has
also been identified during the period. This
strategy of seeking to “own” the leaflet material
of choice may allow faster commercialisation
with revenues generated during the customer
development phase.
During the current period, two heart valve
programmes were running in parallel – one with a
100% polymer leaflet and the other a textile
polymer composite leaflet. Both designs have
been developed, tested and de-risked to a stage
where the design which ensured the most
resilient and appropriate technology, and
greatest potential, was prioritised. Our chosen
lead design was the textile polymer composite
leaflet, which is very thin and flexible, yet
demonstrates tear resistance many times greater
than a simple polymeric sheet, whilst retaining
the blood contacting properties of Elast-Eon.
The valve manufacturing process has been
refined, and valves of sufficient quality have been
produced that are able to withstand durability
testing via an Accelerated Wear Tester (where
the valve is subjected to accelerated conditions
as if it had been implanted in a heart). Hydro
dynamic performance (which replicates
conditions within the heart) has also been very
promising, with low opening and closing pressure
gradients and orifice areas. Fatigue testing
capability has now been brought in-house, and a
major milestone of c200 million cycles has been
achieved without any indication of delamination
or change to the structure of the material.
Testing of the lead designs (valve and leaflet) will
be further advanced and, if benefits are
demonstrated as anticipated, following on, proof
of concept in vivo trials to assess functionality,
durability, thrombosis and calcification
deposition.
Novel IP on valve design and method of
manufacture has also been created.
Annual Report & Accounts 2023
9
STRATEGIC
REPORT
GROUP MANAGING
DIRECTORS REPORT
QUALITY MANAGEMENT SYSTEM
OUTLOOK
The Group extended scope of its ISO 13485:2016
certification in support of its Quality Management
System (QMS) to include the entire Group of
companies and to meet Medical Device
Manufacturer requirements. This is the second
year in a row that no non-conformities were
noted during the ISO 13485 audit by our Notified
Body, which reflects the increasing expertise
within the Quality department. Electronic QMS
software implementation has begun which will
enable the business to operate a modern,
efficient and compliant QMS to support future
business growth.
Continuing sales growth from our two highly
profitable and cash generative business units
have exceeded expectations, and our two pre-
revenue business units continue to de-risk the
regulatory process and make good technological
progress. A clear route to market has been
agreed for RUA Vascular’s large bore graft upon
market clearance via Corcym, and we are
progressing additionality within our polymeric
heart valve technology platform. We have
worked hard to build the solid foundations
required by a fully fledged medical device
manufacturing business, and to empower staff
within the business with the necessary
experience, knowledge and skillsets to help
deliver on RUA’s ambitious plans. The Group
looks forward to continuing to maximise
revenues, alongside further product
development, in the coming year, and ultimately
delivering on our strategy to disrupt the
cardiovascular market with innovative products
and grow shareholder value.
CAROLINE STRETTON
Group Managing Director
25 July 2023
10
RUA Life Sciences plc
STRATEGY
The mission of the Group is to enhance patients’ lives
through the development of pioneering innovative
cardiovascular medical devices using Elast-Eon™, the
world leading long-term implantable biostable
polyurethane. This is being undertaken through:
International growth
via licensing
Elast-Eon™ to third
parties through RUA
Biomaterials
Developing and
launching a range of
Elast-Eon™ sealed
vascular grafts
through RUA Vascular
Developing
innovative
Elast-Eon™
leaflet polymeric
heart valve and
leaflet
technology
through RUA
Structural Heart
International growth
through RUA Contract
Manufacture; becoming a
centre of excellence for
designing, developing and
manufacturing Elast-Eon™
based medical devices,
whilst continuing to serve
and expand its current
OEM customer base
RUA Life Sciences will seek to maximise shareholder value by growing each business to
achieve attractive levels of profitability or disposing of business areas if the valuations
are attractive.
Annual Report & Accounts 2023
11
STRATEGIC
REPORT
OUR PEOPLE
OUR GROUP’S CORE VALUES
Innovation, Agility, Integrity, Quality and Collaboration
“We believe that the most successful businesses are ones that embrace
the employee experience and protect employee wellbeing. Our 5 core
values are a big part of how the entire business works internally, and
with its customers, to develop new, market leading products. These
allow us to deliver service to the highest standards and create an
environment where innovation can flourish”.
Highlights in the current year:
• Introduced a range of initiatives to maintain employee
wellbeing, including a Mental Health First Aid (MHFA) Team to
provide guidance and support to staff
• Employee net promoter score of 88% (2022: 85%), which
demonstrated that employees were engaged, and held a strong
belief in the vision and values of the Company
• Maintained Living Wage and Good Business Charter
accreditations
• Commenced an Innovate UK Knowledge Transfer Partnership
KTP award programme with the University of Strathclyde
12
RUA Life Sciences plc
STRATEGIC
REPORT
OUR CULTURE
HEALTH AND SAFETY
The entire organisation is involved in creating a
positive culture, to ensure everyone feels
included in driving toward the company’s
business goals. The Group is committed to
building a successful team and has upskilled and
empowered staff within the business with the
necessary experience, knowledge and skillsets to
help deliver on RUA’s ambitious plans.
WELLBEING
The Group continues to be a Living Wage
employer. Proper remuneration ensures we
directly invest in the health and wellbeing of our
employees and improve their quality of life, which
promotes a more productive business since we
have a happier, more motivated, and loyal
workforce.
We are committed to maintaining a working
environment which supports the mental
wellbeing of its staff. This includes promoting a
culture of mental wellbeing amongst colleagues
and offering support for staff who, for any
reason, may be suffering from mental ill-health. A
Mental Health First Aid (MHFA) Team is
responsible for maintaining an open-door policy
for staff to approach them to discuss concerns
with their own mental health and to provide
guidance on how to manage symptoms. The
Group seeks to eliminate the stigma associated
with mental health by promoting an inclusive
approach to all employees, regardless of their
health.
We also have a positive attitude to menopause/
perimenopause and are working proactively to
support individuals experiencing the menopause.
The Group has created an environment where
individuals feel confident enough to raise issues
about their symptoms and ask for support and
adjustments at work. We are committed to
ensuring that conditions in the workplace do not
make menopausal symptoms worse and that
appropriate adjustments and support are put in
place.
The Group is committed to ensuring that the
highest reasonably practicable standards of
health and safety are achieved in all Group
operations. It is our aim to promote and maintain
a high standard of health and safety by:
• Meeting the Health and Safety at Work Act
1974 and Management for Health and Safety at
Work Regulations 1999
• Providing and maintaining a safe place of work,
safe systems of work, safe equipment and a
healthy and safe working environment
• Understanding and ensuring compliance with
health and safety and; industry, regulatory and
other requirements that apply to our activities.
• Ensuring we are taking the appropriate
protective and preventative measures
• Being fully committed to the prevention of
injury and
ill-health to employees, sub-
contractors, the public or visitors, whilst striving
to improve health and safety performance
•
hazards,
Identifying
risk
assessments and reducing risks to as low as
possible
undertaking
• Developing and maintaining systems and
procedures to ensure that all equipment and
premises are safe and do not adversely affect
health
• Consulting employees and promoting the
awareness of health and safety standards, and
encouraging health and safety best practice
throughout our organisation
• Raising awareness, encouraging participation
and training employees in health and safety
matters to ensure employees and others are
assured of a safe and healthy working
environment
• Ensuring all persons working on or behalf of
the group comply with Health and Safety
policies and actively contribute
towards
improving safety in every aspect of their work.
Annual Report & Accounts 2023
13
STRATEGIC
REPORT
OUR PEOPLE
WORKING ENVIRONMENT
The business continues to practice lean
manufacturing methodologies to help refine
operations to deliver better savings and faster
development cycles. Our 6S/lean champions
hold a formally recognised 6S professional
qualification.
Our Industry 4.0 digital transformation continues,
with new digital technology introduced to
support financial control, HR and quality systems.
ENGAGING OUR PEOPLE
Our recent annual employee survey output was
an employee net promoter score of 88% (2022:
85%), which demonstrated that employees were
engaged, held a strong belief in the vision and
values of the Group, and that these values
encourage the right working environment.
The Group has aligned with ‘Fair Work First’,
which aims to promote fairness, equality and
opportunity in Scotland, helping to create greater
economic success and sustainable, inclusive
growth.
ATTRACTING, RECRUITING AND
KEEPING TALENT
The Innovate UK Knowledge Transfer Partnership
KTP award programme with the University of
Strathclyde commenced in May 2022, and is
progressing well. New polymer science and
engineering knowledge and skills have been
introduced into the business, as well as enabling
access to academic networks and specialist
equipment. This support has enabled significant
progress on the Heart Valve development
project, and additional polymer expertise has
assisted with our understanding of Elast-Eon
properties.
The Group’s successful Development of the
Young Workforce (DYW) programme is going
from strength to strength. In partnership with
Skills Development Scotland, we have active
modern and graduate apprenticeship
programmes in place with employees (ten per
cent. of our staff are currently benefitting from
these schemes). We have also entered the third
year of our Intern programme, which allows a
University undergraduate student to gain first-
hand workplace experience in the business.
Employee attrition rate is 16% (2022: 5%), and we
have a number of employee incentivisation plans
in place to increase retention, including cost of
living payments, private health care, and Electric
Vehicle salary sacrifice schemes.
We address gender bias and inequality by
creating an inclusive workplace that is guided by
our Core values each day, with a 32%:68% female
to male employee split, and gender pay gap of
12% (mean) and 0% (median - difference between
the midpoints in the ranges of hourly earnings of
men and women). RUA continues to strive to
create a balanced, experienced team within every
tier of the business.
ENVIRONMENTAL
More than 190 countries adopted a landmark
agreement recently at the COP 15 biodiversity
summit that included a pledge to protect 30% of
the world’s land and oceans by 2030. The Group
recognises this and continues to strive to align its
business practices with the United Nations 2030
Sustainable Development Goals as a blueprint to
achieving a more sustainable future. Key to our
environmental strategy is our proprietary
polymer, Elast-Eon. Most heart valves and large
bore vascular grafts on the market today contain
animal tissue, as a result of compromises being
made due to the lack of suitable biomaterials
during the technological creation of the
cardiovascular industry in the 1970s and 1980s.
As well as cross species contamination and
continuity of supply risks associated with using
animal by products, there is the growing
environmental risk of breeding livestock for
medical purposes, including generation of
significant greenhouse gases, and consumption
of crops, freshwater, and fertilisers. We are
therefore setting up Elast-Eon to de-risk the
future of all animal based cardiovascular medical
devices. As our activities and operations can also
impact on the environment either directly or
indirectly, our aim is to carry out our business in
an environmentally responsible manner and
minimise our impact through internal efficiency,
minimising production of process waste and
minimising our use of natural resources.
CAROLINE STRETTON
Group Managing Director
25 July 2023
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STRATEGIC
REPORT
DIRECTORS
The Company is managed by the Board of Directors which, at
31 March 2023, comprised of five Executive (William Brown,
Caroline Stretton, Iain Anthony, Lachlan Smith and John McKenna)
and three Non-Executive Directors.
The Non-Executive Directors (Ian Ardill, John Ely and Geoff
Berg) are considered independent.
William (Bill) Brown (Chairman). Bill was
appointed to the Board on 21 October 2011 and
became Chairman on 3 July 2012. Bill is a
Chartered Accountant with over 35 years’
experience in advising and investing in high
growth smaller companies. He has floated
several companies and has significant
experience in fund raisings, corporate deals and
restructurings. He launched the first dedicated
fund for AIM and was instrumental in the growth
and internationalisation of AIM as a member and
Chairman of the AIM Advisory Committee. He
joined the Board in late 2011 and, having
conducted a strategic review, and developed a
strategy to monetise the core technology. Bill
provides leadership and direction to the Board,
facilitates the operations and deliberations of
the Board and acts as principal liaison between
the Board and the Executive and assumes
responsibility for the strategic direction of the
company.
Key Areas of Expertise: Strategy, corporate
governance, corporate finance, financial
management, investor relations, international
business risk management.
Annual Report & Accounts 2023
15
STRATEGIC
REPORT
DIRECTORS
Caroline Stretton (Group Managing Director).
Caroline is a graduate of the University of
Strathclyde, and holds a PhD in Pure and Applied
Chemistry. Caroline joined RUA Medical in 2018
from prosthetic hand manufacturer, Touch
Bionics, where she was a key member of the
Leadership Team responsible for Global
Manufacturing, Operations, Quality and Customer
Support. Touch Bionics was sold to Icelandic
Orthotic and Prosthetic manufacturer Ossur in
2016. Between 1994 and 2013, Caroline was
employed by a number of medical device and
pharmaceutical companies in a variety of roles,
most notably Teva Pharmaceuticals, Ocutec and
Mpathy Medical, a surgical medical device
company which achieved a multi-million pound
exit to Danish surgical medical device
manufacturer Coloplast in 2010. Caroline joined
the Board of RUA Life Sciences on 18 January
2021.
Key Areas of Expertise: Manufacturing &
operations, product development, quality
assurance, regulatory affairs, project
management office, strategic planning,
Environmental, Social & Governance.
Iain Anthony (Director of Vascular R&D, Quality,
Clinical and Regulatory Affairs). Iain brings a
wealth of relevant cardiovascular medical device
experience to the company, with over 15 years’
experience in the medical device industry in both
commercial and NHS settings. He was recruited
from the Swiss based MedAlliance where he was
Director Pre-Clinical / Clinical Regulatory Affairs
focusing on development and approval of drug
coated coronary and peripheral angioplasty
balloons. Prior to this Iain was Head of Clinical
Affairs at Terumo Aortic where he developed his
knowledge and experience of the global vascular
graft business. Iain is a graduate of Glasgow
University and has a BSc in Genetics, he also has
a PhD from the University of Edinburgh in
Neurovirology and Neuopathology. Iain has over
40 peer reviewed publications across a multitude
of medical disciplines. Iain joined the Board of
RUA Life Sciences on 31 March 2022.
Key Areas of Expertise: Medical device market,
international market development, product
development, clinical and regulatory affairs,
strategic planning
Lachlan Smith (Group Chief Financial Officer).
Lachlan is a Fellow of the ACCA with over 20
years’ experience in accounting and finance
across multiple sectors, with the last 14 years
spent in leadership roles. Prior to joining RUA Life
Sciences Lachlan served as Finance Director at
high growth technology companies Silver Cloud
Smarter Technology and Equator where he
played a key role in developing strong financial
systems and internal controls. While at Silver
Cloud Lachlan played a crucial role in helping the
business navigate the impact of COVID-19 and
preparing the company to emerge in a strong
position including assisting the business transition
towards new growth opportunities. Furthermore
Lachlan played a key role during multiple rounds
of fundraising during the pandemic. Lachlan
joined the Board of RUA Life Sciences on 31
March 2022.
Key Areas of Expertise: Financial management,
accounting, strategy development and strategic
leadership, digital transformation, corporate
finance, corporate governance.
John McKenna (Director of Clinical Marketing).
John is a leading marketing expert in the field of
cardiovascular devices. With over 30 years’
experience in cardiothoracic surgery, he has
helped develop and launched a number of
successful devices, including heart valves, large
vessel grafts and stents. John has worked for a
number of leading medical companies, including
Pfizer, Vascutek (Terumo) and CryoLife, and has
contacts with both leading heart surgeons and
senior executives at the major device companies.
John re-joined the Board in late 2016, and has
helped develop the product strategy based on his
analysis of competing products and current
market need from the industry. He has
established European-wide distribution networks
for medical devices and OEM supply agreements,
particularly in heart valve related products.
Key Areas of Expertise: Medical device market,
sales management, market development,
international sales, product launch.
16
RUA Life Sciences plc
STRATEGIC
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Ian Ardill (Non-Executive Director). Ian has over
25 years’ experience in senior financial positions,
with the majority of that time being spent in
medical devices and pharmaceuticals. He is
currently CFO of Rhythmn AI Ltd and managing
Director of Causeway Finance Associates Limited,
a Life Sciences consultancy, which he founded in
2017. Previously, he was Chief Financial Officer of
Diurnal Group plc, which he joined in April 2015
ahead of the company’s successful IPO on AIM in
December 2015. Prior to that, Ian was Chief
Financial Officer of two other listed companies.
With Lombard Medical Technologies plc, from
2012 to 2015, he led the company financially
through the late stages of FDA pre-market
approval and the commencement of US
commercial operations. On the financing front, he
managed a £22 million fundraising on AIM and
the company’s IPO on NASDAQ raising $55
million. With Biocompatibles International plc,
from 2003 to 2011, he played a leading role in
transforming the company from a loss-making to
a profitable enterprise with sales of £33 million.
He also managed the company’s sale to BTG Plc
in 2011 for £177 million and two returns of capital
to shareholders totalling £23 million. Ian is a
graduate of Warwick University and qualified as a
Chartered Accountant with Grant Thornton.
Key Areas of Expertise: Life Sciences (particularly
medical devices), public companies, finance and
accounting, corporate finance, corporate
governance, investor relations.
John Ely (Non-Executive Director). John is a
recognised expert in cardiovascular devices and
spent 7 years at FDA, where he was responsible
for a team that approved cardiovascular medical
devices, including heart valves. In industry, he has
successfully managed the process of obtaining
pre-market approvals for 6 heart valves, including
both tissue and mechanical valves. He has also
led research and development, regulatory and
quality assurance teams at Baxter International
Inc., Edwards Lifesciences Corporation and On-X
Life Technologies, Inc. John has authored over 25
scientific papers and is the named inventor on 3
US patents. He was previously engaged as an
expert witness in the area of heart valve design
and development process, giving him an intimate
knowledge of the Group’s heart valve project.
Key Areas of Expertise: Medical device market,
market development, product development,
regulatory affairs, strategic planning.
Geoff Berg (Non-Executive Director). Geoff was
formerly a consultant heart surgeon at the
Golden Jubilee Hospital in Glasgow where he
specialised in surgical treatment of valvular heart
disease and was recognised as one of the leading
surgeons in mitral valve repair and replacement.
He has authored a number of scientific papers on
the treatment of heart disease and conducted
studies into the long term performance of
replacement heart valves. He has been involved in
the early stage development of a number of
cardiovascular devices, including a stentless
animal tissue heart valve, and the launch of the
only biological valved conduit. He is a recognised
authority on stentless aortic valve surgery and
has co-authored papers on stentless versus
stented aortic valve insertions.
Key Areas of Expertise: Surgical practices, heart
valve development, regulatory affairs, clinical
research.
Annual Report & Accounts 2023
17
STRATEGIC
REPORT
SECTION 172(1) STATEMENT
FOR THE YEAR ENDED 31 MARCH 2023
Section 172 of the Companies Act 2006 requires
each of our Directors to act in a way that they
consider, in good faith, would most likely
promote RUA’s long-term success for the benefit
of its shareholders and other stakeholders. In
doing this, section 172 requires our Directors to
have regard, amongst other matters, to the:
a) Likely consequences of any decisions in the
long term.
b) Interests of the company’s employees.
c) Need to foster the company’s business
relationships with suppliers, customers and
others.
d) Impact of the company’s operations on the
community and environment.
e) Desirability of the company maintaining a
reputation for high standards of business
conduct, behaving ethically and transparently.
f) Need to act fairly between members of the
company.
Our Board gains an understanding of stakeholder
issues and, during the year, discharged its section
172 duty by factoring the matters highlighted (a)
to (f), into Board discussions and decision-
making process. The Directors also have regard
to other factors which they consider relevant to
the decision being made, acknowledging that
every decision made will not necessarily result in
a positive outcome for all stakeholders. However,
by considering our vision and values, together
with our strategic priorities and having a process
in place for decision-making, the Board aims to
make sure that all decisions are consistent and
well-considered. This approach ensures that we
continue to serve and support the people who
rely on our products and services. It also
supports our strategy to pivot to sustainable and
profitable growth.
SHAREHOLDERS
The primary mechanism for engaging with
shareholders is through the Company’s AGM and
also through the annual cycle of investor
meetings and webinar presentations held
alongside the publication of the Group’s financial
results for the half year and full year. Further
information is disclosed in the Corporate
Governance Statement.
18
RUA Life Sciences plc
STRATEGIC
REPORT
Modern slavery is a crime and a violation of
fundamental human rights. It takes various forms,
such as slavery, servitude, forced and compulsory
labour and human trafficking, all of which have in
common the deprivation of a person’s liberty by
another in order to exploit them for personal or
commercial gain. We have a zero-tolerance
approach to modern slavery and we are
committed to acting ethically and with integrity
in all our business dealings and relationships and
to implementing and enforcing effective systems
and controls to ensure modern slavery is not
taking place anywhere in our own business or in
any of our supply chains.
We are also committed to ensuring there is
transparency in our own business and in our
approach to tackling modern slavery throughout
our supply chains. We expect the same high
standards from all of our contractors, suppliers
and other business partners, and as part of our
contracting processes, we include specific
prohibitions against the use of forced,
compulsory or trafficked labour, or anyone held in
slavery or servitude, whether adults or children,
and we expect that our suppliers will hold their
own suppliers to the same high standards.
SOCIAL, PEOPLE AND
ENVIRONMENTAL
Our employees, our community and the
environment form a key stakeholder group with
whom we engage on a daily basis. Pages 12 to 14
further detail the extent of the work undertaken
in relation to social, people and environment.
NON-FINANCIAL INFORMATION
STATEMENT
The information below is provided to help our
stakeholders understand our position in relation
to key non-financial matters including, where
appropriate, the relevant policies and processes
we operate.
CUSTOMERS AND SUPPLIERS
RUA operations ensures continuing focus on
quality and delivery of customer products. The
partnership structure between RUA’s Contract
Manufacture business unit and its customers
continues to deepen and strengthen.
It is our policy to conduct all of our business in an
honest and ethical manner. We take a zero-
tolerance approach to bribery and corruption and
are committed to acting professionally, fairly and
with integrity in all our business dealings and
relationships wherever we operate, and
implementing and enforcing effective systems to
counter bribery. We will uphold all laws relevant
to countering bribery and corruption; we remain
bound by the laws of the UK, including the
Bribery Act 2010, in respect of our conduct both
at home and abroad.
HUMAN RIGHTS
We are committed to ensuring that we comply
with our legal obligations as well as
communicating these to individuals who work for
or on behalf of us. We comply with all relevant
UK and devolved legislation in relation to labour
in the workplace. We implement our obligations
under the law through our policies, which are
available to all employees within our ‘Employee
Handbook’, which is also regularly checked for
legal compliance. We also comply by giving all of
our employees’ a Statement of Particulars of
Employment.
Annual Report & Accounts 2023
19
STRATEGIC
REPORT
FINANCIAL REVIEW
REVENUE
£1,625,000
Revenue for the contract
manufacture division
increased to £1,625,000
(2022: £1,138,000).
£554,000
Revenue from royalty
income from Biomaterials
increased to £554,000
(2022: £487,000)
£2,179,000
Reported Group revenues for the year ended 31 March 2023
increased to £2,179,000 compared to £1,625,000 for the
year ended 31 March 2022.
20
RUA Life Sciences plc
STRATEGIC
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RESEARCH AND
DEVELOPMENT COSTS
During the year, the Group expensed
through the income statement £1,072,000
(2022: £903,000) of research costs
relating to the Vascular Graft and Heart
Valve programmes.
IMPAIRMENT CHARGE
NET FINANCE COSTS
No impairment charge has been made on any of
the Group’s assets following impairment reviews
on the carrying amounts of the Group’s cash-
generating units. Key assumptions such as the
amount and timing of future cash flow growth
and the achievement of future development
milestones, support the carrying values of the
intangible assets. Further information on the key
assumptions used is disclosed in Note 10.
GENERAL AND ADMINISTRATIVE
EXPENSES
Administrative expenses have increased during
the year to £4,169,000 (2022: £3,776,000 ), these
figures include amortisation & depreciation
charges of £358,000 (2022: £312,000), the
research and development costs noted above
and the share based payment charges noted
below.
SHARE-BASED PAYMENT CHARGES
The non-cash charge for the year decreased to
£102,000 (2022: £145,000) as additional share
option awards were withdrawn from three
executives leaving the company and granted to
new hires within the executive team.
Finance expenses have increased during the year
to £16,000 (2022: £8,000).
LOSSES BEFORE TAXATION
Losses before taxation from business operations
for the year were £2,322,000 (2022: £2,360,000).
LOSS PER SHARE
Basic and diluted loss per share for the year was
9.03 pence (2022: 9.32 pence).
TAXATION
The Group claims research and development tax
credits each year and, since it is currently loss
making, elects to surrender these tax credits for
a cash rebate. The amount is included within the
taxation line of the consolidated income
statement in respect of amounts received and
receivable for the surrender of research and
development expenditure amounting to £319,000
(2022: £293,000). The Group has not recognised
any tax assets in respect of trading losses arising
in the current financial year or accumulated
losses in previous financial years.
Annual Report & Accounts 2023
21
STRATEGIC
REPORT
FINANCIAL REVIEW
CASHFLOW
Year end cash and short-term deposit balances
were £1,484,000 were (2022: £2,963,000).
Operating cash outflows from operations
amounted to £1,146,000 (2022: £2,353,000)
During the year, capital expenditure was £449,000
(2022: £904,000).
FINANCIAL POSITION
Net assets as at 31 March 2023 were £4,683,000
(2022: £6,584,000) of which cash and cash
equivalents amounted to £1,484,000 (2022:
£2,963,000).
Intangible assets (not including Goodwill)
reduced to £470,000 (2022: £521,000) due to the
amortisation charge of £51,000.
DIVIDENDS
No dividends have been proposed for the
year ended 31 March 2023 (2022: £nil).
KEY PERFORMANCE INDICATORS
At this stage of the Group’s development, the nonfinancial key performance indicators focus around two areas:
•
•
the progression of our Elast-Eon sealed Vascular grafts into clinical trials; and
the development of our Polymeric Heart Valve and composite leaflet material.
The financial key performance indicators focus on five areas:
• Group revenues
• Control of operating expenses
• Research and development expenditure
• Pre-tax results
• Cash and short-term deposit balances
These are further discussed within the Group Managing Director’s Report on pages 7 to 10:
22
RUA Life Sciences plc
STRATEGIC
REPORT
MEASURING OUR PERFORMANCE
GROUP REVENUES (£M’S)
The Group measures revenue as a key financial metric to assess
the progress of its commercial activities.
2021 1.5
2022 1.6
2023 2.2
OPERATING EXP (£M’S)
The Group considers control of operating expenses as a key
performance indicator to monitor and optimize cost
management, ensuring efficient allocation of resources.
2021 3.1
2022 3.8
2023 4.2
R&D SPEND (£M’S)
2021 0.5
2022 0.9
2023 1.1
Research and Development expenditure is a critical KPI for the
company to evaluate its investment in innovation and
technological advancements, driving future growth and
competitiveness.
PRE TAX LOSS (£M’S)
The Group’s pre tax loss measures the overall financial
performance of its commercial and operating activities during
the period.
2021 1.6
2022 2.4
2023 2.3
CASH (£M’S)
2021 6.3
2022 3.0
2023 1.5
Since the ongoing Vascular and Structural Heart
commercialisation activities still require further investment and
the business is not yet generating positive cash flows, the
remaining cash balance is considered a key metric.
LACHLAN SMITH
Group Chief Financial Officer
25 July 2023
Annual Report & Accounts 2023
23
STRATEGIC
REPORT
PRINCIPAL RISKS AND UNCERTAINTIES
PRINCIPAL RISKS AND
UNCERTAINTIES
While risk can never be fully eliminated, RUA Life
Sciences’ approach to risk management aims to
mitigate risk to an acceptable level to execute the
Group’s strategy and create value for all
stakeholders.
The Board has carried out a robust assessment of
the principal risks facing the Group, including
those that would threaten its business model,
future performance, solvency or liquidity. This
included an assessment of the likelihood and
impact of each risk identified, and the mitigating
actions being, or to be, taken. Risk levels are
modified to reflect the current view of the relative
significance of each risk.
Roles and Responsibilities
The Board:
• Has overall responsibility for corporate strategy,
governance, performance, internal controls and
Risk Management Framework.
• Sets the Group’s risk appetite and ensures
appropriate risk management and
internal
control systems are in place to enable a robust
assessment of the principal risks.
• Ensures effective processes exist to manage
the principal risks and takes a balanced view of
those risks against RUA Life Sciences’ strategy
and risk appetite.
• Sets the “tone from the top” and the culture for
managing risk.
• Sets strategic priorities in light of the Group’s
risk profile.
•
Challenges the content of the risk register.
The Audit committee:
• Conducts an annual review and reports to the
Board on the effectiveness of the Group’s risk
management and internal control systems
• Ensures compliance with financial and reporting
legislation, rules and regulations and ensuring
the Annual Report
is fair, balanced and
understandable.
The Executive Team:
• Manages the business and delivery of the
Group’s strategy.
•
Is the central risk team to establish and facilitate
the risk management process across the Group
to provide risk information for management
oversight and decision making.
• Manages the principal risks appropriately to
operate within the Group’s risk appetite.
• Assigns senior business representatives (Risk
Champions) for each category and function to
take a lead role in the identification of risk and
updating the risk register for senior management
oversight.
The principal risks and uncertainties identified are
detailed in this section. Additional risks and
uncertainties to the Group, including those that
are not currently known or that the Group
currently deems immaterial, may individually or
cumulatively also have a material effect on the
Group’s business, results of operations and/or
financial condition.
CONFLICT IN UKRAINE
We do not have any customers or suppliers in
Ukraine or Russia, and are therefore not currently
experiencing any material disruption to our
operations but continue to closely monitor the
evolving situation and will develop appropriate
response plans if required.
POLITICAL AND ECONOMIC
INSTABILITY
We face risks in relation to political and economic
instability associated with the UK having left the
European Union, including potential changes to
the legal framework applicable to our business
(arising from the removal of retained EU law
under the new Brexit Freedoms Bill). Currently,
the majority of sales are to US based customers
and little impact has been seen to date, however
additional customs checks are resulting in delays
on delivery of capital equipment and this risk is
mitigated by seeking to place purchase orders in
a timely basis.
24
RUA Life Sciences plc
STRATEGIC
REPORT
PRINCIPAL RISKS AND UNCERTAINTIES
Risk
Potential Impact
Mitigation
Customer
Concentration
Risk Movement
•
Income shortfall
• Reduced profitability
• Failure to maintain
competitive
advantage
• Second long-term manufacturing contract secured, and opportunity
pipeline in place which has the potential to double existing revenues
over 2-3 years
• Business continuity plans for manufacturing and production facilities,
inventory management and our key supply chain to maintain capability
to respond rapidly and appropriately to any event.
• Processes to monitor, manage and provide assurance to raw material
supply-based risk.
Failure to deliver
effective Business
Strategy &
Transformation
Risk Movement
Innovation & IP
Risk Movement
• Revenue
• Development and launch of new products to secure new customers
underperformance
and drive future growth
•
•
Loss of competitive
advantage
Impact on market
capitalisation
• Detailed planning has been undertaken with external regulatory
consultants, staff and Board to identify key actions, resource
requirements, links between company-wide activities
• Revenue
• Strong pipeline of new products to provide growth and differentiation
•
•
underperformance
Loss of competitive
advantage
Impact on market
capitalisation
• Reputation loss
• Strong business planning
• Effective alignment of corporate and operational strategy
• Appropriate IP protection, confidentiality and licensing agreements in
place to secure our portfolio
People & HR
Risk Movement
•
•
Loss of key staff
• Remuneration and benefits, including long-term incentives, being
Loss of technical skills
• Disruption to business
performance
reviewed and designed to be competitive and attract, motivate and
incentivise key personnel.
•
Investment in training and development to attract talented people.
• Positive staff satisfaction survey 2022 – 88%
Regulatory, Quality &
Clinical
•
Inability to supply our
products
Risk Movement
• Delay in product
• Allocation of sufficiently experienced internal and external resource to
support the regulatory approval of products, including any extensions
to other markets
launches
•
•
Increased costs
Loss of Value
• Commitment to open and transparent engagement with Regulators to
ensure global compliance; training programmes to ensure compliance
with regulatory requirements
• Utilisation of presub process with FDA to ensure early engagement on
product development plans and acceptance of regulatory data
• Monitoring development project high level risks at both a project team
and Board level
Finance & Internal
Controls
Risk Movement
• Financial Loss
• Maintenance of an infrastructure of systems, policies and reports to
•
Liquidity loss
• Disruption to business
operations
ensure discipline and oversight on liquidity matters, including specific
treasury and debt-related issues and control of expenditure to
maximise cash runway
• The funding strategy is approved annually by the Board and includes
maintaining appropriate levels of working capital
FOREIGN EXCHANGE RISK
The Group is exposed to translation and transaction foreign exchange risk. The majority of RUA
Biomaterials sales are to customers in the United States and these sales are priced and invoiced in
US$. The majority of RUA Contract Manufacture sales are also to the United States but the invoices
are raised in GBP. The Group policy is to try to match currency income with currency expenditure as
far as possible, in order to minimise currency exposures.
Annual Report & Accounts 2023
25
STRATEGIC
REPORT
PRINCIPAL RISKS AND UNCERTAINTIES
DOLLAR CASH BALANCE AT THE
YEAR END
The extent to which the Group has residual
financial assets in foreign currencies (US$) at the
financial year end is set out below. Foreign
exchange differences on retranslation of these
assets and liabilities are taken to profit or loss of
the Group.
2023
Asset
US$ Balance GB£ Value
US Dollar Bank Account
$669,221 £542,296
2022
Asset
US$ Balance GB£ Value
US Dollar Bank Account
$214,158 £163,001
INTEREST RATE RISK
The Group finances its operations through
retained cash reserves, and seeks to strike a
balance between liquidity and maximising the
return on funds. Cash holdings are regularly
reviewed by the Board.
The interest rate exposure of the financial assets
and liabilities of the Group as at 31 March 2023 is
shown in the table below. Interest rate risks are
not hedged. If the interest rates to which the
Group is exposed had increased by 1%, the
reported loss after taxation would not have been
materially different to that reported.
Financial assets
Cash and cash
equivalents
Trade and other
receivables
Interest rate
Floating
GB£000
Zero
GB£000
Total
GB£000
1,484
–
1,484
–
588
588
1,484
588
2,072
Financial liabilities
Liabilities at amortised
cost
–
–
980
980
980
980
26
RUA Life Sciences plc
GOVERNANCE
GOVERNANCE
CORPORATE GOVERNANCE
STATEMENT
As Chairman of the Board it is my responsibility
to ensure that the Group has both effective
corporate governance and Board leadership. In
accordance with the requirement for all AIM
quoted companies to adopt a corporate
governance code, RUA Life Sciences has
adopted the Quoted Companies Alliance
Corporate Governance Code (the “QCA Code”).
This report follows the structure of these
guidelines and explains how we have applied the
guidance. The Board considers that the Group
complies with the QCA Code in most respects
and where we deviate from the expectations set
by the QCA I have clearly explained within this
report.
The Board believes that corporate governance is
not a destination in itself but a journey. As the
Group develops and grows, the systems and
processes will evolve and change but our
commitment to being transparent and open with
all of our stakeholders will not change. The QCA
code provides a framework to allow the Board to
better communicate to our shareholders.
QCA PRINCIPLES
Deliver Growth
1. Establish a strategy and business model
which promote long-term value for
shareholders
The strategic objective is to drive value for
shareholders over the medium term by
developing a range of medical devices which are
enabled by incorporating RUA Life Sciences’
world class biomaterial, Elast-Eon™, into the
design. The Board recognises that developing
medical devices can be both costly and time
consuming. The business is currently undertaking
investment in developing its own range of
medical devices. As the product development
progresses, more of the development tasks have
been brought in house reducing the reliance on
third party partnerships. All of the devices being
developed are seeking to limit market risk by
developing replacements for current device
technology that have the advantages of Elast-
Eon™ but will not require surgical training as
surgical procedures will remain the same. In order
to monitor progress against the strategy, a
reorganisation of financial reporting was
undertaken to better analyse the business
segments and the value to the Group.
2. Seek to understand and meet shareholder
needs and expectations
As mentioned above, RUA Life Sciences is currently
developing new medical devices incorporating our
world class biomaterial, Elast-Eon™. The focus of
the Board is on the successful development of
these products and the Board understands that
shareholders expect capital growth from the
execution of this clearly defined strategy.
Relationships with our shareholders are
important to us and we seek to provide effective
communications through our Interim and Annual
Reports along with Regulatory News Service
announcements. We also use the Group’s
website, www.RUAlifesciences.com, for
information on products and technology.
RUA encourages two-way communication with
both its institutional and private investors and
responds promptly to all queries received both
by telephone and by email. The Chairman, Group
Managing Director and Chief Financial Officer
talk to and meet with the Group’s major
shareholders and ensure their views are
communicated fully to the Board. This process is
further enabled by our Nomad/broker, Cenkos,
which organises presentations to existing and
potential investors and updates the Board on
feedback and any changes to shareholders views
and expectations. The Nomad/broker is regularly
briefed on developments to enable research
notes to reflect the current status of the Group.
RUA has also engaged with a third-party
research organisation, Equity Development, to
publish financial analysis on the Group. Members
of the Board make themselves available to
shareholders to answer any questions particularly
relevant to their particular area of expertise.
The Annual General Meeting (“AGM”) is an
important opportunity to meet with the
Company’s private shareholders. All the Directors
attend the AGM and are available to meet
shareholders individually or as a group, listen to
their views and answer questions. For each
resolution the number of proxy votes received
for, against or withheld is disclosed to all
attendees. The results for the AGM are
subsequently published on the Group’s corporate
website. At the 2022 AGM, held in person since
COVID restrictions were lifted, all resolutions
were passed unanimously at the meeting and
proxy votes were in excess of 94% in favour of all
resolutions.
28
RUA Life Sciences plc
GOVERNANCE
3. Take into account wider stakeholder and
social responsibilities and their implications
for long-term success
With the acquisition of RUA Medical in 2020, the
business of RUA Life Sciences has grown
substantially and now has employees, premises,
and regulated processes. The Board recognises
that its long-term success depends upon the
efforts of its employees and maintaining strong
relationships with its customers, suppliers and
regulators. To monitor all these relationships, a
balanced score card system is in operation and
monitored by the Board.
The key stakeholder however is the patient
whose life is dependent on a RUA Life Sciences
device. Only by serving the patient first, and by
demanding quality in all areas of the business,
will RUA Life Sciences be a long-term success.
4. Embed effective risk management,
considering both opportunities and threats,
throughout the organisation
On pages 24 to 26 of this Annual Report and
Accounts, the key risks to the business are
identified and how these are mitigated, in
addition to the change in the identified risk over
the last reporting period.
The Board is responsible for reviewing and
evaluating risk and the Executive Directors meet
at least monthly to review ongoing trading
issues, discuss performance and any new risks
associated with ongoing product development.
An ISO accredited Quality Management system
(ISO 13485) is in place for the entire Group which
is subject to external audit and during the period
the Group successfully extended its areas of
registration.
The Board has formalised the review and
reporting of the main internal controls within the
business. During the year, the Directors
continued to review and address identified risks
within the key risk factors facing the Group.
These areas included regulatory, research and
development, commercial, human resources, and
information technology. The Board will continue
to review the system of internal controls within
the Group.
The Board of Directors is responsible for the
Group’s system of financial controls. However, it
should be recognised that such a system can
provide only reasonable and not absolute
assurance against material misstatement or loss.
The principal elements of the system include:
• A clearly defined structure which delegates
authority, responsibility and accountability.
•
A comprehensive system for reporting financial
results. Actual results are measured monthly
against budget which
together with a
commentary on variances and other unusual
items allows the Board to monitor the Group’s
performance on a regular basis.
•
A comprehensive annual planning and budgeting
programme.
•
A revision of annual forecasts on a periodic basis.
There is no independent internal audit function.
The Directors believe that such a function would
not be cost effective given the current size of the
Group, but they will continue to monitor the
situation as the Group goes forward. The Board
has reviewed the effectiveness of the system of
internal controls as outlined above and considers
the Group has an established system which the
Directors believe to be appropriate to the
business. As part of the evolution of systems and
controls, a digital transformation programme is
being undertaken which has systemised the
control of expenditure through purchase order
systems and reconciliations
Maintain a Dynamic Management Framework
5. Maintain the Board as a well-functioning,
balanced team led by the Chair.
The Company is controlled by the Board. In the
year to 31 March 2023, the Board was led by the
Chairman, William Brown. The Group Managing
Director, Caroline Stretton had executive
responsibility for running the Group’s business
and implementing strategy.
All Directors receive regular and timely
information regarding the Group’s operational
and financial performance. Relevant information
is circulated to the Directors in advance of Board
meetings. All Directors have direct access to the
advice and services of the Company Secretary
and are able to take independent professional
advice in the furtherance of their duties, if
necessary, at the Company’s expense.
Annual Report & Accounts 2023
29
GOVERNANCE
CORPORATE GOVERNANCE
STATEMENT
The Board comprises five Executive Directors and
three Non-Executive Directors. The Board
considers that all Non-Executive Directors bring
an independent judgement to bear. The Non-
Executive Directors are much more active than is
normally expected and participate closely in new
product development activities.
The Board has a formal schedule of matters
reserved to it and is supported by the Audit,
Remuneration and Nominations Committees. The
Schedule of Matters Reserved and Committee
Terms of Reference are available on the Group’s
website.
6. Ensure that between them the Directors have
the necessary up-to-date experience, skills,
and capabilities
The Board recognises that it is healthy for
membership of the Board to be periodically
refreshed. Half of the Board has been appointed
during the last two years; Caroline Stretton and
Ian Ardill were appointed in January 2021,
Lachlan Smith, and Iain Anthony in March 2022.
Two Non-Executive directors have served for five
years and one for two years. The Nominations
Committee is chaired by the Company’s
Chairman. Meetings are arranged as necessary.
The Committee is responsible for nominating
candidates (both Executive and Non-Executive)
for the approval of the Board to fill vacancies or
appoint additional persons to the Board. RUA
Life Sciences believes that a well-managed
business must continuously look to improve the
quality and skill sets of the team.
All Directors receive induction on joining the
Board covering the Group’s operations, goals and
strategy, and their responsibilities as directors of
the Company. The Company supports the
Directors in developing their knowledge and
capabilities.
The Board has established a procedure for
Directors in the furtherance of their duties to take
independent professional advice, if necessary, at
the Company’s expense.
All Directors are subject to election by
shareholders at the first opportunity after their
appointment. In accordance with the Company’s
Articles of Association, all Directors are required
to retire by rotation and shall be eligible for re-
election. The terms and conditions of
appointment of the Non-Executive Directors are
available for inspection upon request.
The terms of reference of the Nominations
Committee have been placed on the Company’s
website.
The Company Secretary supports the Chairman
in addressing the training and development
needs of the Directors.
7. Evaluate Board performance based on clear
and relevant objectives, seeking continuous
improvement
The Board undertook an evaluation process to
consider Board performance which was
conducted by a self-assessment during FY22 by
the Chairman assisted by the Company
Secretary. This process identified the needs
discussed in item 6 above and resulted in the
action points so described.
The Board recognised the need to enhance its
skills and experience and improved the position
through the appointment of Lachlan Smith and
Iain Anthony in March 2022.
30
RUA Life Sciences plc
GOVERNANCE
John McKenna, an Executive Director, has
responsibility for advising on design inputs to
new product development, establishing a sales
and marketing network and managing Key
Opinion Leaders.
The Non-Executive Directors are all willing to
engage with shareholders should they have a
concern that is not resolved through the normal
channels.
John Ely, a Non-Executive Director, provides
advice for the design and oversight of the
regulatory process for the Company’s Heart
Valve project.
Geoff Berg, a Non-Executive Director, provides
advice on surgical matters regarding the design
and ultimate implantation of the Company’s
devices; and chairs the Remuneration
Committee.
Ian Ardill, a Non-Executive Director provides
financial and public company expertise and
chairs the Audit Committee.
The Board delegates authority to three
committees to assist in meeting its business
objectives while ensuring a sound system of
internal control and risk management. The
committees meet independently of Board
meetings.
Annual Report & Accounts 2023
31
8. Promote a corporate culture that is based on
ethical values and behaviours
RUA Life Sciences operates in the medical device
field where human life is dependent upon its
products. As such, sound ethical values and
behaviours are not only an asset to the Group,
but a requirement under the regulatory standards
under which its products are required to be
designed, tested and manufactured. The platform
on which corporate culture is based is “The
patient is the most important stakeholder”.
RUA Life Sciences is still a small Group, so the
actions of its Executives are highly visible and
reflect directly upon the Group. The Group
operates through a number of partnerships, and
it seeks to work with other businesses that
portray similar business ethics and values and
have the capabilities of operating under strict
regulatory environments. The S172 report on
pages 18 to 19 further details some of the work
undertaken in relation to culture, ethics and
stakeholder engagement.
9. Maintain governance structures and processes
that are fit for purpose and support good
decision making by the Board
William Brown, as Chairman, is responsible for
leading an effective board, fostering a good
corporate governance culture and ensuring
appropriate strategic focus and direction.
Caroline Stretton, as Group Managing Director,
has overall responsibility for day-to-day
management of the Group’s business as well as
responsibility for implementation of business
strategy.
Lachlan Smith, as Chief Financial Officer, has
overall responsibility for establishing and leading
the finance function of the Group, and ensuring
alignment with all group strategies and
compliance with all relevant regulation and
standards.
Iain Anthony, as Director of Vascular R&D,
Quality, Clinical and Regulatory Affairs, has
overall responsibility for the clinical, quality and
regulatory affairs functions of the group, as well
as responsibility for product development of
patches and grafts.
GOVERNANCE
CORPORATE GOVERNANCE
STATEMENT
AUDIT COMMITTEE
REMUNERATION COMMITTEE
The objective of the Committee is to provide
oversight and governance to the Group’s financial
reports, its internal controls and processes in
place, its risk management systems and the
appointment of and relationship with the external
auditor.
The Audit Committee is chaired by Ian Ardill and
consists of the three Non-Executive Directors.
The Executive Directors attend by invitation. It
meets a minimum of two times per year and at
least once a year with the external auditors
present.
Its role is to monitor the integrity of the Group
financial statements, including the Annual and
Interim Reports, review the significant accounting
policies and financial reporting judgements
contained therein and provide updates and
recommendations to the Board. It is also
responsible for reviewing and evaluating the
adequacy of internal control and risk
management processes.
The terms of reference for the Audit Committee
can be found at www.RUAlifesciences.com.
The report of the Remuneration Committee is set
out on page 36 to 38. The aim of the
Remuneration Committee is to ensure that
shareholder and management interests are
aligned. The Remuneration Committee consists
of the three Non-Executive Directors. It is chaired
by Geoff Berg and meets as required during the
year. The Committee determines the
remuneration and benefits of the Executive
Directors.
The remuneration of Non-Executive Directors is
determined by the Board within the limits set by
the Company’s Articles of Association.
The Chairman is invited to attend meetings of the
Committee but is not involved in any decisions
relating to his own remuneration.
The Committee keeps itself informed of all
relevant developments and best practice in the
field of remuneration and seeks advice from
external advisers when it considers it appropriate.
A more detailed terms of reference for the
Remuneration Committee can be found at www.
RUAlifesciences.com.
NOMINATIONS COMMITTEE
The primary purpose of the Committee is to lead the process for Board appointments and to make
recommendations for maintaining an appropriate balance of skills on the Board.
The Nominations Committee is chaired by the Chairman and consists of the three Non-Executive
Directors. The Committee meets as necessary to fulfil its responsibilities and meet its objective.
Its role is to review the structure size and composition of the Board, consider succession planning,
review performance of the Directors and the Board as a whole and identify candidates for new Board
positions.
The terms of reference for the Nominations Committee can be found at www.RUAlifesciences.com.
Membership of the Committees is as follows:
Director
William Brown
Ian Ardill
Geoff Berg
John Ely
Audit Committee
Remuneration Committee
Nominations Committee
n/a
Chair
Member
Member
n/a
Member
Chair
Member
Chair
Member
Member
Member
32
RUA Life Sciences plc
GOVERNANCE
The following table sets out the member attendance at Board and Committee meetings during the
year ended 31 March 2023:
Director
William Brown
John McKenna
Geoff Berg
John Ely
Ian Ardill
Caroline Stretton
Lachlan Smith
Iain Anthony
Number of Meetings Attended
Board
Audit
Remuneration
Nominations
5/6
6/6
4/6
5/6
6/6
6/6
6/6
6/6
–
–
2/2
2/2
2/2
–
–
–
–
–
5/5
5/5
5/5
–
–
–
–
–
–
–
–
–
–
–
The Chairman regularly meets with investors after
results announcements have been made and at
other shareholder participant events. The
Company also meets regularly with the Group’s
Nomad/broker and discusses any shareholder
feedback – the Board is briefed accordingly.
All Directors attend the Annual General Meeting
and engage both formally and informally with
shareholders during and after the meeting. The
results of voting at the AGM is communicated to
shareholders via RNS and on the Group’s website.
The Chairman makes presentations to
institutional shareholders and analysts each year
immediately following the release of interim and
full year results.
WILLIAM BROWN
Chairman
25 July 2023
The schedule of matters reserved for the Boards
decision continue to include:
1. Setting strategy
2. Capital structure
3. Financial reporting and controls
4. Borrowing powers
5. Acquisitions and disposals
6. Shareholder resolutions and circulars
7. Board composition
8. Remuneration policies
9. Corporate governance
10. Capital markets compliance
BUILD TRUST
10. Communicate how the Company is governed
and is performing by maintaining a dialogue
with shareholders and other relevant
stakeholders
The Board believes that corporate governance is
more than just a set of guidelines; rather it is a
framework which underpins the core values for
running the business in which we all believe. The
Board has formal responsibilities and agendas
and three sub-committees; in addition, strong
informal relations are maintained between
Executive and Non-Executive Directors. Non-
Executive Directors meet with other business
partners and give advice and assistance between
meetings. Board dinners are held from time to
time to provide opportunities for broader
discussions.
Annual Report & Accounts 2023
33
GOVERNANCE
AUDIT COMMITTEE
REPORT
The Audit Committee has an important role to
play in effective reporting to our stakeholders
and ensuring high standards of quality and
effectiveness in the external audit process. The
committee provides a separate report on its
activities focusing on matters relevant to RUA
Life Sciences plc and the work of the committee
during the year.
MEMBERSHIP
The Audit Committee comprises the Non-
Executive Directors and is chaired by Ian Ardill.
MAIN ACTIVITIES
The committee supports the Board in carrying
out its responsibilities in relation to financial
reporting, risk management and assessing
internal controls. The committee also oversees
the relationship with the external auditor
including the effectiveness of the external audit
and the provision of non-audit services by the
external auditor.
MEETINGS
The committee meets at least twice and met
formally on two occasions during the 2022/23
financial year:
• To consider:
•
•
•
•
including
impairment
the 2021/22 audit findings of the external
auditors
testing,
internal control
recommendations
improvements,
concern
auditor
audit
considerations,
independence and rotation of audit partners
and staff;
going
fees,
for
the review of judgements exercised and
sensitivities applied in: the calculation of the
fair value of share based payments;
impairment reviews; going concern cash
flow forecasts and: the non-capitalisation of
development costs;
the final 2021/22 report and accounts and
to recommend its approval to the Board,
and;
the progress made on bringing in-house of
the group’s accounting function.
•
To consider the 2022/23 interim report including
the consideration of going concern and to
recommend its approval to the Board.
34
RUA Life Sciences plc
The external auditors, Company Secretary and
certain Executive Directors also attended the
meetings at the invitation of the committee
chairman. The Committee met with the external
auditors on one occasion without the Executive
Directors or Management present.
A further meeting was held immediately post the
year end in which the external auditors presented
their plan for the 2022/23 audit. This will be
reported on in next year’s Audit Committee
Report.
FINANCIAL REPORTING
The committee has recently concluded that the
Annual Report and Financial Statements for the
year ended 31st March 2023, taken as a whole,
are fair, balanced and understandable and
provide the information necessary for
shareholders to assess the Group’s business
model, strategy and performance. The committee
reviewed the process for preparing the Annual
Report. This process included the following key
elements:
•
Monitoring of the integrity of the financial
statements and other information provided to
shareholders to ensure they represented a clear
and accurate assessment of the Group’s
financial performance and position.
• Review of matters of accounting judgement
and the underlying rationale in each case
including specifically: impairment reviews of
assets acquired in the April 2020 business
combination and of investments in subsidiaries,
development
capitalisation
expenditure, and the calculation of share based
payment charges. Where appropriate the
committee reviewed papers prepared by
management and agreed with the accounting
treatment.
product
of
•
•
•
Review of significant accounting policies.
Review of a paper outlining the business plan
and cash forecast as the basis of the going
concern assessment.
the
The committee
full year
reviewed
announcement (and the half-year results
announcement at the relevant time), Annual
Report and financial statements and considered
reports from the external auditors identifying
the accounting or judgmental issues requiring
its attention.
GOVERNANCE
The principal elements of the system include:
•
•
•
•
A clearly defined structure which delegates
authority, responsibility and accountability.
A comprehensive system for reporting financial
results. Actual results are measured monthly
against budget which
together with a
commentary on variances and other unusual
items allows the Board to monitor the Group’s
performance on a regular basis.
A comprehensive annual planning and
budgeting programme.
A revision of annual forecasts on a periodic
basis.
There is no independent internal audit function.
The Directors believe that such a function would
not be cost effective given the current size of the
Group but they will continue to monitor the
situation as the Group goes forward. The Board
has reviewed the effectiveness of the system of
internal controls as outlined above and considers
the Group has an established system which the
Directors believe to be appropriate to the
business.
OVERVIEW
The committee considers that it has acted in
accordance with its responsibilities. The Chairman
of the Audit Committee will be available at the
Annual General Meeting to answer any questions
about the work of the committee.
IAN ARDILL
Chairman of Audit Committee
25 July 2023
The committee also reviewed the Strategic
Report and concluded that it presented a fair,
balanced and understandable addition to the
Annual Report.
EXTERNAL AUDIT
The external Audit Partner and team were
changed ahead of the audit of the 2022/23
financial year in accordance with regulatory
requirements on rotation of audit partners and
staff.
In the year ended 31 March 2023 there were no
fees for non-audit services (2022: £20k). The
committee was satisfied with the quality of the
audit, the degree of challenge and review of the
report and accounts.
RISK MANAGEMENT AND INTERNAL
CONTROL
During the previous financial year (2021/22), the
Directors commissioned an updated risk review
exercise and the Committee considered and
approved Management’s risk framework proposal
as the basis for a detailed review of the risks
facing the Group and the available mitigating
actions. The full risk review and register was
presented to the Board during the 2022/23
financial year. Risks were identified, categorised,
graded, allocated ownership and mitigating
actions recorded. These categories included:
Branding, Reputation, Trust, Marketing, Sales and
Distribution; Business Strategy & Transformation;
Corporate; Finance & Internal Controls; Health &
Safety; Infrastructure & Facilities; Innovation & IP;
IT, Data Management & Digital Transformation;
Operations; People & HR, and; Quality,
Regulatory & Clinical. The risk review process is a
key part of the Group’s day to day operations and
updates on the tracked risks and mitigating
actions are reported at each Board meeting, with
particular focus given to a particular key risk. The
Committee plans to perform a further review of
risks during the 2023/24 financial year.
The Board of Directors is responsible for the
Group’s system of financial controls and both the
Committee and the Board will continue to review
the system of internal controls within the Group.
However, it should be recognised that such a
system can provide only reasonable and not
absolute assurance against material misstatement
or loss.
Annual Report & Accounts 2023
35
GOVERNANCE
DIRECTORS’ REMUNERATION
REPORT
This report covers the financial year ended
31 March 2023.
The Company is not required by either the AIM
Listing Rules or the Companies Act 2006 to
produce a separate director’s remuneration
policy and report although AIM companies are
required to report and disclose certain
information on directors pay under AIM Rule 19
and pursuant to s412 of the Companies Act
2006. The Company is a member of the QCA and
has provided the information below as
recommended by the QCA as part of its
commitment to transparency and good
corporate governance.
RESPONSIBILITIES
The Remuneration Committee is Chaired by Geoff
Berg and comprises the Non-Executive Directors.
The Committee is responsible for setting the
remuneration packages for Executive Directors as
well as approving, where appropriate, the
remuneration of senior staff. The Committee sets
incentive schemes for the Executive Directors
and general staff in order to align their interests
with those of the shareholders and to encourage
the strategic development of the business.
EXECUTIVE REMUNERATION POLICY
The Company’s aim is to attract, retain and
incentivise the Executive Directors, senior
management and staff in a manner in line with
good market practice and good corporate
governance. The Committee endeavours to offer
competitive remuneration packages to meet
these objectives taking into account a number of
factors including the salaries, benefits and
incentives available at comparable companies or
on advice of specialist advice from executive
search consultants for new recruits.
The remuneration packages for the Executive
Directors were entered into on 11 June 2018; or
the date of their appointment if later.
Remuneration packages are reviewed each year
to ensure that they are in line with the Group’s
business objectives. No Director participates in
decisions about their own remuneration package.
The main components in determining pay are as
follows:
BASIC SALARY/FEES AND BENEFITS
The basic annual salary is subject to an annual
review, which takes into account the performance
of the Group and the individual as well as market
factors. Benefits comprise the provision of a
death in service insurance scheme and pension
contribution. In the year to 31 March 2022, there
were a number of changes to roles and
responsibilities, time commitments and the
completion of a phased benchmarking exercise.
For the year to 31 March 2023, there were no
such revisions and the Executive Directors
received a salary increase in line with the general
award to all staff. The annual basic salaries of the
Executive Directors as at 31 March 2023 are as
follows:
2023
2022
William Brown
Full Time
£242,420
£230,000
John McKenna
Part Time
(86 days
minimum)
£73,780
£70,000
Caroline Stretton Full Time
£158,100
£150,000
Iain Anthony
Full Time
£126,480
£120,000
Lachlan Smith
Full Time
£126,480
£120,000
ANNUAL PERFORMANCE RELATED
BONUS
Historically there has been no formal bonus
scheme for the Executive Directors. During the
year to 31 March 2023, the Committee agreed a
bonus plan that could have paid out up to 10% of
salary. The bonus was set on specific objectives
and milestones with an emphasis on progressing
the regulatory pathway of the vascular graft
range. Although many achievements were made,
the trigger point was not met and as a result no
bonus award has been made.
PENSIONS
Executive Directors receive pension contributions
of 10% of salary to a stakeholder or money
purchase scheme.
36
RUA Life Sciences plc
GOVERNANCE
SHARE OPTIONS SCHEME
Share options are granted to encourage Directors
and key employees to deliver sustained, long
term growth. During FY2019, we implemented an
EMI approved Share Option Plan consistent with
the Plan described in the Placing and Open Offer
Circular issued during the year and approved by
shareholders at general meeting. In December
2019 a further unapproved plan was set up for
the benefit of Non-Executive Directors. A further
award of EMI options was made in February 2021
to key personnel of RUA Medical Devices Ltd.
The following vesting conditions apply to all
these pre 2023 share options: 20 per cent. after
the expiry of 3 years from the date of grant, 30
per cent. on the receipt by the Company of a
regulatory approval for any of its products and 50
per cent. on the share price reaching at least
£3.00.
New options were awarded to two Executive
Directors who had been appointed to the Board
at the end of the previous financial year. The
vesting terms described above had been
criticised by certain proxy engagement advisers
and as such the terms of the latest options issued
were revised to better meet these
recommendations.
The exercise price of the Options is 44.5 pence
per share, representing the closing mid-market
price per Ordinary Share on the day preceding
the award of the options.
The key vesting terms are that the options may
not be exercised before the third anniversary of
grant. In addition, performance conditions apply
such that 50% of the Options may only be
exercised if the Company has received regulatory
approval for at least one medical device and the
company continues to exploit one such device.
The performance condition for the balance of the
Options is based on total shareholder return with
full vesting achieved at 50% annualised return and
a minimum of the median performance of the
constituents of the FTSE AIM index.
Options Granted
Lachlan Smith
Iain Anthony
2023
2022
120,000
120,000
–
–
Options lapsed in the year were as follows:
Options Lapsed
David Richmond
(retired 31 August 2021)
2023
2022
–
120,000
No share options were exercised in the year.
DIRECTORS INTEREST IN SHARE OPTIONS
The emoluments of the Directors of the parent Company for the year in accordance with the basis of
preparation were as follows:
William Brown
John McKenna
John Ely
Geoff Berg
Caroline Stretton
Lachlan Smith
Iain Anthony
Date of grant
Number
Exercise price
8 June 2019
1,121,072
8 June 2019
469,531
2 December 2019
120,000
2 December 2019
120,000
30.00p
30.00p
92.50p
92.50p
Expiry date
8 June 2028
8 June 2028
2 December 2029
2 December 2029
5 February 2021
135,000
155.00p
8 June 2028
13 December 2022
120,000
13 December 2022
120,000
44.50p
44.50p
12 December 2032
12 December 2032
Annual Report & Accounts 2023
37
GOVERNANCE
DIRECTORS’ REMUNERATION
REPORT
DIRECTORS’ EMOLUMENTS
The emoluments of the Directors of the parent Company for the year in accordance with the basis of
preparation were as follows:
Salary &
fees
£
Share-based
payments
£
Pension
contributions
£
Private
medical care
£
2023
Total
£
2022
Total
£
Parent Executive
W Brown
242,420
29,596
24,242
D Richmond (retired 31 August 2021)
–
C Stretton
J McKenna
L Smith
I Anthony
Non-Executive
G Berg
J Ely
I Ardill
158,100
73,780
126,480
126,480
37,944
42,834
37,944
–
39,604
12,396
3,000
3,000
13,728
13,728
–
–
15,678
–
12,390
12,648
–
–
–
322
–
215
–
131
160
–
–
–
296,580
301,345
–
87,084
213,597
191,234
86,176
90,248
142,001
142,288
–
–
51,672
56,562
37,944
49,728
49,573
36,000
845,982
115,052
64,958
828
1,026,820
805,212
DIRECTORS’ SERVICE CONTRACTS
The details of the service contracts in relation to the Executive Directors and letters of appointment in
relation to the Non-Executive Directors are:
Director
Position
William Brown
Chairman
John McKenna
Director of Marketing
Unexpired Term
None
None
Notice Period
12 months
12 months
Ian Ardill
Non-Executive Director
6 months (first three year term)
1 month
Geoff Berg
Non-Executive Director
11 months (second three year term)
3 months
John Ely
Non-Executive Director
11 months (second three year term)
3 months
Caroline Stretton Group Managing Director
Iain Anthony
Director of Vascular R&D, Quality,
Clinical and Regulatory Affairs
Lachlan Smith
Group Chief Financial Officer
None
None
None
12 months
6 months
6 months
DIRECTORS’ INTERESTS IN SHARES
The Directors’ interests in the Ordinary Shares of the Company at the end of the period were:
31 March 2023
31 March 2022
569,149
569,149
35,452
25,018
4,167
19,341
35,452
25,018
4,167
–
W Brown
J McKenna
G Berg
J Ely
L Smith
On behalf of the Board
G BERG
Chairman of the Remuneration Committee
25 July 2023
38
RUA Life Sciences plc
CONSOLIDATED
FINANCIAL
STATEMENTS
CONSOLIDATED
FINANCIAL
STATEMENTS
REPORT OF THE DIRECTORS
GOING CONCERN
The Board has to consider that the Going Concern principle is appropriate for the preparation of these accounts. At
31 March 2023, the Group had cash and cash equivalents of £1.48m (2022: £2.96m) and, as at the date of signing these
Financial Statements, the cash balance was £0.9m.
RUA Life Sciences has two cash-generative units (RUA Biomaterials and RUA Contract Manufacture). These cash-
generating units provide a healthy Gross Margin (89% and 49%), and contributions to Group operating loss were
£493,000 and £794,000. The Group has two cash-consuming units (RUA Vascular and RUA Structural Heart), and
both these units require further investment before commercialisation and cash generation can be achieved. The
investment will chiefly be for a GLP animal study and Human Clinical Trials for RUA Vascular. The Board anticipates the
requirement for additional funding over the course of the financial year as the internal cash generation will not cover
the additional investment required.
The Board has considered the current cash position, reviewed budgets and profit and cash flow forecasts over the
going concern period (to October 2024) along with sensitivity analyses and made appropriate enquiries. The Board
has concluded that further financing is required and has taken advice from the Company’s Nomad and Broker on the
current state of the equity market and the chances of a successful fundraise. The Board has formed a judgement at
the time of approving the financial statements that the Group will have access to adequate resources, including new
financing, to continue in operational existence for the period of the going concern assessment. If finance is not
successful, which management see as unlikely, management have a number of mitigating actions which can be taken.
There is a level of uncertainty around the ability of management to implement the mitigations during the going
concern period, for this reason management have concluded a material uncertainty is appropriate. For this reason, the
Board considers that the adoption of the going concern basis in preparing the consolidated financial statements is
appropriate.
The Financial Statements have been prepared on a going concern basis and do not include the adjustments that
would result if the Group was unable to continue as a going concern. Due to the factors described above, specifically
the uncertainty around the ability to raise new financing and the ability to implement mitigating actions, a material
uncertainty exists, which may cast significant doubt on the Group and the Company’s ability to continue as a going
concern.
RESEARCH AND DEVELOPMENT ACTIVITIES
Investing in research and development programmes delivers product innovation and manufacturing improvements
within RUA Life Sciences plc. Expenditure on research and development in the period amounted to £1.1 million (2022:
£0.9 million), of which £1.1million was expensed to the consolidated income statement as it does not meet the
requirements for capitalisation under IAS38.
POST STATEMENT OF FINANCIAL POSITION EVENTS
Post balance sheet events and the future developments of the Group are detailed in the Chairman’s Statement on
pages 4 to 6.
DIRECTORS AND THEIR INTERESTS
At 31 March 2023 the Executive Chairman of the Group was W Brown, the Executive Directors were C Stretton, J
McKenna, I Anthony and L Smith. The Non-Executive Directors were G Berg, J Ely and I Ardill.
At each Annual General Meeting any Director who has been appointed by the Board since the last annual general
meeting, or any Director for whom it is their third annual general meeting since being elected or re-elected, should be
proposed for election or re-election. As such John Ely and Geoff Berg are due for re-election.
40
RUA Life Sciences plc
CONSOLIDATED
FINANCIAL
STATEMENTS
The interests of the Directors at 31 March 2023 and 31 March 2022 in the ordinary share capital of the Company (all
beneficially held) were as follows:
W Brown
J McKenna
G Berg
L Smith
J Ely
31 March
2023
Number of
shares
31 March
2022
Number of
shares
569,149
569,149
35,452
25,018
19,341
4,167
35,452
25,018
–
4,167
SUBSTANTIAL SHAREHOLDERS
With the exception of the following shareholdings, the Directors have not been advised of any individual interest or group
of interests held by persons acting together which at 1 April 2023 exceeded 3% of the Company’s issued share capital:
AJ Bell, stockbrokers
Dowgate Capital
Hargreaves Lansdown, stockbrokers
Mr David Richmond
Interactive Investor
Mr Clive Titcomb
Charles Stanley
Amati Global Investors
HSDL, stockbrokers
Number of
shares
2,244,793
2,233,529
1,754,788
1,533,334
1,360,012
1,050,000
834,334
795,586
795,555
%
10.12%
10.07%
7.91%
6.91%
6.13%
4.73%
3.76%
3.59%
3.59%
INFORMATION CONTAINED WITHIN THE STRATEGIC REPORT
The Directors have taken the option to include disclosures in relation to financial risk and dividends within the Strategic
Report on pages 24 to 26 as these are deemed to have strategic importance to the Group.
DIRECTORS’ LIABILITY INSURANCE
The Group maintains Directors and Officers liability insurance which gives appropriate cover against legal action that
may be brought against them.
ANNUAL GENERAL MEETING
The notice convening the Annual General Meeting for 11.00am on Tuesday, 22 August 2023 at Gailes Hotel, Marine
Drive, Ayrshire, KA11 5AEis set out on pages 96 to 98. An explanation of certain business to be considered and voted
on at the AGM is set out on pages 92 to 95.
INDEPENDENT AUDITOR
In accordance with Section 489 of the Companies Act 2006, a resolution for the re-appointment of Grant Thornton
UK LLP as auditors of the Company is to be proposed at the forthcoming Annual General Meeting.
William Brown
Chairman
RUA Life Sciences plc
Company number SC170071
25 July 2023
Annual Report & Accounts 2023
41
CONSOLIDATED
FINANCIAL
STATEMENTS
DIRECTORS’ RESPONSIBILITIES STATEMENT
The Directors are responsible for preparing the Strategic Report and Directors’ Report, the Annual Report and the
financial statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements for each financial year. Under that law the
Directors have elected to prepare the parent company financial statements in accordance with United Kingdom
Generally Accepted Accounting Practice (United Kingdom Accounting Standards and Applicable Law including FRS
101 “Reduced Disclosure Framework”) and to prepare the Group financial statements in accordance with UK-adopted
International Accounting Standards. Under company law the Directors must not approve the financial statements
unless they are satisfied that they give a true and fair view of the state of affairs and profit or loss of the Company and
group for that period. In preparing these financial statements, the Directors are required to:
•
select suitable accounting policies and then apply them consistently;
• make judgements and accounting estimates that are reasonable and prudent;
•
•
state whether applicable UK Accounting Standards and UK-adopted International Accounting Standards have
been followed, subject to any material departures disclosed and explained in the financial statements; and
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company
will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the
Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Company and
enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible
for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection
of fraud and other irregularities.
The Directors confirm that:
•
•
so far as each Director is aware, there is no relevant audit information of which the Company’s auditor is unaware;
and
the Directors have taken all the steps that they ought to have taken as Directors in order to make themselves aware
of any relevant audit information and to establish that the Company’s auditor is aware of that information.
The Directors are responsible for the maintenance and integrity of the corporate and financial information included on
the Company’s website. Legislation in the United Kingdom governing the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions.
BY ORDER OF THE BOARD:
William Brown
Chairman
25 July 2023
42
RUA Life Sciences plc
CONSOLIDATED
FINANCIAL
STATEMENTS
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF RUA LIFE SCIENCES PLC
OPINION
Our opinion on the financial statements is unmodified
We have audited the financial statements of RUA Life Sciences plc (the ‘parent company’) and its subsidiaries (the
‘Group’) for the year ended 31 March 2023, which comprise the Consolidated income statement, the Consolidated
statement of financial position, the Consolidated cash flow statement, the Consolidated statement of changes in
equity, notes to the Consolidated financial statements, including a summary of significant accounting policies, the
Parent Company Statement of financial position, the Parent Company Statement of Changes in Equity and notes to
the Parent Company financial statements, including a summary of significant accounting policies. The financial
reporting framework that has been applied in the preparation of the Group financial statements is applicable law and
UK-adopted international accounting standards. The financial reporting framework that has been applied in the
preparation of the parent company financial statements is applicable law and United Kingdom Accounting Standards,
including Financial Reporting Standard 101 ‘Reduced Disclosure Framework’ (United Kingdom Generally Accepted
Accounting Practice).
In our opinion:
•
•
•
the financial statements give a true and fair view of the state of the Group’s and of the parent company’s affairs as
at 31 March 2023 and of the Group’s loss for the year then ended;
the Group financial statements have been properly prepared in accordance with UK-adopted international
accounting standards;
the parent company financial statements have been properly prepared in accordance with United Kingdom
Generally Accepted Accounting Practice; and
•
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 and the parent company 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.
MATERIAL UNCERTAINTY RELATED TO GOING CONCERN
We draw attention to note 1 in the financial statements, which indicates the requirement for the Group and parent
company to obtain additional funding in order to be able to meet their future obligations and hence their ability to
continue as a going concern. As stated in note 1, these events or conditions, along with the other matters as set forth
in note 1, indicate that a material uncertainty exists that may cast significant doubt on the Group and parent company’s
ability to continue as a going concern. Our opinion is not modified in respect of this matter.
In auditing the financial statements, we have concluded that the director’s use of the going concern basis of accounting
in the preparation of the financial statements is appropriate.
Our evaluation of management’s assessment of the entity’s ability to continue as a going concern
Our evaluation of the directors’ assessment of the Group’s and the parent company’s ability to continue to adopt the
going concern basis of accounting included:
•
•
Obtaining and assessing management’s evaluation of going concern assumptions and supporting information,
including budgets and cash flow forecasts, for a period up to 31 October 2024, as well as sensitivity analyses
covering reasonably possible downside and reverse stress test scenarios;
Challenging the key assumptions in the forecasts, sensitivities, historical accuracy for forecasts and the scope of
scenario planning undertaken given current social and economic conditions in the UK and globally;
Annual Report & Accounts 2023
43
CONSOLIDATED
FINANCIAL
STATEMENTS
INDEPENDENT AUDITOR’S REPORT
(CONTINUED)
•
•
•
•
•
Obtaining an understanding of financing arrangements in place, management’s assessment of their adequacy and
plans to manage these;
Challenging management’s assessment of what reasonably possible assumptions would cause the business to run
out of funding and testing and assessing management’s mitigations to be applied if the assumptions occurred;
Assessing the historical accuracy of the forecasts prepared by management by comparing the prior year forecasts
to actuals and understanding the reasons for any significant variances to inform sensitivities to be reviewed by the
engagement team;
Engaging internal specialists to review the conclusions drawn from testing performed and the appropriateness of
the going concern assumption; and
Examining the disclosures concerning the basis of preparation of the financial statements and assessing the
appropriateness of the use of going concern in preparing the financial statements.
Our responsibilities
We are responsible for concluding on the appropriateness of the directors’ use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that
may cast significant doubt on the Group’s and the parent company’s ability to continue as a going concern. If we
conclude that a material uncertainty exists, we are required to draw attention in our report to the related disclosures
in the financial statements or, if such disclosures are inadequate, to modify the auditor’s opinion. Our conclusions are
based on the audit evidence obtained up to the date of our report. However, future events or conditions may cause
the Group or the parent company to cease to continue as a going concern.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant
sections of this report.
OUR APPROACH TO THE AUDIT
Overview of our audit approach
Overall materiality:
Materiality
Key audit
matters
Group: £116,000, which represents 5% of the Group’s loss before taxation.
Parent company: £87,000, which represents 5% of the parent company’s loss
before taxation.
Key audit matters were identified as:
•
•
Impairment of goodwill and other intangible assets (same as previous year);
Impairment of investments in subsidiaries (same as previous year); and
Scoping
• Going concern (new).
Our auditor’s report for the year ended 31 March 2022 included no key audit
matters that have not been reported as key audit matters in our current year’s
report.
We performed audits of the financial statements of RUA Life Sciences plc and
of the financial information of its only significant component using component
materiality (full-scope audit procedures). We performed analytical procedures
on the four dormant subsidiaries.
There were no changes in scope from the prior year.
In total, our audit procedures covered 100% of the Group’s net assets, 100% of
the Group’s revenue and 100% of the Group’s loss before taxation.
44
RUA Life Sciences plc
CONSOLIDATED
FINANCIAL
STATEMENTS
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 that 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.
Description
Audit
response
KAM
Disclosures Our results
In the graph below, we have presented the key audit matters, significant risks and other risks relevant to the audit. In
addition to the matter described in the Material uncertainty related to going concern section, we have determined the
matters described below to be the key audit matters to be communicated in our report.
High
Potential
financial
statement
impact
Fraud in
revenue
recognition
Impairment of
investments in
subsidiaries (parent
company only)
Impairment of
goodwill and other
intangible assets
Management
override of
controls
Accuracy of
share-based
payment
expense
Low
Low
Extent of management judgement
High
Key audit matter
Significant risk
Annual Report & Accounts 2023
45
CONSOLIDATED
FINANCIAL
STATEMENTS
INDEPENDENT AUDITOR’S REPORT
(CONTINUED)
Key Audit Matter – Group
How our scope addressed the matter – Group
Impairment of goodwill and other intangible
assets
In responding to the key audit matter, we performed the
following audit procedures:
identified
impairment of goodwill and other
We
intangible assets as one of the most significant assessed
risks of material misstatement due to error.
The goodwill in respect of the RUA Medical Devices
Limited is subject to an annual impairment review under
International Accounting Standard (‘IAS’) 36 ‘Intangible
Assets’.
Goodwill and other assets are allocated by the Group to
individual cash generating units (‘CGUs’) on the basis of
the Group’s operations. The Group’s segmental reporting
has changed during the year to allocate the business to
more segments than was previously the case. There is
management judgement in the allocation of goodwill
and other assets to the new CGUs, and as such it could
be subject to management bias.
impairment review
Furthermore, management’s assessment of the potential
impairment of goodwill and other assets that are subject
to an
incorporates significant
judgements. This includes the selection of assumptions
such as the timing and extent of future profits and cash
flows, the relevant CGUs and an estimate of their values
in use, future growth rates and application of an
appropriate discount rate that are all subject to
management bias.
•
•
•
•
•
•
•
Obtained management’s assessment and conclusion
on CGUs identified, and assessed whether this has
been undertaken correctly in accordance with the
requirements of IAS 36;
Assessed the allocation of the Group’s cash flows
and assets between the CGUs for appropriateness
and consistency with our understanding of the
business;
Obtained management’s assessment and conclusion
on the impairment review. Examined the impairment
review performed by management, considered the
underlying assumptions and sensitivities within the
model, robustly challenging them and corroborating
explanations received from management to relevant
support or with individuals outside of the finance
team;
Engaged our internal valuations experts to assess
the appropriateness of certain key assumptions,
particularly the discount rate applied to the cash
flows;
Evaluated the sensitivity analysis performed to
determine whether a reasonably possible change in
assumptions would trigger an impairment;
Assessed the historical accuracy of the forecasts
prepared by management by comparing the prior
year forecasts to actuals and understanding the
reasons for any significant variances to inform
sensitivities to be tested by the engagement team;
and
Assessed the relevant accounting policies and
disclosures to determine whether they are compliant
with the financial reporting framework, including IAS
36.
Relevant disclosures in the Annual Report and
Accounts for the year to 31 March 2023
Our results
•
•
•
Financial statements: Note 2.8, Summary of
significant accounting policies, Impairment testing of
goodwill, other intangible assets and property, plant
and equipment
Financial statements: Note 2.19, Use of accounting
estimates and judgements
Financial statements: Note 10, Goodwill; Note 11,
Other Intangible assets
Based on our audit work, we have not obtained evidence
of material misstatement in respect of impairment of
goodwill and other intangible assets.
46
RUA Life Sciences plc
CONSOLIDATED
FINANCIAL
STATEMENTS
Key Audit Matter –
Parent Company
Impairment of investments in subsidiaries
We identified impairment of investments in subsidiaries
as one of the most significant assessed risks of material
misstatement due to error.
The carrying value of the investment in RMD in the
parent company financial statements requires an
impairment assessment given the delays in the vascular
graft range revenues and some uncertainty in this area,
including lower than forecast revenues and increased
associated costs with the regulatory delay.
Management’s assessment of the potential impairment
incorporates significant judgements in assumptions such
as the timing and extent of future profits and cash flows
and an estimate of their values in use, future growth
rates and application of an appropriate discount rate
that are all subject to management bias.
How our scope addressed the matter –
Parent Company
In responding to the key audit matter, we performed the
following audit procedures:
•
•
•
•
•
Obtained management’s assessment and conclusion
on the impairment review. Examined the impairment
review performed by management, considered the
underlying assumptions and sensitivities within the
model, robustly challenging them and corroborating
explanations received from management to relevant
support or with individuals outside of the finance
team;
Engaged our internal valuations experts to assess
the appropriateness of certain key assumptions,
particularly the discount rate applied to the cash
flows;
Evaluated the sensitivity analysis performed to
determine whether a reasonably possible change in
assumptions would trigger an impairment;
Assessed the historical accuracy of the forecasts
prepared by management by comparing the prior
year forecasts to actuals and understanding the
reasons for any significant variances to inform
sensitivities to be tested by the engagement team;
and
Assessed the relevant accounting policies and
disclosures to consider whether they are
in
accordance with the financial reporting framework,
including IAS 36.
Relevant disclosures in the Annual Report and
Accounts for the year to 31 March 2023
Our results
• Financial statements: Note 1, Accounting policies
Based on our audit work, we have not obtained evidence
of material misstatement in respect of impairment of
investments in subsidiaries.
Annual Report & Accounts 2023
47
CONSOLIDATED
FINANCIAL
STATEMENTS
INDEPENDENT AUDITOR’S REPORT
(CONTINUED)
OUR APPLICATION OF MATERIALITY
We apply the concept of materiality both in planning and performing the audit, and in evaluating the effect of identified
misstatements on the audit and of uncorrected misstatements, if any, on the financial statements and in forming the
opinion in the auditor’s report.
Materiality was determined as follows:
Materiality measure
Group
Parent company
Materiality for financial
statements as a whole
Materiality threshold
Significant judgements
made by auditor in
determining materiality
We define materiality as the magnitude of misstatement in the financial statements that,
individually or in the aggregate, could reasonably be expected to influence the economic
decisions of the users of these financial statements. We use materiality in determining
the nature, timing and extent of our audit work.
£116,000, which is 5% of the Group’s loss
before taxation.
£87,000, which is 5% of the parent
company’s loss before taxation.
In determining materiality, we made the
following significant judgements:
In determining materiality, we made the
following significant judgements
•
We considered loss before taxation to
be the most appropriate benchmark
given the Group’s main focus is the
development of a new product, and all
research and development costs are
expensed through profit or loss, as the
Group does not yet have regulatory
approval for the product. As such, we
believe that a key measure of the
Group’s performance and the area of
most interest to users is how it manages
this expenditure.
•
We considered 5% to be an appropriate
measurement percentage due to the
size and scale of the Group and the
complexity of its operations.
Materiality for the current year is lower than
the level that we determined for the year
ended 31 March 2022 to reflect the change
in benchmark used from the prior year.
The benchmark was changed in the year
due to the engagement team determining
that
loss before taxation was more
reflective of the Group’s current operations
and of more interest to users.
•
We considered loss before taxation to
be the most appropriate benchmark
given the Group’s main focus is the
development of a new product, and all
research and development costs are
expensed through profit or loss, as the
Group does not yet have regulatory
approval for the product. As such, we
believe that a key measure of the
Group’s performance and the area of
most interest to users is how it
manages this expenditure.
•
We considered 5%
to be an
appropriate measurement percentage
due to the size and the scale of the
parent company and the complexity
of its operations.
Materiality for the current year is lower
than the level that we determined for the
year ended 31 March 2022 to reflect the
change in benchmark used from the prior
year.
The benchmark was changed in the year
due to the engagement team determining
that
loss before taxation was more
reflective of the parent company’s current
operations and of more interest to users.
Performance materiality
used to drive the extent
of our testing
We set performance materiality at an amount less than materiality for the financial
statements as a whole to reduce to an appropriately low level the probability that the
aggregate of uncorrected and undetected misstatements exceeds materiality for the
financial statements as a whole.
48
RUA Life Sciences plc
CONSOLIDATED
FINANCIAL
STATEMENTS
Materiality measure
Group
Parent company
Performance materiality
threshold
£87,000, which is 75% of financial statement
materiality.
£65,250, which
statement materiality.
is 75% of
financial
Significant judgements
made by auditor in
determining
performance materiality
In determining performance materiality, we
made the following significant judgements:
•
the strength of the control environment
the
and our experience auditing
financial statements of the Group,
including
limited
misstatements identified in previous
audits.
effect of
the
In determining performance materiality,
we made
following significant
judgements:
the
•
the
strength
control
of
the
environment and our experience
auditing the financial statements of
the parent company including the
effect of
limited misstatements
identified in previous audits.
Specific materiality
We determine specific materiality for one or more particular classes of transactions,
account balances or disclosures for which misstatements of lesser amounts than
materiality for the financial statements as a whole could reasonably be expected to
influence the economic decisions of users taken on the basis of the financial statements.
Specific materiality
We determined a lower level of specific
materiality for the following areas:
We determined a lower level of specific
materiality for the following areas:
Communication of
misstatements to the
Audit Committee
Threshold for
communication
•
Transactions with related parties that
are not Group entities.
•
Transactions with related parties that
are not Group entities.
We determine a threshold for reporting unadjusted differences to the Audit Committee.
£5,800 and misstatements below that
threshold that,
in our view, warrant
reporting on qualitative grounds.
£4,350 and misstatements below that
threshold that,
in our view, warrant
reporting on qualitative grounds.
The graph below illustrates how performance materiality interacts with our overall materiality and the tolerance for
potential uncorrected misstatements.
Overall materiality – Group
Overall materiality – Parent company
Loss
before
taxation
£2.3m
PM
£87,000,
75%
FSM
£116,000,
5%
Loss
before
taxation
£1.7m
PM
£65,250,
75%
FSM
£87,000,
5%
TFPUM
£29,000, 25%
TFPUM
£21,750, 25%
FSM: Financial statements materiality, PM: Performance materiality, TFPUM: Tolerance for potential uncorrected misstatements
Annual Report & Accounts 2023
49
CONSOLIDATED
FINANCIAL
STATEMENTS
INDEPENDENT AUDITOR’S REPORT
(CONTINUED)
AN OVERVIEW OF THE SCOPE OF OUR AUDIT
We performed a risk-based audit that requires an understanding of the Group’s and the parent company’s business
and in particular matters related to:
Understanding the Group, its components, and their environments, including Group-wide controls
We obtained an understanding of the Group and its environment, including Group-wide controls as follows:
•
•
The Group’s accounting process is structured around the centralised Group finance function based at the Group’s
head office in Irvine, UK.
The Group has two trading entities, being the parent company RUA Life Sciences plc, and a subsidiary, RUA
Medical Devices Limited. There are also four dormant subsidiaries. All entities in the Group are registered in the
UK.
Identifying significant components
•
We identified and evaluated the components to assess their significance and to determine the planned audit
response based on both quantitative and qualitative factors. We determined significance as a percentage of the
Group’s revenue and the Group’s loss before taxation. We identified RUA Life Sciences plc and RUA Medical
Devices Limited as the only individually significant components.
Type of work to be performed on financial information of parent and other components (including how
it addressed the key audit matters)
Based on our assessment of the Group as above, we focused our Group audit scope on the two components that were
determined to be individually financially significant, as follows:
•
•
•
•
We performed an audit of the financial information using component materiality (full-scope audit procedures) on
the financial statements of the components determined to be significant; specifically, RUA Life Sciences plc and
RUA Medical Devices Ltd, the only trading subsidiary.
At the Group level we also tested the consolidation process and carried out analytical procedures on the financial
information of the remaining four dormant subsidiaries to obtain assurance that there were no significant risks of
material misstatement of the aggregated financial information of those remaining components.
At the Group level we performed an evaluation of the group’s internal control environment, including its IT systems
and controls.
We identified impairment of goodwill and other intangible assets and impairment of investments in subsidiaries as
key audit matters and the procedures performed in respect of these have been included in the key audit matters
section of our report.
Performance of our audit
•
•
•
All audit procedures were performed by the Group engagement team, there were no component auditors involved
in the performance of the audit.
The audit was performed partly on site and partly remote.
We have tailored our audit response accordingly with all audit work undertaken by the Group engagement team.
In assessing the risk of material misstatement of the Group financial statements, we considered the transactions
undertaken by each entity and therefore where the focus of our work was required.
Changes in approach from previous period
• Our overall scope of the audit has not changed from the prior year.
Audit approach
No. of components
% coverage total assets
% coverage revenue
% coverage LBT
Full-scope audit
Analytical procedures
2
4
100
-
100
-
100
-
50
RUA Life Sciences plc
CONSOLIDATED
FINANCIAL
STATEMENTS
OTHER INFORMATION
The other information comprises the information included in the Annual Report and Accounts for the year to 31 March
2023, other than the financial statements and our auditor’s report thereon. The directors are responsible for the other
information contained within the Annual Report and Accounts for the year to 31 March 2023. 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.
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 themselves. 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.
We have nothing to report in this regard.
OUR OPINION ON OTHER MATTERS PRESCRIBED BY THE COMPANIES ACT 2006 IS UNMODIFIED
In our opinion, based on the work undertaken in the course of the audit:
•
•
the information given in the strategic report and the report of the directors for the financial year for which the
financial statements are prepared is consistent with the financial statements; and
the strategic report and the report of the directors have been prepared in accordance with applicable legal
requirements.
MATTER ON WHICH WE ARE REQUIRED TO REPORT UNDER THE COMPANIES ACT 2006
In the light of the knowledge and understanding of the Group and the parent company and their environment obtained
in the course of the audit, we have not identified material misstatements in the strategic report or the report of the
directors.
MATTERS ON WHICH WE ARE REQUIRED TO REPORT BY EXCEPTION
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires
us to report to you if, in our opinion:
•
adequate accounting records have not been kept by the parent company, or returns adequate for our audit have
not been received from branches not visited by us; or
•
the parent company financial statements are not in agreement with the accounting records and returns; or
• certain disclosures of directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
RESPONSIBILITIES OF DIRECTORS
As explained more fully in the directors’ responsibilities statement set out on page 42, 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 the parent company’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.
Annual Report & Accounts 2023
51
CONSOLIDATED
FINANCIAL
STATEMENTS
INDEPENDENT AUDITOR’S REPORT
(CONTINUED)
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.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. 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 applicable to the parent company and the
Group and the industry in which they operate through our general commercial and sector experience. We
determined that the following laws and regulations were most significant: UK-adopted international accounting
standards, the Companies Act 2006, the AIM Rules for Companies, the Quoted Companies Alliance Corporate
Governance Code and the relevant tax compliance regulations in the jurisdictions in which the Group operates. In
addition, we concluded that there are certain significant laws and regulations that may have an effect on the
determination of the amounts and disclosures in the financial statements, including regulations related to the
manufacture, distribution and use of medical materials and products by relevant authorities in certain jurisdictions.
We obtained an understanding of the applicable legal and regulatory frameworks and how the parent company
and the Group are complying with those legal and regulatory frameworks by making enquiries of management,
those responsible for legal and compliance procedures and the company secretary. We corroborated our enquiries
through an inspection of board meeting minutes and legal and professional fees incurred during the year. We
enquired of management and the Audit Committee whether they had knowledge of actual, suspected or alleged
fraud. We enquired of management and the Audit Committee whether they were aware of any instances of non-
compliance with laws and regulations.
•
We assessed the susceptibility of the parent company’s and the Group’s financial statements to material
misstatement, including how fraud might occur by evaluating management’s incentives and opportunities for
manipulation of the financial statements. Audit procedures performed by the engagement team included:
- identifying and assessing the design and implementation of controls management has in place to prevent and
detect fraud;
- challenging assumptions and judgements made by management in making its significant accounting estimates;
- identifying and testing journal entries, in particular any large or unusual journal entries recorded in the general
ledger and other adjustments made in the preparation of the financial statements; and
- completing audit procedures to conclude on the compliance of disclosures in the Annual Report and Accounts
with applicable financial reporting requirements.
•
These audit procedures were designed to provide reasonable assurance that the financial statements were free
from fraud or error. The risk of not detecting a material misstatement due to fraud is higher than the risk of not
detecting one resulting from error and detecting irregularities that result from fraud is inherently more difficult
than detecting those that result from error, as fraud may involve collusion, deliberate concealment, forgery or
intentional misrepresentations. Also, the further removed non-compliance with laws and regulations is from events
and transactions reflected in the financial statements, the less likely we would become aware of it;
•
The engagement partner’s assessment of the appropriateness of the collective competence and capabilities of the
engagement team included consideration of the team’s:
- Understanding of, and practical experience with, audit engagements of a similar nature and complexity, through
appropriate training and participation;
- Knowledge of the industry in which the Group and parent company operate; and
- Understanding of the legal and regulatory requirements applicable to the Group and parent company.
52
RUA Life Sciences plc
CONSOLIDATED
FINANCIAL
STATEMENTS
•
The communications within the engagement team in respect of non-compliance with laws and regulations and
fraud included the potential for fraud in revenue recognition through manual journal entries and also through areas
of key estimation or where management judgement is required;
•
In assessing the potential risk of material misstatement, we obtained an understanding of:
- The operations of the Group and parent company, including its revenue streams and objectives, in order to
understand the classes of transactions, account balances, expected disclosures and risk areas that were most
susceptible to material misstatement; and
- The Group and parent company’s control environment, including the adequacy of the controls in place to
mitigate the risks identified.
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 company’s members, as a body, in accordance with Chapter 3 of Part 16 of the
Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those
matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted
by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as
a body, for our audit work, for this report, or for the opinions we have formed.
James Andersen
Senior Statutory Auditor
for and on behalf of Grant Thornton UK LLP
Statutory Auditor, Chartered Accountants
Glasgow
Date
Annual Report & Accounts 2023
53
CONSOLIDATED
FINANCIAL
STATEMENTS
CONSOLIDATED INCOME STATEMENT
Revenue
Cost of sales
Gross profit
Other income
Administrative expenses
Operating loss
Net finance expense
Loss before taxation
Taxation
Loss from continuing operations attributable to owners of
the parent company
Loss attributable to owners of the parent company
Loss per share
Basic & Diluted (GB Pence per share)
Year ended
31 March 2023
GB£000
Year ended
31 March 2022
GB£000
Notes
2,179
(388)
1,791
72
(4,169)
(2,306)
(16)
(2,322)
319
(2,003)
(2,003)
1,625
(267)
1,358
66
(3,776)
(2,352)
(8)
(2,360)
293
(2,067)
(2,067)
(9.03)
(9.32)
5
7
8
9
The notes on pages 58 to 82 form part of these financial statements.
There was no other comprehensive income for 2023 (2022: £Nil).
54
RUA Life Sciences plc
CONSOLIDATED
FINANCIAL
STATEMENTS
CONSOLIDATED STATEMENT OF FINANCIAL
POSITION
Assets
Non current assets
Goodwill
Other intangible assets
Property, plant and equipment
Total non current assets
Current assets
Inventories
Trade and other receivables
Cash and cash equivalents
Total current assets
Total assets
Equity & liabilities
Equity
Issued capital
Share premium
Other reserve
Capital redemption reserve
Profit and loss account
Total equity attributable to equity holders of the parent
Liabilities
Non–current liabilities
Borrowings
Lease liabilities
Deferred tax
Other liabilities
Total non–current liabilities
Current liabilities
Borrowings
Lease liabilities
Trade and other payables
Other liabilities
Total current liabilities
Total liabilities
Total equity and liabilities
Year ended
31 March 2023
GB£000
Year ended
31 March 2022
GB£000
Notes
10
11
12
14
15
16
17
17
18
18/19
20
21
18
18/19
21
301
470
2,739
3,510
2,407
81
588
1,484
2,153
5,663
1,109
11,729
(1,450)
11,840
(18,545)
4,683
165
200
85
116
566
29
81
255
49
414
980
5,663
301
521
2,597
3,419
4,207
124
1,120
2,963
4,207
7,626
1,109
11,729
(1,552)
11,840
(16,542)
6,584
199
83
75
174
531
23
39
410
39
511
1,042
7,626
The consolidated financial statements were approved by the Board on 25 July 2023 and were signed
on its behalf by
W Brown, Chairman
L Smith, Group CFO
Company number SC170071
The notes on pages 58 to 82 form part of these financial statements.
Annual Report & Accounts 2023
55
CONSOLIDATED
FINANCIAL
STATEMENTS
CONSOLIDATED CASH FLOW STATEMENT
Cash flows from operating activities
Group loss after tax
Adjustments for:
Amortisation of intangible assets
Depreciation of property, plant and equipment
Share–based payments
Interest expense
Tax credit in year
Decrease / (Increase) in trade and other receivables
Decrease / (Increase) in inventories
Taxation received
Decrease in trade and other payables
Net cash flow from operating activities
Cash flows from investing activities
Purchase of property plant and equipment
Interest paid
Net cash flow from investing activities
Cash flows from financing activities
Proceeds from borrowing
Repayment of borrowings and leasing liabilities
Net cash flow from financing activities
Net decrease in cash and cash equivalents
Cash and cash equivalents at beginning of year
Effect of foreign exchange rate changes
Cash and cash equivalents at end of year
The notes on pages 58 to 82 form part of these financial statements.
Year ended
31 March 2023
GB£000
Year ended
31 March 2022
GB£000
(2,003)
(2,067)
51
307
102
16
(319)
327
43
533
(203)
(1,146)
(449)
(28)
(477)
229
(97)
132
(1,491)
2,963
12
1,484
53
259
145
17
(293)
(53)
(39)
87
(453)
(2,353)
(904)
(8)
(912)
–
(66)
(66)
(3,331)
6,294
–
2,963
56
RUA Life Sciences plc
CONSOLIDATED
FINANCIAL
STATEMENTS
CONSOLIDATED STATEMENT OF CHANGES
IN EQUITY
Issued
share
capital
GB£000
Share
premium
GB£000
Other
reserve
GB£000
Capital
redemption
reserve
GB£000
Balance at 31 March 2021
12,949
11,729
(1,697)
Share–based payments
Buyback of deferred shares
Transactions with owners
–
(11,840)
(11,840)
Total comprehensive loss for the year
–
–
–
–
–
145
–
145
–
–
–
11,840
11,840
Profit
and loss
account
GB£000
(14,475)
–
–
–
Total
equity
GB£000
8,506
145
145
–
(2,067)
(2,067)
Balance at 31 March 2022
1,109
11,729
(1,552)
11,840
(16,542)
6,584
Share–based payments
Transactions with owners
Total comprehensive loss for the year
–
–
–
–
–
–
102
102
–
–
–
–
–
–
102
102
(2,003)
(2,003)
Balance at 31 March 2023
1,109
11,729
(1,450)
11,840
(18,545)
4,683
The notes on pages 58 to 82 form part of these financial statements.
Annual Report & Accounts 2023
57
CONSOLIDATED
FINANCIAL
STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS
1. BASIS OF PREPARATION
General information
RUA Life Sciences plc is the ultimate parent company of the Group, whose principal activities comprise exploiting the
value of its IP & know–how, medical device contract manufacturing and development of cardiovascular devices.
RUA Life Sciences plc is incorporated and domiciled in the UK and its registered office is c/o Davidson Chalmers
Stewart LLP, 163 Bath Street, Glasgow, G2 4SQ.
Basis of preparation
The Consolidated financial statements are for the year ended 31 March 2023. They have been prepared in compliance
with UK–adopted International Accounting Standards.
The Consolidated financial statements have been prepared under the historical cost convention, with the exception of
fair value adjustments made in connection with the acquisition of RUA Medical.
The accounting policies remain unchanged from the previous year.
Going concern
The Board has to consider that the Going Concern principle is appropriate for the preparation of these accounts. At
31 March 2023, the Group had cash and cash equivalents of £1.48m (2022: £2.96m) and, as at the date of signing these
Financial Statements, the cash balance was £0.9m.
RUA Life Sciences has two cash-generative units (RUA Biomaterials and RUA Contract Manufacture). These cash-
generating units provide a healthy Gross Margin (89% and 49%), and contributions to Group operating loss were
£493,000 and £794,000. The Group has two cash-consuming units (RUA Vascular and RUA Structural Heart), and
both these units require further investment before commercialisation and cash generation can be achieved. The
investment will chiefly be for a GLP animal study and Human Clinical Trials for RUA Vascular. The Board anticipates the
requirement for additional funding over the course of the financial year as the internal cash generation will not cover
the additional investment required.
The Board has considered the current cash position, reviewed budgets and profit and cash flow forecasts over the
going concern period (to October 2024) along with sensitivity analyses and made appropriate enquiries. The Board
has concluded that further financing is required and has taken advice from the Company’s Nomad and Broker on the
current state of the equity market and the chances of a successful fundraise. The Board has formed a judgement at
the time of approving the financial statements that the Group will have access to adequate resources, including new
financing, to continue in operational existence for the period of the going concern assessment. If finance is not
successful, which management see as unlikely, management have a number of mitigating actions which can be taken.
There is a level of uncertainty around the ability of management to implement the mitigations during the going
concern period, for this reason management have concluded a material uncertainty is appropriate. For this reason, the
Board considers that the adoption of the going concern basis in preparing the consolidated financial statements is
appropriate.
The Financial Statements have been prepared on a going concern basis and do not include the adjustments that
would result if the Group was unable to continue as a going concern. Due to the factors described above, specifically
the uncertainty around the ability to raise new financing and the ability to implement mitigating actions, a material
uncertainty exists, which may cast significant doubt on the Group and the Company’s ability to continue as a going
concern.
Changes in accounting policies
Standards, amendments and interpretations to existing standards that are not yet effective
At the date of authorisation of these consolidated financial statements, certain new standards, amendments and
interpretations to existing standards have been published but are not yet effective, and have not been adopted early
by the Group.
Management anticipates that all of the pronouncements will be adopted in the Group’s accounting policies for the first
period beginning after the effective date of the pronouncement. None of these new standards, amendments and
interpretations, based on an initial analysis are expected to have a significant impact on the Group’s financial statements
based on current agreements in place and activity.
58
RUA Life Sciences plc
CONSOLIDATED
FINANCIAL
STATEMENTS
2. PRINCIPAL ACCOUNTING POLICIES
2.1 Basis of consolidation
The Group accounts for business combinations using the acquisition method when control is transferred to the Group.
The consideration transferred in the acquisition is measured at fair value, as are the identifiable net assets acquired.
Any goodwill that arises is tested annually for impairment. Any gain on a bargain purchase is recognised in profit or
loss immediately. Transaction costs are expensed as incurred, except if related to the issue of debt or equity securities.
The consideration transferred does not include amounts related to the settlement of pre–existing relationships. Such
amounts are generally recognised in profit or loss.
Any contingent consideration is measured at fair value to the date of acquisition. If an obligation to pay contingent
consideration that meets the definition of a financial instrument is classified as equity, then it is not remeasured and
settlement is accounted for within equity. Otherwise, other contingent consideration is remeasured at fair value at
each reporting date and subsequent changes in the fair value of the contingent consideration are recognised in profit
or loss.
Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has rights to,
variable returns from its involvement with the entity and has the ability to affect those returns through its power over
the entity. The financial statements of subsidiaries are included in the consolidated financial statements from the date
on which control commences until the date on which control ceases. Control exists when the Company has the power,
directly or indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its
activities. In assessing control, potential voting rights that presently are exercisable or convertible are considered. The
financial statements of subsidiaries are included in the consolidated financial statements from the date that control
commences until the date that control ceases.
Inter–company transactions, balances, income and expenses on transactions between group companies are eliminated.
Profits and losses resulting from intercompany transactions that are recognised in assets are also eliminated.
Where considered appropriate, adjustments are made to the financial information of subsidiaries to bring the
accounting policies used into line with those used by other members of the Group.
2.2 Revenue
IFRS 15 “Revenue from Contracts with Customers” establishes a principles-based approach to recognising revenue
only when performance obligations are satisfied, and control of the related goods or services is transferred. It addresses
items such as the nature, amount, timing and uncertainty of revenue, and cash flows arising from contracts with
customers. IFRS 15 applies a five-step approach to the timing of revenue recognition and applies to all contracts with
customers except those in the scope of other standards.
• Step 1 – Identify the contract(s) with a customer
• Step 2 – Identify the performance obligations in the contract
• Step 3 – Determine the transaction price
• Step 4 – Allocate the transaction price to the performance obligations in the contract
• Step 5 – Recognise revenue when (or as) the entity satisfies a performance obligation
The Group principally satisfies its performance obligations at a point in time. Ad hoc revenue is recognised relating to
performance obligations satisfied over time. Therefore, the accounting for revenue under IFRS 15 does not represent
a substantive change for recognising revenue from sales to customers.
Revenue is recognised either at a point in time when control passes to the customer or over time as the Group satisfies
performance obligations by transferring the promised good or services and depending on the nature of the goods or
service being provided.
Annual Report & Accounts 2023
59
CONSOLIDATED
FINANCIAL
STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS (CONTINUED)
Revenue is measured based on the consideration specified in a contract with a customer. The Group recognises
revenue when it transfers control over a good or service to a customer, excluding VAT and trade discounts, as follows:
(a) Royalty revenues: Royalty revenues are recognised as earned in accordance with returns and notifications received
from customers. In the event that subsequent adjustments to royalties are identified they are recognised in the
period in which they are identified.
(b) Contract Manufacture: Income from contract manufacture sales are generally recognised at the date of dispatch
unless contractual terms with customers state that risk and title pass on delivery of goods, in which case revenue
is recognised on delivery. For income derived from custom products that may entail engineering, revenue is
recognised as performance obligations are satisfied over time.
2.3 Defined contribution pension plans
Payments to defined contribution pension plans are recognised as an expense when employees have rendered
services entitling them to the contributions.
2.4 Inventories
Inventories are stated at the lower of cost and net realisable value. Cost is determined using actual costing techniques.
The cost of finished goods comprises raw materials, third party manufacturing costs and other direct costs. Net
realisable value is the estimated selling price in the ordinary course of business, less applicable variable selling
expenses. In arriving at net realisable value, provision is made for any obsolete or damaged inventories.
2.5 Interest
Interest income is the interest earned on cash or cash equivalents held with the Group’s bankers and recognised within
the period earned, accrued on a time basis by reference to the principal outstanding and at the effective rate applicable.
2.6 Intangible assets
Intangible assets are stated at historic cost or capitalised at fair value at time of acquisition, less accumulated
amortisation and impairment losses. Amortisation is calculated on a straight-line basis over the deemed useful life of
an asset and is applied to the cost less any residual value. The asset classes are amortised on a straight-line basis over
the following periods:
Patents and Trademarks
- 20 years
Know how
- 5 years
Customer related
- 5 years (upon asset being available to be utilised/exploited)
Technology Related
- 10 years
Goodwill
Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the net
identifiable assets of the acquired subsidiary at the date of acquisition. Goodwill is tested annually for impairment and
carried at cost less accumulated impairment losses.
2.7 Disposal of assets
The gain or loss arising on the disposal of an asset is determined as the difference between the disposal proceeds and
the carrying amount of the asset and is recognised in profit or loss. The gain or loss arising from the sale or revaluation
of held for sale assets is included in “other income” or “other expense” in the Consolidated income statement.
60
RUA Life Sciences plc
CONSOLIDATED
FINANCIAL
STATEMENTS
2. PRINCIPAL ACCOUNTING POLICIES (CONTINUED)
2.8 Impairment testing of goodwill, other intangible assets and property, plant and equipment
For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately
identifiable cash flows (cash–generating units). As a result some assets are tested individually for impairment and
some are tested at a cash–generating unit level. Goodwill is allocated to those cash– generating units that are expected
to benefit from synergies of a related business combination and represent the lowest level within the group at which
management monitors goodwill.
Individual assets or cash–generating units that include goodwill or intangible assets with an indefinite useful life, and
those intangible assets not yet available for use are tested for impairment at least annually. All other individual assets
or cash–generating units are tested for impairment whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable.
An impairment loss is recognised for the amount by which the assets or cash–generating unit’s carrying amount
exceeds its recoverable amount. The recoverable amount is the higher of fair value, reflecting market conditions less
costs to sell, and value in use based on an internal discounted cash flow evaluation.
All assets are subsequently reassessed for indications that an impairment loss previously recognised may no longer
exist.
2.9 Property, plant and equipment
Property, plant and equipment is stated at historical cost, less accumulated depreciation. The Group has entered into
a number of Plant and Machinery and leaseback arrangements for which the associated right-of-use assets are
classified as Plant and Machinery (Leased). Plant and Machinery (Leased) is measured at cost, less any accumulated
depreciation and impairment losses and adjusted for any remeasurement of lease liabilities. The cost of the Plant and
Machinery (Leased) includes the amount of lease liabilities recognised, initial direct costs incurred, and lease payments
made at or before the commencement date less any lease incentives received.
The gain or loss arising on the disposal of an asset is determined as the difference between the disposal proceeds and
the carrying amount of the asset and is recognised in the Consolidated Income Statement.
Depreciation is provided at annual rates calculated to write off the cost less residual value of each asset over its
expected useful life as follows:
Land & buildings
- Land & buildings
– 50 years
- Property improvements
– 20% reducing balance
Plant & Machinery
– Plant & Machinery
- 10 years
– Plant & Machinery (Leased) - 10 years
Office equipment
- Office equipment
– 15% reducing balance
- Computer equipment – 3-4 years
The directors consider the value of land included within land & buildings to be insignificant.
2.10 Financial assets
Financial assets held by the group comprise cash, loans and receivables. Financial assets are assigned to a category
by management on initial recognition, depending on the purpose for which they were acquired. The Group has
adopted the simplified model for trade receivables allowable under IFRS 9 “Financial Instruments”.
All financial assets are recognised when the Group becomes a party to the contractual provisions of the instrument.
Trade receivables are measured at transaction price with all other Financial assets initially recognised at fair value plus
transaction costs.
Annual Report & Accounts 2023
61
CONSOLIDATED
FINANCIAL
STATEMENTS
2. PRINCIPAL ACCOUNTING POLICIES (CONTINUED)
Financial assets are measured at amortised cost when both of the following conditions are met:
•
•
The financial asset is held within the business model whose objective is to hold financial assets in order to collect
contractual cash flows and
the contractual terms of the financial asset give rise on specific dates to cash flows that are solely payments of
principal and interest on the principal amount owing.
The Group has a relatively small number of customers and therefore the assessment of impairment of trade receivables
is done on a customer–by–customer basis, based on historical impairments and cash collection history, as well as a
review of lifetime expected credit losses that are estimated based on historical loss rates for the relevant country
where the customer is domiciled, adjusted where evidence is available that different rates are likely to apply in the
future. This is based on changes to the expected insolvency rates in the relevant countries.
An assessment for impairment is undertaken at least at each date of the statement of financial position. A financial
asset is derecognised only where the contractual rights to the cash flows from the asset expire or the financial asset
is transferred and that transfer qualifies for derecognition. A financial asset is transferred if the contractual rights to
receive the cash flows of the asset have been transferred or the Group retains the contractual rights to receive the
cash flows of the asset but assumes a contractual obligation to pay the cash flows to one or more recipients. A
financial asset that is transferred qualifies for derecognition if the Group transfers substantially all the risks and rewards
of ownership of the asset, or if the Group neither retains nor transfers substantially all the risks and rewards of
ownership but does transfer control of that asset.
Cash and cash equivalents comprise cash on hand and demand deposits together with other short–term, highly liquid
investments that are readily convertible into known amounts of cash, and which are subject to an insignificant risk of
changes in value.
2.11 Financial liabilities
Financial liabilities fall into the following category: Financial liabilities at amortised cost.
Financial liabilities are obligations to pay cash or other financial assets and are recognised when the Group becomes
a party to the contractual provisions of the instrument. All financial liabilities are recorded initially at fair value, net of
direct issue costs.
A financial liability is derecognised only when the obligation is extinguished, that is, when the obligation is discharged
or cancelled or expires.
Financial liabilities at amortised cost (trade payables and accruals) are subsequently recorded at amortised cost using
the effective interest method, with interest related charges recognised as an expense in finance cost in the income
statement. Finance charges are charged to the income statement on an accrual’s basis using the effective interest
method and are added to the carrying amount of the instrument to the extent that they are not settled in the period
in which they arise.
2.12 Taxation
Current tax is the tax currently payable based on taxable profit for the accounting period.
Deferred taxes are calculated using the liability method on temporary differences. Deferred tax is generally provided
on the difference between the carrying amounts of assets and liabilities and their tax bases. However, deferred tax is
not provided on the initial recognition of goodwill, nor on the initial recognition of an asset or liability unless the related
transaction is a business combination or affects tax or accounting profit.
Deferred tax on temporary differences associated with shares in subsidiaries is not provided if reversal of these
temporary differences can be controlled by the Group and it is probable that reversal will not occur in the foreseeable
future. In addition, tax losses available to be carried forward as well as other income tax credits to the Group are
assessed for recognition as deferred tax assets.
Deferred tax liabilities are provided in full, with no discounting. Deferred tax assets are recognised to the extent that
it is probable that the underlying deductible temporary differences will be able to be offset against future taxable
income. Current and deferred tax assets and liabilities are calculated at tax rates that are expected to apply to their
respective period of realisation, provided they are enacted or substantively enacted at the balance sheet date.
62
RUA Life Sciences plc
CONSOLIDATED
FINANCIAL
STATEMENTS
2. PRINCIPAL ACCOUNTING POLICIES (CONTINUED)
Changes in deferred tax assets or liabilities are recognised as a component of tax expense in profit or loss, except
where they relate to items that are charged or credited directly to equity in which case the related deferred tax is also
charged or credited directly to equity. Tax which relates to items recognised in other comprehensive income is
recognised in other comprehensive income.
2.13 R&D Tax Credits
R&D tax credits are recognised once the R&D tax credits have been calculated and the tax return for the relevant year
submitted to HMRC.
2.14 Equity
Equity comprises the following:
•
•
•
“Issued capital” represents the nominal value of equity shares.
“Share premium” represents the excess over nominal value of the fair value of cash consideration received for
equity shares, net of expenses of the share issue.
“Other reserve” represents the difference arising on consolidation between the nominal value of RUA Life Sciences
Plc shares issued (£3,206,884) and the nominal value of RUA Biomaterials Ltd (formerly AorTech Europe Ltd)
shares acquired (£1,001,884) and the associated share premium account (£201,857) in the company. This acquisition
was prior to the transition to IFRS.
Also included in other reserve is the credit entry when recognising Share Based Payment expense.
•
•
“Profit and loss account” represents retained profits and losses.
“Capital redemption reserve” represents the difference arising between the nominal value of the shares and the
proceeds of the fresh issue of shares on the company buy back of its deferred shares during the 2022 financial year.
2.15 Share-based Payments
Share options
The Group operates Share Option Plans for its employees and directors.
All employee services received in exchange for the grant of any share–based compensation are measured at their fair
values. The fair value is appraised at the grant date and excludes the impact of any non–market vesting conditions (e.g.
profitability and remaining an employee of the Company over a specified time period).
Share based compensation is recognised as an expense in the Consolidated income statement with a corresponding
credit to equity. If vesting periods or other vesting conditions apply, the expense is allocated over the vesting period,
based on the best available estimate of the number of share options expected to vest.
Non–market vesting conditions are included in assumptions about the number of options that are expected to become
exercisable. Estimates are subsequently revised if there is any indication that the number of share options expected
to vest differs from previous estimates.
The proceeds received net of any directly attributable transaction costs are credited to share capital and share
premium when the options are exercised.
The grant of any share–based payment is measured at its fair value using the Black Scholes Option Pricing Model
(BSOPM). The fair value of the share options is ultimately recognised as an expense in profit or loss with a corresponding
credit to retained earnings over the vesting period, based on the best available estimate of the number of share
options expected to vest.
Estimates are subsequently revised if there is any indication that the number of share options expected to vest differs
from previous estimates. Any adjustment to cumulative share–based compensation resulting from a revision is
recognised in the current period. The number of vested options ultimately exercised by holders does not impact the
expense recorded in any period.
Upon exercise of share options, the proceeds received, net of any directly attributable transaction costs, are allocated
to share capital up to the nominal (or par) value of the shares issued with any excess being recorded as share premium.
Annual Report & Accounts 2023
63
CONSOLIDATED
FINANCIAL
STATEMENTS
2. PRINCIPAL ACCOUNTING POLICIES (CONTINUED)
2.16 Foreign currencies
Items included in the financial statements of each of the Group’s entities are measured using the currency of the
primary economic environment in which the entity operates (the functional currency) which is the UK on the basis of
where the cost base of the business is. The Company’s functional currency is Sterling and the Group’s presentational
currency is Sterling.
Transactions in foreign currencies are translated at the exchange rate ruling at the date of the transaction. Monetary
assets and liabilities in foreign currencies are translated at the rates of exchange ruling at the balance sheet date.
Non–monetary items that are measured at historical cost in a foreign currency are translated at the exchange rate at
the date of the transaction. Non–monetary items that are measured at fair value in a foreign currency are translated
using the exchange rates at the date when the fair value was determined.
Any exchange differences arising on the settlement of monetary items or on translating monetary items at rates
different from those at which they were initially recorded are recognised in profit or loss in the period in which they
arise. Exchange differences on non–monetary items are recognised in other comprehensive income to the extent that
they relate to a gain or loss on that non–monetary item taken to other comprehensive income, otherwise such gains
and losses are recognised in profit or loss.
2.17 Grant Income
Government grants are recognised at their fair value in the Consolidated income statement within Other income over
the same period as the costs to which the grants relate, and is only recognised when there is reasonable assurance
that the performance conditions attaching to the grant are met.
2.18 Leases
Any contract entered into, which contains an identified asset, whose use the Group has the right to direct throughout
the period of the lease, and the right to obtain substantially all of the economic benefits from, is accounted for as a
lease. At the lease commencement date, the Group recognises a right–of–use leased asset and a lease liability on the
balance sheet. The lease liability is measured at the present value of the total lease payments due, discounted using
the interest rate implicit in the lease if readily available, or at the Group’s incremental borrowing rate. The right–of–use
asset is measured at cost, being the lease liability, plus any initial direct costs incurred by the Group, or lease payments
made in advance of the commencement date. Right–of–use assets are depreciated on a straight–line basis to the end
of the lease term. The Group assesses the right–of–use asset for impairment when such indicators exist. Lease liabilities
are remeasured to reflect any reassessment or modification of the lease – when the lease liability is remeasured, the
corresponding adjustment is reflected in the right–of–use leased asset, or in the Consolidated Statement of
Comprehensive Income if the asset is already reduced to zero.
2.19 Use of accounting estimates and judgements
The preparation of the Group financial statements in conformity with IFRSs requires Management to make estimates
assumptions and judgments that affect the reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and the reported amount of expenses during the year.
Actual results may vary from the estimates used to produce these financial statements.
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.
Key judgements are as follows:
Research and development
IAS 38 Intangible Assets requires management to differentiate between research and the development phase of R&D
activities and their related costs. In accordance with IAS 38, an intangible asset arising from development shall be
recognised if, and only, if, an entity can demonstrate certain criteria. The Board continually monitor its activities against
the prescribed criteria to determine the point in which the Group would enter the development phase of its activities.
The Group is currently in the phases of formulation, design and evaluation of its products and therefore management
are confident that the relevant projects are in the research phase. As a result, any expenditure arising from R&D
activities are expensed in the Consolidated income statement.
64
RUA Life Sciences plc
CONSOLIDATED
FINANCIAL
STATEMENTS
2. PRINCIPAL ACCOUNTING POLICIES (CONTINUED)
Deferred taxation
The Group has accumulated tax losses of £18,525 million (2022: £16,543 million). IAS 12 requires that a deferred tax
asset relating to unused tax losses is carried forward to the extent that future taxable profits will be available. The
company is in an investment phase, expecting to have increased expenditure on R&D and business development over
the next three years which will increase the tax losses. After the investment period the Board expects the Company
to generate healthy profits but it is difficult at this stage to reliably estimate the period over which profits may arise in
the future. The Board has therefore determined to not recognise the asset at the reporting date. This approach does
not affect the future availability of the tax losses for offset against future profits.
Impairment
In carrying out impairment reviews of intangible assets and goodwill, a number of significant assumptions have to be
made when preparing cash flow projections.
Sources of estimation uncertainty:
a) Impairment: In carrying out impairment reviews, a number of significant assumptions have to be made when
preparing cashflow projections to determine the value in use of the asset or cash-generating unit (CGU). These
include the success and timing of regulatory approval for the vascular graft range, future rate of market growth,
discount rates, the market demand for the products acquired and the future profitability of acquired businesses or
products. If actual results differ or changes in expectations arise, impairment charges may be required which
would adversely impact the statutory results. Further information, can be found in notes 10 and 11.
b) Estimates as to fair value of share–based payments and the likelihood of vesting (see note 2.15).
c) Estimates as to the inputs to the share option valuation models underlying the share-based payment charge, as
disclosed in Note 6.
3. SEGMENTAL REPORTING
The principal activity of the RUA Life Sciences Group comprises exploiting the value of its IP & know–how, medical
device contract manufacturing and development of cardiovascular devices.
Following the acquisition of RUA Medical Devices Ltd and an internal organisation and reporting review, the Board has
decided the business will report by business unit segments, namely royalty and license income (Biomaterials), Contract
Manufacture, product development (Vascular) and product innovation (Structural Heart), rather than trading entities,
which is consistent with both how the business will be managed and reported internally in the future.
The following analysis by segment is presented in accordance with IFRS 8 on the basis of those segments whose
operating results are regularly reviewed by the Chief Operating Decision Maker (considered to be the executive
chairman of the board) to assess performance and make strategic decisions about the allocation of resources.
A brief description of the segments of the business is as follows:
• Biomaterials – Licensor of Elast–Eon polymers to the medical device industry.
•
Contract Manufacture – End–to–end contract developer and manufacturer of medical devices and implantable
fabric specialist.
• Vascular – Development and commercialisation of the Group’s Elast–Eon sealed Vascular Graft products.
• Structural Heart – Development of the Group’s tri leaflet polymeric heart valves.
Operating results which cannot be allocated to an individual segment are recorded as central and unallocated.
Annual Report & Accounts 2023
65
CONSOLIDATED
FINANCIAL
STATEMENTS
3. SEGMENTAL REPORTING (CONTINUED)
Segment Analysis 2023
Consolidated group revenues from
external customers
Contributions to group operating loss
Depreciation
Amortisation of intangible assets
Segment assets
Segment liabilities
Intangible assets – goodwill
Other intangible assets
Additions to non–current assets
Segment Analysis 2022
Consolidated group revenues from
external customers
Contributions to group operating loss
Depreciation
Amortisation of intangible assets
Segment assets
Segment liabilities
Intangible assets – goodwill
Other intangible assets
Additions to non–current assets
554
493
–
–
487
418
–
–
Biomaterials
GB£000
Contract
Manufacture
GB£000
Vascular
GB£000
Structural
Heart
GB£000
Central and
unallocated
GB£000
Total
GB£000
1,625
–
–
–
2,179
(1,201)
(488)
(1,905)
(2,307)
794
139
43
93
–
305
1,406
1,268
–
–
–
–
165
301
259
–
632
–
139
433
16
–
156
31
–
–
–
59
8
2,528
152
–
72
16
307
51
5,663
980
301
470
449
Biomaterials
GB£000
Contract
Manufacture
GB£000
Vascular
GB£000
Structural
Heart
GB£000
Central and
unallocated
GB£000
Total
GB£000
1,138
–
–
–
1,625
(1,083)
(492)
(1,642)
(2,352)
447
135
43
68
–
294
1,735
1,099
–
–
–
–
184
301
302
17
410
–
139
345
8
–
173
30
–
–
156
48
11
4,325
418
–
79
387
259
54
7,626
1,042
301
520
905
Restatement of Segment Analysis to 31 March 2022 is as follows:
The Group’s revenue for 2023 is segmented as follows:
Analysis of revenue by income stream
Contract Design & Manufacture of
Medical Devices
Royalty revenue
Total
Biomaterials
GB£000
Contract
Manufacture
GB£000
Vascular
GB£000
Structural
Heart
GB£000
Central and
unallocated
GB£000
Total
GB£000
–
554
554
1,625
–
1,625
–
–
–
–
–
–
–
–
–
1,625
554
2,179
66
RUA Life Sciences plc
CONSOLIDATED
FINANCIAL
STATEMENTS
3. SEGMENTAL REPORTING (CONTINUED)
Analysis of revenue by
geographical location
Switzerland
UK
Italy
USA
Israel
Total
Biomaterials
GB£000
Contract
Manufacture
GB£000
Vascular
GB£000
Structural
Heart
GB£000
Central and
unallocated
GB£000
Total
GB£000
168
–
–
338
48
554
–
(1)
15
1,611
–
1,625
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
168
(1)
15
1,949
48
2,179
Restatement of Analysis of revenue by income stream to 31 March 2022 is as follows:
Analysis of revenue by income stream
Contract Design & Manufacture of
Medical Devices
Royalty revenue
Total
Analysis of revenue by
geographical location
Switzerland
UK
Italy
USA
Israel
Total
Biomaterials
GB£000
Contract
Manufacture
GB£000
Vascular
GB£000
Structural
Heart
GB£000
Central and
unallocated
GB£000
Total
GB£000
–
487
487
1,138
–
1,138
–
–
–
–
–
–
–
–
–
1,128
487
1,625
Biomaterials
GB£000
Contract
Manufacture
GB£000
Vascular
GB£000
Structural
Heart
GB£000
Central and
unallocated
GB£000
Total
GB£000
148
–
–
285
54
487
–
21
23
1,094
–
1,138
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
148
21
23
1,379
54
1,625
The operating loss of £2,306,000 (2022: £2,352,000), and loss on continuing operations before taxation of £2,322,000
(2022: £2,360,000) is all derived from the United Kingdom.
All of the Group’s non–current assets are held in the United Kingdom.
The Group receives more than 10% of its revenue from a single customer. Revenues from one customer of the Group’s
royalty revenue represents 16% of the Group’s total revenues (2022: 1 customer, 18%). Revenues from one customer of
the Group’s Contract Manufacturing revenue segment represents 67% of the Group’s total revenues (2022: 67%).
Annual Report & Accounts 2023
67
CONSOLIDATED
FINANCIAL
STATEMENTS
4. EMPLOYEES
The average monthly number of persons (including Directors) employed by the Group during the year was:
Directors
Administration/Management
Production & Medical Textiles
Research & Development
Quality
The aggregate remuneration, including Directors, comprised:
Wages and salaries
Social security costs
Pension contributions
Share based payment (credit)/expenses (note 6)
Total costs
Directors’ remuneration comprised: Emoluments for qualifying services
2023
Numbers
2022
Numbers
8
6
19
9
6
48
2023
GB£000
2,018
221
116
102
2,457
1,027
6
10
10
7
5
38
2022
GB£000
1,708
181
86
145
2,120
805
The key management personnel whose remuneration is included in the table above for the current year comprise five
Executive and three Non–Executive Directors.
Please see the Report of the Remuneration Committee on page 38 for full details of Directors’ emoluments. The
highest paid Director’s total emoluments were £296,580 (2022: £301,345). The Company made contributions of
£64,958 (2022: £45,084) into Directors pensions in the year ended 31 March 2023. The number of directors who
received pension contributions was 4 (2022: 3).
68
RUA Life Sciences plc
CONSOLIDATED
FINANCIAL
STATEMENTS
2023
Total
GB£000
2022
Total
GB£000
23
140
402
67
63
379
1,072
1,527
41
102
358
(5)
9
159
497
290
87
254
911
1,075
33
145
313
3
4,169
3,776
5. EXPENSE BY NATURE
The administrative expenses charge by nature is as follows:
Advertising, conferences and exhibitions
IT, telecoms and office costs
Legal, professional and consultancy fees
Other expenses
Patent and IP costs
Premises and establishment costs
Research and development costs
Staff costs, recruitment and other HR
Travelling, subsistence and entertaining
Share–based payment expense (Note 6)
Depreciation & Amortisation charge (Note 11/12)
Bad debt expense
Total administrative expenses
6. SHARE–BASED PAYMENTS
Director and Employee Share Option Plans
The Group established a Share Option Plan, as an approved EMI plan, in June 2018 for the benefit of senior executives
(including Executive directors) and in December 2019 established a Share Option Plan, as an unapproved plan, for the
benefit of Non–Executive Directors. Share options are granted under these plans to Directors to encourage them to
deliver sustained, long-term growth.
Under the plans, participants are granted options which only vest if certain performance standards are met.
Participation in the plans is at the discretion of the board and no individual has a contractual right to participate in the
plans or to receive any guaranteed benefits.
The amount of options that will vest depends on the following performance conditions being satisfied:
• After the expiry of the period 3 years from the date of grant, 20%
• On receipt by the Company of a CE Mark or FDA approval (this change having recently been approved by the Board,
in order to address an inconsistency between options granted under the EMI and the unapproved plan, with the EMI
scheme previously quoting CE Mark approval only) for any of its products, 30% and
• On the closing middle market quotation of the Company’s ordinary shares as derived from AIM Appendix to the
Daily Official List of the London Stock Exchange being at least £3.00 for 10 consecutive days on which trading takes
place on the AIM Market of the London Stock Exchange, 50%.
A number of EMI options were granted in February 2021 to employees of RUA Medical Devices Limited, with the same
vesting terms as those stated above.
A number of EMI options were granted in December 2022 to directors of RUA Life Sciences, with the vesting terms
stated below. The fair value of the options granted is reflected as share–based payment in the Consolidated income
statement of the group, and credited to other reserves.
Annual Report & Accounts 2023
69
CONSOLIDATED
FINANCIAL
STATEMENTS
6. SHARE–BASED PAYMENTS (CONTINUED)
The amount of options that will vest depends on the following performance conditions being satisfied:
• As to 50% of the Option Shares (the “Total Return Option Shares”), on any day when the Company has achieved a
total return for its shareholders (in percentage terms) in the period from the Grant Date at least equal to the median
total shareholder return of the constituents of the FTSE AIM Index (in percentage terms) (the “Minimum Return”)
over the same period, PROVIDED THAT, where the Minimum Return on that day is less than a compound total
shareholder return of 50% per annum over the same period
• As to the other 50% of the Option Shares, upon the Company achieving both of the following strategic objectives,
the Company having achieved regulatory approval for at least one medical device; and the Company continuing to
commercially exploit one of such approved devices.
All share options lapse on the tenth anniversary of the date of grant unless exercised and if no event occurs to cause
it to lapse earlier in accordance with the scheme rules.
The exercise price for each option share granted is as follows:
2019 – £0.300
2020 – £0.925
2021 – £1.550
2023 – £0.445
Summary of number options granted under the plans:
Options at start of financial year
Granted during the year
Exercised or lapsed during the year
Options at the end of the financial year
2023
2022
2,160,603
2,280,603
240,000
–
(120,000)
(120,000)
2,280,603
2,160,603
The 120,000 Options lapsed in the year relate to Options granted in FY21 to Eilidh Callan, Alan Hamilton and Matthew
Litton who have left the group.
Fair Value of options granted
The assessed fair value at the grant date of the various options granted have been determined using the Black Scholes
Option Pricing Model (‘BSOPM’), with the results as follows:
Year of Grant
FY2020
FY2021
FY2023
Fair Value
£0.78
£1.40
£0.39
The BSOPM takes into account the exercise price, the term of the option, the impact of dilution (where material), the
share price at grant date and expected price volatility of the underlying share, the expected dividend yield, the risk–
free interest rate for the term of the option.
70
RUA Life Sciences plc
CONSOLIDATED
FINANCIAL
STATEMENTS
6. SHARE–BASED PAYMENTS (CONTINUED)
The inputs into the Black-Scholes models for the options granted were as follows:
Share price at date of grant
Exercise price
Fair value at date of grant
Expected volatility
Expected life
Risk-free rate
Expected dividends
2023
£0.470
£0.445
£0.390
78.02%
2021
£1.705
£1.550
£1.400
81.82%
2020
£0.985
£0.925
£0.780
75.84%
2019
£0.400
£0.300
£0.330
75.84%
10 years
10 years
10 years
10 years
3.35%
Nil
0.54%
Nil
1.10%
Nil
1.52%
Nil
7. LOSS BEFORE TAXATION
Loss before taxation has been arrived at after charging :
Foreign exchange differences
Depreciation of property, plant and equipment
Amortisation of intangible assets
Employee benefits expense:
Employee costs (Note 4)
Audit and non–audit services:
Audit of the Accounts of the Group
8.
INCOME TAX EXPENSE
2023
GB£000
2022
GB£000
(12)
290
51
(11)
259
54
2,457
2,120
94
68
The tax assessed for the year differs from the standard rate of corporation tax as applied in the respective trading
domains where the Group operates. The differences are explained below:
Loss for the year before tax
Loss for year multiplied by the respective standard rate of corporation tax
applicable (19%)
Fixed asset differences
Expenses not deductible for tax purposes
Income not taxable for tax purposes
Adjustment to tax charge in respect of previous periods*
Movement in deferred tax not recognised**
Actual tax credit
2023
GB£000
(2,323)
(441)
5
33
(2)
(329)
425
(319)
2022
GB£000
(2,360)
(448)
(34)
16
(1)
(207)
381
(293)
Annual Report & Accounts 2023
71
CONSOLIDATED
FINANCIAL
STATEMENTS
2023
GB£000
2022
GB£000
Current tax:
Adjustment in respect of prior periods
(329)
(205)
Deferred tax:
Origination and reversal of temporary differences
Adjustment in respect of prior periods
Effect of tax rate change on opening balance
Tax credit per Consolidated Income Statement
10
–
–
(293)
(116)
(2)
30
(293)
Unrelieved tax losses remain available to offset against future taxable profits. These losses have not been recognised
as deferred tax assets within the financial statements as there is a lack of certainty regarding the timing and scale of
future profits to allow the losses to be utilised. Losses carried forward in the UK total £9,743,000 – the tax effect after
taking account of losses offset against unrecognised fixed asset temporary differences as per note 20 is £2,251,000
(2022 – £8,558,000 – tax effect £1,851,000). An unprovided deferred tax asset in respect of share options totals
£130,000 (2022: £5,104,000). The increase to the rate of corporation tax from 19% to 25% was announced in the March
2021 budget and substantively enacted on 24 May 2021, and therefore 25% was the prevailing rate at the balance sheet
date. The effective rate of tax is 13.7%.
*This relates to R&D tax relief.
** In the prior year this line was disaggregated, this has been updated in the current year to make it clearer to the reader on the financial statements what the
items relate to.
9. LOSS PER SHARE
Loss for the year attributable to equity shareholders
Basic and diluted loss per share
From continuing operations attributable to ordinary equity
holders of the company (GB pence per share)
Weighted average number of shares
Issued ordinary shares at start of the year
Issued ordinary shares at end of the year
Weighted average number of shares in issue for the year
(used for calculating basic loss per share)
2023
GB£000
(2,003)
2022
GB£000
(2,067)
(9.03)
(9.32)
22,184,798
22,184,797
22,184,798
22,184,798
22,184,798
22,184,798
10. GOODWILL
The Goodwill arising on the acquisition of RUA Medical Devices Limited and is attributable to the Contract Manufacturing
CGU, is as follows:
Gross carrying amount
Balance at 31 March 2022
Impairment
Balance at 31 March 2023
72
RUA Life Sciences plc
2023
GB£000
301
–
301
CONSOLIDATED
FINANCIAL
STATEMENTS
10. GOODWILL (CONTINUED)
Impairment review
An impairment review of the Group’s intangible and tangible non–current assets was conducted at 31 March 2023.
Impairment tests are mandatory for CGUs containing goodwill acquired in a business combination. Impairment tests
for other CGUs are carried out when an indication of impairment is considered to exist.
Goodwill relates to the acquisition of RUA Medical Devices Ltd, which was acquired by the Group in the year ending
31 March 2021.
For the purpose of annual impairment testing, goodwill is allocated to RUA Contract Manufacture which is a single
cash generating unit and is compared to its recoverable amount and we are satisfied that no impairment is required.
The recoverable amount has been based on value in use, by reference to the budgets and projected cash flows for the
CGU over a five–year period. Revenue growth rates average 24.9% over the five-year forecast, reflecting revenue from
new contracts for medical device manufacturing as outlined in the Chairman’s statement, with future cash flows
discounted at a rate of 16.2% (2022: 16.2%) referencing the discount rate used for the independent valuation of the
intangibles at acquisition. Cash flows beyond the five–year period are extrapolated using a 2.0% growth rate.
Impairment calculations are sensitive to changes in the assumptions around trading performance and discount rate.
Reasonable sensitivities have been applied to these assumptions as two separate scenarios, being
1.
Scenario 1
1.1. An increase in the discount rate of 10.8 percentage points and
1.2. increase in working capital requirements by 3 percentage points
2. Scenario 2
2.1. A shortfall in revenue of 50% against a failure to onboard additional forecasted manufacturing contracts
2.2. No movement in working capital requirements and
2.3. A reduced discount rate of 11.5%
In both scenarios there remained significant headroom against the carrying value of the goodwill held.
Annual Report & Accounts 2023
73
CONSOLIDATED
FINANCIAL
STATEMENTS
11. OTHER INTANGIBLE ASSETS
Development
costs
GB£000
Intellectual
property
GB£000
Customer
Related
(CM)
GB£000
Technology
Based
(CM)
GB£000
Total
GB£000
Gross carrying amount
At 1 April 2021
Additions
At 31 March 2022
Additions
At 31 March 2023
Amortisation and impairment
At 1 April 2021
Charge for the year
At 31 March 2022
Charge for the year
At 31 March 2023
Net book value
At 31 March 2022
At 31 March 2023
337
–
337
–
337
334
3
337
–
337
–
–
3,325
–
3,325
–
3,325
3,099
7
3,106
8
3,114
219
211
247
–
247
–
247
29
29
58
29
87
189
160
141
–
141
–
141
14
14
28
14
42
113
99
4,050
–
4,050
–
4,050
3,476
53
3,529
51
3,580
521
470
(1)
Intellectual Property:
Intellectual property includes patents and trademarks which are amortised on a straight line basis over their useful
economic lives of 20 years,
The carryingvalue of patents and trademarks within at 31 March 2023 is £80,000 (2022: £88,000). The amortisation
charge for the period is £8,000 (2022: £7,000) and the cumulative amortisation is £3,114,000 (2022: £3,106,000).
Know-how relating to the RUA Vascular CGU is also included under Intellectual Property at cost and will be amortised
over 5 years from the commencement of revenue derived from the sale of devices following the exploitation of the
know-how.
The carrying valueof know how held in intellectual property at 31 March 2023 is £139,000 (2022: £139,000). The Group
has yet to commercialise the intangible asset and has therefore not incurred any amortisation.
The Know How allocated to RUA Vascular as a cash generating unit is subject to annual impairment testing until such
time as revenues commence and then amortised over 5 years.
The recoverable amount has been based on value in use, by reference to the budgets and projected cash flows for the
CGU over a five-year period. Commercial revenues are expected to commence in FY 2027 with YOY growth to FY
2028 estimated at 86%, with future cash flows discounted at a rate of 20% to reflect the risk profile. Working capital
requirements are estimated at 4%. Cash flows beyond the five-year period are extrapolated using a 2% growth rate.
Impairment calculations are sensitive to changes in the assumptions around trading performance and discount rate.
Reasonable sensitivities have been applied to these assumptions as two separate scenarios, being
Reasonable sensitivities have been applied to these assumptions as two separate scenarios, in both scenarios there
remained significant headroom against the carrying value of the intangible asset held.
74
RUA Life Sciences plc
CONSOLIDATED
FINANCIAL
STATEMENTS
11. OTHER INTANGIBLE ASSETS (CONTINUED)
The Directors have considered the sensitivity of the key assumptions, including the discount rate, and have concluded
that any possible changes that may be reasonably contemplated in these key assumptions would not result in the
value in use falling below the carrying value of goodwill, intangibles and plant, property and equipment, given the
headroom available. The directors believe the only indication to impairment would be derived from failure to achieve
FDA clearance.
The following intangible assets were recognised on acquisition of RUA Medical Devices Ltd and are allocated to the
contract Manufacturing CGU
(2) Customer Related
The excess earnings approach was used to value this intangible asset on acquisition of RUA Medical Devices Ltd, with
the value of the contract being the sum of the present value of projected cash flow in excess of returns on contributory
assets over the lives of the relationship.
Customer related intangible assets are amortised over 8.5 years
(3) Technology based
The Group’s technology-based asset was valued on acquisition of RUA Medical devcies Ltd by means of the royalty
savings (relief from royalty) method of the income approach. Under the premise, it is assumed that a company,
without a similar intangible asset would license the right to use technology, and pay a royalty related to turnover
achieved in this industry.
Technology based intangible assets are amortised over 10 years.
See impairment section of Goodwill note 10 for impairment considerations for other intangible assets, including the
intangible asset held within intellectual property associated with RUA Contract Manufacturing.
12. PROPERTY, PLANT AND EQUIPMENT
Land &
Buildings
GB£000
Assets Under
Construction
GB£000
Plant &
Machinery
GB£000
Office
Equipment
GB£000
Motor
Vehicles
GB£000
Total
GB£000
Cost
At 31 March 2021
Additions for the year
Disposals
At 31 March 2022
Additions for the year
At 31 March 2023
Depreciation
At 31 March 2021
Charge for the year
At 31 March 2022
Charge for the year
At 31 March 2023
Net book value
At 31 March 2022
At 31 March 2023
944
391
–
1,335
–
1,335
58
62
120
60
180
1,215
1,155
–
–
–
–
142
142
–
–
–
–
–
142
1,114
500
–
1,614
291
1,905
112
175
287
222
509
1,327
1,396
63
16
–
79
16
95
18
15
33
17
50
46
45
28
–
(3)
25
–
25
9
7
16
8
24
9
1
2,149
907
(3)
3,053
449
3,502
197
259
456
307
763
2,597
2,739
Annual Report & Accounts 2023
75
CONSOLIDATED
FINANCIAL
STATEMENTS
12. PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
Included in the net carrying amount of property plant and equipment are right-of-use assets as follows:
Cost
At 31 March 2021
Disposals
At 31 March 2022
Additions for the year
At 31 March 2023
Depreciation
At 31 March 2021
Charge for the year
At 31 March 2022
Charge for the year
At 31 March 2023
Net book value
At 31 March 2022
At 31 March 2023
Plant &
Machinery
(Leased)
GB£000
Motor
Vehicles
GB£000
Total
GB£000
162
–
162
229
391
7
16
23
25
48
139
343
28
(3)
25
–
25
9
7
16
8
24
9
1
190
(3)
187
229
416
16
23
39
33
72
148
344
See notes 10 and 11 for impairment considerations for property, plant and equipment.
13. FINANCIAL INSTRUMENTS
Risk management
The Group’s financial instruments comprise cash and cash equivalents, trade and other receivables, trade and other
payables. These arise directly from the Group’s operations, and it is the Group’s policy that no trading in financial
instruments shall be undertaken.
The Groups Risk Management Framework outlines the Group’s objectives, policies and procedures for measuring and
managing risk. The Board of Directors has overall responsibility for the establishment and oversight of the Group’s risk
management framework. .
76
RUA Life Sciences plc
CONSOLIDATED
FINANCIAL
STATEMENTS
13. FINANCIAL INSTRUMENTS (CONTINUED)
Categories of financial instrument
Financial assets at amortised cost – loans and receivables
Cash and cash equivalents
Trade and other receivables
Financial liabilities
Liabilities at amortised cost
2023
GB£000
2022
Restated
GB£000
1,484
422
1,906
722
722
2,963
532
3,495
679
679
Maturity profile of financial liabilities
The undiscounted maturity analysis of the carrying amount of the Group’s financial liabilities at 31 March 2023 is as
follows:
Less than six
months
GB£000
Later than six
months and
not later than
one year
GB£000
Later than one
year and not
later than two
years
GB£000
Later than
three years
and not later
than four
years
GB£000
Greater than
five years
GB£000
(318)
15
(303)
(70)
16
(54)
(256)
56
(200)
(134)
32
(102)
(85)
22
(63)
Total
GB£000
(863)
141
(722)
Repayments
Finance Charges
Present Value
The financial statements for 2022 contained a misstatement relating to the overstatement of both Trade and other
receivables and Liabilities at amortised cost. This resulted in a restatement of trade and other receivables as at 31
March 2022 from £1,120,000 to £532,000 and a restatement of Liabilities at amortised cost as at 31 March 2022 from
£1,042,000 to £679,000. These adjustments were identified in the current year and the restatement had no impact on
prior period income or expenditure.
Annual Report & Accounts 2023
77
CONSOLIDATED
FINANCIAL
STATEMENTS
13. FINANCIAL INSTRUMENTS (CONTINUED)
Trade and other receivables
Trade and other receivables per 2022 statements
Less prepayments
Less tax credit due
Less other receivables
2022 Restatement
Liabilities at amortised cost
Liabilities at amortised cost per 2022 statements
Less taxes due
Less deferred tax
Less deferred grant
Less other liabilities
2022 Restatement
Foreign currency risk
GB£000
1,120
(315)
(205)
(68)
532
GB£000
1,122
(60)
(76)
(214)
80
679
Foreign currency risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because
of changes in foreign exchange rates.
The Group seeks to transact the majority of its business in its reporting currency (£Sterling). However, many customers
and suppliers are outside the UK and a proportion of these transact with the Group in US Dollars and Euros. For that
reason, the Group operates current bank accounts in US Dollars and Euros as well as in its reporting currency. To the
maximum extent possible receipts and payments in a particular currency are made through the bank account in that
currency to reduce the amount of funds translated to or from the reporting currency. Cash flow projections are used
to plan for those occasions when funds will need to be translated into different currencies so that exchange rate risk
is minimised.
If the exchange rate between Sterling and the Dollar had been 10% higher/lower at the reporting date the effect on
profit and equity would have been approximately £32,000 (2022: £34,000) higher/lower and £5,000 (2022: £4,000)
higher/lower respectively
Cash balances are carried within the Group in bank accounts, which comprise the following currency holdings:
Sterling
Euros
US dollars
2023
GB£000
941
1
542
1,484
2022
GB£000
2,799
1
163
2,963
The Group holds the majority of its cash balances in a mixture of Sterling’ and US dollars. As the Group reports in
Sterling, there is translation risk in respect of US dollar balances. Based on year-end balances held in USD, a 10%
adverse movement in the $ / £ exchange rate would have had a £49,300, adverse impact on net assets and expenses
(2022: £14,818).
78
RUA Life Sciences plc
CONSOLIDATED
FINANCIAL
STATEMENTS
13. FINANCIAL INSTRUMENTS (CONTINUED)
Interest rate risk
The Group finances most of its operations through equity fundraising, although some capital purchases in its subsidiary
have been financed with HP and bank loans, on fixed rate terms. (See note 18). The following cash balances and are
held at floating bank interest rates:
Cash and cash equivalents
Sensitivity analysis
2023
GB£000
1,484
1,484
2022
GB£000
2,963
2,963
A rise or fall of interest rates over the year of 1% would have a minimal adverse impact on the results, given the current
low bank interest rates being offered on deposit account.
Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to
the Group. In order to minimise this risk, the Group endeavours only to deal with companies which are demonstrably
creditworthy and this, together with the aggregate financial exposure, is continuously monitored. The maximum
exposure to credit risk in the case of both the cash and short-term deposits is the value of the outstanding amount.
Liquidity risk
Liquidity risk arises from the Group’s management of working capital. It is the risk that the Group will encounter
difficulty in meeting its future obligations as they fall due. The Group’s policy is to ensure that it will always have
sufficient cash to allow it to meet its liabilities when they become due. To achieve this aim, it seeks to maintain cash
balances to meet its expected cash requirements.
The Group currently holds cash balances and short-term deposits in Sterling and US dollars. These balances provide
funding for the Group’s trading activities. There is no material difference between the fair values and the book values
of these financial instruments.
14. INVENTORIES
Inventories consist of the following:
Raw materials
Work in progress
2023
GB£000
2022
GB£000
48
33
81
40
84
124
The cost of inventories recognised as an expense and included in cost of goods sold amounted to £79K (2022: £58K).
Amounts provided against inventory £nil (2022: £nil).
Annual Report & Accounts 2023
79
CONSOLIDATED
FINANCIAL
STATEMENTS
15. TRADE AND OTHER RECEIVABLES
Current
Trade receivables – gross
Allowance for credit losses
Trade receivables net
Other receivables
Tax credit due
Prepayments and accrued income
2023
GB£000
2022
GB£000
175
–
175
34
–
379
588
221
(5)
216
83
205
616
1,120
Included in the above is £247,333 (2022: £273,670) of accrued income which relates to royalty revenues not billed until
after the period end but which related to royalties earned pre-year end.
In accordance with IFRS 9, trade and other receivables are recognised and carried at their anticipated realisable value,
which implies that a provision for a loss allowance on lifetime expected credit losses of the receivables is recognised.
A provision for loss allowance for expected credit losses is performed at each reporting date and is based on a
multifactor and holistic analysis depending on several assumptions taken. The Group considers reasonable and
supportable information that is available without undue cost or effort and that is relevant for the assessment of credit
risk with regard to customer. The Group’s trade and other receivables are all current and not overdue.
Payment terms apply to amounts owed by the customers for contract manufacturing sales, typically this is within 30
days. Historically, invoices are normally paid on or around the due date and this is the established operating cycle
under IFRS 9, as a result the loss given default is deemed to be a negligible timing difference. The Group has had no
historical losses on trade and other receivables during this period. As long as the customer continues to settle invoices
on a monthly basis in line with what has been established practice, there are no indications of a significant increase in
credit risk, and therefore deemed there to be an insignificant probability of default. Therefore, it is not considered
necessary to provide for any loss allowance on credit losses.
Of the trade receivables balance at the end of the year £116,000 (2022: £155,000) was due from the Group’s largest
customer. There is one (2022: one) other customer who represents more than 5% of the total balance of trade
receivables.
16. CASH AND CASH EQUIVALENTS
Cash at bank and in hand
17. SHARE CAPITAL
Ordinary shares of 5 pence each
In issue at 1 April 2022
Issue of shares
In issue at 31 March 2023
80
RUA Life Sciences plc
Shares
Number
22,184,798
–
22,184,798
2023
GB£000
1,484
1,484
2022
GB£000
2,963
2,963
Nominal
Value
GB£000
Premium net
of costs
GB£000
1,109
–
1,109
11,729
–
Total
GB£000
12,838
–
11,729
12,838
CONSOLIDATED
FINANCIAL
STATEMENTS
18. BORROWINGS
Current
Bank loans
Lease liabilities
Non–current
Bank loans
Lease liabilities
Repayable in less than 6 months
Repayable in 7 to 12 months
Repayable in 1 to 5 years
Repayable after 5 years
Total
2023
GB£000
2022
GB£000
29
81
110
165
200
365
23
39
62
198
83
281
Bank loans
GB£000
Lease
liabilities
GB£000
Total
GB£000
14
15
102
63
194
41
40
200
–
281
55
55
302
62
475
£158,078 of bank loans is secured 1. on the property at 2 Drummond Crescent, Irvine, Ayrshire and 2. A bond and
floating charge over the Group’s assets. Secured bank loans carry a variable rate of interest, which were between 3.1%
and 6.1%.
£35,038 of bank loans is an unsecured government support loan. Unsecured bank loans carry an effective rate of
interest at 9%.
The lease liabilities are secured by the related underlying assets. Lease borrowings carry a fixed rate of interest, which
were between 4.0% and 9.6%.
19. LEASES
Lease liabilities are presented in the statement of financial position as follows:
Current
Non–current
2023
GB£000
2022
GB£000
81
200
281
39
83
122
The Group has a lease for one motor vehicle and five items of machinery. With the exception of short–term leases and
leases of low–value underlying assets, each lease is reflected in the statement of financial position as a right–of–use
asset and a lease liability. The Group classifies its right–of–use assets in a consistent manner to its property, plant and
equipment (see note 12). The interest charge for the year for right–of–use assets was £16,685 (2022: £7,287).
The Group is prohibited from selling or pledging the underlying leased asset as security. The Group must also insure
and maintain the underlying asset in accordance with the lease contract.
Annual Report & Accounts 2023
81
CONSOLIDATED
FINANCIAL
STATEMENTS
20. DEFERRED TAX
Deferred tax arising from temporary differences and unused tax losses are summarised as follows:
Fixed asset
temporary
differences
GB£000
Short term
temporary
differences
GB£000
Losses and
other
deductions
GB£000
Total
GB£000
Deferred tax liability at 1 April 2021
Origination and reversal of temporary timing differences
Effect of tax rate changes on opening balance
Adjustments in respect of prior periods
Deferred tax liability at 31 March 2022
365
10
–
–
375
–
–
–
–
–
(290)
–
–
–
(290)
75
10
–
–
85
21. TRADE AND OTHER PAYABLES
Current liabilities
Trade payables
Other payables
Accruals and deferred income
2023
GB£000
2022
GB£000
43
8
204
255
185
74
151
410
Deferred grant income is included within other liabilities in the Consolidated statement of financial position. £49,000
(2022: £39,000) is included in current liabilities and £116,000 (2022: £174,000) included in Non-current Liabilities.
22. CONTINGENT LIABILITIES
There were no contingent liabilities at 31 March 2023 or at 31 March 2022.
23. RELATED PARTY TRANSACTIONS
Related party transaction disclosures are included within the Report of the Remuneration Committee.
82
RUA Life Sciences plc
PARENT
COMPANY
FINANCIAL
STATEMENTS
PARENT
COMPANY
FINANCIAL
STATEMENTS
PARENT COMPANY STATEMENT OF
FINANCIAL POSITION
Asset
Fixed assets
Intangible assets
Tangible assets
Investment in subsidiary undertakings
Total fixed assets
Current assets
Trade and other receivables
Cash and cash equivalents
Total current assets
Total assets
Equity and liabilities
Equity
Issued capital
Share premium
Other Reserve
Capital redemption reserve
Profit and loss account
Total equity attributable to equity holders of the parent
Liabilities
Current liabilities
Trade and other payables
Total current liabilities
Total liabilities
Notes
31 March 2023
GB£000
31 March 2022
GB£000
2
3
5
6
8
7
72
147
2,235
2,454
2,253
1,192
3,445
79
166
2,244
2,489
2,370
2,755
5,125
5,899
7,614
1,109
11,729
554
11,840
1,109
11,729
452
11,840
(19,557)
(17,779)
5,675
7,351
224
224
224
263
263
263
Total Equity and liabilities
5,899
7,614
The parent company has taken advantage of section 408 of the Companies Act 2006 and has not
included its own profit and loss account in these financial statements. The parent company’s loss for
the year ended 31 March 2023 was £1,778,000 (2022: loss of £1,560,000).
The parent company financial statements were approved by the Board on 25 July 2022 and were
signed on its behalf by:
W Brown, Chairman
L Smith, Group CFO
Company number SC170071
The notes on pages 88 to 90 form part of these financial statements.
84
RUA Life Sciences plc
PARENT
COMPANY
FINANCIAL
STATEMENTS
PARENT COMPANY STATEMENT OF
CHANGES IN EQUITY
Capital
redemption
reserve
GB£000
Other
reserve
GB£000
Profit and
loss account
GB£000
Total
shareholders’
fund
GB£000
At 31 March 2021
Share-based payments
Buyback of deferred shares
Transactions with owners
Total comprehensive loss for the
year
Share
capital
GB£000
Share
premium
GB£000
12,949
11,729
–
(11,840)
(11,840)
–
–
–
–
–
–
–
11,840
11,840
–
At 31 March 2022
1,109
11,729
11,840
Share-based payments
Buyback of deferred shares
Transactions with owners
Total comprehensive loss for the
year
–
–
–
–
–
–
–
–
–
–
–
–
307
145
–
145
–
452
102
–
102
(16,219)
8,766
–
–
–
145
–
145
(1,560)
(1,560)
(17,779)
7,351
–
–
–
102
–
102
–
(1,778)
(1,778)
At 31 March 2023
1,109
11,729
11,840
554
(19,557)
5,675
The notes on pages 88 to 90 form part of these financial statements.
Annual Report & Accounts 2023
85
PARENT
COMPANY
FINANCIAL
STATEMENTS
NOTES TO THE PARENT COMPANY
FINANCIAL STATEMENTS
1. ACCOUNTING POLICIES
Statement of compliance
The financial statements were prepared in accordance with FRS 101 ‘Reduced Disclosure Framework’. The Company
has elected to adopt the standard for the year ended 31 March 2023.
All of the policies applied in preparation of the parent company financial statements are consistent with the applied
to the Group financial statements as described on pages 58 to 82. Therefore we have not repeated the polices here,
but have included any additional accounting polices which are relevant to the parent company financial statements.
Basis of preparation
The Company meets the definition of a qualifying entity under FRS 101. The financial statements have therefore been
prepared in accordance with FRS 101 as issued by the Financial Reporting Council.
As permitted by FRS 101, the Company has taken advantage of the disclosure exemptions available under that
standard in relation to financial instruments, capital management, presentation of a cash flow statement, share-based
payments, fair value measurements, comparative reconciliations for tangible and intangible assets, standards not yet
effective, related party transactions with other wholly owned members of the Group and key management personnel
compensation. Equivalent disclosures are, where required, given in the Group accounts of RUA Life Sciences plc. The
Group accounts of RUA Life Sciences plc are available to the public.
The financial statements have been prepared on the historical cost basis.
Going concern
RUA Life Sciences company going concern has been assessed within the wider RUA Life Sciences Group going
concern position. The group going concern assessment (as disclosed in the Group accounts) is as follows:
The Board has to consider that the Going Concern principle is appropriate for the preparation of these accounts. At
31 March 2023, the Group had cash and cash equivalents of £1.48m (2022: £2.96m) and, as at the date of signing these
Financial Statements, the cash balance was £0.9m.
RUA Life Sciences has two cash-generative units (RUA Biomaterials and RUA Contract Manufacture). These cash-
generating units provide a healthy Gross Margin (89% and 49%), and contributions to Group operating loss were
£493,000 and £794,000. The Group has two cash-consuming units (RUA Vascular and RUA Structural Heart), and
both these units require further investment before commercialisation and cash generation can be achieved. The
investment will chiefly be for a GLP animal study and Human Clinical Trials for RUA Vascular. The Board anticipates the
requirement for additional funding over the course of the financial year as the internal cash generation will not cover
the additional investment required.
The Board has considered the current cash position, reviewed budgets and profit and cash flow forecasts over the
going concern period (to October 2024) along with sensitivity analyses and made appropriate enquiries. The Board
has concluded that further financing is required and has taken advice from the Company’s Nomad and Broker on the
current state of the equity market and the chances of a successful fundraise. The Board has formed a judgement at
the time of approving the financial statements that the Group will have access to adequate resources, including new
financing, to continue in operational existence for the period of the going concern assessment. If finance is not
successful, which management see as unlikely, management have a number of mitigating actions which can be taken.
There is a level of uncertainty around the ability of management to implement the mitigations during the going
concern period, for this reason management have concluded a material uncertainty is appropriate. For this reason, the
Board considers that the adoption of the going concern basis in preparing the consolidated financial statements is
appropriate.
The Financial Statements have been prepared on a going concern basis and do not include the adjustments that
would result if the Group was unable to continue as a going concern. Due to the factors described above, specifically
the uncertainty around the ability to raise new financing and the ability to implement mitigating actions, a material
uncertainty exists, which may cast significant doubt on the Group and the Company’s ability to continue as a going
concern.
86
RUA Life Sciences plc
PARENT
COMPANY
FINANCIAL
STATEMENTS
1. ACCOUNTING POLICIES (CONTINUED)
Use of accounting estimates and judgements
Many of the amounts included in the financial statements involve the use of judgement and/or estimation. These
judgements and estimates are based on management’s best knowledge of the relevant facts and circumstances,
having regard to prior experience, but actual results may differ from the amounts included in the financial statements.
Information about such judgements and estimation is contained in the accounting policies and/or the notes to the
financial statements and the key areas are summarised below:
Sources of estimation uncertainty
Amortisation rates are based on estimates of the useful lives and residual values of the assets involved.
Investments
Investments held as fixed assets are stated at cost less provision for impairment. In the opinion of the Directors the
value of such investments is not less than that shown at the balance sheet date.
Deferred tax
Deferred tax is recognised (on an undiscounted basis) on all temporary differences where the transactions or events
that give the Company an obligation to pay more tax in the future, or a right to pay less tax in the future, have occurred
by the balance sheet date. Deferred tax assets are recognised when it is more likely than not that they will be recovered.
Deferred tax is measured using rates of tax that have been enacted or substantively enacted by the balance sheet
date.
Share-based payments
Share options
The Group operates a Share Option Plan for its employees. Options awarded to employees and directors of any
subsidiary companies are recorded in the relevant subsidiary accounts as a charge to the profit and loss account and
a corresponding entry to ‘other reserves’. In the parent company accounts the cost is treated as an additional cost of
investment in the parent company accounts. The cost is calculated using the Black Scholes Option Pricing Model
‘BSOPM’ as outlined below.
The grant of any share-based payment is measured at its fair value using the BSOPM. The fair value of the share
options is ultimately recognised as an expense in profit or loss with a corresponding credit to retained earnings over
the vesting period, based on the best available estimate of the number of share options expected to vest.
Estimates are subsequently revised if there is any indication that the number of share options expected to vest differs
from previous estimates. Any adjustment to cumulative share-based compensation resulting from a revision is
recognised in the current period. The number of vested options ultimately exercised by holders does not impact the
expense recorded in any period.
Upon exercise of share options, the proceeds received, net of any directly attributable transaction costs, are allocated
to share capital up to the nominal (or par) value of the shares issued with any excess being recorded as share premium.
Debtors
The amounts owed by Group undertakings are in respect of intercompany loans. The Company uses its cash to fund
the operations of its subsidiaries until such a time that the subsidiaries are in a position to return the monies to Group.
These loans are interest free and have no fixed repayment date, all loans are repayable on demand.
Tangible Fixed Assets
Tangible Fixed Assets is stated at historical cost, less accumulated depreciation.
The gain or loss arising on the disposal of an asset is determined as the difference between the disposal proceeds and
the carrying amount of the asset and is recognised in profit and loss.
Annual Report & Accounts 2023
87
PARENT
COMPANY
FINANCIAL
STATEMENTS
NOTES TO THE PARENT COMPANY
FINANCIAL STATEMENTS (CONTINUED)
1. ACCOUNTING POLICIES (CONTINUED)
Depreciation is provided at annual rates calculated to write off the cost less residual value of each asset over its
expected useful life:
Plant and machinery
– 10 years
Computer equipment – 3 years
2.
INTANGIBLE ASSETS
Cost
At 31 March 2022
Additions for the year
At 31 March 2023
Amortisation
At 31 March 2022
Charge for the year
At 31 March 2023
Net book value
At 31 March 2022
At 31 March 2023
3. TANGIBLE ASSETS
Cost
At 31 March 2022
Additions for the year
Disposals in the year
At 31 March 2023
Depreciation
At 31 March 2022
Charge for the year
On disposals
At 31 March 2023
Net book value
At 31 March 2022
At 31 March 2023
88
RUA Life Sciences plc
Intellectual
property
GB£000
Development
costs
GB£000
Total
GB£000
4,929
–
4,929
4,850
7
4,857
79
72
330
–
330
330
–
330
–
–
5,259
–
5,259
5,180
7
5,187
79
72
Plant &
Machinery
GB£000
Computer
equipment
GB£000
Total
GB£000
171
–
–
171
7
17
–
24
164
147
6
–
–
6
4
2
–
6
2
–
177
–
–
177
11
19
–
30
166
147
PARENT
COMPANY
FINANCIAL
STATEMENTS
4. DIRECTORS AND EMPLOYEES
The average monthly number of persons (including Directors) employed by the Company during the year was:
Directors
Non-executive directors
Total
The aggregate remuneration comprised:
Wages and salaries
Social security costs
Pension contributions
Share based payments
Total costs
2023
Numbers
2022
Numbers
5
3
8
4
3
7
2023
GB£000
2022
GB£000
846
103
65
111
642
73
33
92
1,125
840
The Directors are the only employees of the parent company. Disclosure of their emoluments is given in the Report
of the Remuneration Committee on page 38.
5. NON-CURRENT ASSET INVESTMENTS
Investment in subsidiary undertakings
Cost
Historical cost
RMD Share based payment adjustment (see note 9)
Net book value at 31 March
Interest in subsidiary undertakings
Name of undertaking
Country of
registration or
incorporation
Registered office
2023
GB£000
2022
GB£000
2,244
(9)
2,235
2,191
53
2,244
Description
of shares
held
Proportion
of nominal
value of
shares held
%
(i) RUA Biomaterials Limited
Scotland
163 Bath St, Glasgow G2 4SQ
Ordinary £1
(ii) RUA Structural Heart Limited
Scotland
163 Bath St, Glasgow G2 4SQ
Ordinary £1
(iii) RUA Vascular Limited
Scotland
163 Bath St, Glasgow G2 4SQ
Ordinary £1
(iv) RUA Medical Devices Limited
Scotland
163 Bath St, Glasgow G2 4SQ
Ordinary £1
(v) Aortech International Limited
Scotland
163 Bath St, Glasgow G2 4SQ
Ordinary £1
100
100
100
100
100
Annual Report & Accounts 2023
89
PARENT
COMPANY
FINANCIAL
STATEMENTS
NOTES TO THE PARENT COMPANY
FINANCIAL STATEMENTS (CONTINUED)
6. TRADE AND OTHER RECEIVABLES
Current
Trade receivables – gross
Allowance for credit losses
Trade receivables
Other receivables
Amounts owed by Group undertakings
Tax credit due
Prepayments and accrued income
Total administrative expenses
Non current
Amounts owed by Group undertakings
Less: Provision*
2023
GB£000
2022
GB£000
79
–
79
14
1,874
–
286
2,253
49
–
49
25
1,772
205
319
2,370
3,955
(3,955)
–
3,955
(3,955)
–
* A cumulative impairment charge of £3,955,000 as at 31 March 2023 (31 March 2022: £3,955,000) has been made to fully provide
against the remaining amount of the inter-company loan account due as at 31 March 2023 to RUA Life Sciences plc by its American
subsidiary, AorTech Polymers & Medical Devices, Inc who were in liquidation as of 2014 and remains so at the balance sheet date.
7. TRADE AND OTHER PAYABLES
Trade payables
Other payables
Accruals and deferred income
8. SHARE CAPITAL
2023
GB£000
2022
GB£000
65
2
157
224
113
37
113
263
See Note 17 in the Consolidated financial statements which details the number of shares in issue at each period end
and movements in the period. The nominal value of all shares in issue at 31 March 2023 is £1,109,240 (2022: £1,109,240).
9. SHARE-BASED PAYMENTS
Director and Employee Share Option Plans
See note (6) in group accounts for detail on share-based payments.
10. RELATED PARTY TRANSACTIONS
The Company is exempt under the terms of FRS 101.8 from disclosing transactions with its wholly owned subsidiaries.
Related party transaction disclosures are included within the Report of the Remuneration Committee in the Group
accounts.
90
RUA Life Sciences plc
ANNUAL
GENERAL
MEETING
ANNUAL
GENERAL
MEETING
LETTER TO SHAREHOLDERS
THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in any
doubt about the action you should take, you should consult your stockbroker, bank, solicitor,
accountant, fund manager or other appropriate independent professional adviser who, if you are
taking advice in the United Kingdom, is duly authorised under the Financial Services and Markets Act
2000 or an appropriately authorised independent professional adviser if you are in a territory outside
the United Kingdom. If you no longer hold shares in RUA Life Sciences plc, please pass this document
to the purchaser or transferee or to the agent who dealt with the sale or transfer to be sent on to the
new owner of the shares.
RUA LIFE SCIENCES PLC
(Incorporated in Scotland SC170071)
Registered office
C/O Davidson Chalmers
Stewart LLP
163 Bath Street
Glasgow G2 4SQ
25 July 2023
Dear Shareholder
I am writing to give you the details of the 2023 Annual General Meeting to be held at 11.00am on 22
August 2023 at Gailes Hotel, Marine Drive, Irvine, Ayrshire KA11 5AE. The formal notice of AGM is set
out on pages 96 to 98 and an explanation of the business is set out below.
FORMAT OF THE AGM
The AGM will be a physical meeting. The Board encourages all shareholders who are unable to, or do
not wish to, attend the AGM in person to vote by proxy. Please see the Notice of AGM set out on
pages 96 to 98 for details of how to appoint a proxy and for further important information regarding
the appointment of proxies.
If you wish to attend the AGM in person, it would assist the Company’s planning if you could please
notify the Company in advance by email to kate.full@rualifesciences.com, including your name as
shown on the Company’s Register of Members.
We will notify shareholders of any significant changes to the AGM arrangements by publishing details
on the Company’s website (www.rualifesciences.com) and via a Regulatory Information Service as
early as is possible before the date of the meeting.
All the resolutions will be voted on by way of a poll and this will ensure that your vote will be counted,
even if you are unable to attend in person.
Your vote is important to the Company and, whether or not you wish to attend the AGM in person,
the Directors strongly recommend you complete and return the Form of Proxy, with your voting
instructions, in accordance with the instructions on the Form. The deadline for the receipt of a Proxy
Form by the Registrars is 11.00am on 18 August 2023.
If you hold your ordinary shares in CREST, you may appoint a proxy by completing and transmitting a
CREST Proxy Instruction to the Company’s Registrars, Equiniti Limited, Aspect House, Spencer Road,
Lancing, West Sussex BN99 6DA so that it is received no later than 11.00am on 18 August 2023.
92
RUA Life Sciences plc
ANNUAL
GENERAL
MEETING
If you are an institutional investor, you may be able to appoint a proxy electronically via the Proxymity
platform, a process which has been agreed by the Company and approved by the Registrar. For
further information regarding Proxymity, please go to www.proxymity.io. Your proxy must be lodged
by 11.00am on 18 August 2023 in order to be considered valid. Before you can appoint a proxy via
this process you will need to have agreed to Proxymity’s associated terms and conditions. It is
important that you read these carefully as you will be bound by them and they will govern the
electronic appointment of your proxy.
If you would like to ask questions about the business of the AGM, please contact us at
kate.full@rualifesciences.com. A summary of the questions received, together with our answers, will
be published on our website shortly after the AGM has concluded.
EXPLANATION OF THE BUSINESS OF THE AGM
Resolution 1 – Receipt of the Annual Report and Accounts
The Companies Act 2006 requires the directors of a public company to lay before the company in
general meeting copies of the directors’ reports, the independent auditors’ report and the audited
financial statements of the company in respect of each financial year. In line with best practice, the
Directors invite shareholders to receive their reports, the audited accounts and the auditors’ report for
the financial year ended 31 March 2023 (the “2023 Annual Report”).
Resolution 2 – Approval of the Report of the Remuneration Committee
The Company invites shareholders to approve the Report of the Remuneration Committee contained
in the 2023 Annual Report.
The vote on this Resolution is advisory only and the Directors’ entitlement to remuneration is not
conditional on it being passed.
Resolutions 3 and 4 – Re-election of Directors
The Articles of Association of the Company require that any Director: (i) who has been appointed by
the Board since the last annual general meeting of the Company; or (ii) for whom it is the third annual
general meeting following the annual general meeting at which he or she was last elected or re-
elected, should be proposed for election or re-election respectively. Accordingly, the shareholders are
invited to re-elect John Ely and Geoffrey Berg. Biographical details on the Directors are contained in
the 2023 Annual Report.
Resolution 5 – Re-appointment and remuneration of the Auditor
The Company is required to appoint or reappoint auditors at each annual general meeting at which its
audited accounts and reports are presented to shareholders. Resolution 5 deals with the re-
appointment of Grant Thornton as auditor for the year ending 31 March 2024. As is market practice,
the Resolution authorises the Directors to fix the auditor’s fees.
Resolution 6 – Authority to allot shares
The Directors currently have a general authority to allot new shares in the Company and to grant
rights to subscribe for, or convert any securities into, shares. This authority is due to expire at this
AGM and the Board would like to renew it to provide the Directors with flexibility to allot new shares
and grant rights up until the Company’s next annual general meeting within the limits prescribed by
The Investment Association.
Annual Report & Accounts 2023
93
ANNUAL
GENERAL
MEETING
LETTER TO SHAREHOLDERS (CONTINUED)
The Investment Association’s guidelines on Directors’ allotment authority state that the Association’s
members will regard as routine any proposal at a general meeting to seek a general authority to allot
an amount up to two-thirds of the existing share capital, provided that any amount in excess of one-
third of the existing share capital is applied to fully pre-emptive rights issues only.
This Resolution would authorise the Directors to allot (or grant rights over) new shares in the
Company: (i) under an open offer or in any situation other than a rights issue up to an aggregate
nominal amount of £369,746 (representing approximately 33 per cent. of the Company’s current
issued ordinary share capital); and (ii) under a rights issue up to an aggregate nominal amount of
£739,492 (representing approximately 66 per cent. of the Company’s current issued ordinary share
capital).
For the avoidance of doubt, the maximum aggregate nominal amount of shares which may be allotted
(or rights that may be granted) under this Resolution is £739,492 (representing approximately 66 per
cent. of the Company’s current issued ordinary share capital).
Resolutions 7 and 8 – Powers to disapply pre-emption rights
These Resolutions would give the Directors powers to allot ordinary shares for cash without first
offering those shares to existing shareholders in proportion to their existing holdings.
The Resolutions seek powers which reflect the revised Statement of Principles published by the Pre-
Emption Group in November 2022 (and endorsed by the Investment Association) (the “Statement of
Principles”) which provide that a company may seek power to issue on a non-pre-emptive basis for
cash shares in any one year representing: (i) no more than ten per cent. of the company’s issued
ordinary share capital; and (ii) no more than an additional ten per cent. of the company’s issued
ordinary share capital provided that such additional power is only used in connection with an
acquisition or specified capital investment.
Accordingly, and in line with best practice, the Board is seeking two separate powers to disapply pre-
emption rights.
Resolution 7 would permit the Board to allot ordinary shares for cash on a non-pre-emptive basis in
connection with a rights issue or similar pre-emptive issue and, otherwise than in connection with any
such issue, up to a maximum nominal amount of £110,924 (which represents approximately ten per
cent. of the issued share capital of the Company as at 24th July 2023, being the latest practicable
date before the publication of this notice) and up to a further nominal amount equal to 20 per cent. of
any such allotment if used only for the purposes of making a follow-on offer which the Directors
determine to be of a kind contemplated by the Statement of Principles. This Resolution will permit the
Board to allot ordinary shares for cash, up to the specified level, in any circumstances (whether or not
in connection with an acquisition or specified capital investment).
Resolution 8 would give the Board an additional power to allot ordinary shares for cash on a non-pre-
emptive basis up to a further maximum nominal amount of £110,924 (again representing
approximately ten per cent. of the Company’s current issued ordinary share capital) where this power
is used only for the purposes of financing (or refinancing, if such refinancing occurs within 12 months
of the original transaction) a transaction which the Directors determine to be an acquisition or other
capital investment of a kind contemplated by the Statement of Principles prior to the date of this
notice, and up to a further nominal amount equal to 20 per cent. of any such allotment if used only for
the purposes of making a follow-on offer which the Directors determine to be of a kind contemplated
by the Statement of Principles.
94
RUA Life Sciences plc
ANNUAL
GENERAL
MEETING
The Directors have no present intention of exercising the authority given by these Resolutions. If the
Directors were to make a non-pre-emptive issue of equity securities for cash using the powers
conferred by Resolutions 7 or 8, the Directors confirm that the Company will comply with the
shareholder protections contained in Part 2B of the Statement of Principles regarding how such an
issue should be carried out.
RECOMMENDATION
The Directors believe that the proposals to be voted on at the AGM are in the best interests of the
Company and its shareholders as a whole. Accordingly, the Directors unanimously recommend
shareholders to vote in favour of the Resolutions, as they intend to do in respect of their beneficial
holdings of shares (save in respect of those matters in which they are interested).
Yours faithfully
WILLIAM BROWN
Chairman
Annual Report & Accounts 2023
95
ANNUAL
GENERAL
MEETING
NOTICE OF ANNUAL GENERAL MEETING
Notice is hereby given that the twenty-sixth Annual General Meeting of RUA Life Sciences plc will be
held at Gailes Hotel, Marine Drive, Irvine, Ayrshire KA11 5AE on 22 August 2023 at 11.00am for the
purpose of considering and, if thought fit, passing the following resolutions of which numbers 1 to 6
will be proposed as Ordinary Resolutions and numbers 7 and 8 as Special Resolutions:
AS ORDINARY BUSINESS
To consider, and if thought fit, pass the following resolutions as Ordinary Resolutions:
1
To receive and adopt the financial statements of the Company for the year ended 31 March 2023
together with the Strategic Report and the Reports of the Directors and Auditor thereon.
2 To approve the Report of the Remuneration Committee for the year ended 31 March 2023.
3 To re-elect as a Director, John Ely, who is retiring by rotation.
4 To re-elect as a Director, Geoffrey Berg, who is retiring by rotation.
5
To re-appoint Grant Thornton UK LLP as auditor of the Company and to authorise the Directors to
fix their remuneration.
AS SPECIAL BUSINESS
To consider, and if thought fit, pass the following resolution as an Ordinary Resolution:
6
That, in substitution for all equivalent authorities and other powers granted to the Directors at the
Company’s annual general meeting held on 16 August 2022 but without prejudice to any allotment
of shares or grant of rights to subscribe for or convert any security into shares in the Company
made or agreed to be made pursuant to such authorities and other powers, in accordance with
section 551 of the Companies Act 2006 (the “Act”) the Directors be generally and unconditionally
authorised to exercise all powers of the company to allot shares in the Company:
6.1
6.2
up to an aggregate nominal amount of £369,746 (such amount to reduced by the aggregate
nominal amount of any equity securities that may be allotted pursuant to paragraph 6.2) of
this resolution in excess of £369,746); and
comprising equity securities (as defined in section 560 of the Act) up to an aggregate nominal
amount of £739,492 (such amount to be reduced by the aggregate nominal amount of any
shares allotted or rights granted pursuant to the authority in paragraph 6.1 of this resolution)
in connection with an offer by way of a rights issue to holders of ordinary shares in the capital
of the Company in proportion (as nearly as may be practicable) to their respective holdings,
but subject to such exclusions or other arrangements as the Directors may deem necessary or
expedient in relation to treasury shares, fractional entitlements, record dates, regulatory or
practical problems in or under the laws of any territory or the requirements of any regulatory body
or stock exchange or any other matter; provided that, unless previously revoked, varied or
extended, this authority will expire at whichever is the earlier of the conclusion of the annual
general meeting of the company to be held in 2024 or the date falling 15 months from the date of
passing this resolution, save that the Company may before such expiry make an offer or agreement
which would or might require the allotment of shares in the Company, or the grant of rights to
subscribe for or to convert any security into shares in the Company, after such expiry.
96
RUA Life Sciences plc
ANNUAL
GENERAL
MEETING
To consider and, if thought fit, pass the following resolutions as Special Resolutions:
7
That, in substitution for all equivalent authorities and other powers granted to the Directors at the
Company’s annual general meeting held on 16 August 2022 but without prejudice to any allotment
of shares made or agreed to be made pursuant to such authorities and other powers, subject to
and conditional upon the passing of Resolution 6 set out in this Notice, in accordance with section
571(1) of the Companies Act 2006 (the “Act”), the Directors be and are hereby empowered
pursuant to section 570 of the Act to allot equity securities (within the meaning of section 560 (1)
of the Act) for cash pursuant to the authority conferred by Resolution 6 set out in this Notice, as if
section 561(1) of the Act did not apply to any such allotment, provided that this power shall be
limited to:
7.1
7.2
7.3
7.4
the allotment of equity securities pursuant to the terms of any share scheme for directors
and/or employees of the Company and/or its subsidiaries approved by the Directors or by the
shareholders of the Company in general meeting;
the allotment of equity securities in connection with or pursuant to an offer by way of rights
issue, open offer or any other pre-emptive offer in favour of ordinary shareholders and in
favour of holders of any other class of equity security in accordance with the rights attached
to such class where the equity securities respectively attributable to the interest of such
persons on a fixed record date are proportionate (as nearly as may be) to the respective
numbers of equity securities held by them or are otherwise allotted in accordance with the
rights attaching to such equity securities subject to such exclusions or arrangements as the
Directors may deem necessary or expedient to deal with to treasury shares, fractional
entitlements, record dates, regulatory or practical problems in or under the laws of any
territory or the requirements of any regulatory body or stock exchange or any other matter;
the allotment (otherwise than pursuant to paragraphs 7.1 and 7.2 of this resolution) of equity
securities having a nominal amount or giving the right to subscribe for or convert into relevant
shares having a nominal amount, not exceeding in aggregate £110,924; and
the allotment of equity securities, other than pursuant to paragraphs 7.1 to 7.3 above of this
resolution, up to an aggregate nominal amount of 20 per cent. of any allotment of equity
securities from time to time under paragraph 7.3 above, such authority to be used only for the
purposes of making a follow-on offer which the Directors determine to be of a kind
contemplated by paragraph 3 of Section 2B of the Statement of Principles on Disapplying
Pre-Emption Rights most recently published by the Pre-Emption Group prior to the date of
this notice,
and such power shall expire on the revocation or expiry (unless renewed) of the authority
conferred on the Directors by Resolution 6 set out in this Notice but may be previously
revoked, varied or extended by special resolution, save that the Company may before such
expiry make an offer or agreement which would or might require the allotment of shares in
the Company, or the grant of rights to subscribe for or to convert any security into shares in
the Company, after such expiry.
Annual Report & Accounts 2023
97
ANNUAL
GENERAL
MEETING
NOTICE OF ANNUAL GENERAL MEETING
(CONTINUED)
8
That, subject to and conditional upon the passing of Resolution 6 set out in this Notice, without
prejudice to any allotment of shares made or agreed to be made pursuant to the authorities and
other powers granted to the Directors at the Company’s annual general meeting held on 16 August
2022, in accordance with section 571(1) of the Companies Act 2006 (the “Act”), the Directors be
and are hereby empowered pursuant to section 570 of the Act to allot equity securities (within the
meaning of section 560 (1) of the Act) for cash pursuant to the authority conferred by Resolution 6
set out in this Notice, as if section 561(1) of the Act did not apply to any such allotment, provided
that this power shall be limited to:
8.1
8.2
the allotment of equity securities up to an aggregate nominal amount of £110,924, such
authority to be used only for the purpose of financing (or refinancing, if the power is to be
exercised within 12 months after the date of the original transaction) a transaction which the
Directors determine to be an acquisition or other capital investment of a kind contemplated
by the Statement of Principles on Disapplying Pre-Emption Rights most recently published by
the Pre-Emption Group prior to the date of this Notice of Meeting; and
the allotment of equity securities, other than pursuant to paragraph 8.1 above of this
resolution, up to an aggregate nominal amount of 20 per cent. of any allotment of equity
securities from time to time under paragraph 8.1 above of this resolution such authority to be
used only for the purposes of making a follow-on offer which the Directors determine should
be of a kind contemplated by paragraph 3 of Section 2B of the Statement of Principles on
Disapplying Pre-Emption Rights most recently published by the Pre-Emption Group prior to
the date of this notice,
and such power shall expire on the revocation or expiry (unless renewed) of the authority
conferred on the Directors by Resolution 6 set out in this Notice but may be previously
revoked, varied or extended by special resolution, save that the Company may before such
expiry make an offer or agreement which would or might require the allotment of shares in
the Company, or the grant of rights to subscribe for or to convert any security into shares in
the Company, after such expiry.
By order of the Board
Kate Full
Company Secretary
25 July 2023
98
RUA Life Sciences plc
ANNUAL
GENERAL
MEETING
IMPORTANT NOTICE REGARDING ATTENDANCE AT THE GENERAL MEETING AND APPOINTMENT
OF PROXIES
1
Members will only be entitled to attend and vote at the meeting if they are registered on the
Company’s Register of Members at 6:30pm on 18 August 2023. Changes to entries on the Register
of Members after that time shall be disregarded in determining the rights of any person to attend
and vote at the meeting. If the meeting is adjourned, the time by which a person must be entered
on the Register of Members of the Company in order to have the right to attend and vote at the
adjourned meeting is 6:00pm two business days prior to the date fixed for the adjourned meeting.
Changes to the Register of Members after the relevant times shall be disregarded in determining
the rights of any person to attend and vote at the meeting.
2
Any member of the Company who is entitled to attend and vote at the Annual General Meeting
may appoint another person or persons (whether a member or not) as their proxy or proxies to
attend, speak and vote on their behalf. A corporation which is a member can appoint one or more
corporate representatives who may exercise, on its behalf, all its powers as a member provided
that no more than one corporate representative exercises powers over the same share.
3
4
Under the restrictions in force at the date of the notice of this meeting, proxies other than the
Chairman of the meeting will not be permitted to attend the AGM in person. If a member is
appointing a proxy, they should appoint the Chairman of the meeting as their proxy. Similarly any
appointment of a corporate representative should be an appointment of the Chairman of the
meeting. Any proxy or corporate representative who is not the Chairman of the meeting will not be
permitted to attend the meeting in person.
To be valid, Forms of Proxy must be lodged with the Company’s Registrars, Equiniti Limited,
Aspect House, Lancing, West Sussex, BN99 6ZL not later than 11.00am on 18 August 2023 or not
later than 48 hours (excluding any non-business day) before time appointed for the holding of any
adjourned meeting together with any documentation required. In the case of a corporation, the
Form of Proxy should be executed under its common seal or signed by a duly authorised officer or
attorney of the corporation. Details of how to complete the proxy form are set out in the notes to
the proxy form. 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 a resolution. If no voting indication is given your proxy will
vote (or abstain from voting) as he or she thinks fit in relation to any other matter put before the
meeting.
CREST members who wish to appoint a proxy or proxies through the CREST electronic proxy
appointment service may do so by using the procedures described in the CREST Manual (available
at https://www.euroclear.com/site/public/EUI). CREST personal members or other CREST
sponsored members, and those CREST members who have appointed a voting service provider
should refer to their CREST sponsors or voting service provider(s), who will be able to take the
appropriate action on their behalf. In order for a proxy appointment or instruction made by means
of CREST to be valid, the appropriate CREST message (a “CREST Proxy Instruction”) must be
properly authenticated in accordance with Euroclear UK & International Limited’s specifications
and must contain the information required for such instructions, as described in the CREST Manual.
The message must be transmitted so as to be received by the Company’s agent, Equiniti Limited
(CREST Participant ID RA19), no later than 11.00am on 18 August 2023. For this purpose, the time
of receipt will be taken to be the time (as determined by the time stamp applied to the message by
the CREST Application Host) from which the Company’s agent is able to retrieve the message by
enquiry to CREST in the manner prescribed by CREST.
Annual Report & Accounts 2023
99
ANNUAL
GENERAL
MEETING
NOTICE OF ANNUAL GENERAL MEETING
(CONTINUED)
CREST members and, where applicable, their CREST sponsor or voting service provider should
note that Euroclear UK & International Limited does not make available special procedures in
CREST for any particular messages. Normal system timings and limitations will therefore apply in
relation to the input of CREST Proxy Instructions. It is the responsibility of the CREST member
concerned to take (or, if the CREST member is a CREST personal member or sponsored member
or has appointed a voting service provider, to procure that his CREST sponsor or voting service
provider takes) such action as shall be necessary to ensure that a message is transmitted by means
of the CREST system by any particular time. In this connection, CREST members and, where
applicable, their CREST sponsor or voting service provider are referred in particular to those
sections of the CREST Manual concerning particular limitations of the CREST system and timings.
The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in
Regulation 35(5)(a) of the Uncertificated Securities Regulations 2001.
5
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 Company’s
Registrars, Equiniti Limited, Aspect House, Lancing, West Sussex, BN99 6ZL. In the case of a
member which is a company, the revocation notice must be executed under its common seal or
signed on its behalf by an officer of the company or an attorney for the company. 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. The revocation
notice must be received by Equiniti no later than 11.00am on 18 August 2023. 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. To change your proxy
instructions simply submit a new proxy appointment. Note that the cut-off time for receipt of
proxy appointments (see above) also apply in relation to amended instructions; any amended
proxy appointment received after the relevant cut-off time will be disregarded. If you require a new
Form of Proxy please contact to the Company’s Registrars, Equiniti Limited on +44 121 415 7047
between 8.30 am and 5.30 pm, Monday to Friday excluding public holidays in England and Wales.
6
As at noon on 24 July 2023 the Company’s issued share capital comprised 22,184,798 ordinary
shares of £0.05 each. Each ordinary share carries the right to one vote at a general meeting of the
Company and, therefore, the total number of voting rights in the Company as at noon on 24 July
2023 is 22,184,798. Voting at this meeting will be on a poll rather than a show of hands. Each
ordinary shareholder present at the meeting will be entitled to one vote for every ordinary share
registered in his or her name and each proxy or corporate representative will be entitled to one
vote for each share which he or she represents.
7
The following documents will be available at the registered office of the Company during normal
business hours from the date of this notice until the date of the Annual General Meeting and at the
AGM venue from at least 15 minutes prior to and until the end of the AGM:
7.1 a copy of the service agreement for the Executive Directors,
7.2 a copy of the letters of appointment for the Non-Executive Directors,
7.3 the Memorandum and Articles of Association of the Company.
100
RUA Life Sciences plc
ANNUAL
GENERAL
MEETING
8 Any member attending the meeting has the right to ask questions.
The Company has also made alternative arrangements for questions to be submitted by members
by email. The Company must cause to be answered any such question relating to the business
being dealt with at the meeting but no such answer need be given if: (a) to do so would interfere
unduly with the preparation for the meeting or involve the disclosure of confidential information;
(b) the answer has already been given on a website in the form of an answer to a question; or (c) it
is undesirable in the interests of the Company or the good order of the meeting that the question
be answered.
9
If you have any general queries about the meeting please contact the Company Secretary at
kate.full@RUAlifesciences.com or by calling on 01294 317 073. You may not use any electronic
address provided either in this notice of meeting or any related documents (including the Form of
Proxy) to communicate for any purposes other than those expressly stated.
Annual Report & Accounts 2023
101
RUA Life Sciences plc
2 Drummond Crescent
Irvine, Ayrshire
Scotland
UK
KA11 5AN
info@rualifesciences.com