The Buckle Annual Report 2018

FY2018 Annual Report · The Buckle

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BTG plc
Annual Report
and Accounts
2018

Imagine where we can go.

At BTG, we are focused
on bringing to market
innovative products in
specialist areas of medicine
to better serve doctors
and patients.

Our growing portfolio of image-guided
minimally invasive Interventional Medicine
products is designed to advance the
treatment of cancer, severe blood clots,
varicose veins and severe emphysema.

We also provide Pharmaceuticals that
counteract certain snake venoms and
toxicities associated with some heart
and cancer medications.

Chairman’s introduction
CEO’s Strategic report

Strategic Report
04
06
08 Market overview
10
12
14
28

Our business model
Our strategic priorities
Performance
Group financial review

Governance
38
38
40
42
52
54

Corporate Governance report
Letter from the Chairman
Board of Directors
Leadership
Effectiveness
Accountability
(including Audit Committee report and risk)
Relations with shareholders
Remuneration
Directors’ report
Statement of directors’ responsibilities in respect of
the Annual Report 2018 and the financial statements

68
69
95
98

Financials
100

Independent auditor’s report to the members
of BTG plc only

108 Consolidated income statement
109

Consolidated statement of comprehensive
loss/income
Consolidated statement of financial position
Consolidated statement of cash flows
Consolidated statement of changes in equity
Notes to the consolidated financial statements
Company financial statements
Statement of financial position

110
111
112
113
154

155 Statement of cash flows
156 Statement of changes in equity
157
161 Five-year financial record
164 Shareholder information

Notes to the Company financial statements

Creating value today...

Establishing leadership positions
in attractive markets

The role of Interventional Medicine is expanding. Advances in imaging and device
technology mean that more diseases can now be treated in minimally invasive
procedures. Short hospital stays and low rates of treatment complication benefit
patients and healthcare providers.

BTG focuses on market segments where there are large patient populations with
high unmet need. We provide leading-edge interventional therapies, and we invest
in activities to expand their use and to enable our customers to treat more patients.

Our Pharmaceuticals business provides antidote products for conditions where there
are limited or no existing treatment options. We continue to invest in product and data
enhancements to ensure optimal outcomes for patients.

Business units

Stage

Therapies

Patient populations†

High-growth
businesses

Interventional Oncology
Embolic and drug-eluting beads,
and radioactive microspheres to
treat tumours in the liver
Cryoablation technology to treat
solid tumours

c. 325,000

annual patients
worldwide

Interventional
Medicine

Interventional Vascular
Ultrasonic catheter drug delivery
device for treating severe blood clots
Anchoring catheters and microcatheters
used to cross complex lesions and
arterial blockages

c. 2-3m

annual patients
worldwide

Early-stage
products

Varithena®
Injectable microfoam that reduces the
symptoms and improves the appearance
of varicose veins

c. 800,000

annual GSV
procedures in the US

PneumRx® Coil
Implantable metal coils designed
to improve lung function in certain
patients with severe emphysema

>4m

annual severe emphysema
patients worldwide

Pharmaceuticals

Established
cash generation

CroFab®/DigiFab®/
Voraxaze®
Antidote products for treating snakebite
envenomation, and toxicity from
overexposure to certain medicines

>10,000

patients treated
annually

Licensing

† Company estimates.

To learn more about our products go to pages 14 to 23.

Zytiga®/Two-part
hip cup
Royalties relating to products subject
to BTG intellectual property and
licence agreements

OverviewBuilding a scalable growth platform

s
e
e
y
o
l
p
m
e
f
o
r
e
b
m
u
n
e
g
a
r
e
v
A

1,600

1,200

800

400

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

We have built our business through acquisition and organic development, and we now have
a scalable platform for sustained growth.

With each acquired business we have added capability as well as products, development
programmes and technology platforms. We have also invested in our company infrastructure
to ensure we have the right skills and experience across the business to be leaders in our field.

As we have grown, successfully integrating businesses and people, we have maintained
a consistent company culture centred on putting our customers and their patients first.

Delivering a good underlying financial performance
Revenue

£620.5m +9% (+10% CER1)

Adjusted operating profit2

IFRS operating loss

£152.7m +18% (+20% CER)

(£102.8m) n/m

Adjusted basic EPS2

32.9p

Free cash flow2

+42%

£109.3m +69%

IFRS basic EPS

3.9p

(55%)

IFRS cash from operating activities

£120.7m +63%

1.
2.

Constant exchange rate ('CER') growth is computed by restating 2017/18 results using 2016/17 foreign exchange rates for the relevant period.
Adjusted operating profit, Adjusted basic EPS and free cash flow are not prepared in accordance with IFRS. For definition see page 34.

OverviewGovernanceFinancialsStrategic ReportBTG plc Annual Report and Accounts 2018

…while investing to ensure
growth over the long term
1 Innovation and development

Investing in our technology platforms to expand our portfolio
and enable our customers to treat more patients.

Our goal is to bring to market differentiated products with the characteristics that meet the
needs of customers, patients and payers. We invest in product innovation and clinical studies,
to develop new products from our current technology platforms and to expand the use of our
products to new patient populations and therapy areas.

Healthcare
themes

Smart access
Local delivery
Enhanced safety
Value for money
Precision
medicine
Patient
friendly

Liver
Kidney
Lung
Bone

Neuro
Vascular
Prostate
Pain

Existing and
potential therapy
area targets

Technology
platforms

BTG
Interventional
Medicine

Radiation
Embolisation
Ablation
Coil and foam
technology
Enhanced
drug activity

Liver

Lung

TheraSphere® STOP-HCC and EPOCH clinical trials to expand use
in HCC and mCRC

PneumRx® Coils ELEVATE study to support market adoption

Immuno-oncology

Exploring how BTG products may be synergistic to immuno-
oncology therapies

Developing other treatment approaches to supplement
chemoembolisation, radiation therapy and cryoablation

Developing products for tougher obstructions and smaller vessels

Solid tumours

Vascular

OverviewBTG plc Annual Report and Accounts 20182 Commercial and

geographic expansion
Making our products available
to patients around the world.

BTG is a global business with direct commercial
operations in the US and major European
markets. We supplement our direct sales
activities with partnerships to ensure our
products are available worldwide.

We are investing in clinical and regulatory
development activities to gain approvals
to market our products in new geographies,
and to secure appropriate reimbursement.
We are also building our commercial and
medical capabilities to support our growth
in new territories, including China and other
Asian markets, where we see significant
future growth opportunities.

3 Acquisitions

Sourcing leading-edge
external innovation.

In parallel with our organic innovation and
development programmes, we will continue
to seek opportunities to expand our portfolio
and pipeline through acquisitions.

We look for differentiated products and
technology platforms that will enhance our
customer offering and help us develop and
maintain leadership positions in our chosen
therapy areas. This gives us confidence we can
continue to create long-term value through
disciplined allocation of capital to sourcing
external technologies and investing behind them.

Progress with liver cancer
therapy in Asia, Europe
and Latin America
During the year, the first patients were
treated with TheraSphere® in Latin
America, Taiwan and Israel, and the
first patients in Europe were treated
with the novel radiopaque chemo-
embolising bead, DC Bead LUMI™.

Roxwood Medical
acquisition
In October 2017, BTG acquired
Roxwood Medical, an innovative
provider of advanced cardiovascular
specialty catheters used in the
treatment of patients with severe
coronary and peripheral artery disease.

OverviewGovernanceFinancialsStrategic ReportBTG plc Annual Report and Accounts 2018Chairman’s
introduction

Creating value
through leadership in
Interventional Medicine
Our vision is to be a global leader
in Interventional Medicine.

This drives our growth strategy to expand our
portfolio of minimally invasive products through
organic development and acquisitions, and to invest
in activities that support sustained product growth.

Our Interventional Oncology and Interventional
Vascular businesses are performing well. We were
pleased to add Roxwood Medical’s specialty catheters
into the Interventional Vascular portfolio in October 2017.
The earlier-stage assets, Varithena® and the PneumRx®
Coils, continue to progress towards key milestones.
The fact that the market for the Coils is taking longer
to develop than expected, has resulted in an impairment
charge of approximately £145m in our results for the year,
and we took the decision to reduce costs and to focus on
activities to build long-term value.

The Pharmaceuticals business has delivered another
good performance and continues to generate
significant cash that is available for reinvestment.
All rights to Vistogard® were returned to Wellstat
Therapeutics Corporation following a legal ruling,
and we recorded a charge of £57.7m in our full year
results to cover the associated damages and costs.

Strategy
While we continue to develop and embed
a strong governance framework across the
culture of our organisation, we also take a
proportionate approach to ensure that our
processes are efficient and support our
growth strategy.

Business performance
We monitor our operating performance
at regular Board meetings and, through
an annual strategy review, we concentrate
on forward planning to support long-term
sustainable growth.

Pages 6 to 13, to read more

Pages 14 to 23, to read more

OverviewBTG plc Annual Report and Accounts 2018

Board changes
Strong corporate governance and leadership is an
essential part of BTG's strategy and we strive to
maintain the best talent capable of achieving the
highest standards.

During the year, Rolf Soderstrom stepped down as
Chief Financial Officer (CFO) and as an Executive
Director of the Company. The Board is grateful to
Rolf for his significant contributions since joining
BTG in 2008. I am delighted that Duncan Kennedy
has been appointed as his successor. Duncan joined
BTG as Group Financial Controller in 2005 and most
recently led our Interventional Oncology business.
He brings a wealth of financial and commercial
experience and we welcome him to the Board.

After almost eleven years, Giles Kerr has announced
his intention to step down from the Board at this year’s
Annual General Meeting (AGM). During the year we
appointed Anne Thorburn who, having previously
been Chief Financial Officer of Exova Group PLC,
brings an extensive range of international financial
management, risk, audit and M&A experience.

We also were pleased to appoint Gregory Barrett
to the Board in November 2017. Greg has extensive
commercial experience in the US MedTech industry,
with a focus on Interventional Medicine therapies.
Anne and Greg’s strong track record will be of great
benefit to BTG as we continue to implement our
growth plans. Further details on the changes to the
Board can be found in the corporate governance
report on page 37.

With more than 90% of current revenues earned in
US dollars, we are going to switch from reporting in
Sterling to reporting in US dollars starting with our
Interim Results in November 2018. This will help
reduce volatility in our reported results caused by
exchange rate movements.

Vision: Be a global leader
in providing Interventional
Medicine therapies.

Aim: Deliver sustained
value creation for all
our stakeholders.

Outlook
In the year ahead we expect ongoing growth
in our Interventional Oncology and Interventional
Vascular businesses, with Pharmaceuticals and
Licensing providing strong cash flows that are
available for reinvestment.

I continue to be excited by BTG's journey. We are
building leading positions in our chosen markets,
by providing differentiated, minimally invasive
therapies and by investing in activities that help
our customers treat more patients. With our financial
resources and capabilities, I am confident our strategy
will create long-term value for all our stakeholders.

Our products make a real difference to our
customers and to their patients’ lives. This is the
main motivation for colleagues throughout BTG.
I would like to thank all of our employees for their
dedication and professionalism, which enable us
to serve more physicians and patients every year.

Garry Watts
Chairman

Leadership & people
We invest in the development of our people
to ensure we have the capabilities to
succeed. Our business standards and ways
of working are guided by our Code of
Conduct and are embodied in the day-to-day
behaviours that we call the BTG 'DNA'.

Internal control & risk
The Group’s risk management framework
is based on the UK Corporate Governance
Code. Our internal processes and controls
provide us with a clear understanding of
the principal risks inherent in our business
operations and strategy, and give us
confidence in the appropriateness of
the actions we take to mitigate them.

Stakeholder engagement
Ensuring good communication with our
shareholders and employees is important to
us. We meet with shareholders throughout
the year, and we regularly engage with and
seek input from our employees.

Pages 24 to 27, to read more

Page 62, to read more

Page 68, to read more

OverviewGovernanceFinancialsStrategic ReportBTG plc Annual Report and Accounts 2018

CEO’s Strategic report

While continuing to source external innovation, we are
investing to build an organic development pipeline.
We are exploiting our existing technology platforms
to deliver new products to enhance our position in
existing markets and to access new organs and
therapy areas. These investments give us confidence
that we can continue to grow our Interventional
Medicine business over the next decade and beyond.

Operational progress
BTG has delivered a good operational performance
over the year. As a leader in Interventional Oncology,
significant progress has been made with multiple
activities to support the sustained high-growth of this
business. Geographic expansion has continued, with
regulatory approvals and the start of commercial
activities in a number of territories in Asia, EMEA
and Latin America.

The TheraSphere® Phase III trials are progressing well,
with data expected in 2019. Our cryoablation business
received 510(k) and CE Mark regulatory clearances
for Visual-ICE® MRI, a new cryoablation system and
needles from Galil Medical that are compatible with
all Magnetic Resonance Imaging (MRI) scanners.

Our Interventional Vascular business was
strengthened by the acquisition of Roxwood Medical
in October 2017. Roxwood’s anchoring catheters
complement our existing EKOS® product by allowing
physicians to cross complex lesions and arterial
blockages, thus enabling them to treat patients with
some of the most complex arterial diseases. One-year
data from the OPTALYSE PE study reinforced the
safety and efficacy of shorter, lower-dose EKOS®
therapy for PE, and we also initiated a further PE
registry to build upon our leadership in this field.

Varithena®, the novel treatment for varicose veins,
received finalised category 1 CPT reimbursement
codes in the US, effective from January 2018. While
these codes have led to renewed physician interest,
we will have a better understanding of their impact
on physician ordering and reordering patterns,
and on insurer coverage and payment practice,
by the end of 2018.

Implementing our
growth strategy
Healthcare systems around the world
are continuing to evolve to meet
ever-growing demands for improved
patient care and value for money.

Interventional Medicine can help healthcare providers
and payers meet these goals. Delivering targeted
therapies through minimally invasive procedures
can provide cost-effective solutions and improve
treatment outcomes.

Our strategy
Our aim is to establish leadership positions in
selected therapy areas where there are large
patient populations with unmet needs. We develop
and acquire differentiated products, and invest in
activities that support their growth. These include
generating clinical data to access new patient
populations and to provide evidence to payers
to support appropriate reimbursement. We also
undertake regulatory and commercial activities
to enable geographic expansion, and product
innovation to maintain our technology leadership.

Customers are at the centre of everything we do.
Our sales, medical and product development teams
work closely with our customers to ensure that we
can provide the leading-edge products they desire.
We also provide the clinical data, training and
other support our customers need to enable them
to treat more patients.

A scalable platform for success
Over the past decade we have been transforming BTG
from a royalties business into a product sales business
with diverse, sustainable revenue streams. We have
built the capabilities and infrastructure that support
ongoing business growth, by investing our strong
cash flows to develop leading positions in selected
Interventional Medicine markets and to maintain
a strong Pharmaceuticals business.

We have national sales forces for Interventional
Oncology in the US and the EU and an Interventional
Vascular sales force in the US. Multiple investments
in product innovation, clinical studies and geographic
expansion, together with a focused acquisition
strategy, support sustained high-growth in these
businesses and increasing operating leverage
over time.

Strategic ReportBTG plc Annual Report and Accounts 2018European sales of the PneumRx® Coils have been
disappointing. We continue to believe that over the
long term this product can help address a significant
unmet need in treating severe emphysema. However,
market development, including securing appropriate
reimbursement, is taking longer than expected and
we recognise that it will take some years to develop
this therapy area and to build product sales. We are
therefore focusing activities to build long-term value
while appropriately reducing the cost base. These
include conducting the ELEVATE clinical study to
support market development including accessing
reimbursement, and progressing our pre-market
approval (PMA) application in the US.

In our Pharmaceuticals business growth was driven
by strong performances from CroFab® and Voraxaze®.
We expect continued strong cash generation in this
business. While there is likely to be some impact
over time on sales of our antivenin CroFab® from a
different antivenin product that could enter the US
market from October 2018, we are implementing
strategies to ensure we maintain our market
leadership. We were disappointed with the court
judgement concerning the commercial dispute over
Vistogard®. However, despite having lost a potential
revenue contributor our Pharmaceuticals business
will continue to provide us with a strong financial
underpin. Licensing revenues performed well as a
result of new clinical data supporting earlier use of
Johnson & Johnson’s prostate cancer treatment, Zytiga®.

Multiple drivers of growth for the future
As we enter a period of financial transition, we have
built a scalable platform, with a broad portfolio of
differentiated products, strong customer relationships,
and multiple investments to support sustained growth.
As the use of minimally invasive therapies continues to
grow, we have the financial resources and capabilities
to continue to make targeted new investments, so
that we can continue building our Interventional
Medicine business and developing leadership
positions in attractive growth markets.

Dame Louise Makin
Chief Executive Officer

BTG has delivered a good
operational performance over
the year… significant progress
has been made with multiple
activities to support the
sustained high-growth
of this business.

F
i
n
a
n
c
i
a
l
s

OverviewGovernanceStrategic ReportBTG plc Annual Report and Accounts 2018Market overview

Markets and competition
The healthcare industry is highly competitive.
Companies compete to attract and retain technical
and commercial talent, to develop and acquire
products, and to gain share in their chosen markets and
geographies. We focus on medical areas where we can
develop market-leading positions through our capability
and resources to undertake product innovation, clinical
development and commercial expansion.

Pages 14 to 23, for a detailed description

of our markets and competition in the
performance review

Understanding BTG’s
strategy in today’s
healthcare market

The global context
Against a background of political, social and economic
uncertainty, the global healthcare industry is expected
to benefit from favourable demographic trends and
shifting behaviours. According to United Nations’
projections, the world’s population is estimated to
grow by more than 1 billion people by 2030, with
the number of people over the age of 60 anticipated
to rise by 500 million to 1.4 billion. The prevalence
of chronic illnesses such as cancer, cardiovascular,
metabolic and respiratory diseases is set to rise
with this ageing population.

Healthcare spending is expected to increase annually
by 4% to 5% on average through to 2020. By then
c. 50% of spending – approximately $4 trillion –
will be on cardiovascular diseases, cancer and
respiratory disease.1

Growing demand for
high-quality treatment
In recent years, there have been fundamental shifts
in consumer empowerment and digital enablement.
Consumers now have more choice and understanding
and a greater say in their treatment. In response,
MedTech companies have pursued innovation outside
the traditional boundaries of the sector. BTG’s strategy
is to invest in innovation and development and offer
products that demonstrate greater safety, efficacy
and value for money to physicians, patients and payers.
In particular, our portfolio of minimally invasive
Interventional Medicine therapies offers significant
advantages over conventional treatment options.

1. Deloitte 2017 Global Healthcare sector outlook.

Strategic ReportBTG plc Annual Report and Accounts 2018Pricing and reimbursement
Pricing and reimbursement remain challenging in many
markets for the healthcare industry. Government, insurers
and other private payers continue to implement strict
controls on cost. We look to mitigate this by providing
innovative, differentiated products that advance the
treatment of patient populations that are currently
underserved. We have also invested in our market access
capabilities, so that we can work with policy makers
and regulators to ensure that our products demonstrate
value for money and thus gain market acceptance and
appropriate reimbursement coverage and pricing.

Regulation
The healthcare industry is highly regulated by
governments, with strict rules overseeing research,
clinical development, manufacturing and commercial
activity. At BTG, we have developed extensive quality,
pharmacovigilance and compliance systems and
procedures. Our skilled and experienced employees
are provided with regular training to ensure that we
comply with all relevant regulatory standards. We pay
close attention to the future regulatory landscape and
the potential impact of healthcare reforms. This is of
particular importance when reviewing product
development or acquisition opportunities.

We have developed extensive
quality, pharmacovigilance
and compliance systems, and
we provide regular training
to our highly skilled and
experienced employees.

Risk management
Rigorous governance, along with our consistent risk
management systems and processes, enable us to
identify, assess, manage and mitigate the key
existing and newly emerging risks facing the business.
BTG’s Board of Directors is responsible for the Group’s
risk management and internal control systems, and
for regularly and robustly assessing these systems.

We believe the most significant risks that could
materially affect the Group’s ability to achieve its
financial goals and its operating and strategic
objectives are: ensuring continuity of product
supplies; securing acceptable product reimbursement;
obtaining/maintaining product regulatory approvals;
Intellectual Property (IP)/legal challenges; competition;
healthcare law compliance; and successful completion
of merger and acquisition activity.

Pages 62 to 67, for BTG’s risk management
governance and processes, and the principal
risks listed above described in detail

Cost of treating cancer,
cardiovascular and
respiratory diseases will be

$4trn

by 2020

People over the age
of 60 estimated to rise

500m

to 1.4 billion by 2030

OverviewGovernanceFinancialsStrategic ReportBTG plc Annual Report and Accounts 2018Our business model

Business context

Addressing unmet specialist healthcare needs

BTG activity

Identify
opportunities

Product development
and acquisitions

Manufacturing

Commercialise

Reinvestment

Business outcomes

Strategic ReportBTG plc Annual Report and Accounts 2018By using our strong cash flows to reinvest in
product innovation, commercial expansion,
clinical studies and complementary acquisitions,
we are confident of delivering long-term growth.

How does BTG create value for its stakeholders?
Human health and well-being continue to benefit
from advances in medical science. Yet some patients
with certain medical conditions are still poorly served
by existing treatment options. At BTG, we see an
exciting opportunity to provide novel therapeutic
solutions to a wide-range of complex medical
problems. Our solutions focus on local delivery of
targeted therapies, to optimise efficacy and side
effect profiles while providing cost-effective options
for healthcare providers.

Aligning our business model with our strategy
Our strategy is to become commercial and technical
leaders in our chosen therapy areas by delivering
therapies that are of value to patients, physicians and
payers. By developing strong partnerships with the
medical community and key opinion leaders, we gain
valuable insights into their needs. This informs our
product development and acquisition strategy. As an
agile organisation with strong networks in medicine,
industry and academia, we can quickly identify and
initiate new product development opportunities.

1. Identifying opportunities
We focus on addressing unmet healthcare
needs, by providing innovative products in
specialist areas of medicine to better serve
doctors and their patients. We also invite
proposals from the medical community for
funding to explore the use of our products
in different patient populations. Close
interactions with our customers give us
valuable insights into the way they treat
their patients, helping to inform our
innovation strategy and identify new
product opportunities.

2. Product development
and acquisitions
To exploit the full value of our products,
we invest in lifecycle management, which
includes product innovation and clinical
studies to support new regulatory approvals.
Our development and acquisition strategy is
focused on opportunities that complement
our current product portfolio. We seek to
balance late-stage development and
marketed product opportunities, with
efforts to build an early-stage pipeline
that will ensure sustained business growth.

3. Manufacturing
Our products are either manufactured
in-house or we use third-party contractors to
manufacture and supply certain key materials
and services. We have robust quality systems,
policies and procedures in place to ensure we
meet our legal and compliance obligations.

4. Commercialise
We have product sales teams in the US, Europe
and Asia and we also work with distribution
partners in these and other regions. Our sales
teams are supported by marketing and brand
specialists. We also have experienced
professionals working in regulatory affairs
and market access who generate and provide
the data and product support to healthcare
providers and payers to ensure that our products
are used and reimbursed appropriately.

5. Reinvestment
Invest in organic innovation and development
and in targeted acquisitions. Invest in
commercial and geographic expansion.
Invest in upgrading manufacturing operations
and capabilities.

Business outcomes
– Portfolio of leading-edge technologies
– Leadership in chosen therapy areas
– Product sales growth
– Cash generation to support sustained growth
– Foundations for future growth

Stakeholder benefits
– Shareholders: return on investment
– Physicians: treat more patients,

deliver better outcomes

– Patients: shorter hospital stays,

improved treatment

– Social benefits: job creation, tax revenue

OverviewGovernanceFinancialsStrategic ReportBTG plc Annual Report and Accounts 2018Our strategic priorities

We monitor our performance against four strategic priorities: (1) delivering products that meet the needs of
our customers and their patients; (2) investing for growth; (3) ensuring our people have the right capabilities
and our practices are fit for purpose and scalable; and (4) financial key performance indicators (KPIs).
Our objectives may span several years.

Objective

Progress against objectives set for 2017/18

Strategy risk summary2

Priorities for 2018/19

1 Delivering products for our

customers and their patients
Our specialist physician customers
and their patients are at the heart
of everything we do. We deliver
differentiated products that enable
physicians to address unmet patient
needs. We make our products as widely
available as we can, through regulatory
and commercial activities that support
geographic expansion, market adoption
and appropriate reimbursement.

2 Investing for growth

We are investing in expanding our
product portfolio and building our
pipeline to generate long-term value
for our stakeholders.

3 People and practices

As a fast-growing business, we strive to
ensure that our organisational structure,
capabilities and systems are scalable
and can support our growth strategy.

Pages 24 to 27 for more details

4 Financial management

We report on four KPIs that demonstrate
progress towards our long-term goals.

Pages 28 to 36 for more details

Interventional Oncology: mid-teens percent sales growth
achieved; launched DC Bead LUMI™ in the EU; expanded
TheraSphere® into new territories, including Latin America,
Taiwan and Israel; vandetanib bead first-in-man study commenced.

Interventional Vascular: delivered high-teens percent product
sales growth; expanded US PE/DVT business with increased
hospital penetration; increased sales personnel in EU.

Not achieved: 20%+ sales growth not met; new control unit launch
delayed until FY19

Early Stage IM: Varithena® granted US Level 1 CPT codes from
January 2018. PneumRx® ELEVATE study initiated; progressed
US PMA application.

Not achieved: PneumRx reimbursement delays in Germany and France

Pharmaceuticals: Copperhead study published in the Annals
of Emergency Medicine; Voraxaze® included in the 2017
Expert Consensus Guidelines contained within the Annals
of Emergency Medicine.

Innovation and Development: Patient enrolment completed
in TheraSphere® STOP HCC trial; successful completion and
outcomes in EKOS®, OPTALYSE PE and ACCESS PTS studies;
completion of cryoablation lung and bone metastases
studies. MRI visible cryoablation needles developed;
Roxwood Medical acquired.

Business Unit Operating Model fully embedded across
BTG to best meet the needs of each business at their stage
of the growth life cycle and create scalable support structures
that are fit for purpose and the future.

Learning & Development continued to be a supportive
programme that enabled BTG’s focus on accelerating growth.

A succession plan identifying future business leaders and
development programmes was implemented to provide
growth opportunities.

Product sales

£423.8m

(2016/17: £387.3m)

Adjusted operating profit1

£152.7m

(2016/17: £129.6m)

Adjusted basic EPS1

32.9p

(2016/17: 23.1p)

Free cash flow

£109.3m

(2016/17: £64.7m)

IFRS operating loss

(£102.8m)

(2016/17: profit of £57.5m)

IFRS basic EPS

3.9p

(2016/17: 8.7p)

Cash from operating activities

£120.7m

(2016/17: £74.2m)

The following could adversely impact product adoption

and revenue growth:

–

Failure or significant delay in gaining regulatory

approvals to market products.

–

Failure to secure timely or adequate levels

of reimbursement for products.

–

Increased competition.

Interventional Oncology: deliver continued very good

sales growth; expand offering in Latin America; launch

of LC Bead LUMITM M0 in the US

Interventional Vascular: deliver continued very good sales

growth; build on OPTALYSE PE data to expand US PE/DVT

business; launch new EKOS® control unit; develop business in

existing ex-US territories; expand into new RoW territories

Early stage IM: Varithena® – expand US sales based on new

CPT codes, focusing on evaluations, orders and re-orders by

high-volume vein practices; PneumRx® – progress US regulatory

application; progress ELEVATE clinical study

Pharmaceuticals: execute CroFab® leadership strategy;

strengthen Voraxaze® value proposition; develop digital

solutions; maintain product inventories and robust supply chain

Failure to deliver pipeline programmes or to expand

the portfolio, whether by R&D or M&A, would limit

BTG’s long-term growth potential.

Ensure timely and efficient delivery of pipeline projects

and lifecycle management

Build early-stage pipeline; implement medical education

strategy to help physicians improve patient outcomes

Identify acquisitions, in-licensing and investment

opportunities that can accelerate growth/de-risk execution

Without the right capabilities and capacity, BTG’s growth

Deliver against succession and hiring plans, actively

plans may not be achieved.

Without maintaining appropriate and efficient systems BTG

would fail to meet regulatory obligations or not be nimble

enough to respond to, and capture, market opportunities.

promoting diversity at all levels; focus on talent development

to build fit-for-future capabilities in all areas

Progress roll-out of global ERP system; drive efficiency

across the business

A number of risks relate to numerous objectives.

These include: failure to execute business plans;

increased competition; supply chain disruption; legal or

intellectual property disputes; failing to meet the Group’s

legal, regulation and compliance obligations; failure to secure

adequate levels of reimbursement or regulatory approvals;

failure to attract, retain and develop staff with the requisite

skills and expertise to deliver the strategy.

In 2018/19 we expect to deliver:

•

Interventional Oncology and Interventional Vascular:

13% to 15% CER growth;

• Pharmaceuticals: flat to single-digit percent CER decline

1. For information on our adjusted earnings policy, and those items excluded from our adjusted financial metrics, see pages 35 to 36.

2. For a full disclosure of risks, see pages 62 to 67.

Strategic ReportBTG plc Annual Report and Accounts 2018
Objective

Progress against objectives set for 2017/18

Strategy risk summary2

Priorities for 2018/19

The following could adversely impact product adoption
and revenue growth:

–

Failure or significant delay in gaining regulatory
approvals to market products.

Failure to secure timely or adequate levels
of reimbursement for products.

–

Increased competition.

Interventional Oncology: deliver continued very good
sales growth; expand offering in Latin America; launch
of LC Bead LUMITM M0 in the US

Interventional Vascular: deliver continued very good sales
growth; build on OPTALYSE PE data to expand US PE/DVT
business; launch new EKOS® control unit; develop business in
existing ex-US territories; expand into new RoW territories

Early stage IM: Varithena® – expand US sales based on new
CPT codes, focusing on evaluations, orders and re-orders by
high-volume vein practices; PneumRx® – progress US regulatory
application; progress ELEVATE clinical study

Pharmaceuticals: execute CroFab® leadership strategy;
strengthen Voraxaze® value proposition; develop digital
solutions; maintain product inventories and robust supply chain

Failure to deliver pipeline programmes or to expand
the portfolio, whether by R&D or M&A, would limit
BTG’s long-term growth potential.

Ensure timely and efficient delivery of pipeline projects
and lifecycle management

Build early-stage pipeline; implement medical education
strategy to help physicians improve patient outcomes

Identify acquisitions, in-licensing and investment
opportunities that can accelerate growth/de-risk execution

Without the right capabilities and capacity, BTG’s growth
plans may not be achieved.

Without maintaining appropriate and efficient systems BTG
would fail to meet regulatory obligations or not be nimble
enough to respond to, and capture, market opportunities.

Deliver against succession and hiring plans, actively
promoting diversity at all levels; focus on talent development
to build fit-for-future capabilities in all areas

Progress roll-out of global ERP system; drive efficiency
across the business

A number of risks relate to numerous objectives.
These include: failure to execute business plans;
increased competition; supply chain disruption; legal or
intellectual property disputes; failing to meet the Group’s
legal, regulation and compliance obligations; failure to secure
adequate levels of reimbursement or regulatory approvals;
failure to attract, retain and develop staff with the requisite
skills and expertise to deliver the strategy.

In 2018/19 we expect to deliver:

•

Interventional Oncology and Interventional Vascular:
13% to 15% CER growth;

• Pharmaceuticals: flat to single-digit percent CER decline

We monitor our performance against four strategic priorities: (1) delivering products that meet the needs of

our customers and their patients; (2) investing for growth; (3) ensuring our people have the right capabilities

and our practices are fit for purpose and scalable; and (4) financial key performance indicators (KPIs).

Our objectives may span several years.

1 Delivering products for our

customers and their patients

Our specialist physician customers

and their patients are at the heart

of everything we do. We deliver

differentiated products that enable

physicians to address unmet patient

needs. We make our products as widely

available as we can, through regulatory

and commercial activities that support

geographic expansion, market adoption

and appropriate reimbursement.

2 Investing for growth

We are investing in expanding our

product portfolio and building our

pipeline to generate long-term value

for our stakeholders.

Interventional Oncology: mid-teens percent sales growth

achieved; launched DC Bead LUMI™ in the EU; expanded

TheraSphere® into new territories, including Latin America,

Taiwan and Israel; vandetanib bead first-in-man study commenced.

Interventional Vascular: delivered high-teens percent product

sales growth; expanded US PE/DVT business with increased

hospital penetration; increased sales personnel in EU.

Not achieved: 20%+ sales growth not met; new control unit launch

delayed until FY19

Early Stage IM: Varithena® granted US Level 1 CPT codes from

January 2018. PneumRx® ELEVATE study initiated; progressed

US PMA application.

Not achieved: PneumRx reimbursement delays in Germany and France

Pharmaceuticals: Copperhead study published in the Annals

of Emergency Medicine; Voraxaze® included in the 2017

Expert Consensus Guidelines contained within the Annals

of Emergency Medicine.

Innovation and Development: Patient enrolment completed

in TheraSphere® STOP HCC trial; successful completion and

outcomes in EKOS®, OPTALYSE PE and ACCESS PTS studies;

completion of cryoablation lung and bone metastases

studies. MRI visible cryoablation needles developed;

Roxwood Medical acquired.

3 People and practices

As a fast-growing business, we strive to

ensure that our organisational structure,

capabilities and systems are scalable

and can support our growth strategy.

Pages 24 to 27 for more details

Business Unit Operating Model fully embedded across

BTG to best meet the needs of each business at their stage

of the growth life cycle and create scalable support structures

that are fit for purpose and the future.

Learning & Development continued to be a supportive

programme that enabled BTG’s focus on accelerating growth.

A succession plan identifying future business leaders and

development programmes was implemented to provide

4 Financial management

We report on four KPIs that demonstrate

progress towards our long-term goals.

Pages 28 to 36 for more details

growth opportunities.

Product sales

£423.8m

(2016/17: £387.3m)

Adjusted operating profit1

£152.7m

(2016/17: £129.6m)

Adjusted basic EPS1

32.9p

(2016/17: 23.1p)

Free cash flow

£109.3m

(2016/17: £64.7m)

IFRS operating loss

(£102.8m)

(2016/17: profit of £57.5m)

IFRS basic EPS

3.9p

(2016/17: 8.7p)

Cash from operating activities

£120.7m

(2016/17: £74.2m)

1. For information on our adjusted earnings policy, and those items excluded from our adjusted financial metrics, see pages 35 to 36.

2. For a full disclosure of risks, see pages 62 to 67.

OverviewGovernanceFinancialsStrategic ReportBTG plc Annual Report and Accounts 2018
Strategic priorities: performance

Interventional
Medicine: Oncology

Our Interventional Oncology (IO) products include: TheraSphere®,
glass microspheres that deliver internal radiation therapy; LC Bead®
and DC Bead®, our embolisation and chemoembolisation polymer
beads; and BTG cryoablation systems and needles. This unique portfolio
gives us the ability to offer our customers minimally invasive treatment
alternatives to systemic radiotherapy, chemotherapy or open surgery.

Conventional versus
Interventional

Although remarkable progress has been made in
the detection, prevention and treatment of cancer,
it has surpassed cardiovascular diseases as the leading
cause of death worldwide. Conventional treatment for
tumours includes: chemotherapy, which uses anti-
cancer drugs to destroy the cancer cells; radiotherapy,
which uses radiation to control or kill malignant cells;
or surgery to cut out the tumour. While these three
conventional options are widely used today,
Interventional Oncology has successfully established
itself as an essential and independent pillar within
the choices for treatment of cancer patients alongside
Medical, Surgical and Radiation Oncology.

Interventional Oncology makes use of advances in
device technology and imaging to deliver the loco-
regional equivalent chemotherapy, radiotherapy or
surgery. This often brings the advantage of being able
to deliver a higher local dose of the therapeutic agent
while minimising side effects or sparing healthy tissue.

Beads and TheraSphere®

Beads and TheraSphere® are used in the treatment
of primary liver cancer, commonly known as
hepatocellular carcinoma (HCC). They are also used
when tumours from other organs spread to the liver,
one of the most common being metastatic colorectal
cancer (mCRC).

We estimate that, globally, the combined annual
incidence of HCC and mCRC is approximately
1.2 million people. Of these, around 147,000 patients
would be amenable to locoregional treatments every
year, based on their disease progression and taking
into account access to treatment and affordability
in different countries. This represents a global
opportunity of approximately $1.3bn.

The beads and TheraSphere® products are delivered
by the same interventional oncologist through a
catheter that is placed in the arterial system. Once
they have reached the tumour site, the beads block the
blood flow within the vessels, depriving the tumour of
oxygen. DC Bead® starts a controlled release of a
chemotherapeutic drug over time, which results in
ischemia and tumour cell death. Once TheraSphere®
has reached the tumour, it emits a high, localised
dose of Y90 beta radiation that kills the tumour cells.

Strategic ReportBTG plc Annual Report and Accounts 2018Competition in IO
Embolisation and transarterial chemoembolisation
(TACE) have become established treatments for
unresectable, intermediate-stage HCC around the
world. Conventional TACE (cTACE) involves the
administration of a compounded oil and drug solution
emulsion, followed by an embolising material.
LC Bead® competes with a small number of
commercially available beads, while DC Bead®
competes with cTACE and a small number of
other beads that are capable of being loaded
with chemotherapeutic drugs.

TheraSphere® is one of only two commercially
available selective internal radiation Y90 products
used to treat liver tumours and BTG cryotherapy
systems compete with other minimally invasive
surgical devices, such as radiofrequency ablation.

IO growth strategy and progress
To sustain our strong annual sales growth we are
investing in commercial and geographic expansion,
focusing on product innovation and generating
clinical data to support new indications and
expanded use of our products.

During the year, we received regulatory approvals
and commenced commercial activities in a number
of territories in Asia, EMEA and Latin America. BTG has
partnered with Mirada, the medical imaging software
company, to develop advanced dosimetry software
that enables physicians to personalise TheraSphere®
Y90 treatment for every patient. A centre of excellence
in BTG for ablation has been created and a range of
development programmes have been initiated, which
have the potential to deliver several new products
over the next 12 to 24 months.

The TheraSphere® Phase III trials are progressing well,
with data expected in 2019. Enrolment of 526 patients
with unresectable hepatocellular carcinoma (HCC) was
completed in the STOP-HCC trial, and approximately
two-thirds of patients with metastatic colorectal
cancer (mCRC), who have failed first-line
chemotherapy, have now been enrolled in the EPOCH
trial. Both trials are intended to support Premarket
Approvals (PMAs) of TheraSphere® in the US.

The MOTION and SOLSTICE studies, using BTG
cryoablation for the palliation of bone metastases,
and for treating pulmonary metastatic disease, are
both fully enrolled and on track to report data in 2018.

How DC Bead® works

1. DC Bead®
containing negatively
charged sites are
bound with a positively
charged cancer drug.
Water is displaced
as the cancer drug is
absorbed throughout
the beads.

2. The drug loaded
embolic beads are
inserted into an
artery through a
catheter which is
then advanced into a
tumour feeding vessel.

3. The beads are
guided to the tumour
site and there they
block the blood flow
within the vessels,
depriving the tumour
of oxygen.

4. DC Bead® start a controlled release of
a chemotherapeutic drug over time which
results in ishchemia and tumour cell death.

Where next?
Building on our leadership in IO
by expanding our product range,
generating clinical data and selling
our products in new territories.

OverviewGovernanceFinancialsStrategic ReportBTG plc Annual Report and Accounts 2018Strategic priorities: performance

BTG cryoablation
technology

In June 2016, BTG acquired Galil Medical, a
leading provider of cryoablation technology for use
in oncology and other indications. The main clinical
use for the cryoablation technology today is in kidney
cancer (renal cell carcinoma).

Globally, kidney cancer is the twelfth most common
cancer, with an annual incidence of approximately
340,0001 new cases. Causes include smoking, though

there are other risk factors including being overweight,
hypertension and having polycystic kidney disease.
Treatment choices depend upon the stage of the
cancer when diagnosed and include surgery, ablation,
radiation therapy and biologic and chemotherapies.

The needles use ultra-thin probes that are inserted
through the skin into the tumour. Argon gas is pumped
under pressure into a small chamber inside the tip of
the needle where it cools to a temperature below
-100°C. This produces an ice ball of predictable size
and shape that engulfs the tumour and leads to the
successful destruction of the cancer cells.

How BTG cryoablation works

1. To freeze the
cancer, special
ultra-thin probes
called cryoablation
needles are inserted
through the skin
into the tumour.

3. Argon gas is
delivered under
pressure into a small
chamber inside the
tip of the needle
where it expands
and cools, reaching
a temperature well
below -100°C.

2. The needles are
inserted under guidance
of CT, ultrasound
imaging or MRI.

4. This produces an
iceball of predictable
size and shape
around the needles.
The iceball is visible
under imaging, allowing
the physician to ensure
the iceball fully engulfs
the tumour, killing the
cancerous cells.

Where next?
Galil's ablation expertise
is anticipated to deliver
a range of products,
from new needle types
to new modalities.

5. The body temperature gradually melts
the iceball, resulting in ablated tissue.

1. Source: www.cancerresearch.co.uk

Strategic ReportBTG plc Annual Report and Accounts 2018Immuno-oncology… the
next frontier in cancer care?
As immunotherapy becomes ever more
relevant in the fight against cancer,
so BTG is exploring ways in which our
minimally invasive therapies can work
in combination with immuno-oncology
agents to enhance their efficacy and
reduce adverse side effects. During the
year, BTG expanded its collaboration
with the Society of Interventional
Oncology to award nine research
grants with the aim of developing
greater collaboration in this
emerging field of cancer treatment.

OverviewGovernanceFinancialsStrategic ReportBTG plc Annual Report and Accounts 2018Strategic priorities: performance

Interventional
Medicine: Vascular

Our Vascular portfolio consists of: the EKOS® System, which is an
ultrasonic catheter drug delivery device used in the treatment of
blood clots; and specialist anchoring catheters (CenterCross®,
CenterCross® Ultra and MultiCross®) and microcatheters (MicroCross®),
which enable physicians to cross complex lesions and arterial blockages.

Building on our success…
Roxwood Medical acquisition
In October 2017, BTG acquired Roxwood
Medical, an innovative provider of
advanced cardiovascular specialty
catheters used in the treatment of
patients with severe coronary and
peripheral artery disease. This bolt-on
acquisition continues to build
BTG’s strength in the vascular space,
further expanding our portfolio of
differentiated minimally invasive
vascular technologies.

The rise of minimally
invasive vascular
procedures

Every year, thousands of people die as a result of
some form of blood clot. The collective term is venous
thromboembolism (VTE) and this includes deep vein
thrombosis (DVT), which is a blood clot in one of the
deep veins in the body, and pulmonary embolism (PE),
a blood clot in the vessel that carries blood from the
heart to the lungs.

The incidence of VTE has increased markedly, driven
in part by an ageing population and rising levels of
obesity. Anticoagulant drugs, such as Heparin or
Warfarin, are still widely prescribed as they decrease
the clotting ability of blood, however, they have little
effect on dissolving existing clots. When a VTE is very
large, blocks major veins, or produces severe pain and
swelling of the limb, then minimally invasive surgery,
performed in a hospital setting by vascular surgeons
and interventional radiologists, has been shown to
reduce the severity of symptoms.

EKOS®

Enabling more procedures
and faster clot dissolution
The core of our vascular business is based upon
the EKOS® ultrasonic catheter drug delivery device.
Once a catheter is inserted through the blood clot,
the unique EKOS® ultrasonic core is fed through the
infusion catheter and ultrasonic pulses thin and
separate the fibrin strands that enmesh the blood clot.
This acoustic action, combined with direct placement
of a thrombolytic drug, results in faster and more
complete clot dissolution.

Strategic ReportBTG plc Annual Report and Accounts 2018How we treat blood clots

1. When blood clots form in the
body they can cause chronic
pain and swelling. The clot
might also break free and travel
through your blood stream to
major organs, such as your lungs
resulting in a life-threatening
pulmonary embolism (PE).

2. An infusion catheter is
inserted within the blood
vessel through the clot.

3. A unique ultrasonic core, containing numerous
ultrasound transducers, is then inserted inside
the infusion catheter.

4. The ultrasonic core then
delivers acoustic pulses that
loosen the fibrin strands that
enmesh the blood clot. This
acoustic action combined with the
direct placement of a thrombolytic
drug results in faster and more
complete clot dissolution.

5. Blood flow is then restored
within the vessel.

Where next?
Expand our vascular presence outside
of the core US market, including Europe
where we have established a direct sales
presence in select countries.

In many instances, patients with severe coronary and
peripheral arterial disease have complex blockages that
prevent catheter guidewires from being able to get to
the clot. The CenterCross® Catheter is designed to be
used in conjunction with guidewires and microcatheters
to access discrete regions of the coronary and
peripheral vasculature and enable clinicians to better
address wire-crossing of complex lesions.

Our CenterCross® and MultiCross® platforms enable
clinicians to access the most challenging coronary
and peripheral anatomies with optimum guidewire
support and successfully treat patients with some
of the most complex arterial disease.

Competition in vascular
EKOS® faces competition from standard side-hole
catheters and mechanical devices that use catheters
that physically break up the clot. The Roxwood
products compete with more expensive powered
devices that aim to break through the obstruction
and clear a path for the guidewire.

Strategic progress and growth drivers
The vascular business now has a US national sales
force selling both EKOS® and Roxwood products. US
hospital penetration has increased to around 80% and
expansion in other territories continues. In the EU, the
sales and medical presence in major markets has been
strengthened to support revenue growth and expand
reimbursement, including in Germany where a new
direct sales force has been established.

Adding to the clinical data already generated by
EKOS® will enable us to build on our leadership
position in the treatment of VTE. Clinical data from
the OPTALYSE PE study showed that PE can be
treated effectively with EKOS® using lower doses of
thrombolytic drug and shorter treatment times than
the standard protocol. This allows for scheduling
flexibility and efficiencies in clinician time and drug
costs. In addition, we have commenced the KNOCOUT
PE registry, which will measure how hospitals and
patients are benefitting from this new standard
of care in the treatment of PE with EKOS® therapy
using the protocols proven in the OPTALYSE PE study.
EKOS® is the only device cleared by the US Food and
Drug Administration (FDA) for use in treating PE.

Positive data were also reported from the ACCESS PTS
study, which found that patients with chronic deep
vein thrombosis (DVT) and post-thrombotic syndrome
(PTS) can be treated safely and effectively with a
combination of EKOS® therapy and balloon dilatation.
As this is the only treatment regimen proven to
significantly reduce the signs and symptoms of PTS
and lead to a significant improvement in quality of life,
over time this could provide another new procedure
for physicians treating their patients.

OverviewGovernanceFinancialsStrategic ReportBTG plc Annual Report and Accounts 2018Strategic priorities: performance

Early-stage
Interventional Medicine

BTG’s early-stage Interventional Medicine products are:
the PneumRx® Coil, a treatment for severe emphysema;
and Varithena®, a treatment for varicose veins.

PneumRx® Coil

Emphysema is a debilitating lung disease,
most commonly caused by cigarette smoking.
It is characterised by damage to the elasticity and
function of the lung tissue, leading to shortness
of breath and significant disability. Treatments
to alleviate symptoms include pharmacotherapy,
pulmonary rehabilitation and oxygen therapy.
A very small number of patients may qualify for
lung transplants or lung volume reduction surgery.

Strategic ReportBTG plc Annual Report and Accounts 2018Take a deep breath, hold it
for three seconds, now take
another deep breath without
exhaling… this is what every
breath feels like in the severe
emphysema patient.

Dr Jerry Criner, Temple University

How the coils work
The PneumRx® Coils are made of a shape-memory
material called nitinol, pre-programmed in a double-
loop shape. After being straightened for insertion
into the lung via a bronchoscope, they gather up and
compress the diseased lung tissue surrounding them,
re-tensioning the airway network, as they recover their
original shape. The coils are designed to improve lung
function by enabling more efficient contraction during
the breathing cycle, and by tethering open small
airways, preventing airway collapse during exhalation.

Market opportunity
It is estimated that there are over four million people
worldwide with severe emphysema. The PneumRx
Coil has been shown in clinical studies to improve
lung function and quality of life in certain patients
with severe emphysema.

Growth strategy and progress
Interventional Pulmonology is an emerging
medical field. The coils are cleared for use in
Europe, where low sales levels reflect that market
development, including securing appropriate levels
of reimbursement, is taking longer than expected.

Third party market research and feedback from
payers received in the second half of the year has
corroborated that there is a need for more clinical
data in order to expand reimbursement and support
market adoption in both Europe and the US.

There is a significant long-term opportunity and
BTG is focusing on activities to build long-term value.
These include conducting the ELEVATE clinical study,
which is designed to generate additional clinical
data to support patient selection and progressing
reimbursement discussions in the EU. In the US, BTG
is progressing a PMA application, with a decision
expected from the FDA by the end of 2018.

Varithena®
Transforming the treatment of varicose veins
Varithena® is a uniform, low-nitrogen, engineered
microfoam, that is dispensed from a proprietary
canister device. Treatment is a non-surgical procedure
and usually takes less than one hour, after which
patients may resume light activities.

Market opportunity
It is estimated that there are approximately 30 million
Americans with varicose veins, of whom about
2.5 million develop symptoms each year that qualify
them to receive reimbursed treatment by their
healthcare provider. Varicose veins are a progressive
disease and, if left untreated, can result in more
serious and painful leg ulcers.

Competition in the US reimbursed sector
The majority of reimbursed procedures are conducted
in private vein clinics. Since 2005, most symptomatic
varicose vein treatments involve a combination of
heat ablation of the great saphenous vein (GSV),
stab phlebectomy of the visible varicosities and
sclerotherapy of the visible veins.

Growth strategy and progress
Category 1 CPT reimbursement codes in the
US were implemented for Varithena® effective
1 January 2018. The new CPT codes define
Medicare payment rates and enable automatic and
electronic processing of claims, providing physicians
in the US with further predictability of payment
and streamlining the reimbursement process.
The impact of these new codes on physician
ordering and re-ordering patterns, and on insurer
practice, will be clearer by the end of 2018.

OverviewGovernanceFinancialsStrategic ReportBTG plc Annual Report and Accounts 2018Strategic priorities: performance

Pharmaceuticals and Licensing

Our Pharmaceutical portfolio of three acute care
products offers rescue medication to patients for
whom there are few or no other treatment options.

Pharmaceuticals

We have built leading positions within our
Pharmaceuticals business. Our portfolio of marketed
products is sold in the US through small, specialist
sales teams and elsewhere in the world, where
approved or permitted on a named patient basis,
through commercial partners.

Physician education and awareness initiatives continue
to drive optimum use of BTG’s antidotes. We have
invested in digital consumer platforms for CroFab®,
a treatment for North American crotalid snake
envenomation, and we have strengthened distribution
channels for the digoxin overdose antidote DigiFab®.

7,000 to 8,000

people per year receive venomous
bites in the United States
Source: Centers for Disease Control and Prevention

Growth of the high-dose methotrexate antidote
Voraxaze® continues, as awareness of methotrexate
toxicity and treatment options increases.

During the year, BTG stopped the sale of Vistogard®
as the related distribution agreement with Wellstat
Therapeutics Corporation was terminated following a
court ruling in relation to the litigation with Wellstat.

Licensing

Whilst no longer a strategic priority for BTG, the Group
expects to continue to receive royalties for some years
to come, primarily from sales of Johnson & Johnson’s
prostate cancer drug Zytiga®. Generic competition to
Zytiga® is not expected in the US before October 2018
and in the EU by September 2021.

Royalties from Zytiga® grew strongly following
the publication of positive data from two clinical
studies that showed benefits in men who were
initiated on Zytiga® treatment at an earlier stage
of disease progression.

BTG plc Annual Report and Accounts 2018

Strategic ReportProgress in the year

2017

April 2017
First European patients treated
with radiopaque drug-eluting beads
Two patients are treated for hepatocellular
carcinoma (HCC) and one patient is treated
for malignant colorectal cancer metastasised
to the liver (mCRC) using DC Bead LUMI™.
This is the first commercially available radiopaque
drug-eluting bead (DEB) in the EU that can be
loaded with doxorubicin or irinotecan for the
local treatment of tumours in patients with
HCC and mCRC, respectively.

September 2017
BTG and Mirada Medical sign
software development agreement
Mirada Medical and BTG began working together
to develop software solutions to optimise
radioembolisation therapy with TheraSphere®.
That collaboration resulted in Simplicit90Y™, a
customised, easy-to-use dosimetry software that
helps physicians to personalise treatment with
TheraSphere®, for patients with liver cancer.

November 2017
Varithena® receives finalised CPT codes
The US Centers for Medicare and Medicaid Services
publish the final fee schedule for new Category I
CPT codes for Varithena® procedures. The codes
are effective from 1 January 2018 and define
Medicare payment rates and enable automatic
and electronic processing of claims.

June 2017
SIO announces first grants in
Interventional Oncology/
Immuno-Oncology research programme
BTG and The Society of Interventional Oncology
(SIO), a global organisation working to nurture
and support interventional oncology worldwide,
announce their 2017 Interventional Oncology/
Immuno-Oncology research grant recipients.

October 2017
BTG acquires Roxwood Medical
This bolt-on acquisition continues to build BTG’s
strength in the interventional vascular space,
further expanding our portfolio of differentiated,
minimally invasive vascular technologies alongside
our existing EKOS® business.

2018

February 2018
First patient in Latin America receives
treatment with TheraSphere®
Liver cancer has a high mortality rate in Mexico
and is now the 14th highest cause of all fatalities.
Dr Jose Luis Rios Reyna, Interventional Radiologist,
Chief of Imagenology, Hospital Ángeles Mocel, in
Mexico was responsible for administering the first
ever dose of TheraSphere®.

OverviewGovernanceFinancialsStrategic ReportBTG plc Annual Report and Accounts 2018Strategic priorities: performance

People and practices

As a fast-growing business, we invest in our people,
our capabilities, and the practices that ensure BTG
will be able to deliver value over the long term and
for a wide-range of stakeholders.

Diverse people with diverse perspectives
BTG employs more than 1,600 people in 20 countries
around the world. These employees come from all
walks of life and represent a diverse range of age,
race, religion, gender, gender expression and sexual
orientation. More importantly, our employees offer
a diversity of opinions and perspective. We foster an
open and inclusive culture that allows employees to
understand and trust each other, and to listen and
learn from each other’s experiences. We believe this
leads us to better business decisions and more
innovative solutions to problems.

This section highlights areas where we are working
to ensure our growth is sustainable and that our
organisation continues to be a responsible corporate
citizen and a trusted member of the communities
where we operate.

We provide additional information about our policies
and positions on a range of social, environmental and
governance topics on our website at btgplc.com/
responsibility.

Maintaining our culture
As we grow, both organically and through acquisition,
maintaining our culture continues to be an essential
component of our success. Monthly company-wide
meetings, hosted by the CEO and featuring news,
stories and major developments, help to keep
employees informed and to reinforce our ways of
working. Our DNA defines a set of behaviours that
provide consistent ways of working as the company
grows. We believe these behaviours provide a
competitive advantage, allowing us to stay agile and
entrepreneurial, while also making BTG a great place
to work. As part of our ongoing effort to maintain
this culture, this year we put particular emphasis on
encouraging communication, an appropriate appetite
for risk, critical thinking, efficiency, and accountability.

Rather than a top-down initiative, we reinforce our
culture through a network of influential employees
we call 'Champions' who span our business functions
and geography. They are empowered to maintain and
propagate our culture through role-modelling, sharing
experiences, and peer-to-peer interactions. This year
we bolstered our Champion network by selecting and
training 'Site Mobilisers' to help guide and coordinate
our efforts at particular locations and for each major
group of field based employees.

Strategic ReportBTG plc Annual Report and Accounts 2018In accordance with the UK government’s Equality Act
2010 (Gender Pay Gap Information) Regulations of
2017, BTG has published data on our website and in
a government registry showing differences in mean
and median pay between genders.

The data shows that on average male employees
earn 17% more than women with the median male
employee earning 11% more than the median
female employee. These differences are driven by
proportionally more men being in senior, higher paid
roles. More clearly identifying these gaps helps us
better target our efforts to address them. Additional
statistics required by the legislation are available on
the Responsibility section of our website.

Analysis of BTG’s pay practices globally gives us comfort
that men and women are paid the same for carrying out
the same work or work of equal value, and we see no
statistically significant difference in average salaries
between men and women in the same job band.
Women make up 27% of our board and 44% of our top
leadership. BTG has several programmes to identify,
develop, and recruit diverse talent into the Company.

Learning from others
This year’s HORIZONS participants
formed teams that conducted 'learning
expeditions,' capturing transferable
lessons from businesses ranging from
Netflix and Hubspot to non-profit
organisations such as the Cure Violence
campaign in Chicago and the United
Nations Human Rights Council.

Investing in people and capabilities
Our Management Development Programme (MDP)
enrolled 39 people this year and the formal programme
was reinforced by online forum discussions between
participants. This is our third year since we started
facilitating and developing the MDP internally and since
then 78% of the participants have moved into new roles
within the organisation. Our mentoring programme has
paired 34 new employees this year with senior leaders to
further develop their leadership, management and
executive presence skills.

This year 90 people participated in our HORIZONS
programme, which aims to foster a community of
emerging leaders from across the company. HORIZONS
stems from the belief that our success depends on us
having leaders who understand the direction the
company is heading in and what it means to be
accountable for making things happen. Participants
discussed the capabilities needed to lead in BTG today
and in the future, heard from external guest speakers,
and held individual Q&A sessions with several
members of the Leadership Team.

We continue to place a strong focus on succession planning
and have improved successor readiness across the
organisation with all of our Leadership Team and next level
down roles having an identified succession plan, 86% have
an internal successor identified whilst 14% require an
external successor. Of the 86% of internal successors,
readiness has more than doubled in two years with 63% of
the successors being identified as ready now; 65% mid-term
and 84% long-term. We’ve seen a number of significant
moves across the top levels of the organisation this year
that were a result of our robust succession planning
process. These include the previously announced internal
placement of Duncan Kennedy to the Board and role of
Chief Financial Officer as well as the placement of Peter
Pattison to the Head of Interventional Oncology role and a
member of our Leadership Team. Looking further into the
future, the company is working to generate a pipeline of
talent with two new graduate trainees and 10 participants
in our apprenticeship scheme. Next year we will double
these figures across the company to add another three
graduate trainees and 10 more apprentices. This year we
also rolled out a new Technical Ladder and Bonus Plan for
our Manufacturing Production teams across the globe.
These guidelines support visibility for career progression,
more accurate measurement of individual performance
and create an incentive structure that allows for a closer
connection of performance to payout.

OverviewGovernanceFinancialsStrategic ReportBTG plc Annual Report and Accounts 2018Strategic priorities: performance

Looking further into the future, the company is working
to generate a pipeline of talent by continuing to invest
in graduate and apprenticeship schemes.

Health and well-being
The physical and mental well-being of our employees is
a high priority for managers, especially at our higher risk
facilities. The number of accidents increased from five
to seven in the year. Two initiatives were commenced
as a result of investigations into the accidents.

(a) all BTG sites implemented the use of safety knives

(b) an ergonomic improvement was started at the

Seattle site

The Australia site recorded its second consecutive year
without a lost time accident.

Month/year
End March 2018
End March 2017

Accidents per 100,000
hours worked1
0.22
0.17

1. This figure includes accidents where people have returned to

work and were given alternative duties as they were not able to
fulfil their normal roles.

Community service and charitable giving
Our community service and charitable giving activities
are coordinated locally at each of our major sites.
Employees choose the charities and initiatives they
feel best support their local community or causes

Environmental Impact
Data Point
Total CO2 equivalent generated (tonnes)1-5
Total CO2 equivalent generated (tonnes), scope 11-5
Total CO2 equivalent generated (tonnes), scope 21-5
Total production units1-5
Total Kg CO2 generated per production unit1-5
Total employees8
Total Kg CO2 generated per employee1-5
Total electricity consumed (MWh)1-5
Total electricity consumed per production unit1-5
Total waste from production and research sites (tonnes)6
Waste recycled6
Hazardous waste – incinerated or other treatment6
Waste to landfill6
Total water consumed production and research sites (m3)7

aligned to our values. Charities chosen this year
include, for example, the American Heart Association,
American Lung Association, London Air Ambulance,
Wales Air Ambulance, Sue Ryder, and the Black Dog
Institute (a more complete list of charities is available
on our website). BTG also encourages employees to
support charitable events by matching funds raised
by individuals up to a designated cap.

During this fiscal year we donated £23,866 (2016/17:
£44,000) to charitable causes chosen by our employees.

Protecting the environment
Each year we look for new ways to reduce our
environmental impact. Each facility exclusively
occupied by BTG with more than 20 employees is asked
to implement two eco-efficiency projects per year.

Electricity consumption and total carbon dioxide
emissions were broadly flat compared to last year, with
the closure of BTG Germany siteoff setting an increase at
other sites. A decrease in production units led to the per
unit increase in electricity use and CO2 emissions.

2017/18
6,698
1,286
5,412
229,571
29.45
1,631
4,145
9,939
0.0433
602.3
186.7
159.3
256.3
40,853

2016/17
6,989
1,571
5,418
276,691
25.26
1,558
4,383
9,879
0.0357
687.9
213.6
200.0
274.3
39,132

% Change
(4)
(18)
–
(17)
17
5
(5)
1
21
(12)
(13)
(20)
(7)
4

Notes
This data excludes Frankfurt facility closed during the year, and Roxwood facility acquired in 2017.
1. GHG protocol used for data. Scope 3 emissions have not been calculated.
2. Covers 100% of BTG controlled operations; third-party manufacturing has not been included in either the carbon dioxide generated or

the intensity figures.

3. Data from operational sites with more than 20 employees based on energy bills.
4. Emissions from field based staff and smaller offices estimated based on average US consumption – as this is where the majority of

employees are based, 24% of data is estimated.

5. Conversion factors used: Defra/DECC 2017 and government websites for operations in countries outside the UK.
6. Waste from our manufacturing and research sites in Australia, USA, Israel, Germany and UK.
7. Water consumption measured at our production sites in Australia, USA and UK.
8. Employee number includes all employees, plus contractors and temporary workers directly supervised by BTG employees.

Strategic ReportBTG plc Annual Report and Accounts 2018Our code
Because BTG operates in a highly regulated industry,
our employees are trained and regularly reminded of
the ethical behaviours expected of them. We instruct
every employee in every region and function on our
Code of Conduct annually, and contractors and other
third parties we work with are expected to adhere to the
same standards. The principles and procedures described
in the Code, along with supporting policies, ensure that
we operate in line with applicable industry codes of

practice (e.g. ABHI, AdvaMed, EFPIA, IFPMA, JPMA,
MedTech Europe, PhRMA), and the specific laws and
regulations of the countries in which we do business.

We encourage employee incident reporting and
are committed to investigating and dealing with all
concerns in an open and honest manner and protect
those raising concerns. Employees can report concerns
in a variety of ways, including via a confidential
whistleblowing helpline.

Anti-bribery
and corruption

Transparency

Bribery is considered illegal in all countries in
which BTG conducts business. Our anti-bribery and
corruption (ABAC) policy prohibits BTG employees, and
those acting on their behalf, from offering anything of
value as a bribe or inducement to others to make
decisions that favour BTG’s interests. These policies
are designed to promote compliance with the UK
Bribery Act, the US Foreign Corrupt Practices Act
(FCPA), and other local law equivalents.

Tax strategy

The overriding policy of BTG is to pay the taxes which
are legally due in the territories in which it operates
and to make filings and tax payments on a timely
basis. Tax decisions take account of the views and
interests of all of our stakeholders and are in
accordance with the BTG Code of Conduct and core
values. We publish information on our website about
how we manage tax risk, our approach to tax planning
and tax risk, and how we interact with tax authorities.

To ensure the transparency of our relationship
with healthcare providers, BTG collects, tracks, and
reports payments to healthcare professionals and
organisations in accordance with the US Physician
Payment Sunshine Act.

Respecting international
standards

BTG has publicly committed to respecting international
standards such as the United Nations Universal
Declaration of Human Rights. All appropriate staff
are provided with information, instruction and training
to raise awareness of the responsibilities under the
Modern Slavery Act and those directly responsible
for the selection of new suppliers and on-going
management of existing supplier relations are required
to act in accordance with the Act’s requirements.
Our statement on Human Rights is available on our
website and satisfies the UK Modern Slavery Act and
the US California Transparency in Supply Chains Act.

Ethically
priced

Each of our products is priced in accordance with its
value from the points of view of healthcare professionals,
patients and payers, and to allow our continued
investment in R&D. For some products we offer Patient
Assistance and access programmes to ensure life-saving
treatments are available to patients who need them.

Carbon disclosure

BTG participates in CDP, formerly Carbon Disclosure
Project, a not-for-profit organisation providing
a global system for companies to share vital
environmental information.

OverviewGovernanceFinancialsStrategic ReportBTG plc Annual Report and Accounts 2018Delivering a good
underlying financial
performance
BTG delivered a good underlying
financial performance in 2017/18,
and the Group has built a product
sales business that is well positioned
to deliver sustained profitable growth.

This review includes financial metrics on both
an IFRS and adjusted basis. Information on the
Group’s adjusted financial information is set out
on pages 35 and 36.

Financial highlights
Revenues
– Product sales were £423.8m (2016/17: £387.3m)

up 10% on a Constant Exchange Rate (CER) basis,
with growth driven by Interventional Oncology,
Interventional Vascular and Pharmaceuticals. At
actual exchange rates product sales were up 9%.

– Interventional Medicine delivered very good
growth, up 14% at CER, and Pharmaceuticals
delivered good growth, up 5% at CER.

– Revenues were £620.5m (2016/17: £570.5m), up
10% at CER and up 9% at actual exchange rates.
Revenues in the year benefited from good growth
in Licensing, with very strong growth in Zytiga®
royalties, and from £11.0m of Lemtrada™
back-royalties.

Group
financial
review

Strategic ReportBTG plc Annual Report and Accounts 2018Financial summary
Revenues

Interventional Oncology
Interventional Vascular
Early-stage Interventional Medicine

Interventional Medicine

Pharmaceuticals
Product Sales

Licensing
Revenues

PneumRx®
Varithena®

CroFab®
DigiFab®
Voraxaze®
Other

Zytiga®
Lemtrada™
Other

1. For the methodology applied to calculate CER growth, refer to page 34.

Operating profit
– Adjusted operating profit was £152.7m

(2016/17: £129.6m), up 20% at CER, reflecting
higher revenues offset by targeted commercial
and R&D investments. Adjusted operating margin
improved to 25% (2016/17: 23%).

– On an IFRS basis, the Group reported an operating

loss of £102.8m (2016/17: profit of £57.5m).
The loss includes intangible asset impairment
charges of £151.1m (principally charges of £143.2m
relating to the impairment of PneumRx intangible
assets) and a charge of £57.7m in respect of the
Vistogard® commercial dispute.

EPS
– Adjusted basic EPS was 32.9p (2016/17: 23.1p), up
42% due to higher adjusted profit after tax, before
non-controlling interests, of £125.7m (2016/17:
£88.7m). Adjusted profit after tax was higher in
2017/18 due to growth in adjusted operating profit
and foreign exchange forward contract gains
in 2017/18 compared to losses in 2016/17, partly
offset by a higher adjusted effective tax rate.

– IFRS basic EPS was 3.9p (2016/17: 8.7p), down 55%
due to lower profit after tax. The IFRS loss before
tax in 2017/18 was offset by a net tax credit, in
part due to a one-time credit recognised as a result
of US tax reform.

2017/18
£m
156.2
73.7
6.8
6.2
242.9
100.4
51.8
25.5
3.2
180.9
423.8
155.4
21.8
19.5
196.7
620.5

2016/17
£m
139.0
64.0
9.1
4.1
216.2
82.4
64.1
21.1
3.5
171.1
387.3
123.2
39.0
21.0
183.2
570.5

Growth
%
12
15
(25)
51
12
22
(19)
21
(9)
6
9
26
(44)
(7)
7
9

Growth at
CERtt (%)
14
18
(29)
55
14
19
(18)
22
(3)
5
10
30
(49)
(5)
9
10

We are well positioned to
continue generating around
double-digit product sales
growth through the anticipated
royalties decline, and to
deliver operating leverage
over the medium term.

Cash flow
– Free cash flow was £109.3m (2016/17: £64.7m),

up 69% with growth benefiting from comparison
with free cash flow in 2016/17 which included
the DOJ litigation. Excluding this settlement,
free cash flow was up 18% in 2017/18 as very
good growth in adjusted operating profit was
converted into cash.

– On an IFRS basis, cash flow from operating

activities was up 63% to £120.7m (2016/17: £74.2m).

OverviewGovernanceFinancialsStrategic ReportBTG plc Annual Report and Accounts 2018Licensing
Licensing revenues increased by 9% at CER to £196.7m
(2016/17: £183.2m).

Royalties from Zytiga® were £155.4m (2016/17:
£123.2m), up 30% at CER, delivering very strong
growth following the publication of new data that
supported earlier use in patients with advanced
prostate cancer. As previously outlined, no generic
entrant to Zytiga® is expected in the US before
October 2018, and no generic entrant to Zytiga®
is expected in the EU before September 2021.

Royalties from Lemtrada™ declined to £21.8m
(2016/17: £39.0m) due to the expiration of the
US and EU patents in March and September 2017
respectively. These final royalties included £11.0m
of back-royalties.

Gross profit
Adjusted gross profit was £435.0m (2016/17: £391.6m)
at an adjusted gross margin of 70% (2016/17: 69%).
IFRS gross profit was £434.6m (2016/17: £390.6m),
at a gross margin of 70% (2016/17: 68%).

The Interventional Medicine gross margin of 71%
(2016/17: 71%) continues to be supressed by the fixed
manufacturing cost base for the early-stage products,
Varithena® and PneumRx®. The Pharmaceuticals
gross margin of 90% (2016/17: 90%) reflects the high
efficiency of this business.

The Licensing gross margin improved to 51%
(2016/17: 45%) as a result of increased revenues from
higher margin royalty streams in 2017/18 and the
ongoing benefits of being able to offset expenses
incurred by BTG against amounts owed to licensors.

Group financial review
continued

Interventional Medicine
Interventional Medicine revenues increased to
£242.9m (2016/17: £216.2m), up 14% at CER.
Interventional Medicine is the Group’s largest and
fastest growing business unit.

Interventional Oncology revenues grew 14% at CER
to £156.2m (2016/17: £139.0m). This primarily reflects
increased demand for TheraSphere® from existing
and new customers in the US and EU, and continued
growth in the number of cryoablation procedures.

Interventional Vascular revenues were £73.7m
(2016/17: £64.0m), 18% higher at CER. Positive data
from the OPTALYSE PE study supported continued
growth in the use of the EKOS® devise to treat
pulmonary embolism, and the total number of US
hospitals using EKOS® grew. Revenues included the
first sales of the specialty catheters and crossing
devices from Roxwood Medical, which was acquired
in October 2017.

Among the earlier-stage products, sales of the
PneumRx® Coil treatment for severe emphysema
were £6.8m (2016/17: £9.1m), down 29% at CER due
to a lower number of procedures in Germany, the
largest market.

Sales of the varicose veins treatment Varithena®
increased to £6.2m (2016/17: £4.1m), reflecting steady
progress and customers transitioning from interim
reimbursement codes in the US to new category 1
CPT reimbursement codes in January 2018.

Pharmaceuticals
Pharmaceuticals revenues were £180.9m
(2016/17: £171.1m), up 5% at CER.

Sales of CroFab®, the snakebite antivenin, were up
19% at CER, driven by volume growth and benefit
of single digit price increases. A different antivenin
could enter the US market from October 2018. While
this competition would likely result in some impact
on CroFab® sales over time, BTG expects CroFab®
and the Pharmaceuticals business overall to continue
to provide a strong financial underpin.

Sales of the digoxin toxicity treatment DigiFab®
were lower as expected, down 18% at CER, primarily
reflecting the timing of hospital reorders relating to
expired product batches.

Sales of Voraxaze®, used for treating high-dose
methotrexate toxicity, were 22% higher at CER. Final
sales from Vistogard® were £3.2m (2016/17: £3.2m)
as BTG has relinquished all its former rights to
this product.

Strategic ReportBTG plc Annual Report and Accounts 2018Financial expense/income
Adjusted net financial income was £7.3m (2016/17:
net financial expense of £26.6m), principally reflecting
gains of £8.8m on foreign exchange forward contracts
in 2017/18 compared to losses of £25.2m in 2016/17.

IFRS net financial income was £32.2m (2016/17: net
financial expense of £25.9m). In addition to foreign
exchange forward contract gains, IFRS net financial
income includes a net credit of £24.9m relating to
the change in fair value of contingent consideration
liabilities (2016/17: net credit of £0.7m), principally
a credit of £26.5m relating to the release of the
PneumRx® Coil US regulatory approval milestone.

Taxation
The adjusted effective tax rate of 21% (2016/17: 14%)
is higher than the standard rate of UK corporation tax
as a significant portion of the Group’s profit arises
in the US where there is a higher US corporate tax
rate. This is in part offset by the UK's patent box
deduction on royalty income and the recognition
of deferred tax assets for historical losses and
timing differences.

On an IFRS basis, there was a tax credit of £83.3m
(2016/17: credit of £2.0m). The tax credit in part arises
from the one-time impact of US tax reform, which
resulted in a net credit of £36.2m being recorded in
2017/18, principally relating to the revaluation of net
deferred tax liabilities to the lower US federal tax rate.
The overall tax credit also includes the benefit of
expected future tax relief for litigation provisions and
deferred tax credits relating to the amortisation and
impairment of acquired intangible assets.

SG&A
Adjusted SG&A grew 4% at CER to £185.7m (2016/17:
£178.6m), reflecting increased commercial investments
in Interventional Medicine that were partly offset
by continued effective cost management across
the Group. Adjusted SG&A was up 4% at actual
exchange rates.

IFRS SG&A of £325.5m (2016/17: £206.6m) includes
a provision of £57.7m in relation to the previously
disclosed Vistogard® commercial dispute, and
impairment charges relating to the ex-US intangible
assets of PneumRx® and Vistogard® of £76.6m and
£5.5m respectively. IFRS SG&A in 2016/17 included
a charge of £28.0m in relation to the settlement
of the investigation into the historical marketing
of LC Bead®.

Research and development
Adjusted R&D expenditure was £95.3m (2016/17:
£87.8m), up 10% at CER, reflecting increased
investment primarily in Interventional Oncology
programmes, including the STOP-HCC and EPOCH
TheraSphere® trials, as well as support for a number
of ablation development projects. At actual exchange
rates, adjusted R&D was up 9%.

IFRS R&D expenditure was £165.5m (2016/17: £87.8m)
and includes intangible asset impairment charges of
£68.7m, principally in relation to the PneumRx®
in-process research and development intangible asset.

Operating profit
Adjusted operating profit was £152.7m (2016/17:
£129.6m), up 20% at CER, reflecting higher revenues
offset by targeted commercial and R&D investment.
Adjusted operating margin improved to 25%
(2016/17: 23%).

On an IFRS basis, the Group reported an operating
loss of £102.8m (2016/17: profit of £57.5m). The loss
includes intangible asset impairment charges of
£151.1m (principally charges of £143.2m relating
to the impairment of PneumRx® intangible assets)
and a charge of £57.7m in respect of the Vistogard®
commercial dispute.

OverviewGovernanceFinancialsStrategic ReportBTG plc Annual Report and Accounts 2018BTG has a robust financial
position that can support
sustained, profitable growth.

Non-current liabilities
Non-current liabilities decreased to £59.8m
(31 March 2017: £165.7m) principally due to a
reduction in deferred tax liabilities as a result
of the effects of US tax reform, foreign exchange
retranslation, and impairments and amortisation
of associated intangible assets.

Current liabilities
Current liabilities increased to £190.1m
(31 March 2017: £165.5m). Trade and other payables
decreased to £127.9m (31 March 2017: £152.0m)
principally due to a reduction in the fair values of
contingent consideration liabilities in relation to the
PneumRx® acquisition. Derivative financial instrument
liabilities decreased to £0.6m (31 March 2017: £7.9m)
due to changes in the fair values of foreign exchange
forward contracts in the period.

These decreases were more than offset by an increase
in provisions, principally due to the recognition of
a provision of £53.9m in respect of the Vistogard®
commercial dispute, reflecting damages awarded
and estimated pre- and post-judgement interest
consistent with the Final Order and Judgement
issued in November 2017. BTG has appealed the
quantum of damages and the appeal is ongoing.

Group financial review
continued

Earnings per share
Adjusted basic EPS was 32.9p (2016/17: 23.1p),
up 42% due to higher adjusted profit after tax,
before non-controlling interests, of £125.7m
(2016/17: £88.7m). Adjusted profit after tax was
higher in 2017/18 due to growth in adjusted operating
profit and foreign exchange forward contract gains in
2017/18 compared to losses in 2016/17, partly offset
by a higher adjusted effective tax rate.

IFRS basic EPS was 3.9p (2016/17: 8.7p), down 55%
due to a lower profit after tax in the year.

Balance sheet

Non-current Assets
Current Assets
Non-current Liabilities
Current Liabilities
Net Assets

31 March
2018
£m
754.7
408.0
(59.8)
(190.1)
912.8

31 March
2017
£m
968.8
342.3
(165.7)
(165.5)
979.9

Non-current assets
Non-current assets decreased by £214.1m to £754.7m
(31 March 2017: £968.8m), principally due to lower
intangible assets. The carrying value of intangible
assets decreased by £215.2m following the
impairments of PneumRx, Vistogard® and Oncoverse
intangible assets, together with the effect of
amortisation and foreign exchange translation.
These decreases were partially offset by intangible
assets acquired with Roxwood Medical.

Current assets
Current assets increased to £408.0m (31 March
2017: £342.3m). Cash and cash equivalents were
£54.5m higher at £210.0m (31 March 2017: £155.5m),
reflecting continued strong cash generation.

Inventories increased to £61.0m (31 March
2017: £58.4m) and receivables increased to
£134.0m (31 March 2017: £125.7m) as a result
of underlying business growth, partially offset by
foreign exchange retranslation.

Strategic ReportBTG plc Annual Report and Accounts 2018Summary cash flow

Free Cash Flow
Cash paid for Galil Medical,
net of cash acquired
Cash paid for Roxwood Medical,
net of cash acquired
Other investing and
financing activities
Net Change in Cash
Opening Cash and Cash Equivalents
Effect of foreign exchange on cash
Closing Cash and Cash Equivalents

2017/18
£m
109.3

2016/17
£m
64.7

–

(55.1)

–

(0.4)
9.2

(43.6)

(2.4)
63.3
155.5
(8.8)
210.0

The business continues to be highly cash generative.
Free cash flow was £109.3m (2016/17: £64.7m), up 69%,
with growth benefiting from comparison with free cash
flow in 2016/17 which included the settlement of the
DOJ litigation. Excluding this settlement, free cash flow
was up 18% in 2017/18 as very good growth in adjusted
operating profit was converted into cash.

On an IFRS basis, cash flow from operating activities
was up 63% to £120.7m (2016/17: £74.2m).

Cash and cash equivalents were £210.0m at 31 March
2018 (31 March 2017: £155.5m).

On 7 November 2017, the Group refinanced its multi-
currency revolving credit facility (RCF) which was
otherwise due to expire in November 2018. Following
the refinancing, BTG has a £150m multi-currency RCF,
with an option to increase the RCF by a further £150m.
The RCF has a three-year term which expires in
November 2020, although the Group has the option
to extend the term of the RCF for up to an additional
two years. The RCF currently remains undrawn.

Reporting in US Dollars (USD)
BTG will in future report in USD, starting with
its Interim Results for the six months ending
30 September 2018. In June 2018 BTG will publish
selected historical financial results restated to USD.

Summary and outlook for 2018/19
BTG has delivered a good financial performance
this year, with very good growth in Interventional
Medicine contributing to double-digit growth in
product sales and adjusted operating profit, and
strong cash generation.

BTG has the financial resources and capabilities to
continue to make targeted investments in product
innovation, clinical data, geographic expansion
and acquisitions. This will enable the business to
develop and sustain leading positions in attractive
growth markets, creating significant long-term value
for shareholders.

Viability statement
The activities of the Group, together with
factors likely to affect its future development
and performance, its financial position, its cash
flows, liquidity position and borrowing facilities
are described in the Strategic Report on pages
4 to 36. The Directors have 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. These risks and the manner in which
they are mitigated are summarised in the risk
management and principal risks section on
pages 62 to 67.

Taking account of the Group’s financial position
and principal risks, the Directors assess the
prospects of the Group by reviewing at least
annually the annual budget, the three year
strategic plan and the Group’s risk framework.
The Directors review the potential impact of each
principal risk as well as the risk impact of any
major events or transactions. A three-year period
is considered appropriate for this assessment as
it is consistent with the period covered by the
group’s business planning process.

The Group is well positioned to manage its
business risks in the event identified risks
materialise. The Group has a number of
established business units which provide a
strong financial underpin. The Group also has
considerable financial resources, including cash
and cash equivalents of £210.0m at 31 March
2018, strong free cash flows and access to a
£150m revolving credit facility, with an option to
increase the RCF by an additional £150m. Based
on the results of its analysis, the Directors
believe that the Group is well placed to manage
its business risks successfully. The Directors
have a reasonable expectation that the group
will be able to continue in operation and meet
its liabilities as they fall due over the three-year
period of their assessment.

OverviewGovernanceFinancialsStrategic ReportBTG plc Annual Report and Accounts 2018Adjusted gross profit, Adjusted SG&A, Adjusted R&D,
Adjusted Finance Income/Expense and Adjusted
effective tax rate are stated after excluding the effect
of those items outlined below.

Management apply a consistent policy in determining
its adjusted financial measures. In determining this
policy, outlined below, management assess the nature
and materiality of individual or groups of items, and
have deemed it appropriate to adjust for those items
including their tax effect, which (i) occur outside the
normal course of business and (ii) relate to corporate
acquisitions. These adjustments allow better
comparability with historic performance and identify
year on year trends in the underlying performance
of the business.

Items excluded from adjusted financial measures
in 2016/17, 2017/18 and from our outlook for
2018/19 are:

(a) Acquisition related adjustments

– The release of the fair value uplift of acquired

inventory or PP&E

– Amortisation of acquired intangible assets and
impairment charges relating to acquired or
in-licensed intangible assets or goodwill

– Fair value adjustments relating to contingent

consideration liabilities

– Transaction costs incurred in relation to

corporate acquisitions

(b) Other adjustments

– Net costs relating to the settlement of litigation,

disputes and government investigations

– Reorganisation costs, including redundancy

programmes, property costs and asset impairments
arising from significant restructuring

– The impact of US tax reform on current and

deferred tax

Group financial review
continued

Information on adjusted
financial information
The financial review includes financial information
prepared in accordance with International Financial
Reporting Standards and the Group’s accounting
policies, as well as financial information presented
on an adjusted basis.

Financial information on an adjusted basis excludes
certain cash and non-cash items which management
believe are not reflective of the underlying financial
performance of the business and is consistent with
how management reviews the business for the
purpose of making operating decisions.

Metrics presented on an adjusted basis in this Annual
Report include Constant Exchange Rate (CER) growth,
Adjusted Gross Profit, Adjusted SG&A, Adjusted R&D,
Adjusted Operating Profit, Adjusted Net Financial
Income/Expense, Adjusted Effective Tax Rate, Adjusted
Basic EPS and Free cash flow. A reconciliation between
IFRS and adjusted financial information is included on
page 35 and 36 of this report.

These metrics are further discussed below:

CER growth: CER growth is calculated by restating
2017/18 performance using 2016/17 exchange
rates for the relevant period. CER growth allows
management to focus on underlying performance
without the impact of foreign exchange, which it
cannot control.

Adjusted Operating Profit: Adjusted operating
profit reflects the IFRS operating profit of the
Group excluding the impact of certain adjustments,
which have been separately outlined below.
Adjusted operating profit allows management
to assess operational performance without the
impact of certain items which are not reflective
of underlying financial performance.

Adjusted Basic EPS: Adjusted Basic EPS reflects
Basic EPS excluding the after tax impact of certain
adjustments, which have been outlined below.
Adjusted Basic EPS allows management to assess
EPS without the impact of certain items which are
not reflective of underlying financial performance.

Free Cash Flow: Reflects the cash generated
from operating activities after recurring capital
expenditure, being a measure of cash flow available
for discretionary investing or financing activities.
The reconciliation of free cash flow to net cash flows
from operating activities is shown on page 36.

Strategic ReportBTG plc Annual Report and Accounts 2018Reconciliation between IFRS and Adjusted Income Statement
For the period ended 31 March 2018
Release
of the fair
value uplift
on acquired
inventory
and PPE1
£m
–
0.4
0.4
–

Amortisation
and
impairments
of intangible
assets
(ex. PneumRx)2
£m
–
–
–
5.5

PneumRx
impairment
charges3
£m
–
–
–
76.6

IFRS
Total
£m
620.5
(185.9)
434.6
(325.5)

Acquisition
costs4
£m
–
–
–
–

Fair value
adjustments
to contingent
consideration
liabilities5
£m
–
–
–
–

Litigation
and other6
£m
–
–
–
57.7

US Tax
Reform7
£m
–
–
–
–

Adjusted
Total
£m
620.5
(185.5)
435.0
(185.7)

Revenue
Cost of sales
Gross profit
SG&A expenses
Research and
development
Other operating expense
Amortisation of acquired
intangible assets
Acquisition and
reorganisation costs
Operating (loss)/profit
Financial income
Financial expense
(Loss)/profit before tax
Tax credit/(charge)
Profit for the year
Attributable to non-
controlling interests
Attributable to owners
of the parent
Profit for the year

(165.5)
(1.3)

(43.8)

(1.3)
(102.8)
41.5
(9.3)
(70.6)
83.3
12.7

(2.3)

15.0
12.7

–
–

–

–
0.4
–
–
0.4
(0.1)
0.3

–

0.3
0.3

2.1
–

43.8

–
51.4
–
–
51.4
(17.7)
33.7

0.9

32.8
33.7

68.1
–

–

–
144.7
–
–
144.7
(49.3)
95.4

–

95.4
95.4

–
–

–

1.3
1.3
–
–
1.3
–
1.3

–

1.3
1.3

–
–

–

–
–
(26.5)
1.6
(24.9)
–
(24.9)

–
–

–

–
57.7
–
–
57.7
(14.3)
43.4

–
–

–

–
–
–
–
–
(36.2)
(36.2)

(95.3)
(1.3)

–

–
152.7
15.0
(7.7)
160.0
(34.3)
125.7

–

(1.4)

(24.9)
(24.9)

43.4
43.4

(36.2)
(36.2)

127.1
125.7

Weighted average number
of shares – basic
Weighted average number
of shares – diluted
Basic earnings per share
Diluted earnings per share

386.1

389.2
3.9
3.9

0.1
0.1

8.5
8.4

24.7
24.5

0.3
0.3

(6.4)
(6.4)

11.2
11.2

(9.4)
(9.3)

386.1

389.2
32.9
32.7

1. The release of the fair value uplift relating to property, plant and equipment (PPE) acquired with Galil Medical in June 2016 of £0.2m and

inventory acquired with Roxwood Medical in October 2017 of £0.2m.

2. Amortisation charges relating to intangible assets acquired through corporate acquisitions of £43.8m and impairment charges relating to the

Vistogard® and Oncoverse intangible assets of £5.5m and £2.1m respectively.
Impairment charges relating to PneumRx inventory and PP&E (£1.5m), in-process research and development (£66.6m) and developed
technology (£76.6m) intangible assets.

4. Costs related to the acquisition of Roxwood Medical in October 2017 (£1.3m).
5. Fair value adjustments to contingent consideration liabilities relating to the PneumRx acquisition (credit of £26.5m) and the Galil Medical

acquisition (charge of £1.6m).

6. Litigation costs (£57.7m) reflect amounts provided based on the Final Order issued by the Court of Chancery of Delaware ruling against BTG
in respect of the previously announced litigation with Wellstat Therapeutics Corporation concerning the commercialisation of Vistogard®.
The Court has found that BTG has breached the distribution agreement and that Wellstat is entitled to damages of $55.8m plus interest
and costs. BTG has appealed the quantum of damages and the appeal is ongoing.

7. The US tax reform credit of £36.2m comprising a net £41.8m credit from revaluation of net deferred tax liabilities and current tax charge of £5.6m.

OverviewGovernanceFinancialsStrategic ReportBTG plc Annual Report and Accounts 2018Group financial review
continued

Reconciliation between IFRS and Adjusted Income Statement
For the period ended 31 March 2017

Revenue
Cost of sales
Gross profit
Selling, general and administrative expenses
Research and development
Other operating income
Amortisation of acquired intangible assets
Acquisition and reorganisation costs
Operating profit
Financial income
Financial expense
Profit before tax
Tax credit/(charge)
Profit for the year

Weighted average number of shares – basic
Weighted average number of shares – diluted

Basic earnings per share
Diluted earnings per share

IFRS
Total
£m
570.5
(179.9)
390.6
(206.6)
(87.8)
4.4
(42.0)
(1.1)
57.5
3.3
(29.2)
31.6
2.0
33.6

384.4
390.0

8.7p
8.6p

Release
of the fair
value uplift
on acquired
inventory
and PPE1
£m
–
1.0
1.0
–
–
–
–
–
1.0
–
–
1.0
(0.3)
0.7

Amortisation
of acquired
intangible
assets2
£m
–
–
–
–
–
–
42.0
–
42.0
–
–
42.0
(13.1)
28.9

Acquisition
costs3
£m
–
–
–
–
–
–
–
1.1
1.1
–
–
1.1
–
1.1

Fair value
adjustments
to contingent
consideration
liabilities4
£m
–
–
–
–
–
–
–
–
–
(3.0)
2.3
(0.7)
–
(0.7)

Litigation
and other5
£m
–
–
–
28.0
–
–
–
–
28.0
–
–
28.0
(2.9)
25.1

0.2p
0.2p

7.6p
7.4p

0.3p
0.3p

(0.2p)
(0.2p)

6.5p
6.4p

Adjusted
Total
£m
570.5
(178.9)
391.6
(178.6)
(87.8)
4.4
–
–
129.6
0.3
(26.9)
103.0
(14.3)
88.7

384.4
390.0

23.1p
22.7p

1. The release of the fair value uplift relating to inventory and property, plant and equipment (PPE) acquired with Galil Medical in June 2016

of £1.0m.

2. Amortisation charges relating to intangible assets acquired through corporate acquisitions of £42.0m.
3. Acquisitions and reorganisation costs are directly attributable costs related to the acquisition of Galil Medical in June 2016, including costs

incurred with professional advisers in relation to the corporate acquisition of £1.1m.

4. Fair value adjustments to contingent consideration liabilities relating to the PneumRx acquisition (credit of £3.0m) and the Galil Medical

acquisition (charge of £2.3m).

5. Settlement with the US government in relation to the Department of Justice’s investigation of the historical marketing of LC Bead® of £28.0m.

Reconciliation between IFRS and Adjusted financial information – Free Cash Flow
For the period ended 31 March 2018

Net cash inflow from
operating activities
£m
120.7

Purchase of
intangible assets
£m
(1.0)

Purchase of property
plant and equipment
£m
(10.4)

For the period ended 31 March 2017

Net cash inflow from
operating activities
£m
74.2

Purchase of
intangible assets1
£m
(0.6)

Purchase of property
plant and equipment
£m
(8.9)

Free cash Flow
£m
109.3

Free cash Flow
£m
64.7

Duncan Kennedy
Chief Financial Officer

Approval of the strategic report
This strategic report is approved by the Board
and signed on its behalf by:

Dame Louise Makin
Chief Executive Officer

Strategic ReportBTG plc Annual Report and Accounts 2018Governance

Contents
38 Corporate Governance report
38 Letter from the Chairman
40 Board of Directors
42 Leadership
52 Effectiveness
54

Accountability
(including Audit Committee
report and risk)

68 Relations with shareholders
69 Remuneration
95 Directors’ report
98

Statement of directors’
responsibilities in respect of
the Annual Report 2018 and
the financial statements

OverviewGovernanceFinancialsStrategic ReportBTG plc Annual Report and Accounts 2018Corporate Governance report
Letter from the Chairman

The Board is ultimately responsible for ensuring the
highest standards of governance are embedded into
everything we do as a company. An efficient and
effective governance framework is essential to support
management in delivering the Company’s strategy and
to manage the risks facing the business while striving
to deliver value to all our stakeholders. Our approach
to governance is enhanced by the high standards of
ethical behaviour the Board demands of all employees,
as reflected in our code of conduct. This is underpinned
by the BTG DNA, which directs our people to do
whatever is in the best of interests of the Group while
striving to live up to our values in all our activities.

As usual, we have reviewed our governance framework
with reference to the UK Corporate Governance Code
and a statement of compliance with the Code is set
out on page 42.

Governance during 2017/18
During the year, we have continued to strengthen our
governance, having reviewed the reporting structures
of our Board and its primary committees, as well as the
major policies that underpin our business operations.
The terms of reference for each of the Board’s primary
committees and sub-committees were reviewed and
adjusted as necessary during the year to reflect best
practice. Following the Board evaluation undertaken
last year, changes were made to the Board’s forward
agenda, dedicating additional time to key strategic
areas and opportunities as well as to continue to
evolve our approach to risk management (as described
in more detail on pages 62 to 67).

As a Board, we take our governance responsibilities
very seriously and will continue to seek ways to
improve those mechanisms of governance that support
the efficient running of the business. As part of the
continuing governance review, the Board conducted
a formal review of the roles and responsibilities of the
Chairman, Chief Executive Officer, Senior Independent
Director and Company Secretary; this division of
responsibilities has been approved by the Board,
and can be found on the Company’s website.

Dear shareholder

On behalf of the Board, I am
pleased to present the Corporate
Governance Report for the year
ended 31 March 2018.

BTG plc Annual Report and Accounts 2018GovernanceThe following pages of this report set out in greater
detail the framework and processes that the Company
has in place to ensure the highest levels of corporate
governance. The report as a whole provides an
insight into how, through its actions, the Board
and its committees have fulfilled their governance
responsibilities and have worked to ensure that
your investment and the assets of the business
remain protected.

Governance Framework
The Corporate Governance Report, the Directors’
Remuneration Report and the Directors’ Report
have been prepared to provide shareholders with
a comprehensive understanding of how the Board
and its committees operate and how we meet the
requirements of the UK Corporate Governance
Code (the Code) and other guidance.

Our Corporate Governance Report can be found
on pages 38 to 68 and includes our statement of
compliance with the Code and its principles on
page 42. The Directors’ Remuneration Report can
be found on pages 69 to 94.

With the Board, I look forward to discussing BTG’s
progress with you at our forthcoming AGM on
18 July 2018.

Garry Watts
Chairman

Board changes and
succession planning
As Chairman, I am responsible for ensuring the Board
operates effectively. This requires it to maintain the
appropriate level of independence and objectivity
and have the correct balance of experience, diversity
and skills, alongside a good understanding of the
operations of the business. I am delighted to lead a
Board with such experience, diversity and knowledge.

The Board continues to develop, with Greg Barrett
and Anne Thorburn joining the Board in November
2017 and January 2018 respectively. Details of these
appointments and the review of Board composition
leading to their appointment can be found on
pages 49 to 51.

On 1 January 2018 Duncan Kennedy joined the Board
to succeed Rolf Soderstrom who stepped down as
an executive director after more than ten years with
the Company.

The Board appointed Graham Hetherington to the
Nomination Committee in November 2017. Graham
was also appointed as the Board’s Senior Independent
Director during the year, replacing Giles Kerr. Giles will
step down as a director following the AGM in July 2018
and will therefore not be standing for re-election at
that meeting. I would like to offer my sincerest thanks
to Giles for his significant contribution to the Board
as a non-executive director, as Chairman of the Audit
Committee and as the Senior Independent Director.

Board evaluation
An external Board effectiveness evaluation exercise
was conducted by Calibro in late 2017 following
on from their review of the Board’s composition
last year. It is pleasing to note that the evaluation
confirmed that the Board and its principal committees
have, individually and collectively, worked effectively
to discharge their responsibilities and support the
ongoing development of the Group. More information
on the Board evaluation can be found on pages 52
and 53.

OverviewGovernanceFinancialsStrategic ReportBTG plc Annual Report and Accounts 2018Corporate Governance report
Board of Directors

We have a strong Board with the
appropriate balance of skills and
experience to oversee the future
growth of the Company. The Board
is collectively responsible for the
leadership of the Company, its
culture, values and standards.

Garry Watts
FCA, MBE
Chairman

Joined the Board as Chairman
in January 2012. He is Chairman
of the Nomination Committee.

Other directorships: Garry is
Chairman of Spire Healthcare
and of Foxtons Group plc and
is a non-executive director of
Coca-Cola Enterprises, Inc.

Expertise and experience:
Garry provides considerable
commercial leadership
experience and expertise to
the BTG Board. For seven years
up to December 2010, he was
CEO of SSL International plc
and, before that, its CFO. He
was previously an executive
director of Celltech plc and of
Medeva plc, and a non-executive
director of Protherics plc and
of Stagecoach Group plc.
Other roles have included
17 years as a member of the
UK Medicines and Healthcare
Products Regulatory Agency
Supervisory Board. Garry is
a former partner at KPMG.

Dame Louise Makin
MA, PhD (Cantab),
MBA, DBE
Chief Executive Officer

Joined BTG as Chief Executive
Officer in October 2004.

Other directorships: Louise
is a non-executive director
of Intertek Group plc and the
Woodford Patient Capital Trust.
She is a Trustee of the Outward
Bound Trust, an Honorary
Fellow of St. John’s College,
Cambridge and is Chair of the
1851 Trust.

Expertise and experience:
Louise is a highly experienced
international business leader,
who brings considerable
strategic and operational
expertise to the Board. Prior to
joining BTG, she was President,
Biopharmaceuticals Europe, of
Baxter Healthcare from 2001,
with responsibility for Europe,
Africa and the Middle East.
Before Baxter Healthcare,
Louise was Director of Global
Ceramics at English China Clay
and prior to that she held a
variety of roles during 13 years
at ICI.

Duncan Kennedy
BSc, ACA
Chief Financial Officer

Joined the Board as Chief
Financial Officer in January 2018.

Other directorships: Duncan
currently holds no external
directorships.

Expertise and experience:
Duncan offers significant
financial expertise to the Board.
Before being appointed CFO,
Duncan led BTG’s Interventional
Oncology business, a role he
held since May 2015. Duncan
joined BTG in December 2005 as
Group Financial Controller and
became a member of the
Leadership Team in April 2012
when he was appointed Group
Director of Finance, with
responsibility for managing the
global finance function and
supporting the CFO. Prior to
joining BTG, Duncan spent six
years in the group finance
function of Wembley plc. He
qualified as a Chartered
Accountant at Arthur Andersen
and holds a BSc in Mathematics
from Durham University.

Dr Susan Foden
MA, DPhil
Non-executive director

Appointed to the Board in March
2015. She is a member of the
Remuneration Committee.

Other directorships: Susan
currently holds non-executive
roles with BerGenBio ASA,
Evgen Pharma plc and Vectura
Group plc, and is an advisory
board member for CD3 (a joint
initiative between Leuven
University and the European
Investment Fund).

Expertise and experience:
Susan brings extensive scientific
knowledge to the Board together
with many years’ experience in
intellectual property, licensing
and company creation. She has
a strong track record of having
assisted in the development of
a number of businesses in the
sector including Kudos Ltd,
acquired by AstraZeneca in
2002 and Piramed Pharma Ltd
acquired by Roche in 2008.
She was Investor Director with
the venture capital firm Merlin
Biosciences, was formerly
CEO of the technology transfer
company, Cancer Research
Campaign Technology Ltd and
was Head of Academic Liaison
at Celltech Ltd.

Gregory Barrett
Non-executive director

Ian Much
Non-executive director

Appointed to the Board in
November 2017.

Other directorships: Greg is
currently non-executive
director of Cutera Inc and
Aqua Medical.

Expertise and experience:
Greg has a broad range of
commercial experience in the
US MedTech industry, with a
focus on interventional
medicine therapies. He was
previously President and Chief
Executive Officer of DFINE Inc,
Barrx Medical Inc, and ACMI
Corporation. His prior roles
include leading a minimally
invasive surgery division of
Boston Scientific, both in the US
and in emerging markets. Greg
has also held a series of senior
sales and marketing roles at a
number of companies, including
Baxter Healthcare and C.R. Bard.

Appointed to the Board in
August 2010. He is Chairman of
the Remuneration Committee
and a member of the Audit and
Nomination Committees.

Other directorships:
Ian currently holds no
other directorships.

Expertise and experience:
Ian provides substantial
international business
experience to the Board.
He was Chief Executive of
De La Rue plc between 1998
and 2004 and Chief Executive
of T&N plc between 1996
and 1998. Previously, he was
non-executive director of
Manchester United plc,
Camelot plc, Admiral plc,
and Chemring Group plc.

BTG plc Annual Report and Accounts 2018GovernanceGraham Hetherington
FCMA
Senior independent
director

Appointed to the Board in
August 2016. He is the Company’s
Senior Independent Director
and is Chairman of the Audit
Committee and a member
of the Remuneration and
Nomination Committees.

Other Directorships:
Graham currently holds
no other directorships.

Expertise and experience:
Graham brings substantial
financial and industry
experience to the BTG Board.
Prior to joining BTG he was
Chief Financial Officer of
Shire plc, a role he held from
June 2008 to February 2014.
Previously he held the same
positions at Bacardi in 2007 and
at Allied Domecq plc from 1999
to 2005. Graham has a broad
knowledge of international
finance management and
planning, including M&A, and
audit and risk management.
He is also a Fellow of the
Chartered Institute of
Management Accountants.

Jim O’Shea
Non-executive director

Appointed to the Board in April
2009. He is a member of the
Nomination Committee.

Other Directorships: Jim
serves as Chairman of Cardiome
Pharma Corp., and is a director
of Ocular Therapeutix Inc.

Expertise and experience:
Jim provides the Board
with significant US industry
experience. He is a former
Chairman of the US National
Pharmaceuticals Council.
From 2007 to 2008, he was
Vice Chairman of Sepracor, Inc,
where he was also President
and Chief Operating Officer
from 1999 to 2007. Previously,
Jim was Senior Vice President
of Sales & Marketing and
Medical Affairs for Zeneca
Pharmaceuticals (US), a
business unit of Zeneca Inc.
While at Zeneca, he held
several management positions
of increasing responsibility
in international sales and
marketing in the US and the UK.

Richard Wohanka
Non-executive director

Appointed to the Board in
January 2013. He is a member
of the Audit Committee.

Other directorships: Richard
is a board member of Lloyds
Banking Group Insurance
(Scottish Widows), Embark
Group and Pershing Square
Holding Limited, and is
Chairman of the Nuclear
Liabilities Fund and of Old
Mutual Global Investors.

Expertise and experience:
Richard provides substantial
expertise to the BTG Board
in the field of business and
finance, with more than 20
years’ experience in building
asset management businesses.
He was CEO of Union Bancaire
Privée Asset Management
between October 2009 and
June 2012, and CEO of Fortis
Investment Management from
2001 to 2009.

Gender Diversity
(%)

a Male 73%

b Female 27%

Balance of directors

a Chairman 1

b Executive directors 2

c Non-executives 8

Anne Thorburn
CA
Non-executive director

Appointed to the Board in
January 2018. She is a member
of the Audit Committee.

Other Directorships: Anne is
non-executive director and
Chair of the Audit Committee
of Diploma plc.

Expertise and experience:
Anne has an extensive range
of international financial
management, risk, audit and
M&A experience. She was
Chief Financial Officer of
Exova Group plc from 2009
to 2015 and previously served
as Group Finance Director at
British Polythene Industries plc.
Anne is a member of the
Institute of Chartered
Accountants in Scotland.

Giles Kerr
FCA
Non-executive director

Appointed to the Board in
October 2007. He is a member
of the Audit and Remuneration
Committees.

Other directorships: Giles is the
Director of Finance with the
University of Oxford, UK. He is
also a Director of Oxford University
Innovation Ltd, Senior plc,
PayPoint plc and Adaptimmune
Therapeutics plc, as well as
being a non-executive director
and Chair of the Audit Committee
of Arix Bioscience plc.

Expertise and experience:
Giles provides important relevant
industry and financial experience
to the BTG Board. He was
previously the Group Finance
Director and Chief Financial
Officer of Amersham plc, acquired
by GE Healthcare in 2004, and
previously served as Director of
Victrex plc. Prior to his role at
Amersham, he was a partner
with Arthur Andersen in the UK.

Company Secretary

Dr Paul Mussenden
General Counsel, Head
of Strategic Affairs &
Company Secretary

Appointed as Company
Secretary in March 2010.

Other directorships: Paul
is a non-executive director
and trustee of LifeArc Ltd.

Expertise and experience:
Paul supports the board with
over 20 years of advisory
experience in the healthcare
industry. As a member of
BTG’s Leadership Team he is
accountable for management
of the Legal, Intellectual
Property, Global Market Access,
Healthcare Compliance and Risk
Management functions. Paul is
a solicitor and has a BSc (Hons)
in Biotechnology and a Ph.D.
in molecular biology and
microbial physiology.

Tenure of non-executive
directors and Chairman
(as at 31 March 2018)

a More than 6 years 4

b 4 – 6 years 1

c 2 – 4 years 1

d 0 – 2 years 3

OverviewGovernanceFinancialsStrategic ReportBTG plc Annual Report and Accounts 2018Corporate Governance report
Leadership

Compliance with the UK Corporate
Governance Code (the Code)
BTG’s governance structure is based on the principles
of the Code published by the Financial Reporting
Council (FRC) and available from www.frc.org.uk.

The Code contains broad principles and specific
provisions that set out standards of good practice.
Our Corporate Governance Report, which includes
reports from the Nomination and Audit Committees
and the Directors’ Remuneration Report, is structured
to report against these key areas and sets out how
we have applied the Code’s main principles and
complied with its provisions.

Statement of Compliance with
the provisions of the Code
The Board considers that throughout the financial year
ended 31 March 2018 and up to the date of this report,
the Group has applied and complied fully with the
April 2016 edition of the Code. The Board has at all
times throughout the year been mindful to consider
how we comply with not only the principles of the
Code but also the spirit.

KPMG is required to review certain elements of the
corporate governance statement and to report if those
disclosures do not reflect the Company’s compliance
(and the Company has not instead explained why it
has not complied) with the provisions of the Code
specified for the auditor’s review by the Listing
Rules of the Financial Conduct Authority (FCA).

The role of the Board
and its committees

The Board
— Responsible for the overall leadership of the
business, its culture, values and standards.
— Has a schedule of matters reserved specifically

for its decision or approval.

— Determines governance, strategy and risk appetite.
— Responsible for ensuring adequate organisational

capabilities and capacity.

Disclosure Committee
— Responsible for ensuring the

Company’s compliance with applicable
transparency and disclosure obligations
under the Market Abuse Regulation
(MAR) including those related to the
management of price sensitive
information.

The Leadership Team
— Chaired by the CEO.
— Members include the CFO and senior
management from different areas of
the business and functions.

— Responsible for the day-to-day running

of Group operations and making
recommendations to the Board
on strategy.

— Ensures the capabilities are in place
to deliver on strategy and annual
objectives.

— Ensures the internal controls in place
to assess and manage risk are fully
complied with. This includes
responsibility for maintaining a system
to ensure that the Group is compliant
with all applicable healthcare laws
and regulations.

BTG plc Annual Report and Accounts 2018GovernanceAudit Committee
— Assists the Board on oversight of financial

results, internal control and management of risk
and compliance and maintaining an appropriate
relationship with the external auditor and
internal audit function.
Page 54 to read more.

Remuneration Committee
— Determines executive director remuneration
and oversees that for senior management.
— Ensures the Remuneration policy supports the
strategy by attracting, developing, motivating
and retaining people of the appropriate calibre.
Page 69 to read more.

Nomination Committee
— Considers the structure, size and composition of

the Board and its committees to ensure inclusion
of appropriate experience, diversity and expertise.

— Oversees talent management and succession

planning for senior roles.
Page 49 to read more.

Treasury Committee
— Primary responsibility is to monitor the Group’s treasury

activities, including cash management, foreign exchange
management and financing. The Committee also ensures
compliance with the Group’s treasury policy.

Risk Committee
— Responsible for monitoring risks throughout the

organisation and assessing the risk control and mitigation
measures implemented by the Group.

— Conducting work to support the assessment of the

Viability Statement by the Board.

— Ensuring operations are undertaken within the risk

appetite defined by the Board.

— Assisting with the evaluation of external macro risks that

may impact the Group.

— Assisting with the integration of risk management and

strategy development.

Internal Audit
— Testing of the effectiveness of the internal control systems.
— Supporting the risk management and compliance

functions with appropriate audits.

Portfolio Review Board and R&D Leadership Team
— Ensures BTG is investing in its assets efficiently and in relation to opportunities with well-targeted business cases where the

value to the customer and to BTG is clearly understood.

— Oversees the definition of activities and priorities of the R&D Leadership Team.
— The R&D Leadership Team provides strategic and operational leadership of R&D activities, harnessing BTG’s combined
knowledge and resources, to deliver a balanced pipeline of innovative therapies aligned with its business priorities.

Operational Leadership Team
— Responsible for ensuring that the manufacturing and supply chain are tightly controlled and their operations are optimised,

as far as practicable, and meeting all applicable regulatory requirements.

Global Quality Leadership Team
— Reviews progress with the overall Quality Strategy and objectives, including inspection readiness, Quality Management
System effectiveness and enhancements, product delivery on time and to required quality, safety and efficacy standards.

— Ensures continued regulatory compliance.

Performance Management Review
— Monthly meeting of the Leadership Team and senior staff to review progress against business plans and targets, both

financial and operational (includes business unit risk assessments).

Corporate Responsibility Committee
— Provides guidance and leadership in regards to social, environmental and governance issues of most relevance to BTG

to ensure the Group maintains appropriate standards in this area.

Business Unit Leadership Teams
— Each business segment has an established leadership team comprising commercial and functional capabilities. They are

responsible for managing the day-to-day operations of each specific business.

OverviewGovernanceFinancialsStrategic ReportBTG plc Annual Report and Accounts 2018Corporate Governance report
Leadership continued

Matters reserved for the Board
and delegated authorities
The Board is ultimately responsible for the management
and direction of the Group and monitors performance
of the business. There is clear division of responsibilities
between the running of the Board and the running of the
Company’s business, and the Board has reserved certain
matters for its approval. Other matters and authorities
have been delegated to its primary committees and
other management committees detailed on pages 42 and
43. A review of the Board’s reserved matters and those
authorities delegated below primary committee level
was conducted during the year and amendments were
made, as appropriate, to ensure they remain relevant,
are in line with best practice, and scalable going forward
as the Group grows. The Board continues to maintain
a watching brief over those delegated matters and
recommends amendments as it considers appropriate.

The Board’s powers are set out in the Company’s
Articles of Association. The Articles of Association and
those matters reserved for the Board’s consideration,
along with the terms of reference for each of the
Board’s primary committees, which are reviewed
annually, can be found on the Group’s website at
www.btgplc.com.

The Board of Directors
The Board maintains standing annual agenda
schedules setting out core activities for its
consideration and those of its primary committees.
The agendas are carefully planned to ensure they
remain focused on the Group’s strategic goals and
afford sufficient time for monitoring and reviewing
significant activities. A review of these schedules,
which help plan and structure meetings, was
conducted during the year. Additional meetings
are held as required to respond to important issues
as they arise.

While, as a unitary board, the executive and non-
executive directors are collectively responsible for
the success of the Group and have fiduciary duties
to shareholders, their roles are strictly delineated.
The roles of the Chairman and Chief Executive are
separate and distinct, and the division of their
responsibilities is clear (and is set out on BTG’s
website www.btgplc.com). During the year, a formal
review of those responsibilities and those of the Senior
Independent Director and Company Secretary was
conducted to ensure they remain fit for purpose and
in line with best practice. The responsibilities of the
executive directors and non-executive directors are
clearly defined. The executive directors have direct
responsibility for the business operations of the Group,
while the non-executive directors are responsible for
bringing independent and objective judgement to
Board decisions.

BTG plc Annual Report and Accounts 2018GovernanceEffective division of
Board responsibilities
Chairman
Responsible for leading the Board, creating conditions
for overall Board and individual director effectiveness,
promoting constructive debate and for:

– Ensuring a robust decision-making process is
in place, based on all appropriate information
being provided to the Board in a timely manner.
Ensuring clear decisions are made, communicated
and effected. Ensuring appropriate input from
all directors.

– Setting the Board agenda, focusing on strategic

matters and giving adequate time to other key
issues, such as its role in shaping and ensuring
adequate organisational capabilities and capacity.

– Managing the Board to allow enough time for
discussion of complex or contentious issues.

– Ensuring the Board environment is productive

and the Board and its committees have appropriate
composition and diversity, experience and
expertise with regards to the Company’s
evolving needs.

– Ensuring Board Committees are properly structured.

– Ensuring the Board discharges its responsibilities
with respect to risk management and governance
generally (including determining the appropriate
risk appetite for the Group and addressing those
matters reserved for the decision of the Board).

– Ensuring necessary relationships of mutual respect
and open communication are fostered between the
executive directors and non-executive directors.
Providing support and advice while respecting
executive responsibility.

– Effective communication with shareholders and

other stakeholders.

– Appropriate oversight of business performance.

– Ensuring appropriate delegation of authority from

the Board to executive management.

– Ensuring the performance of the Board, its

committees and individual directors is evaluated
at least once a year and acting on the results
of such evaluation. Where appropriate, through
the nomination committee, proposing that new
members be appointed to the Board or seeking
the resignation of others.

– Promoting high standards of corporate governance.

Chief Executive Officer (CEO)
Primarily responsible for the running of the Group and
for executing strategy in line with the risk appetite
defined by the Board and Company values. Through
her direct reports, the CEO is responsible for all
financial reporting, tax and financial control aspects
of the Group. The Chief Executive is responsible for:

– Communicating to the Board her views on business
issues to improve the standard of Board discussion
and prior to final decision on an issue, explaining
in a balanced way, any divergence of views in the
executive team.

– Driving the strategy formulation process and
definition of the Group’s objectives, to enable
an effective and evidence based approach and to
ensure that the Board is well informed about all
aspects of the business and its operations that
bear on its strategy.

– Driving the execution of the strategy.

– Managing the Group’s risk profile in accordance
with the risk appetite defined by the Board.

– Ensuring implementation of Board actions.

– Delivering high-quality information to the Board

to enable it to monitor the performance of the
whole business including the management of risk,
and to make critical decisions.

– Developing the overall capabilities of the

organisation.

The Senior Independent Director (SID)
Principally to support the Chairman in his role and
to work with him and other directors to resolve any
significant issues that may arise. The Senior
Independent Director is responsible for:

– Supporting the Chairman’s delivery of objectives.

– Leading the non-executive directors in the

oversight and evaluation of the Chairman and
ensuring there is clear division of responsibility
between the Chairman and Chief Executive Officer.

– Being available to shareholders who wish to

express concerns that the normal channels have
failed to resolve or which would be inappropriate
to raise with the Chairman.

– Taking responsibility for an orderly succession

process for the Chairman.

Company Secretary
Provides advice and assistance to the Board,
particularly in relation to corporate governance
practices and development. The Company Secretary
ensures that:

– Board procedures are complied with and applicable

legislative and regulatory rules are followed.

– A good flow of information exists to the Board and

its committees.

– There is appropriate induction and facilitating

ongoing training for directors.

– The Board’s risk management discussions are

underpinned by robust process.

OverviewGovernanceFinancialsStrategic ReportBTG plc Annual Report and Accounts 2018Corporate Governance report
Leadership continued

Board activity during the year:

Strategy
— Annual strategy away day
including presentations
from each of the business
units and discussion of risks
associated with the strategy
and risk appetite.

— Ongoing assessment of M&A
opportunities including the
acquisition of Roxwood Medical.

— Ongoing assessment of

Business performance
— Oversight of the financial and
operational performance of
the business.

— The 2018/19 budget was
considered in depth.

— Reviewed the half-year and

annual results, announcements
and analyst presentations.
— Approved the Annual Report

and Accounts.

R&D portfolio.

— Approved appropriate action

— Consideration of geo-political
developments, including
Brexit and geographical
expansion plans.

relating to litigation with Wellstat
Therapeutics Corporation with
respect to Vistogard®.

Governance and shareholders
— Discussed the outcome of the Board
and committee evaluations and
set objectives for the coming year.
— Regularly reviewed feedback from

institutional investors.

— Where necessary, updated the
terms of reference for the
Nomination, Audit and Remuneration
Committees and Matters Reserved
for Board approval.
— Annual General Meeting.
— Continued to develop the
governance frameworks.

The Board

Internal control and risk
— Regular review of the risk

Leadership and people
— Discussed and evolved the

management system; deep
dives into specific areas,
including Healthcare
Compliance and geographical
expansion strategy. Review of
principal risks, potential impact
and support for the Viability
Statement. Participation of
representative Board members
in the Risk Committee meetings.

— Review of reports from the
Audit Committee (including
summary of Internal Audit
and Compliance reports).

composition of the Leadership
Team and Board and its committees,
including succession planning.
— Undertook external Board and

committee evaluations.

— Considered a capability review of the
wider workforce population, including
succession planning and training
requirements for the next generation
of business leaders.

— Approved the appointment of Duncan

Kennedy to the Board.

— Approved the appointment of
Greg Barrett to the Board.

— Approved the appointment of Anne
Thorburn to the Board and as a
member of the Audit Committee.

— Approved the appointment of Graham
Hetherington as a member of the
Nomination Committee and to act
as Senior Independent Director.
— Regular review of the capabilities

deemed necessary for the delivery of
the future strategy (including review
of Clinical and Regulatory capabilities).

BTG plc Annual Report and Accounts 2018GovernanceCase study
Board Induction process
The Board welcomed two new non-executive directors and a new Chief Financial Officer during the year and
took the opportunity to review and enhance its Board induction materials and programme in support of their
on-boarding process. A full pack of induction materials was made available to each new director, with additional
material provided depending on the requirements of the director and their roles within the BTG Board.
A comprehensive guide to UK corporate governance and directors’ duties, was provided to all directors, with
additional guidance highlighting the main differences between the UK and US listed company environments being
provided to Greg Barrett. As part of her induction to the operations of the Audit Committee, Anne Thorburn met
with senior finance team members, the internal audit function and the external auditors. She also met with the
heads of the risk and compliance functions to support her understanding of those functions and their inputs into
the Committee.

Directors have an open invitation to visit any of the Company’s facilities to help them gain a deeper understanding of
the Group’s operations and are encouraged to do so as their other commitments permit. While the Board was in the USA
in February, Anne Thorburn took the opportunity to tour the Company’s facility in Salt Lake City, Utah, and meet with its
employees and both Greg and Anne met a range of senior US personnel. Greg Barrett has also arranged to visit a number
of US facilities.

In the coming year, the Board continues its rolling programme of visiting global offices and will take advantage of these
visits to meet staff and provide the Board with enhanced understanding of the various areas of the business.

Attendance by individual directors at Board and Committee meetings during 2017/18
Board & committee
composition & attendance
Total number of meetings held

Board
meetings
6

Committee
memberships

Independent

Nomination
Committee
8

Number of meetings attended

Executive Directors
Louise Makin (CEO)
Rolf Soderstrom (CFO)1
Duncan Kennedy (CFO)2

Non-Executive Directors
Garry Watts
Greg Barrett6
Susan Foden
Graham Hetherington
Giles Kerr
Ian Much
Jim O’Shea
Anne Thorburn7
Richard Wohanka

n/a
n/a
n/a

Nom4
n/a
Rem
Aud4, Rem, Nom5
Aud, Rem, Nom
Aud, Rem4, Nom
Nom
Aud
Aud

No
No
No

n/a3
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes

6/6
4/4
2/2

5/6
2/2
6/6
5/6
5/6
6/6
6/6
2/2
5/6

–
–
–

7/8

–
2/4
3/4
8/8
8/8
–
–

Audit
Committee
5

Remuneration
Committee
5

–
–
–

–

–
4/5
4/5
5/5
–
2/2
4/5

–
–
–

–

5/5
3/5
5/5
5/5
–
–
–

1. Rolf Soderstrom left the Board on 31 December 2017.
2. Duncan Kennedy joined the Board on 1 January 2018 and attended all Board meetings after this date.
3. Garry Watts is excluded from the determination of independence by virtue of his role as Chairman of the Group.
4. Committee Chairman.
5. Graham Hetherington became a member of the Nomination Committee with effect from 27 September 2017.
6. Greg Barrett was appointed to the Board on 27 November 2017 and attended all Board meetings after this date.
7. Anne Thorburn was appointed to the Board and Audit Committee on 23 January 2018 and attended all Board and Audit Committee meetings

after this date.

Notes
In addition to the formal meetings contained in the table above, the Board held seven telephone meetings during the year scheduled as needed
to address specific areas of business.
Garry Watts was unable to attend the July 2017 meetings due to illness.
Graham Hetherington was unable to attend meetings held in November 2017 due to illness.
Giles Kerr was unable to attend the September 2017 meetings due to illness.
Richard Wohanka was unable to attend the Audit Committee and Board meetings in March 2018 due to an unavoidable pre-arranged engagement.
Directors did not attend Nomination Committee meetings where consideration of their appointments was the sole agenda item.
The external auditor attends the Audit Committee meetings and the remuneration advisers attend the Remuneration Committee meetings.
There was an informal Board update call when there was a larger break between scheduled meetings.

OverviewGovernanceFinancialsStrategic ReportBTG plc Annual Report and Accounts 2018Corporate Governance report
Leadership continued

Board composition, membership
and election of directors
The Board currently comprises nine non-executive
directors, including the Chairman, and two
executive directors.

The names and brief biographical details of all the
current directors are set out on pages 40 and 41.

The Board recognises the range of benefits that
diversity in its broadest sense brings to the business as
a whole and is committed to supporting the culture of
equal opportunities that exists throughout the Group,
which aims to foster an inclusive environment for all
its employees, regardless of age, disability, gender,
race or sexual orientation. While appointments to the
Board are made on merit, the Board seeks to appoint
candidates from diverse backgrounds that will support
it in overseeing the long-term growth ambitions of
the Company.

The Nomination Committee reviews Board composition,
size, structure and diversity on a regular basis to ensure
that, as the business evolves, the Board continues to
have the necessary skills and experience to support
its strategy now and in the future. A description of the
activities of the Nomination Committee can be found
on page 50.

The Board and Leadership Team are comprised of
members with a diverse range of experience and
backgrounds. The Board currently comprises 27% of
women, which will increase to 30% when Giles Kerr
steps down from the Board following the AGM in July.
The Leadership Team comprises 33% of women and
details of gender diversity across the Group below
Board level, can be found in the Directors’ report
on page 97.

Following the formal external evaluation process,
further details of which can be found on pages 52 and
53, the Chairman is satisfied that each of the directors
continues to perform effectively and demonstrates
commitment to their role. This includes having time for
Board and committee meetings and their other duties,
and their capacity to dedicate sufficient time to deliver
what is expected of them.

Independence
The Board applies a rigorous process to satisfy itself
that its non-executive directors remain independent.
The Board reviews this question every year, using its
own judgement when applying the criteria in the Code.
Having undertaken this review, the Board confirms that
all the non-executive directors are considered to be
independent in character and judgement. Giles Kerr has
been a member of the Board for more than nine years
and, following his review, the Board was satisfied that
he continued to demonstrate the attributes of an

independent non-executive director, with no evidence
that the length of his tenure had impacted this. Giles
has announced his intention to stand down as a director
of the Company and will therefore not be seeking
re-election at the AGM in July 2018.

In line with the recommendations of the Code, at
least half the Board, excluding the Chairman, are
independent non-executive directors. Garry Watts
was considered to be independent at the time of his
appointment although, in accordance with the Code,
he is excluded from the determination of whether at
least half the Board are independent non-executive
directors thereafter.

Independent non-executive Board appointments are
for three-year terms, subject to re-election at each
year’s AGM. When a non-executive has served on the
Board for more than six years, their term of reappointment
reduces to one year, in line with best practice. Giles
Kerr, Jim O’Shea and Ian Much have each served on
the Board for more than six years. During the year,
the Chairman Garry Watts was reappointed for a further
three-year term.

Structure and reporting
The Group has a well-defined management structure
with clear lines of responsibility and accountability.
The Board is responsible for setting the overall strategy
and reviewing the performance of the Group.

The Leadership Team generally meets weekly and
more formally on a monthly basis to review business
performance measured against annual budgets,
longer-term plans, an agreed set of objectives and
performance criteria for each business segment. In
addition, it will assess and respond to issues arising
across the Group. Forecasts are monitored monthly on
the basis of detailed reviews of progress and prospects.
Reporting to the Board is based on the information
provided to and reviewed by the Leadership Team,
as well as their assessment and recommendations
regarding how to deliver the Group’s objectives.
The reports include non-financial as well as financial
information and a review of progress within the
development portfolio.

Compliance and the review of risk and risk management
are embedded throughout the Group. The Audit
Committee has reviewed the detailed reports on Risk,
Internal Audit and Compliance and reported its findings
to the Board (see the Audit Committee report on pages
54 to 61 for more detail). The Board has reviewed the
risk management process and confirms that ongoing
processes and systems ensure that the Group continues
to be compliant with the guidance on internal control
in the Code.

Delegated authority structures ensure that decisions
are taken at an appropriate level, with an appropriate
level of input by internal and external expert advisers.
The delegated authority structure prescribes financial
limits of approval at each level and requires decisions
with significant financial, risk or reputational impact
for the Group to be approved by the Board.

BTG plc Annual Report and Accounts 2018GovernanceAs part of the Committee’s succession planning
process and in conjunction with the external
assessment of required experience and capabilities,
criteria for the selection of a successor to Rolf
were developed. The Committee considered the
performance of Duncan in his previous roles at BTG,
both financial and operational, and the results of an
external capability assessment he had undertaken as
part of his personal development plan. The Committee
also considered the particular requirements for the
CFO role and the overall experience and capabilities
required of the Board as a whole going forward in light
of the Group’s strategy. Following a thorough process,
during which the views of the whole Board were
gathered along with the input from external advisers,
the Committee concluded that Duncan was the most
suitable candidate for the role.

During the year, the Committee also considered the
composition of each Board Committee and the role
of Senior Independent Director (SID). This resulted
in the appointment of Graham Hetherington to this
Committee and also his appointment as the Board’s
SID, replacing Giles Kerr. On her appointment to the
Board, Anne Thorburn was also appointed as a
member of the Audit Committee.

After a busy year, the Board and Leadership Team are
now well placed for the next stage of the Company’s
growth. Long-term succession planning remains the
cornerstone of the Committee’s activities and we
will continue this work into 2018/19 to ensure the
Company retains, develops and, where necessary,
attracts the talent at all levels that will support the
delivery of its strategy.

Garry Watts
Nomination Committee Chairman

Nomination
Committee report

Dear Shareholder

I am pleased to present the report of the
Nomination Committee of the Board for the year
ended 31 March 2018.

The Nomination Committee has an important role to
play to ensure the composition of the Board and senior
leadership team remains appropriate for continued
success. As I mentioned in my Chairman’s statement on
page 38 and 39, during the year we announced three
changes to the Board: the departure of Rolf Soderstrom
and the appointment of Duncan Kennedy as Chief
Financial Officer (CFO); and the appointment of Greg
Barrett and Anne Thorburn as non-executive directors.

Last year I reported that an external assessment of
the Board skills and competencies required to deliver
on the Group’s longer-term strategic plans had been
conducted and the findings would be used to inform
the continued evolution of the composition of the
Board. The Committee engaged Heidrick & Struggles
(who have no other connection to the Group) to assist
in the search for two suitable candidates, in particular
those with relevant US MedTech commercial
experience and recent Finance and Audit Committee
experience. A diverse list of candidates with a range
of experience was developed for each role. Following
detailed evaluation of a long list and meetings with
a short list of candidates, the Committee agreed
unanimously to recommend the appointment of
Greg Barrett and Anne Thorburn to the Board, both
of whom bring substantial recent relevant experience
in addition to other relevant facets. Greg joined the
Board in November 2017 and Anne Thorburn was
appointed in January 2018. Both directors received
an induction tailored to their respective roles and
experience, details of which can be found on page 47.

OverviewGovernanceFinancialsStrategic ReportBTG plc Annual Report and Accounts 2018Corporate Governance report
Leadership continued

The Nomination Committee
and its membership
The Committee’s terms of reference were reviewed
during the year and are considered fit for purpose and
reflect current best practice. They are available on the
Group’s website, www.btgplc.com, or from the Group
Company Secretary on request.

Committee members
Garry Watts
(Committee Chairman)
Graham Hetherington
Giles Kerr
(until 27 September 2017)
Ian Much
Jim O’Shea

Date of appointment to the Committee

1 January 2012
27 September 2017

16 July 2008
1 January 2012
13 May 2009

Composition of the Committee
As at the year end, the Committee comprised three
non-executive directors and the Chairman.

Directors’ biographies
See pages 40 and 41.

Meeting attendees
Only members of the Nomination Committee have
the right to attend meetings, however, the CEO and
the other non-directors may attend meetings by
invitation, as may employees or external advisers
when appropriate and necessary. The Group Company
Secretary serves as secretary to the Committee.

Scheduled meetings during the year
Committees are typically held before scheduled
meetings of the Board and additional meetings
convened when required. There were eight meetings
of the Committee during the year. Details of
attendance can be found on page 47.

The key responsibilities
of the Committee
The Board has delegated responsibility for the
following to the Committee:

– Keep under review the structure, size and

composition of the Board, looking at its balance of
skills, experience, independence and knowledge as
well as its diversity, and make recommendations to
the Board on any appropriate changes.

– Identify, via a rigorous and transparent procedure,

and nominate, for the Board’s approval, suitable
candidates to fill any vacancies for non-executive
directors and, with the assistance of the CEO,
executive directors.

– Plan for the orderly succession of directors to

the Board.

– Recommend to the Board the membership and
chairmanship of the Nomination, Audit and
Remuneration committees.

Time spent by the Committee
during the year

a Composition and balance including diversity 14%
b Governance/effectiveness 17%
c

Succession planning and re-appointment
of directors 23%

d Non-executive search 20%
e CFO replacement 26%

BTG plc Annual Report and Accounts 2018GovernanceActivities
The principal activities of the Committee during the
year related to:

– The process to appoint a new Group CFO.

– The process to find and appoint two new

non-executive directors.

– The reappointment of non-executive directors
Giles Kerr, Ian Much and Jim O’Shea, each for a
further 12 months, subject to being re-elected
at the Annual General Meeting (AGM).

– The reappointment of Sue Foden as non-executive

director for a further three-year period, subject to
being re-elected at the AGM.

– The reappointment of Garry Watts as a

non-executive director and Chairman of the Board
for a further period of three years, subject to being
re-elected at the AGM.

– Considering the composition of the Board and the
appointment of Graham Hetherington as Senior
Independent Director.

– Reviewing the independence and effectiveness of

each non-executive director prior to recommending
their re-election at the AGM.

– Discussing succession planning for the Group’s

Leadership Team, including the CEO and CFO and
the Group’s senior managers in key positions.

– Considering the expertise, capabilities and capacity
of the Group’s management team with regard to
the Group’s strategy and future requirements.
Progress to address perceived capability gaps is
regularly reviewed and this remains an area of
focus and is considered in the context of growth,
both organically and by acquisition.

Appointment process
Board appointments are made on merit and in
line with current and future needs, reflecting the
UK listing and international activities of the Group.
The Committee considers what areas of expertise the
Board would most benefit from and draws up a full
description of the role accordingly, where necessary
utilising the services of senior executive search
agencies. Any search agency engaged by the Committee
to provide a list of potential candidates is required to
be free from any conflicts of interest with the Group
and to have adopted the Voluntary Code of Conduct
for addressing gender diversity and best practice in
the search process.

The Committee will typically consider a longer list of
potential candidates before shortlisting candidates for
interview. The candidates will be interviewed by the
Committee members on behalf of the Board. Preferred
candidates are also then interviewed by the other
non-executive directors, the CEO and, where
considered appropriate, the Group Company Secretary.
Taking into account their views and the Board’s
requirements, the Committee will make a
recommendation to the Board. Appointments to the

Board receive a thorough induction process, details
of which can be found on page 52. The appointment
process for Duncan Kennedy differed from the above
as it was part of the Board’s long-term succession
planning process.

Development of capabilities
and succession planning
The development of talent below Board level is
extremely important and an area of focus for the
Board. BTG continues to build an internal leadership
pipeline for senior roles and the Head of HR updates
the Board regularly on progress. In addition to
traditional Management Development Programmes,
the Group has many learning and development
opportunities available to prospective leaders. By
focusing on creating a pool of talent, we are increasing
the probability of retaining them through meaningful
development and career opportunity, and building the
internal capability needed to support the Company’s
growth. The strength of the Company’s capability
development and succession planning programme
was demonstrated during the year by the appointment
of Duncan Kennedy as CFO.

Diversity
Any appointment to the Board will be made on merit
and for the benefit of the continuing success of the
Company. However, the benefits of diversity in its
broadest form, including gender diversity, are
recognised by the Board and play a very important
part in the decision-making process regarding
appointments. The Board remain supportive of
best practice recommendations to improve gender
balance on Boards. The Board currently comprises
eight men (73%) and three women (27%). The Board
recognises the value of a workforce with diverse skills,
experience, thinking and background and those values
are reflected in the recruitment policies in effect
throughout the Group. Those policies of diversity
and inclusion are applied when making appointments
to the Board.

Further details can be found in the Directors’ report
on page 97.

Committee evaluation
The Committee’s performance was reviewed as part
of the externally facilitated annual Board evaluation
process. The assessment found that it continued to
function effectively and reinforced the work begun
during the year to continue to evolve the Board’s
composition to ensure it contained the necessary skills
and experience in light of the Group’s strategy. The
evaluation supported the ongoing focus on succession
planning both at Board and Leadership Team level.

Garry Watts
Nomination Committee Chairman

OverviewGovernanceFinancialsStrategic ReportBTG plc Annual Report and Accounts 2018Performance evaluation
The Board recognises that a rigorous evaluation of
its performance is important to optimise its continued
effectiveness and development.

The CEO appraises the performance of the CFO.
The Chairman and non-executive directors review
the performance of the CEO. The non-executive
directors, led by the Senior Independent Director,
with input from the executive directors, evaluate
the performance of the Chairman each year. The
committees also review their own performance and
report the results to the Chairman and the Board.
During the year, the non-executive directors held
a meeting without the executive directors to discuss
the performance of the executive directors and their
management of the Group’s affairs.

A formal Board evaluation is carried out annually and
is externally facilitated every three years. This year an
external evaluation was carried out by Calibro, who
reviewed the performance and effectiveness of the
Board and its committees. Calibro was considered to
be best placed to conduct the review given the insight
into the Board acquired during their work in 2016/17
relating to Board composition. Calibro developed a
comprehensive brief with the Chairman and Group
Company Secretary and attended certain Board and
committee meetings held during November 2017.
Individual interviews were also conducted with
each Board member and the Company Secretary.

The main areas considered by the evaluation were:

– Board structure and composition.

– The quality of information provided to the Board.

– Development of organisational capabilities needed

for BTG to succeed.

– Process for the definition of strategy.

– Governance oversight, including risk management.

– Board culture and communication.

Corporate Governance report
Effectiveness

Induction and training
All new directors receive a comprehensive induction
tailored to their needs. The programme continues to
evolve taking into account feedback from directors.
It includes written information on areas such as
directors’ duties and corporate governance guidelines
and includes meetings with other directors and a cross
section of senior management at a Group and business
unit level. Site visits are encouraged. New Board
members also receive a full briefing on the financial
and operating history of the Group and details of its
strategy, risk management and compliance processes,
operating plans, budgets and forecasts for future
years. Following their appointment to the Board during
the year both Greg Barrett and Anne Thorburn
received tailored induction programmes. Further
information on these inductions can be found in
the case study on page 47.

All directors, including those newly appointed, are
given the opportunity to attend external courses and
refresh their knowledge regularly through publications
and conferences, and through information provided by
the Group and its advisers.

In accordance with best practice, the Chairman
considers and addresses the development needs of
the Board as a whole, if any, and ensures that each
director updates their individual experience, skills
and knowledge as appropriate.

Support
There are robust processes in place to ensure that the
Board receives management information and reports
on strategic and operational matters for discussion on
a timely basis via a secure Board portal. The Board
calendar includes annual strategy days and senior
management regularly attend meetings to enhance
the non-executive directors’ understanding of the
business and to present deep-dive analysis of their
areas of the business. Board meetings are held twice a
year at other Group locations outside the UK, affording
non-executive directors an additional opportunity to
meet employees and enhance their understanding of
Group businesses.

There is an agreed procedure for directors to take
independent professional advice, if necessary, at the
Group’s expense. They also have direct access to the
advice and services of the Company Secretary, who
is responsible for ensuring that Board procedures
are followed and for providing advice on corporate
governance. The Group provides appropriate directors’
and officers’ liability insurance. Further information on
directors’ indemnities is given in the Directors’ report
on page 95.

BTG plc Annual Report and Accounts 2018GovernanceProgress on the output from the 2017 evaluation and objectives following the 2018 evaluation is set out below:

Board evaluation

Key 2017 objectives
The risk management process
is to be further integrated into
strategic planning.

Progress
Good progress. The risk discussion was
an integral part of the Board strategy
day discussion.

The Board will receive further
strategic updates throughout the
year as part of an iterative discussion.

The strategic updates were integrated
into the 2017/18 Board agenda with
deep-dives in key areas.

Continue to evolve the top-down
macro risk assessment of those
external developments that may
adversely impact the business.

Good ongoing progress. External risk
briefings were provided to the Risk
Committee with participation of a
number of non-executive directors.

Definition of key risks inherent in the
strategy and discussion of appropriate
risk appetite in key areas.

Monitor the execution of the R&D
strategy and evaluation of the
pipeline of earlier-stage development
opportunities.

Continue the varied leadership
development programmes. Continue
the consideration of capability needs
at Board level.

Ongoing focus on changes in the external
environment and the impact on strategy.

Ongoing development of the R&D pipeline,
reviewed by the Board twice a year.

Addressed with ongoing work and new
leadership development initiatives across
the business. Ongoing evolution of the
composition of the Board occurred during
the year with the succession of CFO and
two additional Board appointments.

Key 2018 objectives, taking into account
the 2018 Board evaluation
Strategy and risk – increase the
focus on the evolution of the Group’s
strategy and definition of the
associated risk appetite.

Communication – continue to improve
external communication of the strategy
and shareholder engagement.

Capabilities – ongoing evolution of the
composition, expertise and diversity
at the Board and Leadership Team.

Ongoing review of the capability and
capacity needs of the Group to deliver
the strategy and ‘deep-dive’ reviews
of key strategic capabilities. Continue
to enhance internal M&A expertise.

Related parties and conflicts of interest
The Group maintains robust procedures to ensure that
related party transactions and potential conflicts of
interest are identified, disclosed and managed. To
address the effect of Section 175 of the Companies Act
2006, the Group’s Articles of Association enable the
Board to authorise situations that might give rise to
directors’ conflicts of interest. Directors declare interests
in other businesses on appointment to the Board, as
they arise and complete an annual self-certification.

Board members are regularly reminded to disclose any
conflicts should they arise, and any such notifications
are kept in a conflicts register maintained by the
Company Secretary. Any director who considers they
may have a potential conflict of interest is required to
report this to the Chairman in the first instance, who
may consult the Nomination Committee and report its
findings to the Board.

Where it is identified that a related party relationship
exists, the Board agrees specific additional procedures
to ensure the effective management of potential
conflicts of interest.

At the March 2018 Board meeting, all directors were
asked to review and make any necessary amendments
to their existing declarations. The Company Secretary
has reviewed the latest declarations and has
confirmed that no conflicts are believed to have arisen.

Giles Kerr, a non-executive director of the Board,
is also the Director of Finance for Oxford University
and a director of Oxford University Innovation Limited,
a subsidiary of Oxford University. Wholly-owned
subsidiaries of the Group entered into technology

commercialisation and revenue-sharing agreements
with these organisations prior to Giles Kerr joining
the Board. The Group has licensed the intellectual
property rights covered by these agreements to
independent third-party companies that are developing
and/or selling the licensed products. Under these
licence agreements, the Group is entitled to receive
milestone payments and/or royalties on sales of the
products sold by the third-party licensees.

Under the various revenue-sharing agreements, the
Group pays a share of any income it receives to Oxford
University or Oxford University Innovation, depending
on the specific technology that generated the income.
As the revenue-sharing agreements do not permit
these organisations to have any input over the
commercialisation of the licensed products or the
amount payable under the relevant revenue-sharing
agreement, Giles Kerr is not able to influence the
amounts received in his position outside the Group.
As Giles has no influence over any aspect of these
agreements in his role outside the Group, the
Company considers that his independence in relation
to the Group is not compromised.

To avoid any possible conflict of interest, it has been
agreed that Giles Kerr will not participate in any
discussions or decisions concerning the relevant
agreements either within the Board or in any other
discussions or meetings with the executives of its
subsidiaries. Giles Kerr will not be standing for
re-election at the 2018 AGM.

The Board has considered, and is satisfied with,
the separation of duties and safeguards.

OverviewGovernanceFinancialsStrategic ReportBTG plc Annual Report and Accounts 2018Corporate Governance report
Accountability

Audit
Committee Report

Dear Shareholder

I am pleased to present the report of the Audit
Committee for the year ended 31 March 2018.

External auditor
Last year I announced the intention to put the Group’s
external audit out to tender, which has resulted in
Deloitte LLP being appointed as external auditor
of the Company with effect from the 2018 AGM,
full details of which can be found on page 59. As
Chairman of the Committee and on behalf of the
Company, I would like to thank Richard Broadbelt
and his team at KPMG for the firm’s service as
auditor of the Company for the last 26 years.

Review of reporting currency
As the majority of the Group’s revenue and a
significant proportion of the Group’s operating costs
are denominated in US Dollars, with effect from the
2018/19 financial year the Group will change its
reporting currency to US Dollars. The Committee
reviewed the implications of this change, including
a review of historical financial information restated
to the US Dollar, together with the implications
of the change on financial systems and external
communications.

Oversight of CFO transition
With the departure of Rolf Soderstrom, the
Committee oversaw the transition of the CFO role
to Duncan Kennedy.

Review of Group Tax strategy and the
effect of US tax reform
During the year, the Committee reviewed the
Company’s tax strategy, including a detailed review of
the effect of US tax reform on the Group’s current and
future effective tax rate and the one-off effect of the
enactment of US tax reform on the 2017/18 financial
statements.

Review and oversight of Enterprise
Resource Planning (ERP) programme
As part of its efforts to increase efficiencies and
implement common processes and controls across the
Group, the Company has been evaluating the adoption
of a Group-wide ERP system. During the year the
Committee reviewed the rationale for the ERP
implementation, programme governance and the
project plan.

Risk and risk mitigations
The Committee has continued to review and monitor
the approach to risk management. The Committee
focused on those risks considered to be of greatest
significance to delivery of the Company’s strategy,
as well as the effect of external healthcare and
macro-economic risks. Further explanation of the
risk management process and work by the Committee
in this area during the year can be found on pages 60
and 61.

Governance
The Committee has continued to oversee the
ongoing review and, where necessary, revision of
the Company’s general governance framework during
the year to ensure it remains relevant for the current
year as well as the future of the business.

Viability Statement
The Company’s Viability Statement can be found on
page 33. The Committee has reviewed the elements
of the statement in light of the latest FRC guidance.
The Committee concluded that the approach, and the
internal work undertaken to support the statement
remained robust and appropriate and that the
three-year period covered by the statement
was also appropriate in the circumstances.

BTG plc Annual Report and Accounts 2018GovernanceFair, balanced and understandable
The report provides the Committee’s opinion as to
whether the Annual Report, taken as a whole, is fair,
balanced and understandable. The Board, after taking
advice from the Audit Committee, has confirmed this
to be the case and that it provides the information
necessary for shareholders to assess the Group’s
position and performance, business model
and strategy.

Committee constitution
The Committee welcomed a new member during
the year, with Anne Thorburn joining in January.
Committee members are selected to provide the
extensive range of financial and relevant sector
experience required by the Committee in order to
fulfil its duties. Anne’s arrival will allow Giles Kerr
to step down as a member of the Committee at
the AGM and I would like to thank Giles for his
commitment and energy during his time serving as
Chairman, and latterly, as a member of the Committee.

I will be available at the AGM to answer any questions
about the work of the Committee.

Graham Hetherington
Chairman of the Audit Committee

The Committee and its membership
The Committee, established by the Board, is
responsible for monitoring all aspects of financial
reporting, governance and management of risk. The
Committee comprises five non-executive directors, all
of whom are considered independent for the purposes
of the Code.

Committee members
Graham Hetherington
(Committee Chairman)
Giles Kerr
Ian Much
Anne Thorburn
Richard Wohanka

Date of appointment to the Committee

1 August 2016
6 November 2007
1 November 2010
23 January 2018
1 January 2013

Graham Hetherington is designated as the Committee
member with recent and relevant financial experience
as required by the Code. All other members of the
Committee are deemed to have the necessary
accounting or related financial management
experience and ability to discharge the responsibilities
of the Committee, and as a whole, have competence
relevant to the sector in which the company operates.
Members provide a wealth of experience of financial
reporting, risk management and internal controls, and
possess knowledge relevant to the sector in which the
Group operates. More information on the experience
and expertise of Committee members can be found in
the directors’ biographies on pages 40 and 41.

Meeting attendees
Only members of the Audit Committee are entitled to
participate in meetings, however, there is a standing
invitation for other non-executive directors to attend
meetings of the Committee as observers. At the
Committee’s invitation, the Group CEO, CFO and SVP
Group Finance regularly attend meetings, as do other
senior business, legal and compliance team members,
representatives from the external auditor KPMG LLP
and the internal auditor PwC LLP. Deloitte LLP were
also invited to attend the meetings in March and
May 2018 as part of the external auditor transition.
The Group Company Secretary serves as secretary
to the Committee.

Scheduled meetings during the year
The Committee has an annual standing agenda
developed from its terms of reference, which is
aligned with the Company’s financial calendar and the
annual audit cycle. Five meetings were held in the year
and details of attendance can be found on page 47.

During the year, immediately following a Committee
meeting, private meetings were held with the external
and internal auditor to allow them the opportunity to
discuss matters without management being present.

OverviewGovernanceFinancialsStrategic ReportBTG plc Annual Report and Accounts 2018Corporate Governance report
Accountability continued

Role of the Committee
In accordance with its terms of reference, the
Committee’s primary purpose is to provide the Board
with assurance as to the effective nature of the
internal control and risk management environment
within the Group. In satisfying this purpose, the
Committee is required, in addition to other tasks, to:

– review, understand and monitor the integrity of the
Group’s financial reporting, and its compliance with
relevant accounting standards;

– review the effectiveness of the Group’s internal
financial controls, systems and processes for the
assessment and monitoring of financial risk;

– assist in the assessment of the principal risks facing

the Group;

Time spent by the Committee
during the year

– monitor and annually review the effectiveness of

the Group’s internal audit function;

a Internal audit 13%
b External audit (inc. non-audit services) 23%
c
d Tax 8%
e Risk management and compliance

Financial reporting 24%

(inc. whistleblowing) 16%
Governance/Policy/other 16%

– oversee the relationship with the Company’s

external auditor and make recommendations to the
Board in relation to their appointment,
remuneration and terms of engagement;

– approve the scope of the internal and external

audit programmes and monitor and review outputs;

– annually review and monitor the objectivity,

independence and effectiveness of the external
auditor;

– review the adequacy of group policies, procedures
and controls for preventing fraud, bribery and
money laundering and the Group’s whistleblowing
arrangements;

– review the Annual Report and Accounts and

oversee the process for determining whether, if
taken as a whole, the report is fair, balanced and
understandable and provides the necessary
information to assess the Company’s position,
performance, business model and strategy; and

– review and approve the going concern assumptions

and the Viability Statement.

The terms of reference for the Committee are set out
in full on the Group’s website, www.btgplc.com, or
are available on request from the Group Company
Secretary. The terms were reviewed during the year
and are considered fit for purpose and reflect current
best practice.

BTG plc Annual Report and Accounts 2018GovernanceActivities
During the year, in discharging its responsibilities, in addition to those standing agenda items considered at each
meeting, the Committee received and considered reports across a number of areas as summarised below:

Area of review
Financial reporting

External auditor

Risk management
and internal control

Activities undertaken
— Reviewed the Group’s half-year and full-year results and announcements.
— Reviewed the process to ensure that the Board was able to confirm that the Annual Report

and Accounts is fair, balanced and understandable.

— Reviewed the external auditor reports on the half-year and full-year results.
— Considered the significant accounting issues as detailed on the following table.
— Reviewed trading and close period updates issued by the Group.
— Conducted an assessment of the going concern basis of preparation for the financial statements,
including a consideration of whether there were any material uncertainties as to the Group’s
ability to continue to adopt this basis over a period of at least 12 months from the date of
approval of the financial statements.

— Reviewed and advised the Board on the Viability Statement.

— Oversaw a formal competitive tender for the appointment of the new external auditor and made

recommendations to the Board in relation to that appointment.

— Reviewed the performance, objectivity and independence of the external auditor.
— Reviewed the strategy, scope and results of the half-year review and full-year audit.
— Reviewed and approved external auditor remuneration.
— Reviewed the use of the external auditor for non-audit work.

— Reviewed the effectiveness of risk management systems, internal controls and fraud, anti-bribery
and anti-corruption procedures, and made recommendations to the Board in relation to ongoing
improvements to the approach to risk management and integration of the discussions of risk
and strategy.

— Reviewed the Group’s whistleblowing policy and arrangements for employees to raise

concerns confidentially.

— Reviewed compliance systems and policies and made recommendations to the Board regarding
the further development of compliance procedures relating to the Group’s distributor network.

— Reviewed the results of internal compliance monitoring and auditing.
— Reviewed and established enhanced Gifts & Hospitality Policy and Travel Policy.

Tax

Internal audit

Committee governance

— Reviewed and approved the Group’s tax strategy and its publication of the required disclosure

of this strategy on the Company website.

— Considered the impact of US tax reforms on the Group.

— Reviewed the scope of the internal auditor’s work plan.
— Reviewed internal audit reports produced throughout the year.
— Reviewed the performance of PwC who lead the internal audit function.

— Reviewed the terms of reference of the Committee.
— Completed a review of the Committee’s performance and effectiveness.
— Provided oversight and advice on the transition of the Group CFO.
— Reviewed the Delegation of Authorities and Treasury Policy.
— Reviewed and approved relevant Group-wide policies.
— Reviewed governance and project plan for the planned implementation of a Group-wide ERP

system.

OverviewGovernanceFinancialsStrategic ReportBTG plc Annual Report and Accounts 2018Corporate Governance report
Accountability continued

Significant accounting matters
The Committee considered the following key accounting issues, significant judgements, areas of estimation and
disclosures during the course of the year:

Significant issues considered
Carrying value of
intangible assets

How the issue was addressed
The Committee critically reviewed the Company’s assessment of the recoverability of intangible assets,
including developed technology and In-process R&D assets.

These reviews particularly focused on the PneumRx® assets and the key assumptions and valuation
methodologies which underpinned the valuation of these assets, as further disclosed in Note 11.
Additionally, the Committee reviewed the full impairment of the Vistogard® asset in light of the
Wellstat litigation.

Key assumptions with respect to PneumRx® included forecast revenue growth, peak sales, discount
and terminal growth rates and related sensitivity analyses. In addition, key judgements included the
probability of success from the ELEVATE trial, and for the US asset the probability of achieving FDA
approval. As a result of the review, the PneumRx® intangible assets were deemed not to be fully
recoverable and an impairment charge of £143.2m was recorded.

The Committee received reports on and reviewed the accounting implications of US tax reform, in
particular the revaluation of deferred tax assets and liabilities as a result of the lower US federal
corporate tax rates and the establishment of a current tax liability as a result of the deemed
repatriation provisions, see Note 8.

The Committee assessed the progress of the ongoing Wellstat litigation, including the probability of
any outflow. Following the Final Order and Judgement issued by the court in November 2017 and the
status of the related appeal by the Company, the Committee reviewed the level of provisioning and
disclosure requirements in relation to the litigation, see Note 18.

Taxation

Contingent liabilities

Contingent
consideration liabilities

The Committee reviewed the assumptions which underpinned the fair value of contingent
consideration liabilities, in particular the liability relating to a $60 million milestone payable to
former PneumRx® shareholders if FDA approval of the PMA for the PneumRx® was received by
31 December 2017.

Business combinations

The Committee received reports on the key accounting judgements in relation to the Company’s
acquisition of Roxwood Medical, Inc.

In particular, the Committee reviewed the identification and valuation of acquired intangible assets
and the fair value of contingent consideration liabilities relating to potential sales milestone payments,
see Note 25.

Change in
presentation currency

The Committee received detailed reports from management on the key accounting and disclosure
impacts relating to the future change of the Group’s presentation currency from Sterling to US Dollar.

The Committee reviewed management’s plans for communication of the change and the commitment
to perform historical retranslation of the Group’s results to the US Dollar to assist shareholders in
understanding the transition.

BTG plc Annual Report and Accounts 2018GovernanceExternal auditor
External audit tender

Audit scope

Non-audit work

The Committee has primary responsibility for the relationship with the external auditor and makes
recommendations to the Board with regard to their appointment, reappointment and removal, taking
into account their overall performance, independence and audit partner rotation. KPMG has been the
Group’s sole external auditor since the Company listed in 1995 and in last year’s Audit Committee
Report the Company stated its intention to put the external audit out to tender,
with a view to appointing a new external auditor for the financial year ending 31 March 2019.

The Committee recommended that a tender process should take place in the financial year ending
31 March 2018, to align with the current audit partner rotation schedule. Having reviewed current
regulations and best practice guidance governing the rotation of the external auditor, the Committee
decided that KPMG would not be included in the tender process. The tender process was carried out
in accordance with the EU Audit Reform and the best practice guidelines provided by the FRC and the
Investment Association.
Selection criteria and timetable – The Committee considered and approved a proposed timetable
for the tender process. The timetable was developed to ensure that the tender process would be
completed in sufficient time to allow the successful audit firm a thorough induction period, which
would include shadowing KPMG as they concluded the year-end audit for the financial year ended
31 March 2018.

A selection sub-committee was established, chaired by Graham Hetherington and including the CFO
and the SVP Group Finance, supported by other senior managers. The sub-committee developed key
criteria to select and evaluate prospective audit firms which included:

— audit partner capabilities and character;
— wider audit team capabilities (including industry sector experience);
— business understanding and relevant insight;
— audit quality and innovation;
— approach to issue resolution;
— quality control, policies and procedures;
— transition approach; and
— fees.

Potential audit firms considered included firms inside and outside the Big Four accounting firms.
The Audit Committee concluded that, given the size and geographical spread of the Group’s business,
an audit firm with a global reach and multi-jurisdictional experience would be most appropriate.
Invitation to tender – In November 2017 two shortlisted firms were invited to tender. The tender
documents invited each firm to prepare a detailed proposal document for consideration by the
sub-committee, including a proposed transition timetable. A virtual data room of relevant BTG financial
information was made available to both. Each audit firm was also invited to attend a number of
meetings with the Audit Committee chair, executive directors and senior BTG management.

Written proposals from each firm were received in January 2018. In February 2018 formal presentations
to the sub-committee were delivered by the selected audit partners of each firm and members of the
proposed audit teams. Following these meetings, the sub-committee scored each audit firm against the
selection criteria and in addition, assessed both firms as to their capability, audit quality and cultural fit.
Selection of new external auditor – At a meeting of the Audit Committee in February 2018, following
the conclusion of the formal tender process, the sub-committee proposed that Deloitte be appointed
as the Company’s new external auditor.

The Audit Committee considered the assessment provided by the sub-committee and recommended to
the Board that following the completion of the March 2018 year-end audit, and subject to shareholder
approval at the 2018 AGM, Deloitte LLP be appointed as the Group’s external auditor. The Board
accepted and endorsed that recommendation.

For the year under review, the current external auditor (KPMG) presented their proposed audit plan
to the Committee for consideration and approval. The Committee agreed the approach and scope of
the audit plan which had been discussed with management to ensure alignment with business focus
and risk.

The Committee agreed the terms of engagement and fees for the audit work to be undertaken.
Details of the amounts paid to the external auditor for the audit services are provided in Note 5
to the accounts.

The Committee has a formal policy for approving the use of the auditor for non-audit work, detailing
areas where the auditors may not be used, areas where they may be used subject to the agreement of
the Committee and areas where prior approval is not required. The external auditor is precluded from
engaging in non-audit services that would compromise their independence or violate any laws or
regulations affecting their appointment as external auditor. During the year, no approval was granted
for any non-audit services not in full accordance with these standards.

The Committee receives a written annual report from management summarising the fees paid to
the auditors for non-audit work and whether such services were pre-approved or specifically approved
by the Committee. Details of the amounts paid to the external auditor for non-audit services are set
out below.

Audit Committee approval
Pre-approval required:

Task

Taxation compliance services

Other audit related assurance services

Fees
£’000
4

OverviewGovernanceFinancialsStrategic ReportBTG plc Annual Report and Accounts 2018Corporate Governance report
Accountability continued

External auditor continued
Evaluation

The Committee reviews the performance of and considers the independence of the external auditor
annually. During the year, the Committee and senior members of the finance team evaluated the
external auditor performance, reviewing the strength of the audit team, its expertise and experience,
the completion of the approved audit plan, communication, and interactions with Internal Audit and
reporting. The evaluation was conducted by questionnaire and the results shared and discussed in
detail at a meeting of the Committee. As part of the assessment, the Committee also monitored the
progress against the approved external audit plan and considered the Audit Quality Review findings
for KPMG.

In considering external auditor independence, the committee received a statement of independence,
a report describing their arrangements for identifying and managing conflicts of interest, and
confirmation that the provision of non-audit services would not impair its independence or objectivity.

Following its annual review, the Committee deemed the performance of the external auditor
satisfactory, the audit process was effective, and KPMG remained independent and objective.

Risk management and internal control committee considerations
Approach to risk
management

The Board has overall responsibility for risk management and for defining risk appetite, being the
risk the Company is willing to take in pursuit of its strategy. Additional details of our approach to risk
management and the specific principal risks that may affect the business are given on page 13 in the
Strategic Report and on pages 62 to 67 following this report.

On behalf of the Board, the Committee oversees the risk management process and the effectiveness
of internal controls. It reports its findings to the Board biannually. Where appropriate, the Committee
may recommend more specific ‘deep-dive’ reviews be provided to the Board in selected areas, the aim
being to ensure the Company is able to identify, assess and effectively manage or mitigate existing and
newly emerging risks.

The overall risk assessment structure is designed to manage rather than eliminate the risk of failure
in achieving business objectives. It can only provide reasonable and not absolute assurance against
material misstatement or loss.

The Group operates a Risk Committee that is chaired by the CFO, Duncan Kennedy, and comprises
senior members of staff representing relevant parts of the business and key functions and a non-
executive director of the Board. The output from the Risk Committee is formally reported, biannually,
to the Leadership Team and Audit Committee. This Group Risk report is also shared and discussed
with the Board and is used to identify those individual risks that the Board may wish to monitor and
consider in greater detail throughout the year. Leading indicators of material changes in principal risks
are monitored six monthly by the Board via the Audit Committee.

The criteria applied by the directors in judging the effectiveness of these controls are that they allow
the maximisation of shareholder value by exploiting business opportunities, while ensuring that risks
are properly identified and managed, and the Group’s legal, regulatory and other obligations are met.

To strengthen the control framework of the business, the Group has an Internal Audit group supported
by PwC.

The Committee discharges these duties using a combination of reports from management, Internal
Audit and external auditor reviews. A risk management reporting structure has been in place
throughout the year and up to the date of approval of the financial statements, and is regularly
reviewed by the directors in accordance with the Code.

The Committee’s review focuses on a wide range of areas including financial, operational, anti-bribery,
regulatory and healthcare law compliance risks and controls, for the year under review and up to the
date of this Report. This year the Committee also specifically considered the key risks that could impact
the business model and strategy over the longer term, such as the changing healthcare landscape in
the US and the implications of Brexit.

PwC is engaged to perform the role of the Group’s Internal Audit function and operates under the
direction of the Audit Committee. The Committee monitored and reviewed the work of internal audit
throughout the year. Internal audit reviews of the risk management programme, cyber security, HR
and payroll processes, Group and local site finance processes, healthcare law compliance and treasury
management were undertaken. The work carried out by internal audit did not identify any material
weaknesses in internal controls but included proposals to enhance control procedures. The Committee
monitors management’s responses to ensure that control improvements are instigated on a timely basis.

During the year, the Committee evaluated the performance of the internal auditor using the same
methodology applied to the external auditor. In general, performance of the Internal Audit group was
deemed satisfactory.

Audit Committee
interaction with Group
risk management process

Areas of focus

Use of Internal Audit

BTG plc Annual Report and Accounts 2018GovernanceRisk management and internal control committee considerations continued
Assessment of fair,
balanced and
understandable

Communications with shareholders, such as results announcements, interim reports, annual reports and
AGM and close period updates, are reviewed carefully and approved by the Board, or a sub-committee
of the Board, to ensure they are accurate, transparent, balanced and understandable in the view they
give of the Group’s progress and prospects.

A key role of the Committee includes a review of the significant financial reporting judgements
contained in the Annual Report and Accounts with the aim of ensuring that they present a fair and
balanced view of the Group and comply fully with the relevant statutes and accounting standards.
To determine whether, taken as a whole, the Annual Report and Accounts is fair, balanced and
understandable, the Committee discusses audit findings and the Auditor’s Report with management
and the external auditor, and considers significant judgements and issues contained within those
reports. Following this discussion, the Chairman of the Committee reports the results of its review
to the full Board. The Annual Report and Accounts is compiled by members of the Finance, Investor
Relations and Company Secretariat functions who review the content to ensure it is balanced and,
where necessary, contains appropriate links to various sections of the report. The Committee has
assessed and recommended to the Board that, taken as a whole, the Company’s 2018 Annual Report
and Accounts is fair, balanced and understandable, and provides the necessary information to enable
shareholders to assess the Company’s performance, business model and strategy.

The statement of directors’ responsibilities in relation to the preparation of the financial statements is
set out on page 98 and the auditor’s statement on the respective responsibilities of directors and the
auditor is included within its report set out on pages 100 to 107.

The Company places great emphasis on the embedded behaviours and values that define the BTG
DNA, which have been integral in building the organisation to date, and we believe them to be key
for continuing success. They are underpinned by the Code of Conduct, which covers all aspects of
ethics, business practices and compliance, including a whistleblowing policy, an anti-bribery and
anti-corruption policy and policies related to the ethical conduct of research and development and
interactions with doctors and other healthcare professionals.

A Companywide meeting is held each month where all sites join via video conference. The CEO updates
employees on different aspects of the business and presentations are given by employees from all
areas of the business.

The Committee continued its role of monitoring and providing oversight of the operation of the
Group’s Whistleblowing policy. The Group operates an ‘open door’ policy and, in line with best practice,
an independent and confidential Whistleblowing procedure, which includes an anonymous reporting
‘Helpline’. The Leadership Team is responsible for ensuring that arrangements, under which employees
may raise concerns about possible improprieties, are operating effectively and that appropriate follow-
up action takes place. Details of the Group’s Whistleblowing and non-retaliation policy are included
within the Employee Code of Conduct and various employee training modules.

The Group has continued to operate and enhance its anti-bribery and anti-corruption (ABAC) policy,
which reflects the Group’s commitment to ethical business practices. This has included the conduct of
due diligence on existing and new key business partners who may act on behalf of the Group in higher
risk areas of business. During the year, all employees were required to undertake refresher training in
relation to the policies via the Group’s online training portal.

Further enhancements were completed during the year with the development of a compliance
programme ‘toolkit’ of simple policies and procedures for third parties with whom the Company
contracts. Training on the toolkit, which confirms the company’s expectations in relation to anti-bribery
and anti-corruption standards was provided. Audits measuring against the policies and procedures
within the toolkit will commence during the year and the results will be considered by the Committee
on an ongoing basis.

Corporate policies,
values and compliance

Whistleblowing

Anti-bribery and
anti-corruption policy

Committee evaluation and action plan for 2018/19
The review of the Committee and its effectiveness was considered as part of the overall externally facilitated
Board evaluation conducted during the year. The Committee was found to be continuing to function efficiently and
effectively, providing a healthy balance between in-depth assessment and analysis and a clear practical approach.
In the year ahead, the Committee will support the Board in further developing the articulation of risk to assist in
the Company’s strategic development. It will provide oversight of the transition and handover to the Company’s
new auditors, and in addition to conducting selective deep-dive reviews into some of the Company’s key risk areas,
it will also provide ongoing assessment of all aspects of the Company’s ERP project.

Compliance with CMA Order
The Company confirms that during the period under review, it has complied with the provisions of The Statutory
Audit Services for Large Companies Market Investigation (Mandatory Use of Competitive Tender Processes and
Audit Committee Responsibilities) Order 2014.

Graham Hetherington
Chairman of the Audit Committee

OverviewGovernanceFinancialsStrategic ReportBTG plc Annual Report and Accounts 2018Corporate Governance report
Accountability continued

Risk management
and principal risks
Accountability for oversight of risk
The goal of the Board is to ensure the Company is able
to identify, assess and effectively manage or mitigate
existing, changing and newly emerging risks. The
Board also assesses the likelihood and potential
impact of plausible concurrent risks and seeks to
ensure that the overall risk profile of the Group is
appropriate in light of its strategy.

With direct support from the Audit Committee, the
Board believes it has taken all reasonable steps to
satisfy itself that the risk management process is
effective and fit for purpose. Nevertheless, as with
all risk management processes, there remains a
degree of uncertainty, planned mitigations may not
be effective and unpredicted risks may arise. As a
consequence, there can be no guarantee that all
risks to the business will be successfully identified,
controlled or mitigated. Risk is inherent in a number
of aspects of the Company’s growth strategy, such
as investments in product development, M&A and
geographic expansion.

Senior management and the Board specifically
consider risks that, in their opinion, could cause
the Group’s future results, financial condition
and prospects to differ materially from current
expectations, including the ability to meet the
objectives outlined in the Strategic Report. Based
on that analysis, the Board believes it has taken into
account material and plausible risks and can confirm
the viability of the Company over the next three years
as set out in the Viability Statement required by the
UK Corporate Governance Code (see page 33, the
Viability Statement).

Risk review process
BTG has a three-year financial plan that is updated
annually. Performance against that plan is monitored
on a monthly basis.

The corporate goals have been built into the risk
management process and, as such, form one of
the bases on which business risks are measured.
Individuals in the business managing discrete risks
on a day-to-day basis produce and update their
business unit specific risk registers regularly, as
business conditions change. These registers are
consolidated into a Group Risk Register that is
reviewed at least twice-yearly by the Risk Committee
before being considered by the Leadership Team
and reported to the Audit Committee and Board.

Further detail of the work of the Group Risk
Committee can be found on page 43.

Where appropriate, the Audit Committee will
commission deep-dive assessments of a key risk to
better understand its nature and to consider available
mitigation options that could be deployed to better
manage that risk, together with the costs, timelines
and likelihood of success of those options.

During 2017, a number of improvements were made to
the risk management process based on a PwC audit of
the risk management process conducted in 2016. This
included further integrating the review of risk in the
discussion of the Group’s strategy and specific risk
assessment of the external environment in which the
Group operates.

The Board uses information from the risk management
process to define the appropriate risk appetite for
inclusion within the Company strategy. The Board
also considers new material risks in a timely fashion
as they arise.

Governance and risk
management systems
An integral part of the risk management framework
is the operation of a number of compliance and
governance systems, each of which comprises a
framework of policies, processes and procedures used
to ensure that BTG fulfils all tasks required to achieve
the desired corporate governance objectives. Examples
include the corporate functions such as Internal Audit,
Compliance, Finance, Legal, Regulatory, Research &
Development, Pharma/Device vigilance, Quality,
Environmental, Health and Safety and other assurance
groups. These are integrated to ensure an overall
robust risk management and assurance framework.

A number of these systems are required by legislation
or by authorities governing our industry, e.g. in the
pharmaceutical industry, product quality is governed
by the principles of Good Manufacturing Practice
(GMP), enforced by the Food and Drug Administration
(FDA) in the US and Medicines and Healthcare
Products Regulatory Agency (MHRA) in the UK
and other equivalent agencies in other territories.

These BTG governance systems each have a series
of Key Performance Indicators (KPIs), reviewed by
the Leadership Team at set intervals and fed into
the business unit and Group Risk Registers. Non-
conformances are investigated, and corrective actions
defined and tracked to completion. These systems aim
to ensure that risks arising from internal activities or
those conducted via third parties with whom we work
do not become material. The principal systems are
outlined in the following table.

BTG plc Annual Report and Accounts 2018GovernanceA deep-dive has been conducted on the effects of Brexit to the BTG Business. Overall the effect of Brexit on
BTG is not currently deemed to be material but significant uncertainties remain, so the risks will continue to
be assessed.

Plans have been drawn up to deal with all risks resulting from a hard Brexit in March 2019 (i.e. the worst case
scenario). Implementation of these plans is being monitored by the Leadership Team and the Board.

The highest impact risks identified are:

– Medical devices unable to be sold and marketed in the EU because the Notified Body is not based in the EU.

– UK imports and exports held up in customs because infrastructure cannot cope with the demands placed on

the systems by Brexit.

Outline of BTG Governance & Risk Management Systems
Functional area
Product quality control and assurance:
Ensuring all products:

Summary of KPIs measured
— Ensuring all products placed in a market meet applicable
release criteria for the market for which they are intended.

— Assessment against internal operating standards

— meet applicable specifications, GMP and other regulatory

and procedures.

requirements;

— deliver expected efficacy and safety;
— are supported by necessary manufacturing and marketing

licences in relevant markets.

Healthcare law compliance:
Ensuring:

— Testing the effectiveness of training.
— FDA/MHRA/Internal Audit findings and delivery on

remediation plans.

— Monitoring customer complaints, for example, product
failures or adverse events (via a comprehensive device/
pharmacovigilance system).

— Monitoring completion of corrective actions for all

measures reported.

— Collection of internal monitoring data and assessment

against operational targets.

— Internal audit findings, auditing of commercial partners

— compliance by BTG Group and its principal commercial

and delivery on remediation plans.

partners with applicable laws and regulations relating to
the conduct of business including, for example, the UK
Bribery Act, US False Claims Act, US Anti-Kickback Statute
and the US Foreign Corrupt Practices Act, and other
applicable regulations to prevent improper conduct,
inaccurate regulatory submissions, misleading or off-label
marketing of products, or the submission of false claims
for reimbursement of products;

— appropriate protection and management of the collection
and use of personal data and operation of an appropriate
global data privacy framework.

Finance:
Ensuring:
— the ongoing viability of BTG’s business and adequate
financial resources to meet our operational and
strategic objectives;

— all BTG employees abide by internal and external

transaction and reporting standards;

— BTG is not subject to serious fraud or misappropriation

of company assets.

Supply chain:
Ensuring:
— products are delivered on time and orders completed;
— continuity of supply;
— maintenance and management of supply chains such
that all internal and regulatory standards are met.

Environment, Health & Safety (EHS):
Ensuring:
— BTG operations are safe for employees, visitors and the

public who interact with our business;

— we appropriately manage our impact on the environment;
— compliance with internal and external regulatory

standards.

Cyber Security & Global Privacy:
Ensuring:
— prevention of cyber attacks to protect BTG systems,

data and assets;

— protection of personal data.

— Monitoring of complaints/queries/allegations. Conduct of

investigations where required.

— Testing the effectiveness of training of BTG employees

and commercial partners.

— Internal and external audit findings at BTG businesses

and commercial partners.

— Adherence to budget, delegated authorities and other
internal financial controls and assurance procedures.

— Monitoring of financial transactions.
— Monitoring completion of corrective actions for all

measures reported.

— Collection of internal monitoring data and assessment

against operational targets.

— Maintaining adequate inventories (based on risk
assessments) of raw materials, intermediates and
finished goods.

— Implementation of process and facility

improvement plans.

— Rigorous monitoring of third-party suppliers;

dual sourcing implemented or being investigated
where practicable.

— Investigation of lost time accidents (minimum one

day lost) and all first aid incidents.

— Waste produced.
— Carbon footprint.
— Water consumption.
— Internal audits and site assessments monitoring
training and completion of corrective actions for
all measures reported.

— Dashboard of cyber attack’s activity and responses.
— Data monitoring and assessment.
— Audit results.

OverviewGovernanceFinancialsStrategic ReportBTG plc Annual Report and Accounts 2018Corporate Governance report
Accountability continued

Outline of BTG Governance & Risk Management Systems continued
Functional area

Research & Development (R&D):

Ensuring:

— we protect the safety and data privacy of patients

participating in our clinical studies and meet all applicable
laws and regulations with respect to conduct of R&D
(for example, the requirements of Good Clinical Practice
and Good Laboratory Practice);

— we generate adequate data to support regulatory

submissions and product approvals for intended uses;
— we define appropriate development plans to meet our

strategic goals;

— we meet project specific and portfolio budgets and

timelines.

Skills and capabilities:
— Ensuring the business attracts, retains and develops
talented individuals of the calibre, and with the
capabilities needed, to deliver the Group’s operations and
strategy.

Summary of KPIs measured
— Assessment against internal operating standards and

procedures and ongoing review of the scope and content
of the policy framework and procedures.

— Testing of the effectiveness of training.
— FDA/MHRA/Internal Audit findings and delivery on

remediation plans. Active monitoring of clinical studies
and other activities.

— Detailed review of project progress against agreed stage

gate milestones for further funding.

— Ongoing review of the portfolio as a whole against wider

strategic needs.

— Assessment processes to define the future capability or
development needs of the Group in light of strategy.
— Reviewing the competitiveness of Company reward

programmes and employee benefits.

— Ensuring key individuals have adequate ongoing
development, as well as succession plans in place.

— Enhancing overall leadership development programmes.

Business development
— Identifying and analysing M&A targets which support the

business strategy and business unit (BU) goals.

— Ensuring risks from potential targets are within the risk

appetite of the Board and senior management.

— Assessing ROI and fair market value of investment

opportunities.

— Assessing synergies and opportunities to enhance

revenue in conjunction with existing products and BU
structures.

— Producing risk registers for all recommended investments.

of the Group’s intellectual property or defence against
third-party intellectual property rights.

The pharmaceutical and medical device industries are
highly competitive and require substantial ongoing
product investment, innovation and development to
sustain a continuing competitive advantage. The
Group’s success will continue to depend on its ability
to in-license, acquire or develop new products and
businesses, and to realise the expected benefit from
such activities by the application of resources and
effectively integrating acquired opportunities into the
Group. As BTG operates in such a highly specialised
industry, in order to deliver against our strategic
objectives, we require highly-skilled and experienced
employees who are sought after by our competitors.
Challenges in attracting, retaining and motivating
such employees may impact our ability to maintain
performance levels and to deliver against our strategic
growth objectives.

Principal risks
Although not exhaustive, we describe in the following
table what we believe to be the most significant risks
that could materially affect the Group’s ability to
achieve its financial goals, operating and strategic
objectives. While other risks are deemed less material
at this time, given the nature of the Company’s
business, risks continually change.

The BTG Board and senior management note at this
time that world trade is becoming more difficult and
costly due to protectionist trade polices being mooted
in the US and the forthcoming UK exit from the EU.
These risks have been analysed and at this time are
not thought to be material, however, these risks will
introduce additional operating cost to the business.

As a general risk, the existing and future products
launched by the Company may not be a commercial
success, depending on a number of complex and
inter-related factors including: the receipt,
maintenance and the scope of the applicable required
marketing approvals and clearances (and the time and
investment required to obtain approvals); product
acceptance by physicians and patients; commercially
viable levels of product reimbursement being
established; safety and efficacy continuing to be
demonstrated; maintaining continuity of supply; the
impact of competition; and the successful enforcement

BTG plc Annual Report and Accounts 2018GovernanceGeneral mitigation strategy

Risk
Market access: Securing adequate reimbursement for BTG’s products
BTG may not be able to sell its products profitably
if reimbursement by third-party payers, including
government and private health insurers, is limited,
uncompetitive or unavailable. The Group may
be subject to price limits on reimbursement of
products that are outside of its control, reducing
sales volume or prices, negatively impacting
Group revenues. This is particularly the case in the
US where a significant proportion of the Group’s
revenues are derived, and in light of the ongoing
US healthcare reforms, which may reduce the
number of insured patients or require increased
rebates or discounts to be provided. Third-party
payers are increasingly attempting to contain
healthcare costs through measures that are likely
to impact the products that BTG is developing.

Ensuring effective advocacy with
payers based on accurate data and
analysis to inform reimbursement
decisions. Ensuring accurate
and complete submissions. BTG
is seeking to use its expanding
expertise across the portfolio, both
within and outside the US. R&D
plans increasingly seek to create
the data likely to be required
to secure the desired level of
reimbursement for the applicable
products after commercial launch.

Obtaining/Maintaining product regulatory approvals
The pharmaceutical and device industries are
highly regulated in relation to the development,
approval, manufacturing and sale of products.
The development of healthcare products has a
high level of inherent risk and a high failure rate.
An inability to meet existing or new regulations
or regulatory guidance may result in delays
or failures in bringing products to market,
additional material costs of development or the
imposition of restrictions on approval or the sale
of a product or its manufacture or distribution,
including the possible withdrawal of a product
from the market.

The Company has expert internal
teams dedicated to ensuring
compliance in each of these areas,
defining regulatory strategies and
supporting product approvals
and maintaining existing product
licences.

The process is supported by the
governance systems defined
above and monthly monitoring
of performance against goals
and of changes in the regulatory
landscape.

Such events may adversely impact the Group’s
revenues and prospects.

IP/Legal challenges
BTG may be subject to challenges relating to
the validity of contracts or its patents or alleging
infringement by BTG of intellectual property
(IP) rights of others, which might result in the
cessation of BTG product sales, litigation and/
or settlement costs and/or loss of earnings.
BTG might elect to sue third parties for their
infringement of BTG’s IP to protect current
or future product revenue streams. Litigation
involves significant costs and uncertainties.

BTG may not be able to secure or maintain
the necessary IP in relation to products sold,
acquired or in development, limiting the
potential to generate value from these products
and investments. Patent expiries can adversely
impact the Group’s revenues due to a resultant
increase in competition and price erosion.

Significant legal commitments are required to
be made by the Group to third parties in pursuit
of the Group’s strategy and, reciprocally, delivery
of the strategy is in some cases dependent on
third parties meeting their legal and contractual
obligations to the Group. Dependency on
contractual relationships carries with it varying
degrees of risk of future disputes and litigation
which may result in loss of product rights or
exposure to damages following an adverse court
ruling. Examples include the Group’s obligation
to use reasonable commercial efforts to
commercialise certain products or to meet future
milestones under product acquisition agreements.

BTG’s proprietary data and knowhow is also
threatened by increased cyber attack threats.

Maintenance of the IP and legal
functions as core capabilities
of the Group, supplemented by
external expertise, which monitors
third-party patent portfolios and
patent applications and IP rights.
Development and implementation
of BTG patent filing, defence and
enforcement strategies, pursuing
litigation or settlement strategies
where appropriate. Robust
processes are in place to automate
patent renewals; internal controls
established to avoid disclosure of
patentable material prior to filing
patent applications and to protect
valuable know-how.

Processes are in place to ensure
the Group meets its obligations
under material contracts and
to monitor and manage the
satisfaction of third-party
obligations to the Group.

BTG has established a cyber risk
function to protect itself against
cyber threats.

Change in 2017/18

A number of initiatives are being
taken by the company to support
reimbursement for all products.
These initiatives include post market
registration studies. Clinical studies are
underway for EKOS®, TheraSphere®
and the PneumRx® Coils. Market
adoption of the PneumRx® Coils and
securing adequate reimbursement has
taken longer than anticipated.

Varithena® CPT codes took effect in
the US from January 2018. However,
further time is required to understand
the impact of the availability of these
codes on future US revenues.

Overall, this risk is deemed to be at the
same level as last year.

The PMA submission to seek US
approval of the PneumRx® Coil, was
made during the year and discussions
with the US FDA are ongoing. That
process has taken longer than
anticipated and uncertainty remains
regarding the likelihood and timing
of approval.

TheraSphere® clinical trials continue
and are on track to complete to plan.

The Company continues with a number of
clinical trials and investigator-led studies
to support and extend indications for
existing products. In addition, a number of
early stage partnership projects are being
investigated, which will support future
business growth.

The overall level of risk is deemed to
be the same as last year.

As reported in previous years, Zytiga®
is facing generic challenges in the
US which are expected to enter the
market in late 2018. The effects of
generic entry have been analysed
and are included within BTG financial
forecasts. At a hearing before the US
Patent and Trademark office held
during the year, the patent protecting
the market for Zytiga® was held to be
invalid, subject to ongoing appeal.

In last year’s annual report,
we recorded that BTG were in
litigation with Wellstat over the
commercialisation of Vistogard®.
The initial judgement found in favour
of Wellstat and BTG were ordered to
pay significant damages (exceeding
US$56 million plus interest). BTG have
appealed this decision and we await
the appeal decision. In the meantime,
we have made financial provisions
for these damages and initial interest
within our actual 2017/18 results and
our financial forecasts.

As a result of the court decision the
Vistogard® asset has been returned to
Wellstat and will not contribute further
revenue to the Group.

The risk is assessed to have increased
during the year.

OverviewGovernanceFinancialsStrategic ReportBTG plc Annual Report and Accounts 2018Corporate Governance report
Accountability continued

General mitigation strategy

Change in 2017/18

BTG focuses on select
opportunities addressing
specialist segments where there
are relatively high barriers to
entry, for example, relating to the
development and manufacturing
processes, or the need to generate
significant supportive clinical data
to gain approval and commercial
acceptance. We seek adequate
reimbursement to differentiate
our products by demonstrating, in
clinical trials, safety and efficacy
benefits, cost effectiveness or
greater patient acceptance.

Interventional Oncology products
continue to encounter strong
competition in all countries. In
particular, Sirtex, which produce
a product that competes against
TheraSphere®, and may apply for
a US PMA in 2018. If successful,
this may have a negative effect on
TheraSphere® revenues.

As previously announced, Bioclon
are expected to launch their product,
which will compete with CroFab®
in October 2018.

Overall, the risk is assessed as
comparable with last year.

A comprehensive compliance
programme is in place as referred
to above. Ongoing monitoring and
auditing is undertaken to seek to
ensure any material failures are
identified where possible and
remediated. The programme is
continually reviewed and improved
to reflect ongoing learnings
and changes to the external
environment.

The BTG compliance programme
is a company standard, which
is introduced to all acquisitions.
The programme has been fully
implemented by the latest addition
to the BTG Group.

Compliance within this area
continues to be an essential focus.
A privacy function has also been
established by the Group this year to
ensure compliance with a number
of developing regulations across
the globe, most notably General
Data Protection Regulation (GDPR)
in Europe.

A data security team was also
established to further develop and
implement a programme of enhanced
protections against cyber attacks.

Risk in this area is deemed to be
equivalent to last year.

Risk
Competition
BTG’s products may face competition from
products that have superior attributes, including
better efficacy or side effect profiles, cost less
to produce or be offered at a lower price than
BTG’s products.

There are currently no competitive products to
CroFab®, DigiFab® or Voraxaze® but Instituto
Bioclon may launch a competitor product to
CroFab® around October 2018.

TheraSphere® competes with a product from
Sirtex Medical Limited (subject to an acquisition
proposed by Varian Medical Systems Inc.) and
LC Bead® and DC Bead® compete with products
from Boston Scientific Corporation, Terumo and
Merit Medical. Varithena® competes with other
treatment modalities including heat ablation,
vein stripping and physician-compounded
sclerosing foam.

A number of new immuno-oncology biological
products are entering the market by various
companies and may provide significant new
competition to BTG’s Interventional Oncology
products.

EKOS® competes with other interventional clot
treatment products from US companies like
Boston Scientific.

There is a competitor to PneumRx® in the
form of the Pulmonx, Inc. valve. In Licensing,
Zytiga® competes with a number of other
treatments for prostate cancer including
Xtandi® (enzalutamide) and is at risk of
generic competition.

Healthcare law compliance
Extensive laws and regulations relate to how
BTG markets its products and interacts with its
customers and payers. Failure to meet applicable
requirements may result in criminal or civil
proceedings against the Group, exclusion of sale
of products in certain territories and material
financial penalties or other sanctions against
the Group (or their commercial partners, or their
respective employees or directors).

Defending actual or alleged violations may
require significant management time and
financial commitment, even if not proven.

The Group is required to take significant
measures to protect personal data, and failure
to do so could result in significant penalties.

BTG plc Annual Report and Accounts 2018GovernanceGeneral mitigation strategy

Change in 2017/18

BTG sites and supply chain partners
underwent 24 inspections by external
bodies such as the FDA, MHRA and
BSI, within the 2017 financial year.
No major or critical findings were
received and corrective actions for all
observations were completed or are on
track to the timetables agreed with the
authorities.

A focus for this year has been to
identify and take necessary actions to
ensure continued supply to all patients
through the Brexit process. Supply
chain managers are therefore ensuring
increased stocks of raw materials and
final products will be built up prior to
March 2019. The assumption of BTG
is to prepare for a hard Brexit with no
transition period. The risks posed by
Brexit are not deemed to be material
to the Group, save for the risks related
to ensuring continuity of the CE marks
for the Group’s device products to
permit them to continue to be sold
in EU. In any event, the Company is
committed to continuing supplying
customers and patients, no matter
what challenges Brexit poses.

Overall, the supply chain risk is
considered to remain unchanged
in comparison with last year.

The Company completed the
acquisition of Roxwood within the year
in the Interventional Vascular area
and continues to evaluate numerous
potential targets on an ongoing basis.

BTG has extensive quality, risk and
business continuity management
systems to ensure resilience of the
supply chain. These management
systems are applied equally to both
the internal and external elements
of our supply chain.

Each area of our supply chain is
thoroughly assessed and stocks
of raw materials, in process
materials and finished products,
are maintained as a result of that
risk assessment. Risk assessments
are reviewed annually or when
business predictions change.
Adherence to the agreed stock
levels are reviewed monthly
through regular business review
meetings.

The final mitigation is business
interruption insurance, which is
maintained at a level for each
business to cover at least two
years loss of business as a result
of catastrophic loss of supply.

A robust market and opportunity
assessment process is undertaken
by the Business Development team.
All potential acquisition targets
undergo extensive due diligence
by a multidisciplinary team which
includes all key business functions.

Development of an acquisition risk
register with foreseen control and
mitigation strategies is submitted
to the Board as part of the process
of assessing acquisition proposals.

Cross functional post-acquisition
integration plans are implemented.

Risk
Supply chain/continuity of supply
There are inherent risks to the BTG supply chain,
as the Company’s products are typically high
value, low volume manufacture. Diversifying
the supply chain of such products (for example
by establishing dual sources of supply) is not
always cost effective. BTG therefore relies on the
following single sources of supply:

A single site in Wales for supply of manufactured
antibodies and a single site in Farnham, UK, for
the manufacture of the Beads and Varithena®.
Consequently, there is the possibility of
disruption to, or loss of supplies resulting from,
technical issues, contamination or regulatory
actions. BTG polyclonal antibody products rely
on serum produced from our sheep flocks in
Australia, which could be subject to disease
outbreaks or fire.

BTG manufactures its EKOS® products at a
single site in Seattle, Washington, USA, and the
PneumRx® Coil at a single site in Santa Clara,
California, USA, with the consequent possibilities
from disruption to or loss of supply.

Galil Medical consumable items are
manufactured at a site in Israel, with the control
units manufactured at a site located in Arden
Hills, Minnesota, USA.

For other products, such as Voraxaze® and
TheraSphere®, we continue to rely on third-party
contractors for the supply of many key materials
and services. These processes inherently carry
risks of failure and loss of product, and these
are risks over which the Company has a lower
degree of control.

Merger & acquisition activity
To maintain BTG growth strategy, the Company
will need to continue to acquire new companies
and/or associated products and assets.

Competition for attractive assets remains
relatively high, as do asset valuations. Failure
to find or successfully acquire the right
opportunities (consistent with the strategy)
at acceptable prices may constrain the future
growth of the Group. Ineffective integration of
acquisitions or failure to progress their product
strategies or realise predicted post-acquisition
synergy benefits may reduce the forecast return
on investment of the acquisition or generate
risks that fall outside the Group’s risk appetite.

The Company’s strategic objectives may
therefore be adversely impacted depending
on the availability and price of suitable targets
and the Group’s ability to effectively and
promptly progress the development and/or
commercialisation of acquired assets.

New reported risk

Key

Increased risk
Unchanged risk
Decreased risk

OverviewGovernanceFinancialsStrategic ReportBTG plc Annual Report and Accounts 2018Corporate Governance report
Relations with shareholders

The Board recognises its responsibility to deliver a
programme of engagement with shareholders and
communication with investors is given a high priority.
The Group is committed to regular and open dialogue
with all current and potential shareholders and
analysts, led by the CEO, the CFO and the Group’s
Investor Relations (IR) department. Meetings with
investors are principally to communicate the Group’s
strategy, performance and policies and their views are
regularly shared with the Board.

The Board believes that appropriate steps have been
taken during the year to ensure that all members of
the Board develop an understanding of the views
of the major shareholders. The Investor Relations
department acts as the day-to-day contact point
for investors and analysts and provide a report at
each Board meeting giving information on material
changes in shareholdings and any feedback from the
Group’s brokers and investors enabling the Board to
further develop an understanding of any issues and
concerns of major shareholders. There is a period of
concentrated activity following the announcement of
the half-year and full-year results when the CEO and
CFO present these results to the Group’s institutional
shareholders, analysts and the media.

The Group also participates in UK and overseas
investor roadshows and conferences throughout
the year. In 2017/18, there was a particular emphasis
on attracting new US shareholders. This resulted in
more frequent US marketing activities and increased
investor interaction from the IR team and CEO. The
Chairman is available to meet institutional investors
and the Senior Independent Director and other
non-executive directors are available to meet
with major shareholders on request.

Extensive information, including annual and interim
reports and all press releases, is published in the
Investor Relations area on the Group’s website
(www.btgplc.com/investors) and individuals can
also register to receive electronic copies of all
announcements on the day they are issued.

Investor contact by
management type (%)

IR
CEO
CFO

Annual General Meeting (AGM)
At the AGM, shareholders will hear directly about the
Group’s performance and strategy with a presentation
by the CEO, and the Board will have the opportunity to
communicate with, and answer questions from, private
and institutional shareholders. The forthcoming
AGM will be held on 18 July 2018 and the Chairs of
the Audit, Nomination and Remuneration Committees
will be available to answer questions.

All resolutions are voted on by way of a poll and
results of voting will be published in a market
announcement and on BTG’s website following
the meeting.

Further details of the 2018 AGM can be found
on page 97.

BTG plc Annual Report and Accounts 2018GovernanceRemuneration

Ian Much
Annual Statement from the
Remuneration Committee Chairman

Dear Shareholder

I am pleased to present the Directors’ Remuneration
Report for the year ended 31 March 2018. The report
includes full details of remuneration earned by the
directors and information on the key decisions taken
by the Remuneration Committee during the year.

To help shareholders understand our remuneration
structure and its link to the Company’s strategy and
performance we have again included a ‘remuneration
at a glance’ section, which can be found on page 73.
This is followed by the Annual Report on Remuneration
on pages 74 to 88 and by the Directors’ Remuneration
Policy on pages 89 to 94. The Policy was approved by
shareholders at the AGM in 2016.

BTG’s performance in 2017/18
As described in detail in the Strategic Report, the
Group has delivered a good underlying financial
performance for 2017/18. The strategic focus on
Interventional Medicine therapies is driving growth
and is aligned with developing macro healthcare
trends, which include strong physician interest in less
invasive therapy options. Interventional Medicine is
now our largest business segment by revenue and
growing at a double-digit pace.

Together with the licensing income and revenue from
the Pharmaceuticals business, it provides capacity for
investment to support sustainable growth over the
longer term.

Activities of the
Remuneration Committee
The Committee has appreciated recent high levels
of shareholder support for directors’ remuneration
at BTG. Our Remuneration Policy was approved in
2016 with the support of approximately 99% of
shareholders. At the AGM in 2017, the advisory
resolution on the Directors’ Remuneration Report was
passed with over 99% of shareholders voting in favour.

During 2017/18, we made no changes to the
application of the Policy other than in respect of the
performance metrics for the annual bonus scheme,
refining the way we measure revenues, profit and cash
generation as explained in my statement last year.
Our work during the year focused on ensuring that
the operation of the Policy helps the Group achieve
an appropriate link between performance and pay.

We reviewed the performance conditions in place
under the annual bonus scheme and the PSP and
confirmed their appropriateness for BTG for 2018/19.

We agreed the departure arrangements for
Rolf Soderstrom, our previous CFO, and the
remuneration package for his successor, Duncan
Kennedy. Further details are set out below.

We considered BTG’s reporting under the new gender
pay regulations, as disclosed on BTG’s website and as
summarised on pages 24 and 25 of the Annual Report,
and will keep the Group’s gender pay gap under review
in 2018/19 and beyond.

Following a review of external advisers, we appointed
Korn Ferry Hay Group as independent advisers to the
Committee. Korn Ferry Hay Group replaces Aon New
Bridge Street, which continues to provide advice on
Total Shareholder Return (TSR) calculations and
non-Committee remuneration matters.

There were no changes to the composition of the
Committee during the year.

OverviewGovernanceFinancialsStrategic ReportBTG plc Annual Report and Accounts 2018Remuneration
continued

Review of 2017/18 outcomes

Annual bonus
Bonus payments for 2017/18 were based on a mixture
of financial and non-financial metrics. The financial
measures, which in total accounted for 70% of the
bonus, were product sales, adjusted operating profit
and free cash flow. An above-target outcome was
reported for product sales, a stretch outcome was
achieved for adjusted operating profit, and an outcome
of between threshold and target was recorded for free
cash flow. This recognises, among other things, the
challenging nature of the targets when they were set.
In addition to the financial measures, the executive
directors had a series of individual corporate
objectives, accounting for the remaining 30% of the
overall bonus. Performance against these objectives
was good. Full details of the bonus targets in place for
the year, and performance against them, is set out on
pages 76 and 77.

Taking into account performance against the set
targets, bonuses were paid at a level of 68% of
maximum for Louise Makin, Duncan Kennedy and
Rolf Soderstrom.

Performance Share Plan (PSP)
Awards under our PSP are granted annually. Awards
granted from 2013 to 2015 under our old PSP
consisted of Core awards vesting after three years,
which could be put at risk by the executive directors
for a further two years in exchange for an additional
equivalent Multiplier award. In such cases, both the
Core award and potential Multiplier award would vest
after five years based on the Company’s relative TSR
performance over the whole period.

2013 PSP awards
For the CEO, this year’s ‘single figure’ of remuneration
includes 50% of the PSP awards granted in July 2013
that will vest later in 2018 based on performance over
the five years to 31 March 2018. This comprises the
Core award granted in 2013 that was rolled over as
well as a matching Multiplier award. Based on BTG’s

relative TSR performance, the Core award vested at a
level of 100% and the matching Multiplier award at
49%. Rolf Soderstrom did not elect to roll over any of
his Core award and therefore his associated Multiplier
awards lapsed on 17 July 2016.

2014 PSP awards
This year’s remuneration single figure also includes
the value of the Core awards granted in June 2014 that
vested in 2017 (i.e. were not rolled over). As disclosed
last year, these awards vested at a level of 46% given
adjusted EPS and relative TSR performance over the
three years to 31 March 2017. The table below
summarises the value of these awards.

As neither the CEO nor the then CFO elected to roll
over any part of their 2014 Core award, these awards
are included in this year’s single figure calculation.

2015 PSP awards
PSP awards granted in 2015 were subject to adjusted
EPS and relative TSR performance over the three years
to 31 March 2018. BTG’s adjusted EPS performance
was assessed at 100%, with the maximum EPS target
being achieved. Relative TSR performance, however,
was below the median of the comparator group and,
accordingly, this element of the PSP award lapsed.

As a result of performance over the last three years,
50% of the 2015 Core awards will be capable of
vesting. For the CEO, vesting is subject to a decision
whether or not to roll over 50% or 100% of the award
and receive an equivalent Multiplier award. If no such
election is made, vesting will occur in June 2018.
Vesting will occur in July 2020 in relation to any part
of the award for which an election is made. For the
former CFO, vesting of the 2015 Core award is
explained below. Having left BTG’s employment, Rolf
Soderstrom may not elect to roll over any part of the
2015 PSP vesting.

As he was not an executive director at the time his
2015 PSP award was granted, Duncan Kennedy’s
award is not capable of being rolled over and will
vest in 2018 and is reported in the single figure for
remuneration table on page 75.

2014 PSP awards

Louise Makin

Rolf Soderstrom

% of Core award
eligible to vest

46%1

Number of
Core award
shares eligible
to vest
141,370

92,661

Percentage
rolled over
0%

Shares vesting
65,030

42,624

Share price on
9 June 20172

649.0p

Market value of
shares vesting
£422,045

£276,630

Core award value at 9 June 2017

1. 91% vesting under the EPS element, 0% vesting under the relative TSR element.
2. Actual share price on date the awards were released.

BTG plc Annual Report and Accounts 2018Governance2016 PSP awards
From July 2016, awards were granted under the new
PSP established as part of the new Remuneration Policy.
Vesting of these awards will be considered in 2019. They
were granted at a level of 225% of basic salary under the
new Remuneration Policy approved by shareholders in
2016. On vesting, these awards are normally subject to
a two-year post-vesting holding period during which
the shares may not be sold other than to settle any tax
or NICs due. Under this policy there is no accompanying
right to roll over vesting awards in 2019.

2017 PSP awards
In June 2017, awards were granted to the CEO and the
then CFO at the same level as the award granted to
both directors in 2016. The awards will vest in June
2020 subject to the satisfaction of adjusted EPS and
relative TSR performance conditions measured over
the three financial years to 31 March 2020.

Within the single figure for remuneration table on
page 75, included for Louise Makin is the value of
the remaining 50% of the 2013 PSP Core award and
related Multiplier award, and her 2014 Core award.
For Duncan Kennedy it includes the value of his 2015
PSP award and for Rolf Soderstrom, it includes the
value of his 2014 and 2015 PSP Core awards.

Change of CFO
On 14 November 2017, we announced the departure
of Rolf Soderstrom as CFO and the appointment of
Duncan Kennedy as his replacement with effect from
1 January 2018. Managing a successful succession at
Board level requires flexibility from the outgoing
executive to ensure that both the timing and the
process are optimised. I am very pleased to be able to
confirm that Rolf provided this flexibility and support
for the transition.

Duncan’s basic salary was set at £375,000, 8% lower
than that of his predecessor, and will next be reviewed
on 1 April 2019. He receives pension contributions at
a level of 20% of basic salary, lower than the 25%
limit permitted under the Remuneration Policy. He
participates in the incentive schemes at the same level
as the CEO and former CFO, namely an annual bonus
opportunity of up to 150% of basic salary and an
annual PSP grant at a level of 225% of basic salary.
He is required to build a shareholding up to a level
of 200% of basic salary.

Duncan’s service contract includes a 12-month notice
period and is in line with best practice provisions,
as set out in the UK Corporate Governance Code.

Duncan’s pay for the 2018/19 financial year will be in
line with the intended application of the Remuneration
Policy as set out below.

Rolf stepped down as a member of the Board and
as a member of the Group Leadership Team on
31 December 2017. He remained as an employee of
BTG until 31 March 2018 to ensure a smooth transition
to his successor. Full details of the payments made to
Rolf in connection with his termination are set out on
pages 83 and 84 and are summarised below.

– Following the end of his employment with

the Company on 31 March 2018 he received a
payment in lieu of notice to cover the remaining
part of his 12-month notice period not worked
(to 14 November 2018). This payment related
to both salary and benefits and reflected the
requirements set out in Rolf’s contract of
employment. As that contract was put in place
in December 2008 when Rolf joined the Group
following the Protherics acquisition, its terms do
not reflect current remuneration best practice.
For example, the above payment is not subject
to mitigation.

– He is eligible for a bonus for the 2018/19 financial
year, pro-rated until 14 November 2018 (i.e.
equivalent to approximately 60% of the financial
year), and subject to the satisfaction of the existing
corporate performance conditions. Again, this
payment, while not in line with current best
practice, comprises an entitlement under his
service contract.

– In light of his long and successful service and the

circumstances of his departure, Rolf was treated as
a ‘good leaver’ under the terms of the Group’s share
incentive schemes. His deferred bonus shares
vested on 10 April 2018. Remaining PSPs will vest
subject to satisfaction of the existing performance
conditions and at the same time as the future
vesting for remaining employees.

– In light of his departure, he was unable to elect to

roll-over the 2015 Core award granted under the
PSP and therefore this award will vest at a level
of 50% following the achievement of the relevant
performance conditions as noted above.

– His 2016 PSP award will vest in 2019, and the

Committee has exercised its discretion to permit
this award to vest in full if the relevant
performance conditions are met. We took this
decision as the terms of Rolf’s departure and his
agreement to remain with BTG for a period
following notice being served helped to facilitate
a smooth and effective transition to the new CFO.
This ensured the success of the move of a strong
internal candidate to the CFO position with
minimal disruption at a critical time for BTG and
validated our managed Board succession process.
Without this internal candidate, an external
appointment would likely have created a longer
period of transition for Rolf’s departure and
potentially he would not have been involved in
a period of handover. We also took into account
Rolf’s strong contribution to BTG’s exceptional
performance since he joined the Group, and the
fact that his contributions prior to his departure

OverviewGovernanceFinancialsStrategic ReportBTG plc Annual Report and Accounts 2018 – We are seeking shareholder approval at the AGM

in July to extend the lives of our two all-employee
share plans. The Group believes that broad-based
employee participation in share schemes is an
important alignment tool helping to focus
employees on delivering value for shareholders.
Our two plans, the BTG Sharesave Plan 2009 and
the BTG USA Stock Purchase Plan 2009, have been
effective in aligning employee interests with those
of the Company and shareholders, and provide
incentives for employees to improve performance
and remain with BTG. Details of these plans are
included in the Appendix to the Notice of AGM.

During 2018/19, we will embark on a review of the
Remuneration Policy ahead of seeking shareholder
approval for a renewed Policy at the 2019 AGM.
We will consult with major shareholders and their
representative bodies on our proposals during
the year.

We will also review the responsibilities and operation
of the Remuneration Committee once the expected
changes to the UK Corporate Governance Code have
been confirmed.

Engagement with Shareholders
We wrote to our major shareholders earlier this
year to provide an update on the Remuneration
Committee’s activities during the year and explain
further the decisions taken in respect of matters such
as the exit arrangements for the former CFO. We are
grateful for the comments received and will factor the
feedback into the design of our new Remuneration
Policy. The Committee remains committed to
maintaining an open dialogue with shareholders and
welcomes any further feedback.

We hope for the continued support of shareholders
at the AGM on 18 July 2018, where you will be invited
to vote on the 2018 Remuneration Report (and this
Annual Statement).

Ian Much
Chairman of the Remuneration Committee
14 May 2018

Remuneration
continued

will have an impact over the longer-term. We were
cognisant that vesting of the 2016 PSP award
remains subject to challenging performance
conditions (which at the time of writing look
unlikely to be met in full). In light of these factors,
we took the view that an exception to the normal
pro-rating arrangements was appropriate in these
specific circumstances. The Committee is clear that
this does not set a precedent for the treatment of
future awards to good leavers.

– Time pro-rating will be applied to Rolf’s 2017

PSP award, such that any vesting under this award
will be reduced to reflect the shortened timeframe
between the start of the performance period and
the end of Rolf’s notice period as a proportion of
the full three-year performance period. The
Committee agreed to use the performance period
rather than the default vesting period to determine
the extent of time pro-rating as the performance
period is the critical timeframe over which
performance is assessed and ultimately rewarded.

– Rolf will not receive a PSP award in 2018.

Looking ahead
We do not intend to make any material changes to the
application of the Remuneration Policy for the
2018/19 financial year. In summary:

– We reviewed the CEO’s basic salary in March 2018
and agreed an increase of 2.5%, in line with the
average increase for BTG employees. The new CFO
was not eligible for an increase given his recent
appointment; his salary will be reviewed next year,
with any increase taking effect from 1 April 2019.

– The annual bonus scheme will continue to operate
with financial performance conditions applying to
70% of the bonus and with individual objectives
applying to the remaining 30%. The financial
metrics will again be BTG product sales, adjusted
operating profit and free cash flow, all equally
weighted. The maximum bonus opportunity
remains at 150% of basic salary.

– Awards will be granted under the PSP in June 2018
at a level of 225% of basic salary, the same as in
2016 and 2017. The awards will vest subject to
Earnings Per Share (EPS) and relative Total
Shareholder Return (TSR) performance over a
three-year period, with a further two-year holding
period applying to vested awards. Full details of
the performance conditions for the awards can be
found on page 86.

BTG plc Annual Report and Accounts 2018GovernanceRemuneration at-a-glance
Performance and remuneration outcomes in 2017/18

2018/19 salary (effective 1 April 2018)

2017/18 salary (effective 1 April 2017)

Pension, benefits and Sharesave

Annual bonus

Long-term incentives

Total remuneration

Share ownership guidelines

Louise Makin
£686,238

£670,000

£157,000

£687,000

£1,513,000

£3,027,000

Duncan Kennedy 1
£375,000

£94,000

£21,000

£96,000

£105,000

£316,000

Rolf Soderstrom2
n/a

£306,000

£68,000

£314,000

£565,000

£1,253,000

Guideline: 250% of salary
Actual: 780% of salary

Guideline: 200% of salary
Actual: 33% of salary

Guideline: 200% of salary
Actual: 576% of salary

1. 2017/18 remuneration reflects period of year served as a director (1 January 2018 to 31 March 2018).
2. 2017/18 remuneration reflects period of year served as a director (1 April 2017 to 31 December 2017).

Product sales

Adjusted
operating profit

Free cash flow

2017/18 adjusted
financial
performance

For reconciliation of adjusted
financial performance (for
remuneration purposes) to
their reported equivalents,
see page 76.

£444.9m
vs. target of
£443.0m

Annual bonus outcome
vs. maximum targets

£116.3m
vs. target of
£122.9m

£171.0m
vs. target of
£144.8m

68.4%

Growth in EPS (p)*

Total shareholder return

300

250

200

150

100

FY 2014

FY 2015

FY 2016

FY 2017

FY 2018

Apr 13

Apr 14

Apr 15

Apr 16

Apr 17

Apr 18

* adjusted EPS as disclosed

LTIP outcome vs
maximum targets

2013
Core awards

2013
Multiplier awards

2014
Core awards

2015
Core awards

100%

49%

46%

50%

OverviewGovernanceFinancialsStrategic ReportBTG plc Annual Report and Accounts 2018Remuneration
continued

Structure of the report
The report is divided into three parts: (i) the ‘Annual
Statement’ (above) summarising the business context
in which the Committee has operated; (ii) the ‘Annual
Report on Remuneration’ which provides shareholders
with details of the major decisions made by the
Committee and the remuneration actually delivered to
the Group’s directors during the 2017/18 financial year;
and (iii) the ‘Directors’ Remuneration Policy report’.

Annual report on remuneration
This part of the report has been prepared in
accordance with Part 3 of Schedule 8 to the Large
and Medium-sized Companies and Groups (Accounts
and Reports) Regulations 2008 (as amended).

The Annual Report on Remuneration and Annual
Statement will be put to an advisory shareholder vote
at the 2018 AGM. The information on pages 69 to 88
has been audited.

About the Remuneration Committee
and its advisers
The Remuneration Committee has been established
by the Board and is responsible for executive
remuneration.

During the year, the Committee reviewed and updated
its terms of reference, which are available in full on
the Group’s website www.btgplc.com, or from the
Group Company Secretary on request.

Members

Committee member
Ian Much (Chairman)
Giles Kerr
Susan Foden
Graham Hetherington

Date of appointment to the Committee
28 September 2010
3 November 2009
1 March 2015
29 September 2016

Details of attendance at meetings are shown in the table on page 47.

Other attendees
at Remuneration
Committee meetings

The Chairman (Garry Watts), CEO (Louise Makin), CFO (Duncan Kennedy), Head of HR and VP of
Total Rewards may attend meetings by invitation, other than when their own remuneration is
being considered.

Committee evaluation

Committee advisers

The Company Secretary (Paul Mussenden) serves as secretary to the Committee.

During the year the Committee carried out a review of its effectiveness. The Committee was found
to be operating effectively, with good oversight, engagement and debate of issues. The emphasis
will remain on ensuring a strong link between remuneration and performance and strategy, and
alignment with shareholder interests.

The Committee appoints its own advisers as it sees fit. During the year, it appointed Korn Ferry Hay
Group (KFHG) to act as advisers to the Committee and a representative usually attends the meetings.
KFHG is a signatory to the Remuneration Consultant Group’s Code of Conduct, which sets out
guidelines to ensure that its advice is independent and free from undue influence. KFHG advises the
Committee on all remuneration issues including the vesting of long-term incentive arrangements.
The Committee will review the performance and independence of KFHG on an annual basis.

The Group continues to use the Committee’s former advisers, NBS (part of Aon plc) to advise on
other matters including remuneration matters in general. NBS also assists with the total shareholder
return (TSR) performance measurement and the implementation of employee share schemes and,
through Aon plc’s Radford brand, provides the Group with advice on matters specific to the US
employment market.

The fees paid to KFHG in 2017/18 were: £56,950 (2016/17: £nil). The fees paid to NBS for Committee
advice during 2017/18 were £70,617 (2016/17: £103,078).

BTG plc Annual Report and Accounts 2018GovernanceSingle figure for total remuneration (audited)1

Salary/fees

Benefits2

BIK
arising from
performance
of duties7

Bonus paid
in cash

Bonus paid
in shares3

Long–term
incentives4

£’000

Pension5

£’000

Other6

£’000

Total
remuneration

£’000

Executive Directors
Louise Makin

Duncan Kennedy8

Rolf Soderstrom9

Non–executive Directors

Garry Watts

Greg Barrett10

2018
2017

Susan Foden

2018
2017
Graham Hetherington11 2018
2017

Giles Kerr12

Ian Much

James O’Shea

Anne Thorburn13

Richard Wohanka

2018
2017

670
650

94
–

306
396

245
235

$36
–

54
52

68
41

54
60

64
62

54
52

10
–

54
52

1
1

1
–

1
1

–
–

–

–
–

4
5

1
–

6
6

2
1

–
–

3
6

2
4

2
2

5
5

4
4

1
–

–
1

502
487

70
–

314
297

185
316

26
–

–
192

1,513
1,407

105
–

565
1,442

148
151

19
–

61
79

–
–

–

–
–

–

–
–

–

–
–

–

–
–

4
4

–
–

–
10

–
–

–

–
–

3,027
3,021

316
–

1,253
2,423

247
236

$36
–

57
58

70
45

56
62

69
67

58
56

11
–

54
53

1. All figures in Sterling, with the exception of Greg Barrett, whose fees are presented in US dollars, the currency in which his fees are paid.
2. Benefits shown above for Louise Makin, Duncan Kennedy and Rolf Soderstrom relate principally to the provision of medical benefits.
3. Element of bonus deferred into the Deferred Share Bonus Plan (DSBP).
4. Awards are included in the financial year in which the performance conditions end. The share price used is the three-month average share

price to the end of the financial year.
– For 2018, this figure does not include the 2015 Core PSP award for Louise Makin, as the Core and Multiplier awards are treated as a

single award and the Core award will be shown in 2019 if no election is made and both Core and Multiplier in 2020 if an election is made.
If 50% of a 2015 Core award is rolled over into a Multiplier award, 50% of the Core award will be shown in 2019 and the remainder with
the Multiplier award in 2020.

– The Long-Term Incentives figure for 2018 relates to 50% of the 17 July 2013 Core award that was rolled over and the related 50% Multiplier
award (for Louise Makin only), plus the 2014 Core award for Louise Makin and Rolf Soderstrom, as neither were rolled over in 2017. It also
includes the vesting 2015 award for Duncan Kennedy and Rolf Soderstrom.

Share price appreciation over the five-year period to 31 March 2018 contributed materially to the total remuneration figure for 2018.
Details can be found in the table on page 78.
The 2017 figure has been restated to reflect the actual share price on the date that the 2012 awards were released.

5. Pension consists of a cash supplement in lieu of employer pension contributions following the changes to pension legislation. In addition,

for Louise Makin, it includes £45,117 (2017: £51,198), representing the value of the increase in the year of her pension entitlement in the defined
benefit BTG Pension Fund.

6. Other shows the value of vested Sharesave options.
7. Certain expenses relating to the performance of a director’s duties, such as travel to and from Company meetings and related accommodation,
are classified as taxable. In such cases, the Company will ensure that the director is not out of pocket by settling the related tax via the PSA.
In line with current regulations, these taxable benefits have been disclosed and are shown in the Benefits in Kind (BiK) incurred arising from the
performance of duties column. The figures shown are the cost to the Company of providing the taxable benefit.

8. Duncan Kennedy’s remuneration is stated as from 1 January 2018.
9. Rolf Soderstrom’s remuneration is stated for the period from 1 April 2017 to 31 December 2017, when he stepped down from the Board.
10. Fees paid to Greg Barrett in 2018 were for the period from his appointment to the Board on 27 November 2017. He currently receives a fee of
$70,000 per annum. Greg is based in Nashville, USA, and in recognition of the extra time commitment he is required to make with respect to
travel on BTG Board business he is paid a supplementary fee of $4,000 for each meeting of the Board requiring less than four hours’ travel, and
$8,000 for each meeting requiring more than four hours’ travel. His fee stated above for 2018 includes $24,394 as his annual base fee and
$12,000 as supplementary travel fees.

11. Fees paid to Graham Hetherington in 2018 were adjusted with effect from 7 June 2017 to reflect his appointment as Senior

Independent Director.

12. Fees paid to Giles Kerr were adjusted with effect from 7 June 2017 to reflect his stepping down as Senior Independent Director.
13. Fees paid to Anne Thorburn in 2018 were for the period from her appointment to the Board on 23 January 2018.

OverviewGovernanceFinancialsStrategic ReportBTG plc Annual Report and Accounts 2018

Remuneration
continued

Annual bonus for the year to 31 March 2018 (audited)
For the year ended 31 March 2018, bonuses were subject to a maximum of 150% of base salary for executive
directors and up to 75% for other senior staff.

Bonus targets were set at the start of the financial year for both Louise Makin and Rolf Soderstrom based on
the achievement of targets for product sales, adjusted operating profit and free cash flow and individual KPIs
intended to drive future growth in the business. The same structure applied for Duncan Kennedy for the
three-month period of the year in which he served as an executive director. The Committee set threshold and
stretch as well as intermediate targets. The bonus is calculated on base salary with a percentage pay out (against
the maximum of 150%) of between 25% at threshold, 50% at on-target and 100% of the maximum at stretch.

The adjusted operating profit and free cash flow measures are adjusted performance metrics, calculated on the
basis of BTG’s adjusted earnings policy as outlined on page 34. A reconciliation of the relevant IFRS metric to these
adjusted metrics is outlined on pages 35 and 36. The Committee may also adjust the final outcome upwards or
downwards in the event that an exceptional event occurs, which, in the Committee’s opinion, materially and
unreasonably affected the bonus out-turn.

During 2017/18, the Committee assessed that normal adjustments for remuneration purposes compared to the
reported metrics should be made for each of the following. These adjustments are consistent with those made in
prior years.

(i)

Exclusion of the impact of the business combinations (Roxwood, Oncoverse and Vetex) which occurred during
the year, as their performance was not included in the original bonus targets.

(ii) Measuring product sales and adjusted operating profit at the constant currency exchange rates used in the

budget. Consistent with prior years it has not been felt practical to make the same adjustment to the cash flow
metric and accordingly cash flow performance has been measured at actual exchange rates during the year.
The adverse impact of exchange rate movements during FY18 has resulted in a significantly lower performance
against the cash flow targets as compared to the adjusted operating profit performance.

For the financial year to 31 March 2018 product sales, adjusted operating profit and free cash flow are calculated
as follows:

Reported metrics
Remuneration Committee adjustments:
Add/(less): effect of business combinations (Roxwood, Oncoverse and Vetex)
Add: Roxwood acquisition related costs
Add/(less): Translational foreign exchange impacts

Product sales
£m
423.8

Adjusted
operating profit
£m
152.7

(0.8)
–
21.9

444.9

2.5
–
15.8

171.0

Free
cash flow
£m
109.3

2.5
4.5
n/a

116.3

The performance achieved against the bonus targets are summarised as follows:

Measure
Corporate Financial Targets
Product sales

Adjusted operating profit

Free cash flow

Individual Corporate
Objectives

Total

As a
percentage
of maximum
bonus
opportunity

Performance required

Louise Makin

Rolf Soderstrom Duncan Kennedy

Threshold
(£m)

Target
(£m)

Stretch
(£m)

Actual
(£m)

% of
maximum

23 1/3%

430.0

134.7

114.3

443.0

144.8

122.9

457.0

156.2

132.6

444.9

171.0

116.3

See narrative on the
following page

30%

100%

13.2

23.3

6.9

25.0

68.4

13.2

23.3

6.9

25.0

68.4

13.2

23.3

6.9

25.0

68.4

BTG plc Annual Report and Accounts 2018GovernanceKey achievements against the individual corporate objectives
The table below includes details of the individual corporate objectives which applied to the executive directors for
the year ended 31 March 2018, and the extent to which these were achieved.

Objectives

Key achievements

Bonus achieved

Louise Makin

Leadership in
Interventional Medicine

— Acquisition of Roxwood Medical in October 2017
— Two strategic investments completed
— Positive progress in R&D pipeline across all areas, including
the approval and launch of new products, clinical study
enrolment, geographic expansion of existing product
portfolio

Succession planning

— Comprehensive succession planning conducted across all

areas of BTG

— Succession plans in place for >90% of all leaders from

Leadership Team to two reporting levels below

— Specific capability reviews completed in key functional areas

25/30

and action plans in place

Operating model

— Clear alignment of the organisation behind Pharmaceuticals

and Interventional Medicine businesses

— Continuous improvements to R&D portfolio management

and prioritisation implemented

— Clarity on business unit/central services operating model

across all areas of the company

— Key finance leadership roles upskilled in the period
— New finance organisational structure implemented to drive
efficiency in centrally provided services and business focus
— Planning completed and Board approval granted to progress

global ERP implementation

— Continued focus on manufacturing cost optimisation with

specific plans approved and implemented

— Benchmarking completed for all central services and specific

plans in place to drive efficiency over the medium term

25/30

Rolf Soderstrom1
Duncan Kennedy2

Leadership in
Interventional Medicine

Finance function

Operating efficiencies

1. CFO until 31 December 2017.
2. CFO from 1 January 2018.

Vesting of Long-Term Incentive awards (audited)
Core awards granted on 17 July 2013 and rolled over by Louise Makin, together with the associated Multiplier award
granted on the same date will vest in July 2018. Core awards granted on 8 June 2015 under the Performance Share
Plan will vest in June 2018 based on performance to the year ended 31 March 2018. For Louise Makin this is subject
to a decision to roll over 50% or 100% of the 2015 Core awards. In light of Rolf Soderstrom’s departure, he was
unable to elect to roll over the 2015 Core award. As he was not an executive director at the time his 2015 PSP
award was granted, Duncan Kennedy’s award is not capable of being rolled over and will vest in June 2018.

The performance conditions and estimated vesting outcomes for these awards are as follows:

2013 PSP – Core and Multiplier
The Core awards granted in July 2013 were subject to 50% adjusted EPS and 50% TSR targets over the three years
to 31 March 2016. At that time, full vesting was achieved on both elements due to performance conditions being
satisfied in full. Vesting of 50% of the Core awards was deferred by Louise Makin and put at risk in 2016 and in
return she was eligible to receive Multiplier awards, with both elements capable of vesting in July 2018, subject
to TSR performance over the five years to 31 March 2018, as detailed in the tables below. (Rolf Soderstrom did
not elect to roll over any of his Core award and therefore his associated Multiplier awards lapsed on 17 July 2016):

Metric
TSR – 2013
Core and
Multiplier

Condition
Five-year
comparison
with index

Threshold Target
0% vesting

Target 100%
vesting – Core
0% vesting –
Multiplier

Outperformance
Target 100%
vesting –
Multiplier

Median

Actual BTG

% Vesting

Median minus
66.66%

Median

Median plus
100%

59.24% 108.47%

100% Core
49.23% Multiplier

TSR has been calculated for the Committee by NBS.

OverviewGovernanceFinancialsStrategic ReportBTG plc Annual Report and Accounts 2018Remuneration
continued

2013 PSP – Core and Multiplier continued

Louise Makin 17 July 2013 Core award

17 July 2013 Multiplier award

Number of
shares granted
that were
rolled over
104,403
104,403

Vesting
outcome
100%
49.23%

Number of
shares to vest
104,403
51,397

Estimated
value*
£731,134
£359,933

Value at grant
of Core award**
£412,496
N/A

Value
attributable
to share price
appreciation**
£318,638
N/A

* Value estimated as not fully vested until 17 July 2018 and is based on the three-month average share price to 31 March 2018 of 700.3p per share
** Estimated value based on the share price at the date of grant, 17 July 2013, of 395.1p, compared to the estimated realised value at date of

vesting due to share price appreciation.

2014 PSP – Core awards and associated Multiplier awards
As neither Louise Makin or Rolf Soderstrom elected in 2017 to roll over any part of their 2014 Core award, the
associated Multiplier awards lapsed on 9 June 2017.

9 June 2014 PSP
Louise Makin
Rolf Soderstrom 9 June 2014 PSP

Number
of shares
at grant
141,370
92,661

Vesting
outcome
46%
46%

Proportion***
of awards
elected for
roll over
0%
0%

Number of
shares vested
in June 2017
65,030
42,624

Value at
vesting*
£422,045
£276,630

Value at grant
of Core awards
vesting in 2017**
£392,781
£257,449

Value
attributable
to share price
appreciation**
£29,264
£19,181

* Value based on the share price at date of vesting 9 June 2017 of 649p per share
** Estimated value based on the share price at the date of grant, 9 June 2014, of 604p, (calculated using the previous five-day average share price),

compared to the estimated realised value at date of vesting due to share price appreciation.

*** Neither Louise Makin or Rolf Soderstrom rolled over any of their Core awards and therefore neither have any outstanding awards from 2014

subject to a five-year TSR condition.

June 2015 PSP
Metric
EPS (50%)

Condition
Adjusted EPS in the financial year to
31 March 2018

Threshold target
23.0p

Stretch target
30.3p

Actual**
33.7p

% Vesting
100%

TSR (50%)*

Three-year comparison with FTSE 250
Index between median and upper quartile

Median
(TSR: 27.6%)

Upper
Quartile
(TSR: 55.3%)

Total vesting

TSR: (10.5)%

50%

* TSR has been calculated for the Committee by NBS.
**

In accordance with the performance condition, in determining the outcome against the adjusted EPS performance targets the Committee took
into account the impact of acquisitions completed since the date of grant of the awards, with Adjusted EPS excluding the effect of those
acquisitions which were not included in the original targets.

Adjusted EPS
Roxwood Medical, Inc.
Galil Medical Inc
Revised EPS used for the purposes of determining vesting

p
32.9
0.2
0.6
33.7

8 June 2015 PSP

Louise Makin
Duncan Kennedy 8 June 2015 PSP****
Rolf Soderstrom 8 June 2015 PSP

Number
of shares
at grant
125,731
30,089
82,411

Vesting
outcome
50%
50%
50%

Number
of shares
to vest***
62,865
15,044
41,205

Estimated
value*
£440,244
£105,353
£288,559

Value at
grant of
Core awards**
£439,741
£105,233
£288,229

Value
attributable
to share price
appreciation**

£503
£120
£330

* Value estimated as not fully vested until 8 June 2018 and is based on the three-month average share price to 31 March 2018 of700.3p per share.
** Estimated value based on the share price at the date of grant, 8 June 2015, of 699.5p, (calculated using the previous five-day average share

price), compared to the estimated realised value at date of vesting due to share price appreciation.

*** If Louise Makin defers her Core awards in June 2018, she will have the Core awards plus the associated Multiplier awards (125,730 awards)

subject to a five-year TSR condition. Duncan Kennedy was not granted Multiplier awards and in light of his departure, Rolf Soderstrom is unable
to elect to roll over the 2015 Core award.

**** Duncan Kennedy’s 2015 PSP was granted with the first £30,000 awarded as a linked Company Share Option Plan (CSOP)/PSP award,

as described on page 81.

BTG plc Annual Report and Accounts 2018GovernanceFor Louise Makin, the number of shares that are capable of vesting under the 2015 PSP this year as a Core award
are subject to an election by her to forego vesting of 50% or 100% of that award and roll over the award in return
for the entitlement to receive a Multiplier award, which may increase or decrease the number of shares vesting at
year five, based on relative TSR performance up to the end of that period. This election must be made before the
shares vest in June 2018. The Core awards will not vest until the expiry of the period within which she is able to
elect to roll over her awards without a valid election having been made. Any Multiplier award will not vest until
the period of five years from grant of the original Core award.

Within the single figure for remuneration table on page 75, included for Louise Makin is the value of the remaining
50% of the 2013 Core award and related Multiplier award and her 2014 Core award. For Duncan Kennedy,
it includes the value of his 2015 award, and for Rolf Soderstrom, it includes the value of his 2014 and 2015
Core awards.

PSP awards made during the year (audited)
On 5 June 2017, the following PSP awards were granted to executive directors.

Louise Makin

Type of award
2017 PSP

Basis of
award granted
225% of salary

Share price at
date of grant
655.3p

Number of
shares over
which award
was granted*
229,875

Face value
of award
£1,506,371

Rolf Soderstrom**

2017 PSP

225% of salary

655.3p

139,990

£917,354

Performance
period

Vesting date

1 April 2017 to
31 March 2020

5 June 2020

* The number of shares awarded under the PSP were calculated by reference to the average share price for the five days prior to the date of grant

on 5 June 2017 of 655.3p per share.

** Please see the Chairman’s’ statement on page 71, explaining the treatment of this award following Rolf Soderstrom’s departure.

The number of awards under the 2017 PSP that will vest will be determined according to the satisfaction of the
following performance conditions (each performance condition applies to 50% of an award)

Percentage of vesting of
that portion of an award*
0%
25%
100%

Adjusted EPS in the financial year
to 31 March 2020
< 29p (below threshold)
29p (threshold)
39.5p (stretch)

Relative TSR ranking against the constituents
of the FTSE 250 Index (as at 1 April 2017)

for the period from 1 April 2017 to 31 March 2020
Below median
Median
Upper quartile

* Vesting on a straight-line basis in between threshold and stretch (EPS) or median and upper quartile (TSR).

Executive directors will be required to hold vested shares, net of tax, for an additional two-year holding period
to 5 June 2022.

OverviewGovernanceFinancialsStrategic ReportBTG plc Annual Report and Accounts 2018Remuneration
continued

Outstanding share awards (audited)
The table below sets out details of executive directors’ outstanding share awards (which will vest in future years
subject to performance and/or continued service).

298.90

153,320

386.00

122,288

498.67

2,165

Granted
in year

Exercised/
vested

Lapsed

–

2,165

–

713

691

–

1,911

124,042
104,403
104,403
141,370
141,370
186,063
125,731
125,731
207,535
–

–
–
–
–
–
–
–
–
–
229,875

107,755
–
–
65,030
–
–
–
–
–
–

16,287
–
–
76,340
141,370
186,063
–
–
–
–

Share
price on
exercise/
vesting (p)

693.5

655.5

649.0

At
31 March
2018

187,179

199,253

153,320

122,288

Exercise period/
vesting date

31 July 2012
to 30 July 2019
13 July 2013
to 12 July 2020
6 July 2014
to 5 July 2021
1 June 2015
to 31 May 2022

– 1 September 2017
to 1 March 2018
713 1 October 2018 to
1 April 2019
691 1 September 2019
to 1 March 2020
1,911 1 September 2020
to 1 March 2021

665,355

–
104,403
104,403
–
–
–
125,731
125,731
207,535
229,875

1 June 2017
17 July 2018
17 July 2018
9 June 2017
9 June 2019
1 June 2017
8 June 2018
8 June 2020
15 July 2019
5 June 2020

Louise Makin

Date of grant/award
Share options
31 July 2009

Exercise price
(p)/market
price on date
of award (p)

At
1 April
2017

179.25

187,179

13 July 2010

201.30

199,253

6 July 2011

1 June 2012

Sharesave
19 July 2014

22 July 2015

23 July 2016

19 July 2017

Total option awards

Performance share awards
1 June 20121
17 July 20132

9 June 2014

1 June 20151
8 June 2015

15 July 20163
5 June 20173

Deferred share awards
5 June 2017

Total other awards

Total awards

504.40

520.53

565.07

380.54
395.10
395.10
604.00
604.00
709.50
699.50
699.50
704.70
655.30

655.30

–

48,206

–

48,206

5 June 2020

945,884

1,611,239

In 2015, Louise elected to receive a Multiplier award as an alternative to the vesting of the 2012 PSP as a Core award and on 1 June 2015
a Multiplier award of 186,063 was granted.
In 2016, Louise elected to roll over 50% of her 2013 PSP Core award. Therefore 50% of the award vested and 50% will be subject to a five-year
TSR condition. 50% of the 2013 PSP Multiplier award lapsed and 50% remains and will also be subject to the five-year TSR condition.

3. PSP awards from 2016 onwards are granted under the 2016 PSP Plan and executive directors will be required to hold vested shares, net of tax,
for an additional two-year holding period. The award granted in 2016 will have a holding period to 15 July 2021, and the award granted in 2017
will have a holding period to 5 June 2022.

BTG plc Annual Report and Accounts 2018GovernanceGranted
in year

Exercised/
vested

Lapsed

At
31 March
2018

Exercise period/
vesting date

Share
price on
exercise/
vesting (p)

Duncan Kennedy

Date of grant/award
Share options
8 June 20151

Sharesave
19 July 2016

20 July 2017

Total option awards

Performance share awards
8 June 2015
8 June 20151
10 June 2016
5 June 2017

Deferred share awards
8 June 2015
10 June 2016
5 June 2017

Total other awards

Total awards

Exercise price
(p)/market
price on date
of award (p)

At
1 April
2017

688.5

4,357

520.53

1,729

–

565.07

–

1,592

699.50
699.50
678.10
655.30

699.50
678.10
655.30

25,732
4,357
34,685
–

5,644
6,038
–

–
–
–
39,840

–
–
7,537

–

–
–
–
–

–
–
–

–

–
–
–
–

–
–
–

4,357

8 June 2018
to 15 June 2018

1,729 1 September 2019
to 1 March 2020
1,592 1 September 2020
to 1 March 2021

7,678

25,732
4,357
34,685
39,840

5,644
6,038
7,537

123,833

131,511

8 June 2018
8 June 2018
10 June 2019
5 June 2020

8 June 2018
10 June 2019
5 June 2020

1. On 8 June 2015, Duncan was granted an HMRC tax approved market value option over 4,357 shares at an option price of 688.5p per share

(the CSOP) and a separate conditional free share award under the PSP over shares worth (on vesting) a maximum of approximately £30,000
(the PSP award). The CSOP and PSP award were designed so that when taken together they deliver the same aggregate gross gain as a free
share award under the PSP over 4,357 shares, but in a more tax efficient manner.

Granted
in year

Exercised/
vested

Lapsed

At
31 March
2018

Exercise period/
vesting date

Rolf Soderstrom

Date of grant/award
Share options
31 July 2009

Exercise price
(p)/market
price on date
of award (p)

At
1 April
2017

179.25

102,649

13 July 2010

201.30

129,514

6 July 2011

1 June 2012

Sharesave
23 July 2015

19 July 2016

298.90

99,658

386.00

90,673

504.40

520.53

1,784

1,729

–

102,649

129,514

99,658

90,673

–

1,784

1,729

Total option awards

Performance share awards
1 June 20121
9 June 2014

1 June 20151
8 June 2015

15 July 20162
5 June 20172

Deferred share awards
5 June 2017

Total other awards

Total awards

380.54
604.00
604.00
709.50
699.50
699.50
704.70
655.30

91,974
92,661
92,661
137,961
82,411
82,411
126,385
–

–
–
–
–
–
–
–
139,990

79,897
42,624
–
–
–
–
–
–

12,077
50,037
92,661
137,961
–
82,411
–
62,218

655.30

–

29,357

–

29,357

5 June 2020

315,925

In 2015, Rolf elected to receive a Multiplier award as an alternative to the vesting of the 2012 PSP as a Core award and on 1 June 2015
a Multiplier award of 137,961 was granted.

2. PSP awards from 2016 onwards are granted under the 2016 PSP Plan and executive directors will be required to hold vested shares, net of tax,

for an additional two-year holding period. Taking into account Rolf’s departure, the Remuneration Committee will have the discretion to
determine whether or not to apply the two-year holding period at the point each award vests.

Share
price on
exercise/
vesting (p)

655.5

655.5
649.0

–

31 July 2012
to 30 July 2019
13 July 2013
to 12 July 2020
6 July 214
to 5 July 2021
1 June 2015
to 31 May 2022

–

1 October 2018
to 1 April 2019
– 1 September 2019
to 1 March 2020

–
–
–
–
82,411
–
126,385
77,772

1 June 2017
9 June 2017
9 June 2019
1 June 2017
8 June 2018
8 June 2020
15 July 2019
5 June 2020

OverviewGovernanceFinancialsStrategic ReportBTG plc Annual Report and Accounts 2018Remuneration
continued

Share options and performance shares were granted for nil consideration. The price used for calculating the
number of shares awarded under the PSP was based on the average of the closing share prices over the five days
immediately prior to the award date. Share options are awarded using the closing mid-market price on the date
before grant. Sharesave options were granted on the condition that participants agreed to enter into a monthly
savings contract.

Awards are normally satisfied using new issue shares. The Group’s share plans comply with recommended
guidelines on dilution limits and the Group has always operated within these limits. Assuming none of the extant
options lapse and will be exercised and, having included all exercised options, the Group has utilised 3.6% of the
10% in ten years and 3.1% of the 5% in ten years in accordance with the Investment Association (IA) guidance on
dilution limits.

Directors’ pensions
Louise Makin is a member of the BTG Pension Fund. The Fund is a defined benefit arrangement, which provides a
pension based on an accrual rate of either one sixtieth or one eightieth of basic salary (up to the HMRC Earnings
Cap), depending on the level of contributions paid by members of 7% or 5% respectively. Members are able to retire
at any time from age 60 without any actuarial reduction to the pension payable (for Louise Makin this is 2020).
Under current legislation, if members continue to work beyond age 60, they may continue to pay contributions
and enhance their pension entitlement, subject to a maximum of 40 years pensionable service. Pension payments
post retirement are increased annually by inflation for pensionable service earned up to 5 April 2006 and inflation
subject to a ceiling of 2.5% for pensionable service earned after that date. Members may take early retirement, once
they have reached 55 years of age, although any pension paid will be subject to an actuarial reduction. Ill-health
retirements may be permitted from an earlier age subject to meeting certain medical conditions. In the event of
the death of a member, the Fund provides for a spouse’s (or at the discretion of the pension fund trustees and
subject to certain conditions being met, a partner who is not a spouse) pension to be payable equal to two-thirds
of the deceased member’s pension (including any pension exchanged for a retirement lump sum). For current active
members, a lump sum death benefit equal to four times basic salary (up to the earnings cap) plus refund of the
member’s contributions is also payable.

During the year, Louise Makin contributed £10,794 (2017: £10,542) to the Fund, representing 7% of her salary up
to the earnings cap and the Group contributed £67,231 (2017: £59,111).

Louise Makin receives a cash payment in lieu of pension to the value of 20% of base salary over the earnings cap.

Duncan Kennedy receives an annual pension allowance equivalent to 20% of his base salary. Rolf Soderstrom
received a cash payment in lieu of pension contributions to the aggregate value of 20% of base salary.
These pension allowances are not subject to bonus or other benefits and are paid less such deductions
as are required by law.

BTG plc Annual Report and Accounts 2018GovernanceDirectors’ shareholding and share interests (audited)
Executive directors are required to build and maintain a holding of Group shares worth at least 250% of salary in
the case of the CEO and 200% of salary in the case of the CFO. As at the date of this report, Louise Makin had met
the requirement.

Vested unexercised
market value options

Subject to
performance conditions

Guideline met?
Yes
Yes
No

Options
662,040
–
–

PSP
897,678
286,568
104,614

Options
–
–
4,357

DSBP
48,206
29,357
19,219

Directors’ holdings of Group shares

Louise Makin
Rolf Soderstrom1
Duncan Kennedy2
Garry Watts
Giles Kerr
Ian Much
James O’Shea
Richard Wohanka
Susan Foden
Graham Hetherington
Greg Barrett
Anne Thorburn

Beneficially owned at
31 March 2018 and at
the date of this report
772,664
347,336
18,288
10,000
–
–
–
26,500
–
–
–
–

1. For Rolf Soderstrom, all numbers relate to holdings as at 31 December 2017.
2. Duncan Kennedy is required to retain a portion of after-tax shares vesting under the BTG long-term incentive plans until the guideline is met.

Vested unexercised nil cost options count towards the guidelines on the basis of their net of tax value. Market value
options do not count until such time as they have been exercised.

The directors are not permitted to hold their shares in hedging arrangements or as collateral for loans without the
express permission of the Board. None of the directors currently holds or has held their shares in such an arrangement.

Leavers and Joiners
On 14 November 2017, we announced the departure of Rolf Soderstrom as CFO and the appointment of
Duncan Kennedy as his successor.

Rolf Soderstrom
Rolf stepped down as a member of the Board and as a member of the Group Leadership Team on 31 December
2017. Full details of the payments made to Rolf up to this date are included in the single figure table on page 75. He
remained as an employee of BTG until 31 March 2018 to ensure a smooth transition to his successor. He was treated
as a ‘good leaver’ under the terms of the company’s share incentive schemes. Details of the payments made to Rolf
in connection with his termination are set out below. All payments were in accordance with the approved Directors’
Remuneration Policy.

– During the period until 31 March 2018, he was employed on his existing terms and received his employment
benefits in full. This included basic salary of £101,929, pension contributions of £20,386 and benefits with a
value of £278. He received an annual bonus payment for the 2017/18 financial year of £418,315, in line with
the satisfaction of the performance conditions as set out on pages 76 and 77. This payment was made in cash
and comprised £313,736 in respect of his service as a director (as set out in the single figure table on page 75)
and a further £104,579 covering the period from the date he stepped down from the Board (31 December 2017
to 31 March 2018).

– Following the end of his employment with the Company on 31 March 2018 he received a payment in lieu of

notice of £303,037 to cover the remaining part of his 12-month notice period to 14 November 2018 not worked.
This payment comprised £251,733 in respect of salary, £50,346 for pension contributions and £958 in respect of
benefits. In line with his contract, this payment is not subject to mitigation, although his medical insurance will
cease if he secures alternative employment with a comparable level of medical insurance before 14 November
2018. He also received a payment of £36,067 in lieu of accrued but untaken holiday.

– He is also eligible for a bonus for the 2018/19 financial year, pro-rated until 14 November 2018 (i.e. equivalent to
approximately 60% of the financial year), and subject to the satisfaction of the existing corporate performance
conditions. This payment, while not in line with current best practice, comprises an entitlement under his existing
service contract.

– His outstanding 29,357 deferred bonus shares vested in full on 10 April 2018, in line with the terms of the

Remuneration Policy. At the date of departure from the Company these shares had a value of £198,453 based
on a share price of 676p.

OverviewGovernanceFinancialsStrategic ReportBTG plc Annual Report and Accounts 2018

Remuneration
continued

– His 2015 PSP Core award will vest at a level of 50% following the achievement of the relevant performance

conditions, as set out on page 78. In light of his departure, he was unable to elect to roll over this Core award into
a Multiplier award. At the date of his departure from the Company, the vested shares had a value of £278,546
based on a share price of 676p.

– His 2016 PSP award will vest in 2019, subject to the satisfaction of the relevant performance conditions.
As explained in the Annual Statement from the Remuneration Committee Chairman, the Committee has
exercised its discretion to permit this award to vest in full if the relevant performance conditions are met. The
full extent of vesting (if any) will be confirmed by the Committee in next year’s Annual Report on Remuneration.

– His 2017 PSP award will vest in 2020, subject to the satisfaction of the relevant performance conditions, and will

be pro-rated for time such that any vesting under this award will be reduced to reflect the shortened timeframe
between the start of the performance period and the end of Rolf’s notice period as a proportion of the full
three-year performance period. The full extent of vesting (if any) will be confirmed by the Committee in the
Annual Report on Remuneration for the 2019/20 financial year.

– Rolf will not receive a PSP award in 2018.

– A contribution of £8,000 plus VAT was made towards his legal fees related to the exit arrangements.

Duncan Kennedy
Duncan Kennedy was appointed as CFO and as an executive director with effect from 1 January 2018. Prior to this,
Duncan served as head of BTG’s Interventional Oncology business and was previously Group Financial Controller
and then Group Director of Finance.

Duncan’s remuneration as CFO is fully consistent with BTG’s Remuneration Policy. Upon appointment, Duncan’s
basic salary was set at £375,000. He receives a cash payment in lieu of pension contributions to the aggregate
value of 20% of salary. He participates in the annual bonus scheme up to an individual maximum bonus opportunity
of 150% of basic salary and has an entitlement to annual PSP awards of up to 225% of basic salary. He is required to
build a shareholding up to a level of 200% of basic salary.

Duncan’s service contract includes a 12-month notice period and is in line with the best practice provisions as set
out in the UK Corporate Governance Code. If leaving the Group, he will not receive an annual bonus for any part of
his notice period not worked and mitigation principles would apply.

Percentage increase in the remuneration of the Chief Executive Officer1

CEO
– Salary
– Benefits
– Bonus

Average per employee2
– Salary
– Benefits
– Bonus3

% change from
2017 to 2018
3
(5)
(14)

1
8
1

1. Percentage increases contained within the table represent changes between financial years 2016/17 and 2017/18 and are presented using

constant currency.

2. We have an international workforce and the Committee considers all employees to be the most relevant comparator group.
3. Group employee bonus based on estimated average pay-out for 31 March 2018.

BTG plc Annual Report and Accounts 2018GovernanceTotal shareholder return
The performance of the Group’s ordinary shares compared with the FTSE 250 (the Index) for the nine-year period
ended on 31 March 2018 is shown in the graph below.

)
d
e
s
a
b
e
r
(

)
£
(

e
u
l
a
V

700

600

500

400

300

200

100

Source: FactSet

31 March
2009

31 March
2010

31 March
2011

31 March
2012

31 March
2013

31 March
2014

31 March
2015

31 March
2016

31 March
2017

31 March
2018

BTG

FTSE 250

This graph shows the value, by 31 March 2018, of £100 invested in BTG shares on 31 March 2009, compared with the value of £100 invested in the
FTSE 250 Index on the same date.

The other points plotted are the values at intervening ﬁnancial year-ends.

The Group has chosen the Index as a comparator as it believes that it gives shareholders a reasonable comparison
with the TSR of other equity investments in companies of a broadly similar size across all sectors. The TSR
performance has been measured by NBS.

The middle market price of an ordinary share on 31 March 2018 was 676.3p. During the year, the share price ranged
from a low of 578p to a high of 784p.

Total remuneration for the Chief Executive Officer over time
2010
1,351
79%
100%

Total Remuneration (£’000)
Bonus Outturn (%)
LTIP Vesting (%)

2013
2,073
100%
92%

2011
1,489
70%
89%

2012
1,944
95%
80%

2014
1,757
82%
100%

2015
1,606
89%
100%

2016
3,759
75%
100%

2017
3,021
82%
51%

2018
3,027
68%
63%

The chart above shows the total remuneration for the Chief Executive Officer during each of the financial years.
The total remuneration figure includes the annual bonus and Long-Term Incentive (LTIP) awards which vested
based on performance in those years. The annual bonus and LTIP percentages show the pay-out for each year as a
percentage of the maximum. 2018 reflects the vesting of the 2013 Core award, the related Multiplier awards and
the 2014 Core awards.

Relative importance of spend on pay
The table below illustrates the change in expenditure by the Group on remuneration paid to all the employees
of the Group and distributions to shareholders from the financial year ended 31 March 2017 to the financial year
ended 31 March 2018.

Overall expenditure on pay
Dividend plus share buyback

2018
£m
179.2
nil

2017
£m
164.0
nil

Percentage
Change
9%
n/a

These matters were selected to be shown as they represent key distributions by the Group to its stakeholders.

OverviewGovernanceFinancialsStrategic ReportBTG plc Annual Report and Accounts 2018

Remuneration
continued

How the 2016 policy will be applied in 2018/19 onwards
2018/19 salary review
Louise Makin’s salary was reviewed in March 2018 and an increase of 2.5% was agreed which was in line with the
average increase for BTG employees. Her annual salary with effect from 1 April 2018 was £686,238 (as at 1 April
2017 was £669,500).

On appointment as CFO on 1 January 2018, Duncan Kennedy’s salary was set at £375,000. This will next be
reviewed with effect from 1 April 2019.

Performance targets for the 2018/19 annual bonus
The bonus opportunity for 2018/19 will be 150% of salary for both directors and will continue to be based on
corporate financial metrics (70% of the total bonus) and individual corporate objectives (30% of the total bonus)
as detailed in the policy report on pages 89 to 94.

The Committee has chosen not to disclose, in advance, the performance targets for the forthcoming year as these
include items which the Committee considers commercially sensitive. However, the targets will be based on three
financial metrics, being BTG product sales (1/3 weighting), adjusted operating profit (1/3 weighting) and free
cash flow (1/3 weighting). Full retrospective disclosure of the financial targets and performance against them
will be seen in next year’s Annual Remuneration Report. The individual corporate objectives will also be disclosed
to the extent possible given their ongoing commercial sensitivity.

The first 75% of salary of any bonus will be paid in cash, with any bonus paid in excess of 75% of salary
compulsorily deferred into shares for three years.

Performance targets for the 2018 PSP awards
The Committee’s policy is to grant executive directors annual PSP awards. The Committee intends to grant awards
in June 2018 at the level of 225% of salary to each executive director.

Targets for the PSP awards made during 2018/19 will be measured in the final year of the three-year period (the
2020/21 financial year) and are as follows:

Below threshold

Threshold

Between threshold
and stretch

Stretch

Adjusted EPS in the year
ending 31 March 2021
(50% of the total award)
Less than 37.5c

37.5c

37.5c to 49c

TSR relative to the constituents of the
FTSE 250 over three financial years ending
31 March 2021 (50% of the total award)
Less than median

Median

Between median
and upper quartile

Percentage of each element that vests
0%

25%

25% to 100%

49c or higher

Upper quartile or higher

100%

Payouts for performance between Threshold and Stretch
calculated on a straight-line basis

This is the first year the Committee has set EPS targets in US Dollars and reflects the move to reporting in this
currency from the 2018/19 financial year. The above targets reflect the anticipated reduction in revenues from
royalties over the period to the 2020/21 financial year and in particular those currently being received from sales
of Zytiga® in the US. The targets require growth in the earnings of the underlying business of between 7% and 17%
per year over the period. These targets were set by the Committee to straddle what it feels both the internal plans
will achieve and what market consensus for the performance of the Company will be. The range reflects the
Committee’s desire to set a demanding level of stretch that it wishes management to strive to achieve.

Executive directors will be required to hold vested shares, net of tax, for a further two-year holding period.

BTG plc Annual Report and Accounts 2018GovernanceValue of remuneration packages at different levels of performance
The Group’s policy results in a significant portion of remuneration received by executive directors being dependent
on Group performance. The chart below illustrates how the total pay opportunities for the executive directors vary
under three different performance scenarios: minimum, target and maximum. These charts are indicative only, as
share price movement and dividend accrual have been excluded. All assumptions made are noted below the chart.

s
0
0
0
£

’

£4,000

£3,500

£3,000

£2,500

£2,000

£1,500

£1,000

£500

£0

£1,725

22%

30%

48%

£824

100%

£3,398

45%

30%

25%

£451

100%

Minimum

Target

Maximum

Minimum

£1,857

45%

30%

25%

Maximum

£943
22%
30%

48%

Target

Louise Makin, Chief Executive Officer

Duncan Kennedy, Chief Financial Officer

Fixed Pay

Bonus

LTIP

Assumptions
Minimum = fixed pay only (salary + benefits + pension)

On-Target = 50% vesting of the annual bonus (75% of salary) and 25% vesting of the PSP award (56.25% of salary).

Maximum = 100% vesting of the annual bonus (150% of salary) and 100% vesting of the PSP award (225% of salary).

– Salary levels (on which other elements of the package are calculated) are based on those as at 1 April 2018.

– The value of taxable benefits is based on the cost of supplying those benefits (as disclosed) for the year ended

31 March 2018, excluding expenses incurred in their role as a director as these cannot be anticipated in advance.

– Pension levels have been estimated at 20% of base salary levels.

– The executive directors can participate in all employee share schemes on the same basis as other employees.

The value that may be received under these schemes is subject to tax approved limits. For simplicity, the value
that may be received from participating in these schemes has been excluded from the above charts.

– Amounts have been rounded to the nearest £1,000.

– No account has been taken of share price growth or dividends on vested shares.

OverviewGovernanceFinancialsStrategic ReportBTG plc Annual Report and Accounts 2018Remuneration
continued

Non-executive director 2018 remuneration
Set out in the table below are the fees paid for the year ended 31 March 2018 and proposed fees for the year
ending 31 March 2019.

Director
Chairman1
Non-executive director2
Senior independent director fee
Audit Committee chairmanship fee
Remuneration Committee chairmanship fee

As from
1 April 2018
£
275,000
55,000
8,000
12,000
12,000

As from
1 April 2017
£
235,000
53,560
5,000
10,000
10,000

% increase
17%
2.7%
60%
20%
20%

1. The fee was increased from 1 January 2018, having last been increased on 1 January 2015, to reflect the increased size, internationality and

complexity of the Group. The fee is fixed until 31 December 2020, with no additional fee paid for his role as Chair of the Nomination Committee.
2. This fee applies to all non-executive directors except Greg Barrett, who received a fee of $70,000 per annum up to 31 March 2018, and a fee of
$71,883 per annum as of 1 April 2018. Greg is based in Nashville and in recognition of the extra time commitment he is required to make with
respect to travel on BTG Board business he is paid a supplementary fee of $4,000 for each meeting of the Board requiring less than four hours
travel, and $8,000 for each meeting requiring more than four hours travel.

Shareholder voting at the Annual General Meeting
At last year’s Annual General Meeting held on 13 July 2017, the following votes were received from shareholders:

Votes cast in favour
Votes cast against
Total votes cast

Abstentions

Remuneration Report (votes)
325,527,863
1,883,099
327,410,962

2,459,182

Percentage of eligible votes
99.42%
0.58%
100.00%

At the Annual General Meeting held on 14 July 2016, the following votes were received from shareholders in
respect of the Remuneration Policy:

Votes cast in favour
Votes cast against
Total votes cast

Abstentions

Remuneration Policy (votes)
322,172,730
3,654,672
325,827,402

543,261

Percentage of eligible votes
98.88%
1.12%
100.00%

Approval
This report was approved by the Board on 14 May 2018 and signed on its behalf by

Ian Much
Chairman of the Remuneration Committee

BTG plc Annual Report and Accounts 2018GovernanceDirectors’ Remuneration Policy Report
This part of our Directors’ Remuneration Report sets out key elements of the Remuneration Policy, which was
approved by shareholders at the 2016 AGM. The full policy is available in the 2016/17 Annual Report on our
website. We will be seeking shareholders’ approval of a new/updated policy at next year’s AGM.

Performance targets
None, although overall individual
and corporate performance
is a factor considered when
reviewing salaries.

Details of the salary review in the
period are set out on page 86.

N/A

Element
Base salary

Benefits

Purpose and
link to strategy
Provides market
competitive fixed
remuneration that
takes account
of individual
responsibilities and
enables the Group
to recruit and
retain executives
who are capable
of delivering the
Group’s strategic
objectives.

Provide a
competitive
package of benefits
that assists
with attracting
and retaining
employees.

Maximum
Other than to
reflect a change
in the size and
complexity of the
role or Group or to
reflect experience
in the role, salary
increases will
normally be no
higher than the
average increases
taking place across
the Group (taking
into account,
where appropriate,
the relevant pay
groups).

The quantum of
benefits will be
in line with local
market practice.
The value of each
benefit is based
on the cost to the
Group, which may
vary from year
to year.

Operation
Set at a broadly mid-market
level, salaries are normally
reviewed annually with effect
from 1 April taking account
of individual responsibilities,
experience and performance.

These mainly comprise
medical benefits and
permanent health insurance,
but the components will have
regard to the market practice
in the location of any future
appointment. This could
include relocation allowances
or other appropriate benefits.

Any reasonable business-
related expenses (including
tax thereon) can be
reimbursed if determined to
be a taxable benefit.

Executive directors are
eligible for other benefits
that are introduced for the
wider workforce on broadly
similar terms.

OverviewGovernanceFinancialsStrategic ReportBTG plc Annual Report and Accounts 2018Remuneration
continued

Element
Annual bonus

Purpose and
link to strategy
A reward that
is linked to the
Group’s short-term
aims and value
creation objectives.

Deferral of part of
the bonus under
the Deferred
Share Bonus Plan
(DSBP) provides an
element of lock-in
and alignment with
shareholders.

Maximum
Maximum of
150% of salary for
executive directors.

Operation
All employees including
the executive directors
participate.

Paid as a mix of cash and
deferred shares under the
DSBP. From 2016, the first
75% of salary of any bonus
will be paid in cash, with
any bonus paid in excess of
75% of salary compulsorily
deferred into shares for
three years.

DSBP awards are structured
as conditional awards over
shares. From 2016, both the
cash and deferred portion of
bonuses and are subject to
clawback and malus.2
Dividend equivalents may be
paid on the shares awarded
as part of the DSBP.

Maximum award of
225% of salary

Long-term
incentives

Support the
strategy to
transition the
business from
an R&D-focused
specialty
pharmaceuticals
company to an
earnings-driven
international
specialist
healthcare
company.

Ensure
remuneration
includes a strong
emphasis on the
delivery of growth,
sustained financial
performance
and superior
shareholder returns.

Annual awards of
performance shares are
made under the PSP, vesting
of which is subject to the
achievement of targets
measured over a minimum
of three financial years.1
Starting with the awards
granted in 2016, a two-year
holding period applies upon
vesting of awards, during
which shares may not be
sold (other than to pay tax
and national insurance).

Awards of performance shares
are subject to clawback and
malus.2
Executives are entitled to
receive dividend equivalents
in respect of vested awards.

Performance targets
Performance targets for the
executive directors are set
annually by the Committee
and focus on Group financial
performance measures such as
revenue, trading profit, operating
cash flow (although the Committee
has discretion to select other
measures) and performance
against a number of corporate and
individual objectives intended to
stimulate future growth.

Financial objectives account for
the majority of the bonus.

Targets are set annually on
a sliding scale with 50% of
maximum bonus potential
normally payable for on-target
performance and up to 25% of
maximum bonus potential payable
for performance at threshold.

The Committee has discretion to
adjust the bonus pay-out if in its
opinion, the pay-out would not
otherwise appropriately reflect the
performance achieved. In addition,
the Committee must be satisfied
that a minimum level of financial
performance has been achieved
before any bonus is paid.

If, in exceptional circumstances,
it was decided to apply upward
discretion, it would first be
discussed with major shareholders
and the reasons fully disclosed in
the annual report on remuneration
for the relevant year.

Awards prior to 2016 are subject to
conditions which are described in
the annual report on remuneration
on pages 69 to 88.

Awards will be granted subject
to a combination of financial and
total shareholder return measures,
tested over a period of at least
three years.

The Committee may introduce or
reweight performance measures so
that they are directly aligned with
the Group’s strategic objectives for
each performance period.

No more than 25% of each
element vests at median/
threshold performance, rising to
full vesting at upper quartile/
stretch performance. Details of
the targets for these awards are
provided in the Annual Report on
remuneration.

The Committee has the discretion
in certain circumstances to grant
and/or settle an award in cash.
In practice, this will only be used
in exceptional circumstances for
executive directors.

BTG plc Annual Report and Accounts 2018GovernanceElement
Pension

Purpose and
link to strategy
Provides
competitive
retirement
benefits that
reward sustained
contribution.

All-employee
share plans

Encourages
employees to
acquire shares in
BTG, increasing
alignment with
shareholders.

Shareholding
guidelines

Provide alignment
between executives
and shareholders.

Performance targets
N/A

Maximum
Defined benefit
provision: 1/60ths
accrual up to cap
(reviewed annually),
normal retirement
age of 60.

Defined
contribution or cash
allowance: up to
25% of salary.

N/A

Participation limits
are those set by
the relevant tax
authorities from
time to time.

CEO: 250% of salary.

N/A

CFO: 200% of salary.

Operation
For longer serving
employees: participation in
contributory defined benefit
pension arrangements up
to a scheme specific cap or
HMRC defined limits.

For more recent hires
and provision above the
cap: defined contribution
pension provision and/or
cash allowances.

Executive directors can
participate in BTG’s save-as-
you-earn scheme, which is
open to all UK employees.

A US Internal Revenue Service
423 Plan with standard terms
is operated for US employees.

Executive directors are
required to build significant
shareholdings in the Group.3
Executive directors may
sell vesting shares to meet
tax and national insurance
liabilities. In addition,
provided they have achieved
and continue to meet the
applicable shareholding
guideline level, they will be
permitted to sell shares over
and above those required to
meet their tax liabilities and
national insurance liabilities
within 30-day periods after
either (i) the announcement
of the Group’s results and
completion of the related
investor road-show or (ii) the
date of subsequent vesting
of shares with respect to the
period to which those results
relate (in either case subject
to agreement with the
Chairman and any other legal
restrictions on share dealings)

1. Prior to 2013, awards consisted of a mix of market value share options granted under the ESOP and performance shares granted under the 2006
PSP. Awards granted under the 2006 PSP consist of a Core award and a Multiplier award and executive directors are able to roll over 0%, 50% or
100% of any Core award that would vest in return for a Multiplier award that could increase or decrease the value of the Core award, vesting
after five years from the date of grant, subject to performance conditions. The full structure of these awards is outlined in the policy approved
at the 2013 AGM.

2. All awards granted post 1 July 2011 under the DSBP, PSP and ESOP are subject to clawback and malus in the event of a material misstatement

of the financial results of the Group for the financial year to which an award relates being discovered, an error in the calculation of performance
for an award or individual misconduct resulting in dismissal. The same principle was adopted in 2015 with respect to the annual bonus.
3. Under the shareholding guidelines the executive directors are not permitted to hold their shares in hedging arrangements or as collateral

for loans without the express permission of the Board.

OverviewGovernanceFinancialsStrategic ReportBTG plc Annual Report and Accounts 2018Remuneration
continued

Recruitment and promotions
The remuneration package for a new director will be set in accordance with the terms of the Group’s approved
Remuneration Policy in force at the time of appointment but focusing on the objective of appointing the most
appropriate incumbent in the right geography.

The salary for a new executive director will be set to reflect their skills and experience, the Group’s target pay
positioning and the market rate for the role in the relevant location, subject to the overall goal of attracting the
right candidate. Where it is appropriate to do so, salaries may be set below the normal market rate, with phased
increases over the first few years as the executive gains experience in their new role.

Benefits and pensions will be in line with those offered to other executive directors, taking account of local market
practice with relocation expenses provided if necessary. Tax equalisation may also be considered if an executive is
adversely affected by taxation due to their employment with the Group. Legal fees and other costs incurred by the
individual may also be met by the Group.

The ongoing incentive opportunity offered to new recruits will be in line with that offered to existing directors.
Different measures and targets under the bonus plan or the PSP may be set initially taking account of the
responsibilities of the individual and the point in the financial year at which they join. A new employee may be
granted normal annual PSP awards in the first year of employment. In addition, the Committee may offer additional
cash and/or share-based elements to assist with recruitment (for example to buyout existing entitlements) when
it considers these to be in the best interests of the Group and its shareholders. Existing arrangements will be used
to the extent possible (subject to the limits set out in the policy), however, the Committee retains discretion to use
the flexibility provided by the Listing Rules to make such awards. Such awards/payments would take account of
remuneration relinquished when leaving the former employer and would reflect (as far as possible) the value,
nature and time horizons attached to that remuneration and the impact of any performance conditions. Awards
may be granted in cash on recruitment if the Group is in a prohibited period at the joining date. Shareholders will
be informed of any such awards/payments at the time of appointment.

For an internal executive appointment, any variable pay element awarded in respect of the prior role will be
allowed to pay out according to its terms, adjusted as relevant to take into account the timing of the appointment.
In addition, any other ongoing remuneration obligations existing prior to appointment may continue, provided that
they are put to shareholders for approval at the earliest opportunity.

For the appointment of a new Chairman or non-executive director, the fee arrangement would be set in accordance
with the approved Remuneration Policy in force at that time.

Legacy arrangements
For the avoidance of doubt, authority is given to the Group to honour any commitments entered into with current
or former directors (such as the payment of a pension or the unwind of legacy share schemes) that have been
disclosed to shareholders in this or any previous remuneration reports or subsequently agreed in line with the
approved policy in force at that time. Details of any payments to former directors will be set out in the annual
Remuneration Report as they arise.

External appointments
The Board believes that it may be beneficial to the Group for executives to hold non-executive directorships
outside the Group. Any such appointments are subject to approval by the Board and the director may retain any
fees received. Louise Makin received fees of £68,625 for being on the Board of Intertek Group during the year to
31 March 2018 (2017: £68,000) and £27,202 for being on the Board of Woodford Patient Capital Trust during the
year to 31 March 2017 (2017: £27,000). Duncan Kennedy does not currently hold any outside directorships, neither
did Rolf Soderstrom.

BTG plc Annual Report and Accounts 2018GovernanceService contracts and payments for loss of office
Executive directors have rolling service contracts, details of which are summarised in the table below:

Provision
Contract dates

Notice period

Termination payment

Remuneration entitlements

Detailed terms
Louise Makin – 19 October 2004

Duncan Kennedy – 14 November 2017

Twelve months from both the Group and from the executive

The Group may terminate the contracts of the executive directors with immediate effect by
making a payment in lieu of notice.

Other than as specifically provided for in the policy with respect to ‘good leavers’ (where for
example existing Multiplier awards elected for are retained) the directors’ contracts do not
provide for automatic entitlement to bonus or share-based payments.

The contracts of Louise Makin and Rolf Soderstrom (who retired from the Board on
31 December 2017) were drafted well before shareholders first approved our pay policy
and contain the provision that they are eligible for bonuses for any period of notice and
within a payment in lieu of notice but there is no automatic and guaranteed amount due.
The contracts do not provide for mitigation. The Committee recognises that these are unusual
features and not in line with current best practice, which has moved on since the directors
were appointed. Reflecting this evolution, Duncan Kennedy’s contract does not contain this
eligibility within the payment in lieu of notice provision and the Committee has determined
that neither will any future contracts.

Louise Makin’s contract contains the following remuneration related entitlements:
— salary, membership of Group pension scheme or contribution to a personal pension,

medical benefits, and permanent health insurance.

Duncan Kennedy’s contract contains the following remuneration related entitlements:
— salary, membership of the Group Defined Contribution Scheme or contribution to a
personal pension, medical benefits, life insurance and permanent health insurance.

The Group’s policy on new directors’ service contracts is that, in line with the best practice provisions of the Code,
they should be terminable by the Group on a maximum of one year’s notice and contracts should not provide for
predetermined compensation in the event of termination or provision for enhanced payments in the event of a
takeover of the Group. Provisions permitting the Group to make any termination payments by instalments, and
requiring directors to mitigate their loss in such circumstances, will be included in new contracts (as it was with
respect to Duncan Kennedy). The Remuneration Committee will exercise discretion in determining whether
termination payments should be paid by instalments, taking account of the reason for the departure of the
director and their prior performance. Other than in gross misconduct situations, the Group would expect to
honour the contractual entitlements of terminated directors.

Other than in certain ‘good leaver’ circumstances (including, but not limited to, redundancy, ill-health or retirement)
no bonus would be payable unless the individual remains employed and is not under notice at the payment date.
Any bonuses paid to a ‘good leaver’ would be based on an assessment of their individual and the Group’s
performance over the period, and pro-rated for the proportion of the bonus year worked.

With regards to long-term incentive awards, the PSP rules provide that other than in certain ‘good leaver’
circumstances, awards lapse on cessation of employment. Where an individual is a ‘good leaver’, the Remuneration
Committee’s policy for future PSP awards will normally be to permit awards to remain outstanding until the end
of the original performance period (although it will have discretion to allow awards to vest on cessation). At such
time, a pro-rata reduction will be made to take account of the proportion of the vesting period that lapsed prior
to termination of employment, although the Committee has discretion to partly or completely disapply pro-rating
and the performance conditions in certain circumstances. Multiplier awards granted under the PSP approved in
2013 would not be subject to pro-rating. The Remuneration Committee has discretion to deem an individual to
be a ‘good leaver’. In doing so, it will take account of the reason for their departure and the performance of
the individual.

Deferred bonus share awards will also normally lapse on cessation of employment, unless the executive director
is deemed to be a ‘good leaver’ by the Remuneration Committee, as referred to above. Unvested deferred bonus
share awards held by ‘good leavers’ will not be time pro-rated.

The Group can pay any statutory redundancy in addition to contractual entitlements and the Committee will have
authority to settle legal claims against the Group (e.g. for unfair dismissal, discrimination or Whistleblowing) that
arise on termination. The Committee may also authorise the provision of outplacement services and pay reasonable
legal expenses associated with the termination.

OverviewGovernanceFinancialsStrategic ReportBTG plc Annual Report and Accounts 2018Remuneration
continued

The non-executive directors do not have service contracts but have letters of appointment for an initial period
of three years, which may be renewed by mutual agreement, normally for a further three-year term. The terms of
appointment provide for a notice period in the event of early termination of six months for the Chairman and three
months for other non-executive directors, other than if they are not re-elected at an AGM.

Details of contracts and letters of appointment, for directors serving at the date of this report, are as set out below.

Non-executive
Garry Watts

Greg Barrett

Susan Foden

Graham Hetherington

Giles Kerr

Ian Much

James O’Shea

Anne Thorburn

Richard Wohanka

Date of first appointment
1 January 2012

27 November 2017

1 March 2015

1 August 2016

1 October 2007

1 August 2010

2 April 2009

23 January 2018

1 January 2013

Notice period (months)
6

Date of expiry of current contract
31 December 2020

26 November 2020

28 February 2021

31 July 2019

30 September 2018

31 July 2018

31 March 2019

22 January 2021

31 December 2018

Non-executive directors’ and Chairman’s fees
The table below summarises the Group’s policy in relation to the fees of non-executive directors.

Purpose and link to strategy
Takes account of recognised
practice and set at a level
that is sufficient to attract
and retain high-calibre non-
executives.

Performance
targets
N/A

Maximum
The
maximum
level of
fees is
set in the
Articles of
Association

Operation
Non-executive directors receive fees paid monthly in cash and
consist of an annual basic fee plus additional fees for additional
responsibilities such as a Committee Chairmanship and the role
of Senior Independent Director.

When reviewing fee levels, account is taken of market
movements in non-executive director fees, Board committee
responsibilities, ongoing time commitments and the general
economic environment.

Additional fees may be paid where there is a material increase
in the time commitment and responsibilities required of non-
executive directors.

Fee increases, if applicable, are normally effective from 1 April
each year.

Non-executives do not participate in any pension, bonus or
share incentive plans and do not receive any benefits (other
than limited benefits relating to travel, accommodation and
hospitality provided in relation to the performance of any
directors’ duties and any tax thereon).

The Chairman, in consultation with the executive directors, is responsible for proposing changes to the non-
executive directors’ fees. The Senior Independent Director, in consultation with the executive directors, is
responsible for proposing changes to the Chairman’s fees. In each case this follows advice on market fee levels
supplied by the Committee’s advisers. In proposing such fees, account is also taken of the time commitments
of the Group’s non-executive directors. The decision on fee changes is taken by the Board as a whole. Individual
non-executive directors do not take part in discussions on their remuneration.

BTG plc Annual Report and Accounts 2018GovernanceDirectors’ report
Other Statutory Information

The directors present their report together with the
financial statements and the independent auditor’s
report for the year ended 31 March 2018.

Principal activity
The principal activity of the Group is the business
of healthcare: focusing on Interventional Medicine
therapies for cancer, vascular disease and other
disorders, and Pharmaceuticals products to help
patients who are overexposed to certain medications
or toxins, and a licensing business.

Strategic Report
The Group is required by the Companies Act 2006
to set out a fair and balanced review of the business,
including the performance and development of the
Group during the year and at the year end, and a
description of the principal risks it faces. This
information is contained within the Strategic Report,
which can be found on pages 6 to 36 and incorporated
into this report by reference:

– The Chairman’s statement on page 4, the Chief

Executive’s review on pages 6 and 7 and the Market
overview on page 8 provide details of the Group’s
principal activities and strategy, its performance
during the year and its prospects for future
development opportunities.

– Details of the principal risks facing the Group are

set out on pages 64 to 67.

– Information relating to the environment,

employees and stakeholders, health and safety,
ethical considerations, charitable donations and
policies regarding its employees is set out on
pages 24 to 27.

This information is prepared solely to assist
shareholders to assess the Group’s overall strategy, the
risks inherent in it and the potential for the strategy to
succeed. The Directors’ report should not be relied on
by any other person or for any other purpose.

Forward-looking statements contained in this report
have been made by the directors in good faith based
on the information available to them up to the time
of their approval of this report and such statements
should be treated with caution due to the uncertainties,
including economic and business risk factors,
inherent in them.

Further information on the Group is available on
the website: www.btgplc.com. Notwithstanding the
references made in this Annual Report and Accounts
to the Group’s website, none of the information made
available on the website constitutes part of, or should
be deemed to be incorporated by reference into, this
Annual Report and Accounts.

Results and dividends
The results for the year and the financial position
at 31 March 2018 are shown in the Consolidated
Income Statement on page 108 and the Consolidated
Statement of Financial Position on page 110. The
directors do not recommend the payment of a dividend
for the year (16/17: nil). The results of the Group for
the year are explained further on pages 28 to 36.

Directors and their
powers and interests
The directors of the Group at the date of this report,
together with their biographical details and dates
of appointment, are shown on pages 40 and 41.

The Board confirms that each of the directors who
served during the year has been formally appraised
during the period. All the directors continue to
demonstrate commitment to the Group, the Board
and to their role. In accordance with the UK Corporate
Governance Code (the Code), all directors of the
Company will stand for election or re-election
annually (other than, in case of the 2018 AGM,
Giles Kerr who is stepping down from the Board
after ten years.

In accordance with the Company’s Articles of
Association, throughout the year the Company has
maintained insurance cover for its directors and
officers and those of its subsidiary companies under
a directors’ and officers’ liability policy as permitted
by sections 232 to 235 of the Companies Act 2006.
The Company has also, to the extent permitted by law,
entered into separate Deeds of Indemnity in favour of
each of its directors to provide them with appropriate
protection with respect to potential liabilities arising
from the discharge of their duties. Neither the
insurance policy nor the indemnities provide cover
where the relevant director or officer is found to have
acted fraudulently or intentionally breached the law.

OverviewGovernanceFinancialsStrategic ReportBTG plc Annual Report and Accounts 2018Directors’ report
Other statutory information continued

Information on directors’ remuneration, contracts,
options and their beneficial interests, including those
of their immediate families, in the shares of the
Company are shown in the Directors’ Remuneration
Report on pages 69 to 94. None of the directors had
an interest in any contract of significance to which the
Company or any of its subsidiaries was party during
the year.

Corporate governance
A report on corporate governance may be found on
pages 38 to 68.

Environmental matters
Our greenhouse gas emissions have been calculated as
carbon dioxide equivalents, these are disclosed in the
People and Practices section of the strategic report on
page 26.

Share capital and shareholders
As at 31 March 2018, the issued share capital of the
Company was £38,649,258, divided into 386,492,575
shares of 10p each. During the year, the share capital
increased by 1,365,050 shares, due to the exercise
and vesting of share awards by employees and former
employees under the Company’s employee share
schemes. The Company has only one class of shares
and there are no restrictions on voting rights or on
the holding or transfer of these securities.

Details of the movements in the Company’s share
capital are shown in Note 15 to the financial
statements on page 136. At 31 March 2018, the
Company had 8,147 shareholders (2017: 8,764).
Further details of shareholdings and Company
reporting dates may be found on page 164.

The BTG Employee Share Trust holds shares in the
Company which may be used for the benefit of
employees. The shares held by the Trust have the
same rights as those held by all other shareholders.

Details of outstanding share options and awards are
set out in Note 20 to the financial statements on
pages 141 to 145.

As at 9 May 2018, the Company had been notified of
the following interests held, directly or indirectly,
in 3% or more of the Group’s issued share capital.

Shareholding

% holding

Invesco Perpetual Asset
Management

Novo Holdings A/S

Woodford Investment
Management

Schroder Investment
Management

AXA Investment Managers

Black Creek Investment
Management Inc

73,047,572

44,173,492

40,154,845

25,321,591

19,792,436

12,982,837

18.90

11.43

10.39

6.55

5.12

3.36

Articles of Association
The Board may exercise all the powers of the
Company, subject to the provisions of relevant
statutes, the Company’s Articles of Association
(the Articles) and any directions given by a special
resolution of the shareholders.

The Articles are available on the Group’s website at
www.btgplc.com/responsibility/corporate-governance

Change of control
There are a number of agreements with third parties
with terms that take effect after, or terminate upon,
a change of control of the Group, such as commercial
contracts, bank facility agreements, guarantees,
property agreements and employee share plans.
None of these are considered to be significant in
terms of their likely impact on the business of the
Group as a whole. Furthermore, the directors are not
aware of any agreements between the Group and its
directors or employees that provide for compensation
for loss of office or employment following a takeover
of the Group.

Research and development
Research and development (R&D) is an important
part of the Group’s activities focusing on the areas
of Interventional Medicine and Pharmaceuticals. The
Group spent £165.5m (2016/7: £87.8m) on R&D during
the year. R&D in 2017/18 includes intangible asset
impairment charges of £68.7m.

BTG plc Annual Report and Accounts 2018GovernanceTreasury management
The Group’s policy on the use of financial instruments
and the management of financial risks is set out in
Note 21 to the accounts on pages 145 to 149.

Going concern
The Group’s business activities together with the
factors affecting its performance, position and future
development are set out within the Strategic Report
on pages 6 to 36.

The directors have reviewed the current and projected
financial position of the Group, making reasonable
assumptions about future performance and taking
into account the Group’s cash balances and available
financial facilities. On the basis of this review and,
after making due enquiries, the directors have a
reasonable expectation that the Group has adequate
resources to continue to operate for the next 12
months. For this reason, they continue to adopt the
going concern basis in preparing the financial
statements.

Viability Statement
In accordance with the Code, directors are also
required to provide a broader assessment of viability
over a longer period. This statement, assessing the
viability of the Group over the three-year period of
that assessment can be found on page 33 of the
Strategic Report.

Political donations
The Group did not make any political donations during
the financial year (2016/17: nil).

Respecting diversity
Our employees come from a variety of cultures,
experiences and backgrounds. They are valued for
their varied perspectives and judged solely by their
abilities, behaviour, performance and potential. As an
Equal Opportunity Employer, we consider employees
and applicants for employment without regard to race,
colour, religion, sex, national origin, or protected
status. And we will not discriminate on the basis
of disability.

Data on gender
Number of females who are:
Employees

Senior Managers

Leadership Team Members

Board Directors

2017/18
671 (51%)

2016/17
678 (48%)

75 (37%)

71 (34%)

4 (33%)

3 (27%)

4 (33%)

2 (22%)

2018 Annual General Meeting
The AGM of the Company will be held at 10.30 am
on 18 July 2018 at the offices of Stephenson Harwood
LLP, 1 Finsbury Circus, London EC2M 7SH. Matters to
be considered at the meeting include resolutions to
receive the Annual Report and Accounts, to appoint
the auditor and elect and re-elect the directors (other
than Giles Kerr).

The Notice convening the meeting is distributed
separately to shareholders at least 20 working days
before the meeting. It is also available on the Group’s
website: www.btgplc.com/investors/reports-and-
presentations. The letter accompanying the AGM
Notice includes full details of the resolutions.

Members of the Company unable to attend the
meeting may elect to vote electronically or using
the proxy form accompanying the Notice. In order
to vote electronically, members should log on to
www.signalshares.com, the website of BTG plc’s
registrars, Link Asset Services (formerly Capita Asset
Services), and follow the instructions on the screen.
CREST members may send their proxy votes to the
Company’s registrars electronically.

Disclosure of information
to the auditor
The directors who held office at the date of approval
of this Report confirm that, so far as they are each
aware, there is no relevant audit information of which
the Group’s auditor is unaware; and each director has
taken all the steps that they ought to have taken as
a director to make themselves aware of any relevant
audit information and to establish that the Group’s
auditor is aware of that information.

Auditor
Resolutions will be proposed at the forthcoming AGM
to appoint Deloitte LLP as auditor and to authorise the
directors to determine its remuneration.

By order of the Board

Dr Paul Mussenden
Company Secretary

14 May 2018

OverviewGovernanceFinancialsStrategic ReportBTG plc Annual Report and Accounts 2018Statement of Directors’
responsibilities
In respect of the Annual Report 2018
and the financial statements

The directors are responsible for preparing the Annual
Report 2018 and the Group and parent Company
financial statements in accordance with applicable
law and regulations.

Company law requires the directors to prepare Group
and parent Company financial statements for each
financial year. Under that law they are required to
prepare the Group financial statements in accordance
with International Financial Reporting Standards as
adopted by the European Union (IFRSs as adopted
by the EU) and applicable law and have elected to
prepare the parent company financial statements
on the same basis.

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 of
the Group and parent company and of their profit or
loss for that period. In preparing each of the Group and
parent Company financial statements, the directors are
required to:

– select suitable accounting policies and then apply

them consistently;

– make judgements and estimates that are

reasonable and reliable;

– state whether they have been prepared in

accordance with IFRSs as adopted by the EU;

– assess the Group and parent Company’s ability

to continue as a going concern, disclosing, as
applicable, matters related to going concern; and

– use the going concern basis of accounting unless

they either intend to liquidate the Group or parent
Company or to cease operations, or have no
realistic alternative but to do so.

The directors are responsible for keeping adequate
accounting records that are sufficient to show and
explain the parent company’s transactions and
disclose with reasonable accuracy at any time the
financial position of the parent Company and enable
them to ensure that its financial statements comply
with the Companies Act 2006. They are responsible
for such Internal Control as they determine necessary
to enable the preparation of financial statements that
are free from material misstatement, whether due
to fraud or error, and have general responsibility for
taking such steps as are reasonably open to them
to safeguard the assets of the Group and to prevent
and detect fraud and other irregularities.

Under applicable law and regulations, the directors
are also responsible for preparing a Strategic Report,
Directors’ Report, Directors’ Remuneration Report and
Corporate Governance Statement that complies with
that law and those regulations.

The directors are responsible for the maintenance and
integrity of the corporate and financial information
included on the Group’s website. Legislation in the
UK governing the preparation and dissemination of
financial statements may differ from legislation in
other jurisdictions.

Responsibility statement of the
directors in respect of the annual
financial report
We confirm that to the best of our knowledge:

– the financial statements, prepared in accordance
with the applicable set of accounting standards,
give a true and fair view of the assets, liabilities,
financial position and profit or loss of the Group
and the undertakings included in the consolidation
taken as a whole; and

– the strategic report includes a fair review of the

development and performance of the business and
the position of the issuer and the undertakings
included in the consolidation taken as a whole,
together with a description of the principal risks
and uncertainties that they face.

We consider the Annual Report and Accounts, taken
as a whole, is fair, balanced and understandable and
provides the information necessary for shareholders
to assess the Group’s position and performance,
business model and strategy.

The directors’ report comprising pages 95 to 97, and
including the sections of the Annual Report and
Accounts referred to in these pages, has been
approved by the Board and signed on its behalf by:

Dame Louise Makin
Chief Executive Officer

Duncan Kennedy
Chief Financial Officer

14 May 2018

BTG plc Annual Report and Accounts 2018GovernanceFinancials

Contents
100

Independent auditor’s report to
the members of BTG plc only
Consolidated income statement
Consolidated statement
of comprehensive loss/income
Consolidated statement
of financial position
Consolidated statement
of cash flows
Consolidated statement
of changes in equity
Notes to the consolidated
financial statements
Company financial statements
Statement of financial position
Statement of cash flows
Statement of changes in equity
Notes to the Company
financial statements
Five-year financial record
Shareholder information

108
109

110

111

112

113

154

155
156
157

161
164

OverviewGovernanceFinancialsStrategic ReportBTG plc Annual Report and Accounts 2018 Independent auditor’s report
to the members of BTG plc only

Basis for opinion
– We conducted our audit in accordance with

International Standards on Auditing (UK) (“ISAs
(UK)”) and applicable law. Our responsibilities
are described below. We believe that the audit
evidence we have obtained is a sufficient and
appropriate basis for our opinion. Our audit
opinion is consistent with our report to the
audit committee.

We have been appointed as auditor by the directors
since incorporation on 12 December 1991. The period
of total uninterrupted engagement is for the 26
financial years ended 31 March 2018. We have fulfilled
our ethical responsibilities under, and we remain
independent of the Group in accordance with, UK
ethical requirements including the FRC Ethical
Standard as applied to listed public interest entities.
No non-audit services prohibited by that standard
were provided.

Overview
Materiality:
group financial
statements as
a whole
Coverage

£5.5m (2017: £4.7m)
0.89% (2017: 0.82%) of Revenue

95%
(2017: 95%) of Revenue
vs 2017

Recoverability of other
intangible assets
Recognition of deferred tax assets
Litigation and contingent liabilities
Recoverability of parent company’s
investment in subsidiaries

Opinions and conclusions arising
from our audit
1. Our opinion is unmodified
We have audited the financial statements of BTG plc
(“the Group”) for the year ended 31 March 2018
which comprise the Consolidated income statement,
Consolidated statement of comprehensive loss/
income, Consolidated statement of financial position,
Consolidated statement of cash flows, Consolidated
statement of changes in equity, Company Statement of
financial position, Company Statement of cash flows,
Company Statement of changes in equity, and the
related notes, including the accounting policies in
note 2.

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 2018 and of
the Group’s profit for the year then ended;

– the Group financial statements have been properly
prepared in accordance with International Financial
Reporting Standards as adopted by the European
Union (IFRSs as adopted by the EU);

– the parent Company financial statements have

been properly prepared in accordance with IFRSs
as adopted by the EU and as applied in accordance
with the provisions of the Companies Act 2006; and

Risks of material
misstatement
Recurring risks

– the financial statements have been prepared in
accordance with the requirements of the
Companies Act 2006 and, as regards the Group
financial statements, Article 4 of the IAS
Regulation.

Event driven
Recurring risk

100

BTG plc Annual Report and Accounts 2018Financials2. Key audit matters: our assessment of risks of material misstatement
Key audit matters are those matters that, in our professional judgment, were of most significance in the audit of the
financial statements and include the most significant assessed risks of material misstatement (whether or not due
to fraud) identified by us, including those which had the greatest effect on: the overall audit strategy; the allocation
of resources in the audit; and directing the efforts of the engagement team. We summarise below the key audit
matters, in decreasing order of audit significance, in arriving at our audit opinion above, together with our key audit
procedures to address those matters and, as required for public interest entities, our results from those procedures.
These matters were addressed, and our results are based on procedures undertaken, in the context of, and solely
for the purpose of, our audit of the financial statements as a whole, and in forming our opinion thereon, and
consequently are incidental to that opinion, and we do not provide a separate opinion on these matters.

Recoverability of other
intangible assets
PneumRx® Coils:
£34.9 million
(2017: £208.6 million)

Varithena®: £16.4 million
(2017: £18.8 million)

Refer to page 58
(Audit Committee Report),
page 117 (accounting policy),
page 120 (critical accounting
judgements and sources
of estimation uncertainty)
and page 132 (financial
disclosures)

Our response
Our procedures included:

– Benchmarking assumptions: Used our own

valuation specialists to critically challenge the
appropriateness of the discount rates used by the
Group and benchmarked them to those used by
an external peer group.

– Critically challenged the assumed revenue

projections by reference to external market data,
where available, in terms of market size and
expectations of market share.

– Historical comparisons: Critically challenged the
assumed revenue projections by reference to
those achieved historically, in terms of market
size and expectations of market share.

– Our sector experience: Critically assessed the

other assumptions used by the Group (as noted
in ‘the risk’) using our own assessments, external
market data and a comparison to recent
performance where possible. We have specifically
challenged the directors with respect to the
probability of FDA approval of PneumRx® Coils;
the probability of success of ELEVATE trials and
the terminal decline rate of PneumRx® Coils for
the period post-patent expiry.

– In addition to this, we obtained additional

representation from the directors regarding the
key assumptions to further corroborate them due
to their highly judgemental nature.

– Sensitivity analysis: Performed breakeven
analysis on the assumptions noted above.

– Assessing transparency: Assessed whether the
group’s disclosures about the sensitivity of the
outcome of the impairment assessment to
changes in key assumptions reflected the risks
inherent in the valuation of the intangibles.

The risk
Forecast-based valuation
Past acquisitions have led to
the recognition of intangible
assets with a significant value
where recovery of that value
is dependent on the assets
achieving forecast
performance.

Due to the challenges in
expanding reimbursement
coverage for PneumRx®
Coils and Varithena® and
the risk in obtaining required
clinical outcomes and
regulatory approval for
PneumRx® Coils in the U.S.,
these assets remain relatively
more sensitive to impairment.

In the current year the pre-tax
impairment charge of £143.2
million against the carrying
value of the PneumRx® Coils
assets results in those assets
having nil headroom at the
year end.

There is a risk that the
carrying amount of these
assets should have been
impaired (Varithena®), or
further impaired (PneumRx®
Coils), if financial performance
or other events, such as
regulatory approvals are not
in line with expectation.

The Group’s estimated future
cash flows for each asset are
used to support their
recoverability. The cash flow
forecasts rely on a number of
critical assumptions and
estimates including likelihood
of success of late stage
development programs;
regulatory approval; discount
rates; future market share;
associated pricing and
terminal growth rates.

101

OverviewGovernanceFinancialsStrategic ReportBTG plc Annual Report and Accounts 2018Independent auditor’s report
to the members of BTG plc continued

2. Key audit matters: our assessment of risks of material misstatement continued

The risk
With respect to the
PneumRx® Coils impairment
the range of acceptable
assumptions are such that the
impairment charge could vary
by an amount broader than
our materiality.

Our response
Our results

– We found the resulting estimate of the

recoverable amount of PneumRx® Coils and
Varithena® intangible assets to be acceptable
(2017 result: acceptable).

Recognition of deferred tax
assets
Tax losses asset within
Deferred tax asset caption:
£1.3 million (2017:
£2.8 million)

Tax losses asset within
Deferred tax liability
caption: £28.4 million
(2017: £42.5 million)

Gross tax losses not
recognised: £84.2 million
(2017: £96.8 million)

Refer to page 120
(accounting policy),
page 122 (critical accounting
judgements and sources
of estimation uncertainty)
and page 128 (financial
disclosures)

The risk
Forecast-based valuation:
The Group has significant tax
losses which have been
acquired as part of business
combinations or from past
business performance.

There is inherent uncertainty
involved in forecasting future
taxable profits, which
determines the extent to
which deferred tax assets are
recognised. The risk exists
that future taxable profits
will not be sufficient to
recover all or part of these
deferred tax assets.

Subjective estimate
There is judgment involved
in determining the extent
to which the tax legislation
permits the losses to be used
to absorb those future profits.

Our response
Our procedures included:

– Our tax expertise: With the assistance of our tax

specialists, in relation to previous acquisitions,
we considered previous assessments and
conclusions for the continued appropriateness of
deferred tax asset recognition. In relation to the
Roxwood acquisition during the period, we
critically assessed the Group’s analysis of the
historic losses taking into consideration Section
382 of the IRC.

– Our sector experience: Evaluated the

appropriateness of the Group’s key assumptions
and estimates, with the assistance of our tax
specialists, in particular the likelihood of
generating sufficient future taxable profits to
support the recognition of deferred tax assets,
with reference to recent product launches,
performance trends and acquisitions.

– Assessing transparency: Assessed the adequacy

of the group’s disclosures about the sensitivity of
the recognition of deferred tax assets to changes
in key assumptions reflected in the inherent risk.

Our results

– As a result of our work we found the level of

deferred tax assets recognised to be acceptable
(2017 result: acceptable).

102

BTG plc Annual Report and Accounts 2018FinancialsLitigation and contingent
liabilities
£53.9 million (2017: £nil)

Refer to page 58 (Audit
Committee Report),
page 118 (accounting
policy) and page 138
(financial disclosures)

Recoverability of parent
company’s investment in
subsidiaries
£779.7 million (2017:
£775.1 million)

Refer to page 158
(accounting policy) and
page 159 (financial
disclosures)

The risk
Omitted exposures
In the normal course of
business, potential exposures
may arise from litigation
relating to the Group’s
Intellectual Property;
contingent consideration
arrangements or compliance
with laws and regulations.

Dispute outcome
The amounts involved in
relation to the damages levied
in the Wellstat dispute are
significant and the Group are
appealing the calculation of
the damages. The application
of the accounting standards to
determine the amount to
provide is inherently
subjective.

Our response
Our procedures included:

– Enquiry of legal counsel: Having enquired of

directors and in-house counsel on all significant
legal cases, we made written enquiries of the
Group’s legal advisers to cross check the result of
those enquiries and also to enquire whether they
were aware of any matters relating to other
litigation and claims.

– Test of detail: Compared a selection of legal

expenses incurred during the year against our list
of external counsel for indications of previously
unidentified litigation and claims.

– Independent reperformance: Recalculated the
Wellstat provision based on the damages and
accrued interest pursuant to the final court order.

– Assessing transparency: Assessing whether the
group’s disclosures detailing significant legal
proceedings adequately disclose the potential
liabilities of the group.

Our results

– The results of our testing were satisfactory
and we considered the liability recognised
to be acceptable.

The risk
Low risk, high value
The carrying amount of the
parent company’s investments
in subsidiaries represents
90.7% (2017: 91.7%) of the
company’s total assets, the
majority of which relates to
BTG International (Holdings)
Limited. Their recoverability is
not at a high risk of significant
misstatement or subject to
significant judgement.
However, due to their
materiality in the context of
the parent company financial
statements, this is considered
to be the area that had the
greatest effect on our overall
parent company audit.

Our response
Our procedures included:

– Tests of detail: Comparing the carrying amount
of 100% of investments with the relevant
subsidiaries’ draft balance sheet to identify
whether their net assets, being an approximation
of their minimum recoverable amount, were in
excess of their carrying amount and assessing
whether those subsidiaries have historically been
profit-making.

– Our sector experience: For the investments

where the carrying amount exceeded the net
asset value, comparing the carrying amount of
the investment with the expected value of the
business based on fair value less costs to sell.

Our results

– We found the Company’s assessment of the

recoverability of the investment in subsidiaries
to be acceptable (2017 result: acceptable).

103

OverviewGovernanceFinancialsStrategic ReportBTG plc Annual Report and Accounts 2018 Independent auditor’s report
to the members of BTG plc only continued

3. Our application of materiality and an
overview of the scope of our audit
Materiality for the Group financial statements as a
whole was set at £5.5 million (2017: £4.7 million),
determined with reference to a benchmark of Group
revenue, of which it represents 0.89% (2017: 0.82%).
We consider Group revenue to be the most appropriate
benchmark as revenue remains the key performance
indicator of the Group that is monitored by stakeholders.

held with the component auditors including those that
were not physically visited by the group team (Australia
and USA). At these visits and meetings, the findings
reported to the group team were discussed in more
detail, and any further work required by the group team
was then performed by the component auditor.

Revenue
£620.5m (2017: £570.5m)

Group materiality
£5.5m (2017: £4.7m)

Materiality for the parent company financial statements
as a whole was set at £5 million (2017: £4.7 million),
determined with reference to a benchmark of company
total assets, of which it represents 0.58% (2017: 0.56%).

We reported to the Audit Committee any corrected
or uncorrected misstatements identified exceeding
£0.28 million (2017: £0.23 million), in addition to other
identified misstatements that warranted reporting on
qualitative grounds.

Of the Group’s 28 (2017: 28) reporting components,
we subjected 10 (2017: 9) to audits for Group reporting
purposes and 0 (2017: 1) to specified risk-focused
audit procedures on key working capital captions.
In aggregate, the components within the scope of
our work accounted for the following percentages
of the group’s results: 95% (2017: 95%) of total Group
revenue; 86% (2017: 90%) of the total profits and
losses that made up Group loss before taxation; and
90% (2017: 96%) of the Group’s total assets. For the
residual 18 components, we performed analysis at an
aggregated group level to re-examine our assessment
that there were no significant risks of material
misstatement within these.

The group team instructed component auditors as to
the significant areas to be covered and the information
to be reported back. The group team approved the
component materialities, which ranged from
£0.2 million to £3.2 million (2017: £0.1 million to
£3.2 million), having regard to the mix of size and risk
profile of the Group across the components. Of the 10
components noted above, two are based in the USA,
one in Australia and five within sites in the UK
(England and Wales), these were all audited by KPMG
component teams. The work on the remaining two
components, including the audit of the parent
company, was performed by the group team.

The group team visited one (2017: three) component
locations in England and Wales (2017: and the USA).
Video or telephone conference meetings were also

104

1 Revenue
2 Group materiality

£5.5m
Whole ﬁnancial
statements materiality
(2017: £4.7m)

£3.2m
Range of materiality
at 10 components
(£0.1m-£3.2m)
(2017: £0.1m to £3.2m)

£0.28m
Misstatements reported
to the audit committee
(2017: £0.23m)

Group
Revenue

Group profit
before tax

86%

(2017: 90%)

95%

(2017: 95%)

Group
total assets

90%

(2017: 96%)

Full scope for group audit purposes 2018
Full scope for group audit purposes 2017
Specified risk-focused audit procedures 2017
Residual components

BTG plc Annual Report and Accounts 2018Financials

4. We have nothing to report on going concern
We are required to report to you if:

– we have anything material to add or draw attention

to in relation to the directors’ statement in note 1
to the financial statements on the use of the going
concern basis of accounting with no material
uncertainties that may cast significant doubt over
the Group and Company’s use of that basis for a
period of at least twelve months from the date of
approval of the financial statements; or

– the related statement under the Listing Rules set
out on page 97 is materially inconsistent with our
audit knowledge.

We have nothing to report in these respects.

5. We have nothing to report on the other
information in the Annual Report
The directors are responsible for the other information
presented in the Annual Report together with the
financial statements. Our opinion on the financial
statements does not cover the other information and,
accordingly, we do not express an audit opinion or,
except as explicitly stated below, any form of
assurance conclusion thereon.

Our responsibility is to read the other information and,
in doing so, consider whether, based on our financial
statements audit work, the information therein is
materially misstated or inconsistent with the financial
statements or our audit knowledge. Based solely on
that work we have not identified material
misstatements in the other information.

Strategic report and directors’ report
Based solely on our work on the other information:

– we have not identified material misstatements in
the strategic report and the directors’ report;

– in our opinion the information given in those

reports for the financial year is consistent with the
financial statements; and

– in our opinion those reports have been prepared in

accordance with the Companies Act 2006.

Directors’ remuneration report
In our opinion the part of the Directors’ Remuneration
Report to be audited has been properly prepared in
accordance with the Companies Act 2006.

Disclosures of principal risks and longer-term
viability
Based on the knowledge we acquired during our
financial statements audit, we have nothing material
to add or draw attention to in relation to:

– the directors’ confirmation within the statement
of viability on page 33 that they have carried out
a robust assessment of the principal risks facing
the Group, including those that would threaten
its business model, future performance, solvency
and liquidity;

– the Principal Risks disclosures describing these

risks and explaining how they are being managed
and mitigated; and

– the directors’ explanation in the statement of

viability of how they have assessed the prospects of
the Group, over what period they have done so and
why they considered that period to be appropriate,
and their statement as to whether they have a
reasonable expectation that the Group will be able
to continue in operation and meet its liabilities as
they fall due over the period of their assessment,
including any related disclosures drawing attention
to any necessary qualifications or assumptions.

Under the Listing Rules we are required to review the
statement of viability. We have nothing to report in
this respect.

Corporate governance disclosures
We are required to report to you if:

– we have identified material inconsistencies between
the knowledge we acquired during our financial
statements audit and the directors’ statement that
they consider that the annual report and financial
statements taken as a whole is fair, balanced and
understandable and provides the information necessary
for shareholders to assess the Group’s position and
performance, business model and strategy; or

– the section of the annual report describing
the work of the Audit Committee does not
appropriately address matters communicated
by us to the Audit Committee.

We are required to report to you if the Corporate
Governance Statement does not properly disclose
a departure from the eleven provisions of the UK
Corporate Governance Code specified by the Listing
Rules for our review.

We have nothing to report in these respects.

105

OverviewGovernanceFinancialsStrategic ReportBTG plc Annual Report and Accounts 2018Independent auditor’s report
to the members of BTG plc only continued

6. We have nothing to report on the other
matters on which we are required to report by
exception
Under the Companies Act 2006, we are required 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 and the
part of the Directors’ Remuneration Report to be
audited 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.

We have nothing to report in these respects.

7. Respective responsibilities
Directors’ responsibilities
As explained more fully in their statement set out on
page 98, the directors are responsible for: the
preparation of the financial statements including
being satisfied that they give a true and fair view; such
internal control as they determine is necessary to
enable the preparation of financial statements that are
free from material misstatement, whether due to fraud
or error; assessing the Group and 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
they either intend to liquidate the Group or the parent
Company or to cease operations, or have no realistic
alternative but to do so.

Auditor’s responsibilities
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 other irregularities (see below), or error, and to issue
our opinion in an auditor’s report. Reasonable
assurance is a high level of assurance, but does not
guarantee that an audit conducted in accordance with
ISAs (UK) will always detect a material misstatement
when it exists. Misstatements can arise from fraud,
other irregularities or error and are considered
material if, individually or in aggregate, they could
reasonably be expected to influence the economic

106

decisions of users taken on the basis of the financial
statements.

A fuller description of our responsibilities
is provided on the FRC’s website at
www.frc.org.uk/auditorsresponsibilities.

Irregularities – ability to detect
We identified areas of laws and regulations that could
reasonably be expected to have a material effect on
the financial statements from our sector experience,
through discussion with the directors and other
management (as required by auditing standards), and
from inspection of the group’s regulatory and legal
correspondence.

We had regard to laws and regulations in areas that
directly affect the financial statements including
financial reporting (including related company
legislation) and taxation legislation. We considered the
extent of compliance with those laws and regulations
as part of our procedures on the related financial
statement items.

In addition we considered the impact of laws and
regulations in the specific areas of health and safety,
anti-bribery and employment law recognising the
financial nature of the group’s activities. With the
exception of any known or possible non-compliance,
and as required by auditing standards, our work in
respect of these was limited to enquiry of the directors
and other management and inspection of regulatory
and legal correspondence. We considered the effect of
any known or possible non-compliance in these areas
as part of our procedures on the related annual
accounts items.

We communicated identified laws and regulations
throughout our team and remained alert to any
indications of non-compliance throughout the audit.
This included communication from the group to
component audit teams of relevant laws and
regulations identified at group level, with a request
to report on any indications of potential existence of
non-compliance with relevant laws and regulations
(irregularities) in these areas, or other areas directly
identified by the component team.

As with any audit, there remained a higher risk
of non-detection of non-compliance with relevant
laws and regulations (irregularities), as these may
involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal controls.

BTG plc Annual Report and Accounts 2018Financials 8. The purpose of our audit work and to whom
we owe our responsibilities
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.

Richard Broadbelt
(Senior Statutory Auditor)
for and on behalf of KPMG LLP, Statutory Auditor

Chartered Accountants
15 Canada Square
London E14 5GL
14 May 2018

107

OverviewGovernanceFinancialsStrategic ReportBTG plc Annual Report and Accounts 2018Consolidated
income statement

Revenue
Cost of sales
Gross profit
Selling, general and administrative expenses1
Research and development1
Other operating (expense)/income
Amortisation of acquired intangible assets
Acquisition and reorganisation costs
Operating (loss)/profit
Financial income
Financial expense
(Loss)/profit before tax
Tax credit
Profit for the year
Attributable to non-controlling interests
Attributable to owners of the parent
Profit for the year

Basic earnings per share
Diluted earnings per share

Year ended
31 March
2018
£m
620.5
(185.9)
434.6
(325.5)
(165.5)
(1.3)
(43.8)
(1.3)
(102.8)
41.5
(9.3)
(70.6)
83.3
12.7
(2.3)
15.0
12.7

Year ended
31 March
2017
£m
570.5
(179.9)
390.6
(206.6)
(87.8)
4.4
(42.0)
(1.1)
57.5
3.3
(29.2)
31.6
2.0
33.6
–
33.6
33.6

3.9p
3.9p

8.7p
8.6p

Note
4

5
7
7

9
9

1. Selling, general and administrative expenses includes intangible asset impairment charges of £82.4m (2017: £0.5m), and Research and

development includes intangible asset impairment charges of £68.7m (2017: £nil).

All activities arose from continuing operations.

108

BTG plc Annual Report and Accounts 2018FinancialsConsolidated statement
of comprehensive loss/income

Profit for the year
Other comprehensive (loss)/income
Items that may be reclassified subsequently to profit or loss
Foreign exchange translation differences
Items that will not be reclassified subsequently to profit or loss
Actuarial gain/(loss) on defined benefit pension scheme
Deferred tax (charge)/credit on defined benefit pension scheme asset
Other comprehensive (loss)/income for the year
Total comprehensive (loss)/income for the year
Attributable to non-controlling interests
Attributable to owners of the parent
Total comprehensive (loss)/income for the year

The notes on pages 113 to 153 form part of these financial statements.

Note

Year ended
31 March
2018
£m
12.7

Year ended
31 March
2017
£m
33.6

(89.9)

1.9
(0.4)
(88.4)
(75.7)
(2.3)
(73.4)
(75.7)

91.7

(5.2)
4.1
90.6
124.2
–
124.2
124.2

109

OverviewGovernanceFinancialsStrategic ReportBTG plc Annual Report and Accounts 2018Consolidated statement
of financial position

ASSETS
Non-current assets
Goodwill
Intangible assets
Property, plant and equipment
Deferred tax assets
Employee benefits
Other non-current assets

Current assets
Inventories
Trade and other receivables
Other current assets
Cash and cash equivalents

Total assets

EQUITY
Share capital
Share premium
Merger reserve
Other reserves
Retained earnings
Attributable to owners of the parent
Attributable to non-controlling interests
Total equity

LIABILITIES
Non-current liabilities
Trade and other payables
Deferred tax liabilities
Corporation tax payable

Current liabilities
Trade and other payables
Provisions
Derivative financial instruments
Corporation tax payable

Total liabilities
Total equity and liabilities

31 March
2018
£m

31 March
2017
£m

Note

10
11
12
8
19

13
14

16
8
8

16
18
17
8

223.1
463.7
40.7
3.6
21.9
1.7
754.7

61.0
134.0
3.0
210.0
408.0
1,162.7

38.6
437.7
317.8
29.9
90.7
914.7
(1.9)
912.8

5.1
49.7
5.0
59.8

127.9
54.8
0.6
6.8
190.1
249.9
1,162.7

225.6
678.9
40.1
5.3
17.2
1.7
968.8

58.4
125.7
2.7
155.5
342.3
1,311.1

38.5
435.4
317.8
119.8
68.4
979.9
–
979.9

8.5
157.2
–
165.7

152.0
0.5
7.9
5.1
165.5
331.2
1,311.1

The notes on pages 113 to 153 form part of these financial statements.

The financial statements were approved by the Board on 14 May 2018 and were signed on its behalf by:

Dame Louise Makin
Chief Executive Officer Chief Financial Officer

Duncan Kennedy

Registered No: 2670500

110

BTG plc Annual Report and Accounts 2018FinancialsConsolidated statement
of cash flows

Profit after tax for the year
Tax credit
Financial income
Financial expense
Operating (loss)/profit

Adjustments for:
Amortisation and impairment of intangible assets
Depreciation and impairment of property, plant and equipment
Share-based payments
Pension scheme funding
Other non-cash items
Cash from operations before movements in working capital

Increase in inventories
Increase in trade and other receivables
(Decrease)/increase in trade and other payables
Increase in provisions
Cash generated from operations

Settlement of foreign exchange forward contracts
Corporation tax paid
Net cash inflow from operating activities

Cash flows from investing activities
Purchases of intangible assets
Purchases of property, plant and equipment
Acquisition of businesses net of cash acquired
Other investing activities
Net cash outflow from investing activities

Cash flows from financing activities
Repayment of debt acquired on business combination
Proceeds of share issues
Other financing activities
Net cash outflow from financing activities

Increase in cash and cash equivalents
Cash and cash equivalents at start of year
Effect of exchange rate fluctuations on cash held
Cash and cash equivalents at end of year

The notes on pages 113 to 153 form part of these financial statements.

Note

8
7
7

11
12

11
12
25

Year ended
31 March
2018
£m
12.7
(83.3)
(41.5)
9.3
(102.8)

Year ended
31 March
2017
£m
33.6
(2.0)
(3.3)
29.2
57.5

198.4
9.0
6.5
(2.8)
0.4
108.7

(2.6)
(8.3)
(15.2)
54.4
137.0

(1.3)
(15.0)
120.7

(1.0)
(10.4)
(45.5)
0.5
(56.4)

–
2.4
(3.4)
(1.0)

63.3
155.5
(8.8)
210.0

46.7
6.6
8.5
(2.9)
0.9
117.3

(9.3)
(8.5)
2.1
0.1
101.7

(17.1)
(10.4)
74.2

(0.6)
(8.9)
(36.2)
0.4
(45.3)

(18.9)
0.8
(1.6)
(19.7)

9.2
140.4
5.9
155.5

111

OverviewGovernanceFinancialsStrategic ReportBTG plc Annual Report and Accounts 2018 Consolidated statement
of changes in equity

Total
equity
£m
847.7

33.6
91.7

(5.2)

4.1
124.2

(1.3)
8.5
979.9

Total
equity
£m
979.9

12.7

(89.9)

1.9

(0.4)

Share
capital
£m
38.3

Share
premium
£m
434.8

Merger
reserve1
£m
317.8

Other
reserves
£m
28.1

Retained
earnings
£m
28.7

At 1 April 2016

Profit for the year
Foreign exchange translation differences
Remeasurements of the net defined benefit
pension scheme asset
Deferred tax on defined benefit pension
scheme asset
Total comprehensive income for the year

Transactions with owners:
Issue of BTG plc ordinary shares
Movement in shares held by the Employee Share
Ownership Trust
Share-based payments
At 31 March 2017

–
–

–

–
–

0.2

–
–
38.5

–
–

–

–
–

0.6

–
–
435.4

Share
capital
£m
38.5

Share
premium
£m
435.4

Merger
reserve1
£m
317.8

Other
reserves
£m
119.8

–
91.7

–

–
91.7

33.6
–

(5.2)

4.1
32.5

–
–

–

–
–

–

–
–
317.8

–
–
119.8

(1.3)
8.5
68.4

Retained
earnings
£m
68.4

Attributable
to owners
of the parent
£m
979.9

Attributable
to non-
controlling
interests
£m
–

–

0.8

At 1 April 2017

Profit/(loss) for the year
Foreign exchange
translation differences
Remeasurements of
the net defined benefit
pension scheme asset
Deferred tax on defined
benefit pension scheme
asset
Total comprehensive
(loss)/income for
the year

Transactions with
owners:
Issue of BTG plc ordinary
shares
Equity contributions by
non-controlling interests
Movement in shares
held by the Employee
Share Ownership Trust
Share-based payments
At 31 March 2018

–

0.1

–

–
–
38.6

–

2.3

–

–
–
437.7

–

–
–
317.8

–

15.0

(2.3)

(89.9)

–

(89.9)

–

1.9

(0.4)

–

(89.9)

16.5

(73.4)

(2.3)

(75.7)

–

–
–
29.9

–

(0.7)
6.5
90.7

2.4

–

(0.7)
6.5
914.7

–

0.4

–
–
(1.9)

2.4

0.4

(0.7)
6.5
912.8

1. For further details on the merger reserve see note 2(b).

The notes on pages 113 to 153 form part of these financial statements.

112

BTG plc Annual Report and Accounts 2018FinancialsNotes to the consolidated
financial statements

1. General information
BTG plc (the ‘Company’) is a company incorporated
and domiciled in the United Kingdom and listed on
the London Stock Exchange. The consolidated financial
statements of the Company for the year ended
31 March 2018 comprise the results of the Company
and its subsidiary undertakings (together referred to
as the ‘Group’).

The financial statements were approved for issue
by the Board on 14 May 2018.

The financial statements have been prepared in
accordance with the Group’s accounting policies
as approved by the Board and described below.

Accounting standards adopted in the year
No standards and interpretations issued by the
EU adopted in the year had a significant impact
on the Group.

Accounting standards issued but not effective
as at 31 March 2018
IFRS 15, ‘Revenue from contracts with customers’,
was issued by the IASB in May 2014 and has been
implemented by the Group from 1 April 2018. IFRS 15
establishes a comprehensive framework for determining
whether, how much and when revenue is recognised,
and also contains new requirements related to
presentation and disclosures. The core principle in
that framework is that revenue should be recognised
dependent on the transfer of promised goods or
services to the customer for an amount that reflects the
consideration which should be received in exchange for
those goods or services. The objective of the standard is
to provide a five-step approach to revenue recognition
that includes identifying contracts with customers,
identifying performance obligations, determining
transaction prices, allocating transaction prices to
performance obligations, and recognising revenue
when or as performance obligations are satisfied.

The new standard replaces IAS 18 Revenues and
related interpretations. The new standard is not
expected to have a material impact on the amount
or timing of recognition of reported revenue. In its
financial statements for the year ending 31 March 2019,
the Group will adopt IFRS 15 applying the retrospective
approach, with a cumulative adjustment to decrease
equity at 1 April 2018, the amount of which will be
immaterial. As permitted by IFRS 15, prior year results
will not be restated under the retrospective approach.

IFRS 9 ‘Financial instruments’ was issued in its final
form in July 2014 and has been implemented by the
Group from 1 April 2018. The standard replaces the
majority of IAS 39 and covers the classification,
measurement and de-recognition of financial assets
and financial liabilities, introduces a new impairment
model for financial assets based on expected losses
rather than incurred losses. The new standard is not
expected to have a material impact on reported
results. In its financial statements for the year
ending 31 March 2019, the Group will adopt IFRS 9
retrospectively, but with certain permitted exceptions.
Accordingly, prior year results will not be restated, but
there will be an immaterial cumulative adjustment to
equity at 1 April 2018.

IFRS 16 ‘Leases’ is effective for accounting periods
beginning on or after 1 January 2019 and will replace
IAS 17 ‘Leases’. It will eliminate the classification of
leases as either operating leases or finance leases and,
instead, introduce a single lessee accounting model.
The standard was endorsed by the EU on 31 October
2017. The adoption of IFRS 16 will result in the Group
recognising lease liabilities, and corresponding ‘right
to use’ assets, for agreements that are currently
classified as operating leases. The Group is currently
assessing the full impact of IFRS 16 on the Group’s
consolidated financial statements. See Note 22 for
further details on operating leases currently held.

IFRIC 23 ‘Uncertainty over income tax treatments’ was
issued in June 2017 and will be implemented by the
Group from 1 April 2019. The Interpretation clarifies
that if it is considered probable that a tax authority
will accept an uncertain tax treatment, the tax charge
should be calculated on that basis. If it is not
considered probable, the effect of the uncertainty
should be estimated and reflected in the tax charge.
In assessing the uncertainty, it is assumed that the tax
authority will have full knowledge of all information
related to the matter. The Group is currently assessing
the impact of the new Interpretation on the Group’s
consolidated financial statements.

Going concern basis
After making enquiries, the directors have a
reasonable expectation that the Company and the
Group have adequate resources to continue in
operational existence for the next 12 months.
Accordingly, they continue to adopt the going concern
basis in preparing the Annual Report and Accounts.

113

OverviewGovernanceFinancialsStrategic ReportBTG plc Annual Report and Accounts 2018Notes to the consolidated
financial statements
continued

1. General information continued
Going concern basis continued
This conclusion has been reached having considered
the effect of liquidity risk on the Group’s ability to
operate effectively. Currently, liquidity risk is not
considered a significant business risk to the Group
given its level of net cash and cash equivalents,
together with its cash flow projections. The Group
does not currently require significant levels of debt
financing to operate its business. Further details of the
Group’s policies and objectives around liquidity risk are
given in Note 21 and are discussed in the Strategic
Report on pages 6 to 36. The key liquidity risks faced
by the Group are considered to be the failure of banks
where funds are deposited and the failure of key
licensees, distribution partners, wholesalers or
insurers.

In addition to the liquidity risks considered above, the
directors have also considered the following factors
when reaching the conclusion to continue to adopt the
going concern basis:

– A signficiant proportion of the Group’s sales are

from products which are life-saving in nature,
providing some protection against an uncertain
economic outlook;

– The Group’s principal licensees are global industry

leaders in their respective fields; and

– On 7 November 2017, the Group refinanced its

multi-currency revolving credit facility (‘RCF’) which
was otherwise due to expire in November 2018.
Following the refinancing, BTG has a £150m
multi-currency RCF, with an option to increase the
RCF by a further £150m. The RCF has a three-year
term which expires in November 2020, although
the Group has the option to extend the term of the
RCF for up to an additional two years. The RCF
currently remains undrawn.

Seasonality of the business
Revenues from the Group’s marketed products are
dependent on both the timing of shipments of product
to the Group’s distributors and the underlying demand
for the products. CroFab®, in particular, demonstrates
seasonality since the main snakebite season in the US,
when the product is in highest demand, runs from
March to October.

2. Significant accounting policies
The principal accounting policies adopted in the
preparation of these financial statements are set out
below. These policies have been consistently applied
to all years presented unless otherwise stated.

(a) Basis of accounting and preparation of
financial statements
The Group financial statements have been prepared
and approved by the directors in accordance with
International Financial Reporting Standards as
adopted by the EU (‘Adopted IFRSs’).

The Group’s consolidated financial statements are
presented in Sterling, all values are rounded to the
nearest £0.1m except where otherwise indicated, and
these financial statements have been prepared on the
historical cost basis modified to include revaluation
to fair value of certain financial instruments and the
recognition of assets acquired and liabilities and
contingent liabilities assumed through business
combinations at their fair value.

The preparation of the financial statements in
conformity with generally accepted accounting
principles requires management to make estimates
and assumptions that affect the reported amounts
of assets and liabilities at the date of the financial
statements and the reported amounts of revenues and
expenses during the reporting period. Actual results
could differ from those estimates. Judgements made
by the directors in the application of these accounting
policies that have a significant effect on the financial
statements and estimates with a significant risk of
material adjustment in future periods are discussed
in Note 3 ‘Critical accounting judgements and key
sources of estimation uncertainty’.

(b) Basis of consolidation
Subsidiary undertakings
Subsidiary undertakings 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 subsidiary undertakings
are included in the consolidated financial statements
from the date that control commences until the date
that control ceases.

114

BTG plc Annual Report and Accounts 2018FinancialsAcquisition accounting
The purchase method is used to account for the
acquisition of businesses by the Group. The cost of
an acquisition is measured as the fair value of the
assets given, equity instruments issued and liabilities
incurred or assumed at the date of exchange.
Identifiable assets acquired and liabilities and
contingent liabilities assumed are measured initially
at their fair values on the date of acquisition,
irrespective of the extent of any non-controlling
interest. Where the consideration transferred, together
with the non-controlling interest exceeds the fair
value of the net assets, liabilities and contingent
liabilities acquired, the excess is recorded as goodwill.

Where necessary, adjustments are made to the
financial statements of subsidiaries to bring
accounting policies into line with the Group’s
accounting policies.

Merger reserve
A merger reserve is used where more than 90%
of the shares in a subsidiary are acquired and the
consideration includes the issue of new shares by
the Company, thereby attracting merger relief under
s612 and s613 of the Companies Act 2006.

Translation reserve
The translation reserve comprises all foreign exchange
differences arising from the translation of the financial
statements of foreign operations into the Group’s
presentational currency.

Transactions eliminated on consolidation
Intra-group balances and any unrealised gains
and losses or income and expenses arising from
intra-group transactions, are eliminated in preparing
the consolidated financial statements. Unrealised
losses are eliminated in the same way as unrealised
gains, but only to the extent that there is no evidence
of impairment.

Non-controlling interests
Where not all of the equity of a subsidiary is acquired,
the non-controlling interest is recognised either at fair
value or at the non-controlling interest’s share of the
net assets of the subsidiary, on a case-by-case basis.

Non-controlling interests in the results and equity of
subsidiaries are shown separately in the consolidated
income statement, statement of comprehensive loss/
income, statement of changes in equity and statement
of financial position respectively.

(c) Operating segments
An operating segment is defined as a component of
the Group (i) that engages in business activities from
which it may earn revenues and incur expenses; (ii)
whose operating results are regularly reviewed by the
Group’s chief operating decision-maker (identified as
the leadership team) to make resource allocation
decisions and monitor its performance; and (iii) for
which discrete financial information is available.

(d) Foreign currency
(i) Foreign currency transactions
Transactions in foreign currencies are translated at
the foreign exchange rate ruling at the date of the
transaction.

Monetary assets and liabilities denominated in foreign
currencies at the balance sheet date are translated at
the foreign exchange rate ruling at that date. Foreign
exchange differences arising on translation of
monetary assets and liabilities are recognised in the
income statement.

Non-monetary assets and liabilities that are measured
at historical cost or stated at fair value are translated
using the exchange rate ruling at the date of
transaction or the date the fair value was determined.
Exchange gains/losses on retranslation of foreign
currency transactions are recognised in the income
statement within ‘Other operating (expense)/income’.

(ii) Financial statements of foreign operations
The assets and liabilities of foreign operations are
translated into Sterling at exchange rates ruling at
the balance sheet date. The revenues and expenses
of foreign operations are translated into Sterling at
rates approximating to the exchange rates ruling
at the dates of the transactions. Foreign exchange
differences arising on retranslation of foreign
operations are recognised directly in the currency
translation reserve presented in other reserves.

(e) Derivative financial instruments
Derivative financial instruments, being forward foreign
exchange contracts, are recorded in the balance sheet
at their fair value, and changes from subsequent
remeasurement to fair value at each balance sheet
date are recognised immediately in the income
statement through ‘Financial income’ (fair value gains)
or ‘Financial expense’ (fair value losses) as appropriate.

The fair value of forward exchange contracts is
derived from observable inputs from active markets
at the balance sheet date.

115

OverviewGovernanceFinancialsStrategic ReportBTG plc Annual Report and Accounts 2018 Notes to the consolidated
financial statements
continued

2. Significant accounting policies
continued
(f) Goodwill
All business combinations are accounted for by
applying the purchase method. Goodwill represents
amounts arising on the acquisition of subsidiary
undertakings. In respect of business combinations that
have occurred since 1 April 2004, goodwill represents
the excess between the consideration paid and the fair
value of the assets acquired and liabilities and
contingent liabilities assumed.

Goodwill is stated at cost less any accumulated
impairment losses. Goodwill is deemed to have an
indefinite useful life and is allocated to groups of
cash-generating units, being the Group’s operating
segments. Goodwill is tested at least annually for
impairment (see Note 2(l)).

(g) Intangible assets
(i) Initial recognition
Intangible assets acquired as a result of a business
combination are initially recognised at their fair value.

Other intangible assets are initially recognised at cost.

(ii) Amortisation
Intangible assets are amortised on a straight-line
basis, over the useful economic life of the asset. In
determining the appropriate useful economic life of
the asset, consideration is given to the expected
useful economic life of the asset or remaining patent
life if different.

The useful economic life of each class of asset is
determined as follows:

– Developed technology: expected useful economic

life, taking into account specific product and market
characteristics for each developed technology;

– Contractual relationships: period to expiry of the

relevant contractual relationship;

– In-process research and development (‘IPR&D’):
amortisation is not charged until the asset is
generating an economic return, at which point it is
amortised over its expected useful economic life;

– Computer software: the shorter of the licence

period and three years;

– Patents: period to patent expiry; and

– Purchase of contractual rights: period to expiry

of the relevant contractual right.

116

The following useful economic lives are applied:

Developed technology
Contractual relationships
Other computer software
Patents
Purchase of contractual rights 2 to 10 years

2 to 25 years
2 to 15 years
3 years
up to 20 years

(iii) Income statement disclosure
Amortisation relating to intangible assets acquired
through business combinations is presented within
‘Amortisation of acquired intangible assets’. Other
amortisation is shown within ‘Cost of sales’, ‘Selling,
general and administrative’ expenses or ‘Research and
development’ dependent on the function to which the
related intangible asset relates.

(iv) Subsequent expenditure
Expenditure subsequent to the initial acquisition of
intangible assets is capitalised only when it increases
the future economic benefits embodied in the specific
asset to which it relates. All other expenditure is
expensed as incurred.

(v) Impairment
If an intangible asset is considered to have suffered
impairment in value it is written down to its estimated
recoverable amount in accordance with the Group’s
policy on impairment (see Note 2(l)).

(h) Property, plant and equipment
(i) Owned assets
Items of property, plant and equipment are stated at
cost less accumulated depreciation and impairment
losses (see Note 2(l)).

(ii) Depreciation
Depreciation is charged to the income statement on
a straight-line basis to write assets down to their
residual value over the following useful economic
lives:

Buildings and improvements
Leasehold improvements
Plant and machinery
Furniture and equipment
Motor vehicles
Computer hardware

10 to 20 years
2 to 10 years
3 to 15 years
2 to 15 years
5 years
3 to 5 years

Depreciation is not charged until the asset is brought
into use. The residual value of property, plant and
equipment is reassessed annually.

BTG plc Annual Report and Accounts 2018Financials(iii) Income statement disclosure
Depreciation and impairment of property, plant and
equipment is included within ‘Cost of sales’, ‘Selling,
general and administrative’ expenses or ‘Research and
development’ dependent on the function to which the
related property, plant and equipment relates.

Profits/(losses) on disposals of property, plant and
equipment are determined by comparing the proceeds
with the carrying amount of the relevant property,
plant and equipment, and are included in Other
operating (expense)/income.

(iv) Subsequent expenditure
Expenditure subsequent to the initial acquisition of
property, plant and equipment is capitalised only
when it is probable that the Group will realise future
economic benefits from the asset.

(v) Impairment
If property, plant and equipment is considered to have
suffered impairment in value it is written down to its
estimated recoverable amount in accordance with the
Group’s policy on impairment (see Note 2(l)).

(i) Inventories
Inventories are valued at the lower of cost and net
realisable value, using the first in, first out method.
Cost comprises materials, direct labour and a share of
production overheads appropriate to the relevant
stage of production. Provision is made for obsolete,
slow-moving or defective items where appropriate.
Net realisable value is determined at the balance
sheet date on commercially saleable products based
on estimated selling price less all further costs to
completion and all relevant marketing, selling and
distribution costs.

Inventories relating to research and development
projects are expensed to the income statement unless
the Group considers it highly probable it will realise
economic value from their sale or use.

If the circumstances that previously caused these
inventories to be written down below cost
subsequently change and there is clear evidence of an
increase in realisable value, the write down is
reversed.

(j) Trade and other receivables
Trade and other receivables do not carry interest and
are stated at amortised cost net of any provisions.

(k) Cash and cash equivalents
Cash and cash equivalents comprise cash balances and
call deposits. Bank overdrafts that are repayable on
demand and form an integral part of the Group’s cash
management and for which the Group has a legal right
of set-off are included as a component of cash and
cash equivalents for the purpose of the statement of
cash flows.

Cash deposits with a maturity of greater than three
months are classified as held to maturity financial
assets.

(l) Impairment
All assets are reviewed for impairment when there is
an indicator of impairment. In addition, goodwill and
unamortised intangible assets (principally IPR&D) are
reviewed for impairment at least annually. An
impairment loss is recognised whenever the carrying
amount of an asset or its cash-generating unit exceeds
its recoverable amount.

The Group reviews its assets for impairment as
follows:

(i) Property, plant and equipment
Property, plant and equipment are reviewed for
impairment whenever there are events that indicate
that an impairment may have occurred. An impairment
loss is recognised if an asset’s carrying amount
exceeds the greater of its value in use and fair value
less costs to sell. Impairment losses are recognised
within Cost of sales, Selling, general and
administrative expenses or Research and development
dependent on the function to which the relevant
property, plant and equipment relates.

(ii) Amortised intangible assets
Amortised intangible assets are tested for impairment
whenever there are indications that their carrying
value may not be recoverable. For the purpose of
impairment testing, intangible assets are grouped at
the lowest levels for which there are separately
identifiable cash flows. An impairment loss is
recognised if an asset’s carrying amount exceeds the
greater of its value in use and fair value less costs to
sell. Impairment losses are recognised within Cost of
sales, Selling, general and administrative expenses, or
Research and development dependent on the function
to which the relevant intangible asset relates.

117

OverviewGovernanceFinancialsStrategic ReportBTG plc Annual Report and Accounts 2018 Notes to the consolidated
financial statements
continued

2. Significant accounting policies
continued
(m) Employee benefits
(i) Defined contribution plans
Obligations for contributions to defined contribution
pension plans are recognised as an expense in the
income statement as incurred. Payments made to
state-managed retirement benefit schemes are dealt
with in the same manner as payments to defined
contribution plans where the Group’s obligations
under the plans are equivalent to a defined
contribution retirement benefit plan. The funds of the
schemes are independent of the Group’s finances.

(ii) Defined benefit plan
For the Group’s defined benefit pension plan, the cost
of providing benefits is determined using the projected
unit credit method, with actuarial valuations being
carried out at each balance sheet date. The
assumptions used to determine the valuation are
shown in Note 19. Actuarial gains and losses are
recognised in full in the period in which they occur,
and are presented in the consolidated statement of
comprehensive loss/income.

Administrative costs of running the scheme are
expensed directly in the Income Statement. Past
service cost is recognised immediately through the
Income Statement. Assets of the pension scheme are
held separately from the Group’s assets.

(iii) Share-based payments
The share option programme allows Group employees
to acquire shares of the Company, subject to certain
criteria. The fair value of options granted is recognised
as an expense of employment in the income statement
with a corresponding increase in equity. The fair value
is measured at the date of grant and spread over the
period during which the employees become
unconditionally entitled to the options. The fair value
of the options granted is measured using a Black-
Scholes or alternative valuation model, taking into
account the terms and conditions upon which the
options were granted. The amount recognised as an
expense in any year is adjusted to reflect the actual
number of share options that are expected to vest.
However, if share options fail to vest due to the
Company’s total shareholder’s return not achieving the
designated performance threshold for vesting, no such
adjustment takes place.

118

(n) Trade and other payables
Trade and other payables, except for contingent
consideration liabilities, are not interest bearing and
are stated at amortised cost.

Contingent consideration liabilities are initially
recognised at their fair value. The fair value of
contingent consideration liabilities are reassessed at
each subsequent balance sheet date, with any change
in fair value being immediately reflected in the income
statement.

A contingent liability is disclosed in the notes to the
accounts, but not recognised on the statement of
financial position, if a material outflow of economic
benefits is expected to be required to settle a legal or
constructive obligation as a result of a past event,
where the probability of such an outflow is less than
probable but more than remote or the liability cannot
be reliably estimated.

(o) Provisions
A provision is recognised on the statement of financial
position when the Group has a present legal or
constructive obligation as a result of a past event, and
it is probable that an outflow of economic benefits will
be required to settle the obligation. If the effect is
material, provisions are determined by discounting the
expected future cash flows at a pre-tax discount rate
that reflects current market assessments of the time
value of money and, where appropriate, the risks
specific to the relevant liability.

A provision for onerous contracts is recognised when
the expected benefits to be derived by the Group from
a contract are lower than the unavoidable cost of
meeting its obligations under the contract.

A charge for reorganisation costs is taken to the
income statement when the Group has approved a
detailed and formal reorganisation plan, and the
reorganisation has either commenced or the Group has
a constructive obligation, for example having made an
announcement publicly to the employees or the Group
as a whole.

(p) Revenue recognition
Revenue represents amounts received or receivable in
respect of the sale of products to customers during
the year, net of trade discounts given, rebates and
returns, and value added tax, and in respect of royalty
arrangements:

BTG plc Annual Report and Accounts 2018Financials(i) Products
The Group recognises revenue for product sales when
each condition of IAS 18, paragraph 14 is wholly-
satisfied. Where sales arrangements specify a second
element of revenue contingent upon a specified event,
this revenue is not recognised until this event has
occurred and it is certain that the economic benefit
triggered by this event will flow to the Group. In cases
where product is sold to a customer with a right of
replacement, the Group views the transaction as a
multi-element arrangement and a portion of the value
from the sale is deferred and allocated to the
replacement right based on the fair value of the
replacement right.

(ii) Royalties
Revenues from the Group’s licensed programmes are
generated following the grant of a licence to a third
party to undertake additional development and
commercialisation of a Research and development
programme or other intellectual property rights.

In addition to an upfront payment, BTG may be
entitled to additional revenues such as milestone
payments or royalties on revenues generated by the
licensee. Revenues associated with royalty
arrangements may in turn be linked to additional
obligations on BTG.

Royalty income is generated by sales of products
incorporating the Group’s proprietary technology.
Royalty revenues are recognised once the amounts
due can be reliably estimated based on the sale of
underlying products and recoverability is probable.
Where there is insufficient historical data on sales and
returns to fulfil these requirements, for example in the
case of a new product, the royalty revenue will not be
recognised until the Group can reliably estimate the
underlying sales.

(q) Cost of sales
Cost of sales includes the direct costs incurred in
manufacturing and bringing products to sale in the
market, revenue sharing costs, and amortisation of
other intangible assets.

Revenue sharing costs represent amounts due under
royalty arrangements to licensors or assignees of
technology and similar directly attributable items.
Amounts due to licensors are recognised on an
accruals basis in accordance with the individual
agreements relating to the relevant technology, in line
with revenue recognition for the related royalties.

(r) Research and development
Research expenditure is charged to the income
statement in the period in which it is incurred.

Expenditure incurred on development projects
(relating to the design and testing of new or improved
products) is recognised as an intangible asset when it
is probable that the project will generate future
economic benefit, considering factors including its
commercial and technological feasibility, status of
regulatory approval, and the ability to measure costs
reliably. Other development expenditures are
recognised as an expense as incurred. Development
expenditure previously recognised as an expense is
not recognised as an asset in a subsequent period.
Development expenditure that has a finite useful life
and which has been capitalised is amortised from the
commencement of the commercial production of the
product on a straight-line basis over the period of its
expected benefit. No development expenditure has
been capitalised in either the current or prior year.

Property, plant and equipment used for research and
development is depreciated in accordance with the
Group’s policy and the cost is included within
‘Research and development’ in the income statement.

(s) Leases
Leases are classified as finance leases whenever the
terms of the lease transfer substantially all the risks
and rewards of ownership to the lessee. All other
leases are classified as operating leases.

Rentals under operating leases are charged to the
income statement on a straight-line basis over the
term of the relevant lease within the appropriate
functional expenditure heading.

(t) Financial income
Financial income comprises interest income receivable
during the year, calculated using the effective interest
rate method, gains on settlement of foreign exchange
forward contracts, and gains from re-measuring at fair
value foreign exchange forward contracts and
contingent consideration liabilities.

(u) Financial expense
Financial expense comprises interest payable during
the year, calculated using the effective interest rate
method, losses on settlement of foreign exchange
forward contracts, losses from re-measuring at fair
value foreign exchange forward contracts and
contingent consideration liabilities, and other
financing and borrowing costs.

119

OverviewGovernanceFinancialsStrategic ReportBTG plc Annual Report and Accounts 2018 Notes to the consolidated
financial statements
continued

2. Significant accounting policies
continued
(v) Tax
Tax on the profit or loss for the year comprises current
and deferred tax. Tax is recognised in the income
statement except to the extent that it relates to items
recognised directly in equity, in which case the related
tax effect is recognised directly in equity.

Current tax is the expected tax payable on the taxable
income for the year, using tax rates enacted or
substantively enacted at the balance sheet date,
and any adjustment to tax payable in respect of
previous years.

Deferred tax is provided using the balance sheet
liability method, providing for temporary differences
between the carrying value of assets and liabilities
for financial reporting purposes and the amounts
used for taxation purposes. The following temporary
differences are not provided for: where the deferred
tax liability arises from the initial recognition of
goodwill or of an asset or liability in a transaction
that is not a business combination and, at the time of
the transaction, affects neither the accounting profit
nor taxable profit or loss; and taxable temporary
differences associated with investments in subsidiaries
and associates, where it is probable that the
temporary differences will not reverse in the
foreseeable future.

The amount of deferred tax provided is based on the
expected manner of realisation or settlement of the
carrying value of assets and liabilities, using tax rates
enacted or substantively enacted at the balance
sheet date.

A deferred tax asset is recognised only to the extent
that it is probable that future taxable profits will be
available against which the asset can be utilised.

(w) BTG Employee Share Ownership Trust
Included within the Group’s financial results are the
financial statements of the BTG Employee Share
Ownership Trust, the costs of which are expensed
within the financial statements of the Trust as incurred.

In the consolidated financial statements, the cost of
BTG plc ordinary shares held by the BTG Employee
Share Ownership Trust is treated as a deduction from
shareholders’ funds.

120

3. Critical accounting judgements and
key sources of estimation uncertainty
In preparing the financial statements, management
is required to make estimates and assumptions that
affect the reported amounts of assets and liabilities
at the date of the financial statements, the reported
amounts of revenues and expenses during the
reporting period and the disclosures of contingent
assets and liabilities. As these estimates involve
judgement, actual amounts and results could differ
from those estimates. Judgements include matters
such as assessing the likelihood of financial loss arising
from contingent liabilities and the appropriate unit of
account at which separate intangible assets should be
recognised in business combinations, while estimates
focus on areas such as recoverable values of assets,
their estimated useful lives, and the measurement
of contingent consideration liabilities. The following
are considered to be the Group’s critical accounting
judgements and key sources of estimation uncertainty:

(i) Recoverability of goodwill and other
intangible assets
The Group has significant goodwill and intangible
assets resulting from historical business combinations.
As at 31 March 2018, goodwill was £223.1m
(2017: £225.6m) and other intangible assets was
£463.7m (2017: £678.9m).

Goodwill is deemed to have an indefinite life and
is tested at least annually for impairment, or more
frequently if events or changes in circumstances
indicate the carrying value of goodwill may not be
recoverable. The recoverable amount of the Group’s
goodwill is assessed based on the fair value less costs
to sell of the relevant cash generating unit to which
goodwill has been allocated. Determining the relevant
cash generating units to which goodwill is allocated
requires the application of significant judgement and
determining fair value less costs to sell represents an
area of significant estimation uncertainty, particularly
in the estimation of forecast future cash flows, the
terminal growth rate for each relevant cash generating
unit and the discount rate used to determine the
present value of forecast future cash flows. Further
details regarding the estimates and assumptions used
in determining the recoverable amount of cash
generating units to which goodwill has been allocated
are included in Note 10 to the financial statements.

BTG plc Annual Report and Accounts 2018FinancialsIt is not deemed reasonably possible that changes to
key assumptions would lead to a material impairment
of goodwill in the next twelve months.

As definite lived intangible assets are tested for
recoverability only when impairment indicators are
deemed to exist, determining if there are indicators of
impairment represents a critical accounting
judgement. Assessing the recoverability of indefinite
lived intangible assets (IPR&D) and those definite
lived intangible assets which management has
determined are subject to impairment indicators
represents an area of significant estimation
uncertainty. The recoverable amount of these
intangible assets is based on the higher of their
value-in-use and fair value less costs to sell.

The Group first applies a value in use approach to
determine whether the recoverable amount is higher
than the carrying value of its developed technology
and IPR&D intangible assets. The determination of
value in use utilises risk-adjusted cash flow forecasts
over the useful economic lives of the relevant assets,
with the present value of these forecasts calculated by
use of a discount rate using the Group’s post-tax WACC
(9%), adjusted if necessary to reflect the specific risk
profile of the relevant asset.

Key assumptions used to estimate value in use include
sales growth rates, anticipated profit margins,
estimated tax rates, terminal growth rates and
discount rates. Sales growth rates are derived from
internal forecasts based on both internal and external
market information, whilst anticipated profit margins
reflect past experience, adjusted for expected future
changes. These forecasts are inherently judgemental
and are based on outputs from the Group’s planning
cycle, with assumptions based on past experience and
future expectations.

If the value in use approach indicates the recoverable
amount of the asset is less than its carrying amount,
the Group then applies a fair value less costs to sell
approach. Fair value less costs to sell, in the absence
of a market price for the asset, represents a source of
significant estimation uncertainty as it involves the
estimation of risk-adjusted, discounted cash flows
similar to determining value-in-use and also requires
the application of judgement regarding whether a
market participant’s assessment of cash flows would
be different to those of the Group. The estimates and
assumptions on which fair value less costs to sell and

value-in-use are based are inherently judgemental.
Future events could therefore lead to changes in
assumptions used in these recoverability assessments.
It is therefore possible a change in any such
assumption could lead to future impairment charges,
which, if recognised, could significantly impact the
Group’s financial results.

Further details of the estimates and assumptions used
in determining the recoverable amounts of the Group’s
intangible assets are included in Note 11 to the
financial statements.

(ii) Contingent consideration liabilities
The fair value of the Group’s contingent liabilities
as of 31 March 2018 was £5.0m (2017: £32.1m).

Contingent consideration liabilities represent the fair
value of those future milestones, included in deferred
payment arrangements from historical business
combinations, which the Company may be required
to pay if certain development, regulatory or sales
milestone events occur. The determination of the fair
value of contingent consideration liabilities requires
the application of significant judgement, including
the probability of the relevant event triggering the
milestone occurring, and significant estimation
uncertainty, including the estimated timing of such
relevant events and the discount rate used to
determine the present value of the risk adjusted
milestone payments.

As at 31 March 2018 the Group’s principal contingent
consideration liabilities relate to development
milestones arising from the acquisition of Galil Medical
in 2016, see Note 21 for further details. The estimates
and assumptions used in determining the fair value of
these and other contingent consideration liabilities are
inherently judgemental. Future events could lead to
changes in assumptions used to determine the fair
value of contingent consideration liabilities. It is
therefore possible that a change in any such
assumption could lead to a material fair value charge
or credit which, if recognised, could significantly
impact the Group’s financial results.

121

OverviewGovernanceFinancialsStrategic ReportBTG plc Annual Report and Accounts 2018 (iv) Business combinations
In conjuction with IFRS 3 Business Combinations, the
Group has recognised intangible assets in respect of
acquired developed technology and in-process
research and development intangible assets during
the year of £45.6m and £2.2m respectively.

Significant judgement is required in determining the
unit of account at which separate intangible assets
should be recognised, and the fair values of the
identifiable intangible assets as of the acquisition
date. Determining the market participant fair value
of acquired intangible assets represents a source
of significant estimation uncertainty, including
estimates of risk adjusted forecast future cash flows,
determination of market participant or buyer specific
synergies, the relevant discount rate to determine the
present value of forecast future cash flows and the tax
amortisation benefit related to the individual
intangible asset.

The estimates and assumptions used to determine the
fair value of acquired intangible assets are inherently
uncertain, and the adoption of different assumptions
and estimates could result in the assignment of a
different fair value for acquired intangible assets than
has been recognised by the Group.

Notes to the consolidated
financial statements
continued

3. Critical accounting judgements and
key sources of estimation uncertainty
continued
(iii) Deferred tax
At 31 March 2018, the Group’s deferred tax assets
amounted to £3.6m (2017: £5.3m) and the Group’s
deferred tax liabilities amounted to £49.7m
(2017: £157.2m).

Deferred tax assets are recognised to the extent that it
is probable that future taxable profits will be available
against which the temporary differences can be
utilised, based on management’s assumptions relating
both to the amount and timing of future taxable
profits. In recognising deferred tax assets,
management has taken into account expected changes
in tax rates in each relevant jurisdiction.

Inherent uncertainties exist as management is
required to exercise judgement in determining
whether it is more likely than not that it would realise
these deferred tax assets. Forecasting the amount
and timing of future taxable profits is a source of
significant estimation uncertainty. In addition, where
deferred tax assets are recognised following an
acquisition, management has to exercise judgement
to assess the validity of acquired tax losses and the
impact of change of control provisions. If actual events
differ from management’s estimates, or to the extent
that estimates of future taxable profits are adjusted
in the future, it is therefore possible that any such
change in assumption could lead to a material charge
or credit, which if recognised could significantly
impact the Group’s financial results.

122

BTG plc Annual Report and Accounts 2018Financials4. Operating segments
Operating segments are determined based on the financial information provided to the Group’s chief operating
decision-making body, being the Leadership Team. The Group has three reportable segments, being Interventional
Medicine, Pharmaceuticals and Licensing.

In assessing performance and making resource allocation decisions, the Leadership Team reviews contribution by
segment. Contribution is defined as being gross profit less directly attributable selling, general and administrative
(‘SG&A’) expenses. The Licensing operating segment includes SG&A relating to the Group’s centrally managed
support functions and corporate overheads. The Group’s reportable segments reflects the management structure
and stewardship of the business. No allocation of central overheads is made across the Pharmaceuticals or
Interventional Medicine operating segments. Research and development continues to be managed on a global
basis, with investment decisions being made by the Leadership Team as a whole. Research and development is not
managed by reference to the Group’s operating segments, though each programme within the pipeline would
ultimately provide revenues for one of the operating segments if successful.

There are no inter-segment transactions that are required to be eliminated on consolidation.

Revenue
Cost of sales1
Gross profit
Selling, general and administrative expenses2
Contribution
Research and development
Other operating expense
Amortisation of acquired intangible assets
Acquisition and reorganisation costs
Operating loss
Financial income
Financial expense
Loss before tax
Tax credit
Profit for the year
Total assets3

Year ended 31 March 2018

Interventional
Medicine
£m
242.9
(71.6)
171.3
(204.7)
(33.4)

Pharmaceuticals
£m
180.9
(17.9)
163.0
(95.5)
67.5

Licensing
£m
196.7
(96.4)
100.3
(25.3)
75.0

Total
£m
620.5
(185.9)
434.6
(325.5)
109.1
(165.5)
(1.3)
(43.8)
(1.3)
(102.8)
41.5
(9.3)
(70.6)
83.3
12.7
1,162.7

1. Cost of sales in the Interventional Medicine segment includes a £0.2m release of a fair value adjustment to PP&E acquired with Galil Medical

in June 2016 and a £0.2m release of a fair value adjustment to inventory acquired with Roxwood Medical in October 2017. The release
represents the reversal of a fair value uplift applied to inventory purchased on acquisition recognised through the income statement as the
product is sold and incremental depreciation related to acquired PP&E.

2. SG&A expenses within Pharmaceuticals includes a charge of £57.7m reflecting amounts provided in respect of the litigation with Wellstat and
an impairment charge of £5.5m relating to the Vistogard® intangible asset. SG&A expenses within Interventional Medicine includes a charge
of £76.6m reflecting an impairment charge relating to the PneumRx® developed technology intangible asset.

3. The Group does not allocate assets to operating segments with the exception of Goodwill.

123

OverviewGovernanceFinancialsStrategic ReportBTG plc Annual Report and Accounts 2018 Notes to the consolidated
financial statements
continued

4. Operating segments continued

Revenue
Cost of sales1
Gross profit
Selling, general and administrative expenses2
Contribution
Research and development
Other operating income
Amortisation of acquired intangible assets
Acquisition and reorganisation costs
Operating profit
Financial income
Financial expense
Profit before tax
Tax credit
Profit for the year
Total assets3

Year ended 31 March 2017

Interventional
Medicine
£m
216.2
(61.9)
154.3
(119.5)
34.8

Pharmaceuticals
£m
171.1
(16.7)
154.4
(33.3)
121.1

Licensing
£m
183.2
(101.3)
81.9
(53.8)
28.1

Total
£m
570.5
(179.9)
390.6
(206.6)
184.0
(87.8)
4.4
(42.0)
(1.1)
57.5
3.3
(29.2)
31.6
2.0
33.6
1,311.1

1. Cost of sales in the Interventional Medicine segment includes a £1.0m release of a fair value adjustment to inventory and PP&E acquired with
Galil Medical in June 2016. The release represents the reversal of a fair value uplift applied to inventory purchased on acquisition recognised
through the income statement as the product is sold and incremental depreciation related to acquired PP&E.

2. SG&A expenses within Licensing includes a charge of £28.0m relating to the Group’s settlement with the US government in relation to the

Department of Justice investigation into the historic marketing of LC Bead®

3. The Group does not allocate assets to operating segments with the exception of Goodwill disclosed in note 10.

Revenue analysis
Analysis of revenue, based on the geographical location of customers and the source of revenue is provided below:

Geographical analysis

USA
Europe
Other regions

Revenue from major products and services

Product sales
Royalties

124

Year ended
31 March
2018
£m
557.5
45.1
17.9
620.5

Year ended
31 March
2018
£m
423.8
196.7
620.5

Year ended
31 March
2017
£m
513.7
41.1
15.7
570.5

Year ended
31 March
2017
£m
387.3
183.2
570.5

BTG plc Annual Report and Accounts 2018FinancialsMajor customers
The Group’s products are sold both directly and through distribution agreements in the USA, Europe and Asia
Pacific region. No individual customer generated income in excess of 10% of the Group revenue during the year
ended 31 March 2018 or 31 March 2017.

Products that utilise the Group’s intellectual property rights are sold by licensees. Royalty income is derived from
over 35 licences. One licence individually generated royalty income in excess of 10% of Group revenue of £155.4m
(2017: one license individually generated £123.2m).

5. Operating (loss)/profit
Operating profit has been arrived at after charging/(crediting):

Depreciation and impairment of property, plant and equipment
Amortisation and impairment of intangible assets (excl. PneumRx® impairments)
PneumRx® intangible asset impairments
Net foreign exchange losses/(gains)
Research and development (excluding impairment charges)
Expense relating to settlement of DOJ investigation
Expense relating to provision for costs of Wellstat litigation
Staff costs
Operating lease rentals payable on property
Acquisition and reorganisation costs

Note
12
11
11

18
6

Year ended
31 March
2018
£m
9.0
55.2
143.2
1.1
95.3
–
57.7
179.2
4.5
1.3

Year ended
31 March
2017
£m
6.6
46.7
–
(4.3)
87.8
28.0
–
164.0
3.0
1.1

Expense relating to the settlement of DOJ investigation
In October 2016, Biocompatibles, a wholly-owned subsidiary of BTG reached a settlement with the US government
in relation to the Department of Justice’s investigation of the historic marketing of LC Bead®. The investigation
focused on the period pre-dating BTG’s acquisition of Biocompatibles in January 2011. Biocompatibles agreed to
settle all allegations and consequently paid a total penalty of US$36m. BTG was not required to enter into a
Corporate Integrity Agreement as part of the settlement. In the year to 31 March 2017, the Group recognised a
charge of £28.0m relating to this settlement within ‘Selling, general & administrative expenses’.

125

OverviewGovernanceFinancialsStrategic ReportBTG plc Annual Report and Accounts 2018 Notes to the consolidated
financial statements
continued

5. Operating (loss)/profit continued
Auditor’s remuneration
The analysis of the auditor’s remuneration is as follows:

Fees payable to the Company’s auditor for the audit of the Group and Company’s annual accounts:
Fees payable to the Company’s auditor and its associates for other services:
Audit of the Company’s subsidiaries pursuant to legislation
Audit of pension scheme trust
Other audit related assurance services
Taxation compliance services

Year ended
31 March
2018
£’000
310

Year ended
31 March
2017
£’000
200

355
12
61
4
742

345
11
60
424
1,040

For information on how auditor objectivity and independence is safeguarded when non-audit services are provided
by the auditor, see the Audit Committee Report on pages 54 to 61.

6. Staff costs
Staff costs (including directors’ emoluments and reorganisation costs) are as follows:

Salaries
Social security costs
Defined contribution pension costs
Defined benefit pension costs
Equity-settled transactions

Year ended
31 March
2018
£m
151.9
12.8
7.2
0.8
6.5
179.2

Year ended
31 March
2017
£m
135.5
12.9
6.7
0.4
8.5
164.0

Key management personnel are considered to be the directors and their remuneration is disclosed within the
Remuneration Report on pages 69 to 94. In addition to the disclosures in the Remuneration Report, the charge to
income in respect of equity-settled transactions of key management personnel, in accordance with IFRS 2, was
£1.9m (2017: £2.6m).

The average number of persons employed by the Group during the year (including executive directors), analysed
by category, was as follows:

Year ended
31 March
2018
Number
104
791
617
1,512

Year ended
31 March
2017
Number
99
703
553
1,355

Management
Research and production
Sales, administration and business support

126

BTG plc Annual Report and Accounts 2018Financials7. Financial income and expense

Interest receivable on money-market and bank deposits
Fair value movements and realised gains from foreign exchange forward contracts
Fair value movements on contingent consideration liabilities
Financial income

Fair value movements and realised losses from foreign exchange forward contracts
Fair value movements on contingent consideration liabilities
Other financial expense
Financial expense

Year ended
31 March
2018
£m
0.5
14.5
26.5
41.5

5.7
1.6
2.0
9.3

Year ended
31 March
2017
£m
0.3
–
3.0
3.3

25.2
2.3
1.7
29.2

In the year to 31 March 2018, the Group recognised a fair value credit of £26.5m (2016/17: £3.0m credit) related
to the contingent consideration from the PneumRx® acquisition and a fair value charge of £1.6m (2016/17: £2.3m
charge) related to the contingent consideration from the Galil Medical acquisition.

Realised gains and gains on the re-measurement of the fair value of the Group’s forward foreign exchange contracts
totalled £14.5m for the year to 31 March 2018 and are recorded within Financial income. Realised losses and losses
on the re-measurement of the fair value of the Group’s forward foreign exchange contracts totalled £5.7m and are
recorded within Financial expense.

The change in fair value and realised losses on the Group’s forward foreign exchange contracts of £25.2m for the
year to 31 March 2017 is recorded within Financial expense. The loss of £25.2m included realised losses of £17.1m
on settlement of forward contracts and unrealised losses of £8.1m on remeasurement of the Group’s outstanding
forward contracts to their fair value.

8. Tax
An analysis of the tax credit in the income statement for the year, all relating to current operations, is as follows:

Current tax
UK corporation tax charge
Overseas corporate tax charge
Adjustments in respect of prior years
Total current taxation

Deferred taxation
Deferred tax credit
Adjustment to tax rates
Total deferred taxation
Total tax credit for the year

Year ended
31 March
2018
£m

Year ended
31 March
2017
£m

6.9
14.6
3.1
24.6

(105.9)
(2.0)
(107.9)
(83.3)

–
11.8
(1.7)
10.1

(13.0)
0.9
(12.1)
(2.0)

127

OverviewGovernanceFinancialsStrategic ReportBTG plc Annual Report and Accounts 2018 Notes to the consolidated
financial statements
continued

8. Tax continued
The credit for the year can be reconciled to the profit shown in the income statement as follows.

Reconciliation of the effective tax rate:

(Loss)/Profit before tax
Tax using UK corporation tax rate of 19% (2017: 20%)
Effect of overseas tax rates1
Effect of US tax reform2
Recognition of tax losses
Movement in unrecognised deferred tax asset
Non-taxable income
Non-deductible expenses
Effect of UK patent box deduction
Adjustment to tax rates
Adjustments in respect of prior years

Year ended
31 March
2018
£m
(70.6)
(13.4)
(23.6)
(36.2)
(3.5)
(0.1)
(4.7)
1.8
(7.0)
0.3
3.1
(83.3)

Year ended
31 March
2017
£m
31.6
6.3
1.4
—
(6.7)
(1.2)
—
4.5
(5.5)
0.9
(1.7)
(2.0)

1. The effect of overseas tax rates includes a deferred tax credit of £21.8m in relation to the impairment of PneumRx® intangible assets.
2. On 22 December 2017 the Tax Cuts and Jobs Act was enacted in the US which included a reduction in the US corporate federal tax rate from
35% to 21% from 1 January 2018. US tax reform increased the overall tax credit for the year by £36.2m, representing a net deferred tax credit
on revaluation of deferred tax liabilities on acquired intangibles, tax losses and short-term timing differences (£41.8m) less a current tax
charge in respect of deemed repatriation (£5.6m).

In addition to the amount credited to the income statement, a tax charge of £0.4m (2017: £4.1m credit) has been
recognised in other comprehensive income.

An analysis of amounts included in the Consolidated statement of financial position in respect of income taxes is
shown below:

Current assets
UK corporation tax receivable
Overseas corporation tax receivable

Current liabilities
UK Corporation tax payable
Overseas corporation tax payable

Non-current liabilities
Overseas corporation tax payable

Year ended
31 March
2018
£m

Year ended
31 March
2017
£m

–
0.1
0.1

1.7
5.1
6.8

5.0
5.0

2.6
0.1
2.7

–
5.1
5.1

–
–

Non-current corporation tax payable relates to the portion of the deemed repatriation charge following US tax
reform which will be payable in more than 12 months’ time.

Deferred taxation
The movements in the deferred tax asset and liabilities (prior to the offsetting of balances within the same
jurisdiction as permitted by IAS 12) during the year are shown below. Deferred tax asset and liabilities are only
offset where there is a legally enforceable right of offset and there is an intention to settle the balance net.

128

BTG plc Annual Report and Accounts 2018FinancialsDeferred tax asset

At 1 April 2016
Adjustment in respect of prior years
Income statement (charge)/credit
Rate change
Foreign exchange differences
At 31 March 2017
Adjustment in respect of prior years
Income statement charge
R&D tax credit
Foreign exchange differences
At 31 March 2018

Tax losses
£m
6.1
0.1
(3.4)
–
–
2.8
0.5
(2.0)
–
–
1.3

Short-term
timing
differences
£m
0.7
0.1
1.9
(0.1)
(0.1)
2.5
–
–
(0.1)
(0.1)
2.3

Net deferred
tax asset
£m
6.8
0.2
(1.5)
(0.1)
(0.1)
5.3
0.5
(2.0)
(0.1)
(0.1)
3.6

The deferred tax asset relates to short-term timing differences in Australia and the UK and tax losses in the UK.

The deferred tax asset has been recognised because the directors are of the opinion, based on recent and forecast
trading, that the level of profits in Australia and the UK in forthcoming years will lead to the realisation of these
assets.

Deferred tax liability

At 1 April 2016
Acquisition
Income statement credit/(charge)
Current year credit to comprehensive income
R&D tax credit
Rate change
Foreign exchange differences
At 31 March 2017
Acquisition
Income statement credit/(charge)1
Current year charge to comprehensive income
R&D tax credit
US tax reform
Rate change
Adjustment to prior year
Foreign exchange differences
At 31 March 2018

Liabilities
Acquired
intangibles
£m
(180.2)
(17.0)
12.9
–
–
–
(27.3)
(211.6)
(18.1)
77.1
–
–
51.6
2.4
–
15.4
(83.2)

Liabilities
Pension fund
surplus
£m
(6.7)
–
(0.7)
4.1
–
–
–
(3.3)
–
(0.5)
(0.4)
–
–
–
–
–
(4.2)

Liabilities
Short-term
timing
differences
£m
0.1
–
(0.1)
–
–
–
–
–
–
–
–
–
–
–
–
–
–

Assets
Tax losses
£m
30.7
10.9
(2.6)
–
–
(0.8)
4.3
42.5
4.1
(9.9)
–
–
(5.3)
(0.4)
(0.2)
(2.4)
28.4

Assets
Short-term
timing
differences
£m
9.1
–
4.8
–
0.1
–
1.2
15.2
(0.1)
(0.9)
–
0.2
(4.5)
–
–
(0.6)
9.3

Net deferred
tax liability
£m
(147.0)
(6.1)
14.3
4.1
0.1
(0.8)
(21.8)
(157.2)
(14.1)
65.8
(0.4)
0.2
41.8
2.0
(0.2)
12.4
(49.7)

1. Of the net income statement credit, £49.7m relates to the impairment of PneumRx® intangible assets.

The deferred tax liability of £49.7m (2017: £157.2m) represents the net position after taking into account the offset
of deferred tax assets against deferred tax liabilities in each jurisdiction.

The UK tax rate fell from 20% to 19% on 1 April 2017 and will fall to 17% on 1 April 2020. This has been reflected
in the deferred tax assets and liabilities and deferred tax has been recognised at the tax rate at which timing
differences and tax losses are expected to be used.

129

OverviewGovernanceFinancialsStrategic ReportBTG plc Annual Report and Accounts 2018 Notes to the consolidated
financial statements
continued

8. Tax continued
The US federal tax rate fell from 35% to 21% on 1 January 2018. The decrease to 21% has been reflected in the
deferred tax assets and liabilities and deferred tax has been recognised at the tax rate at which timing differences
and tax losses are expected to be used.

Unrecognised tax losses
In addition to the losses on which a deferred tax asset has been recognised, the Group has additional tax losses
which have arisen principally as a result of research and development expenditure incurred. These losses are shown
below. UK tax losses can be carried forward indefinitely. The US tax losses can be carried forward for 20 years and
the first year in which they expire is 2019.

A deferred tax asset has not been recognised in respect of the losses shown below as there is uncertainty as to
whether these losses will be used.

The total amount of tax losses and timing differences not recognised is shown below:

Year ended
31 March
2018
£m
49.0
15.2
20.0
–
84.2

Year ended
31 March
2017
£m
50.1
23.1
23.6
31.0
127.8

Year ended
31 March
2018
£m
15.0

Year ended
31 March
2017
£m
33.6

3.9
3.9

8.7
8.6

386.1
3.1
389.2

384.4
5.6
390.0

UK tax losses
US tax losses
Other regions tax losses
Deductible temporary differences

9. Earnings per share
The calculation of the basic and diluted earnings per share is based on the following data:

Profit for the year attributable to owners of the parent (£m)

Earnings per share (p)
Basic
Diluted

Number of shares (m)

Weighted average number of shares – basic
Effect of share options in issue
Weighted average number of shares – diluted

130

BTG plc Annual Report and Accounts 2018Financials10. Goodwill

At 1 April 2016
Acquisitions
Foreign exchange differences
At 31 March 2017
Acquisitions
Foreign exchange differences
At 31 March 2018
Accumulated impairment losses
At 1 April 2016, 31 March 2017 and 31 March 2018
Net book value at 31 March 2018
Net book value at 31 March 2017
Net book value at 1 April 2016

Note

£m
187.9
16.4
21.3
225.6
16.0
(18.5)
223.1

–
223.1
225.6
187.9

Goodwill has been allocated to cash generating units, being the Group’s operating segments (see Note 4), in
proportion to the anticipated benefits of goodwill on the relevant operating segment, having regard for the assets
and liabilities acquired. The carrying value of goodwill has been allocated to the following operating segments:

Interventional Medicine
Pharmaceuticals
Licensing

31 March
2018
£m
186.6
16.4
20.1

31 March
2017
£m
189.1
16.4
20.1

In the year ended 31 March 2018, the recoverable amounts of these cash generating units has been determined
using a fair value less costs to sell approach. Fair value less costs to sell is calculated using a discounted cash flow
approach, with a post-tax discount rate applied to forecast future post-tax cash flows and terminal values. This
valuation methodology uses significant inputs which are not based on observable market data, therefore this
valuation technique is classified as level 3 in the fair value hierarchy. Details relating to the discounted cash flow
approach used in assessing the recoverability of the Group’s cash generating units are as follows:

Key assumptions

Basis for assumptions

Period of specific projected cash flows
Terminal growth and discount rate

Sales growth rates
Profit margins
Tax rates
Terminal growth rates
Market discount rates
Sales growth rates are internal forecasts based on both internal and external information
Profit margins and tax rates reflect past experience, adjusted for expected changes
Terminal growth rates based on management’s estimate of future long-term average
growth rates taking into account both future competition and new product launches
Market discount rates based on an estimate of the Group WACC
Five years

Interventional Medicine
Pharmaceuticals
Licensing

Terminal
growth rate
2.75%
0.5%
0%

Discount
rate
9%
9%
9%

In each case the valuation of each cash generating unit indicated sufficient headroom such that a reasonably
possible change to key assumptions is currently unlikely to result in an impairment to the related goodwill.

131

OverviewGovernanceFinancialsStrategic ReportBTG plc Annual Report and Accounts 2018 Notes to the consolidated
financial statements
continued

11. Intangible assets

Group
Cost
At 31 March 2016
Acquisitions
Additions
Disposals
Foreign exchange differences
At 31 March 2017
Acquisitions
Additions
Disposals
Foreign exchange differences
At 31 March 2018

Amortisation
At 31 March 2016
Amortisation charged
Impairments
Disposals
Foreign exchange differences
At 31 March 2017
Amortisation charged
Impairments
Disposals
Foreign exchange differences
At 31 March 2018

Net book value
At 31 March 2018
At 31 March 2017
At 31 March 2016

Developed
technology
£m

Contractual
relationships
£m

In-process
research and
development
£m

Computer
software
£m

Patents
£m

Purchase of
contractual
rights
£m

592.6
47.3
–
–
78.4
718.3
45.6
–
(0.5)
(68.7)
694.7

129.3
42.0
–
–
14.9
186.2
43.8
76.6
(0.5)
(17.0)
289.1

405.6
532.1
463.3

42.1
–
–
–
5.0
47.1
–
–
–
(4.4)
42.7

–
–
–

109.0
–
–
–
15.5
124.5
2.2
–
–
(13.6)
113.1

5.8
–
–
–
–
5.8
–
68.7
–
–
74.5

38.6
118.7
103.2

1.8
0.4
0.5
–
0.2
2.9
–
0.8
–
(0.2)
3.5

1.0
0.8
–
–
0.1
1.9
0.6
0.1
–
(0.2)
2.4

1.1
1.0
0.8

18.2
–
0.2
(0.8)
–
17.6
–
0.2
–
–
17.8

14.7
0.5
0.5
(0.1)
–
15.6
0.4
0.2
–
–
16.2

1.6
2.0
3.5

31.7
–
–
(1.8)
0.9
30.8
–
–
(6.3)
(0.7)
23.8

3.3
2.9
–
(0.5)
–
5.7
2.5
5.5
(6.3)
(0.4)
7.0

16.8
25.1
28.4

Total
£m

795.4
47.7
0.7
(2.6)
100.0
941.2
47.8
1.0
(6.8)
(87.6)
895.6

196.2
46.2
0.5
(0.6)
20.0
262.3
47.3
151.1
(6.8)
(22.0)
431.9

463.7
678.9
599.2

Amortisation relating to intangible assets acquired through business combinations of £43.8m (2017: £42.0m) is
recorded within Amortisation of acquired intangible assets. All other intangible asset amortisation is recorded
within Cost of sales, Selling, general and administrative expenses or Research and development.

132

BTG plc Annual Report and Accounts 2018FinancialsDeveloped technology
Developed technology represents intangible assets for products acquired through business combinations. The
carrying value of individually significant cash generating units (‘CGUs’) which contain developed technology is:

EkoSonic® (EKOS)
TheraSphere®
CroFab®
DC Bead® and LC Bead®
Galil Medical® (Galil™ cryoablation technology)
Roxwood Medical (BTG Crossing Devices)
DigiFab®
PneumRx® Coil (ROW)

31 March
2018
£m
90.4
77.3
59.9
55.7
41.7
41.1
19.4
15.2

31 March
2017
£m
111.4
95.1
71.6
62.8
50.4
–
23.1
111.8

Remaining
amortisation
period at
31 March
2018
10 years
10 years
16 years
8 years
13 years
11 years
16 years
12 years

In-process research and development (‘IPR&D’)
IPR&D represents intangible assets for products acquired through business combinations which have not yet
obtained regulatory approval. The carrying value of individually significant cash generating units (‘CGUs’) which
contain IPR&D is:

PneumRx® Coil (US)
Targeted Therapies Assets

31 March
2018
£m
19.7
18.9

31 March
2017
£m
96.8
21.2

Purchase of contractual rights
The carrying value of individually significant CGUs within Purchase of contractual rights are outlined below:

Varithena®

31 March
2018
£m
16.4

31 March
2017
£m
18.8

Impairment of PneumRx® Coils intangible assets
In the year ended 31 March 2018 the Group has recognised impairment charges of £143.2m in relation to the
PneumRx® Coils. These impairment charges are split between Developed technology (£76.6m) and IPR&D
intangible assets (£66.6m), and have been recorded within SG&A and R&D expenses, respectively. Following these
impairment charges, the carrying amount of the PneumRx® Coils intangible assets is £34.9m, of which £15.2m
relates to Developed technology and £19.7m relates to IPR&D assets.

While management have concluded that there continues to be a significant long-term opportunity for the
PneumRx® Coils, current sales are lower than originally anticipated, reflecting that market development, including
securing appropriate levels of reimbursement, is taking longer than expected. Third-party market research and
feedback from payers received in the second half of the year has corroborated that there is a need for more clinical
data in order to expand reimbursement and support market adoption both in Europe and the US. As a result,
resources have been focused on key activities to build long-term value. As a consequence of this, and of prioritising
European patients for the ELEVATE study, we do not expect material revenues from this product over the next
two years. Accordingly the recoverability of the PneumRx® Coils Developed technology and IPR&D assets was
re-assessed in the year ended 31 March 2018.

133

OverviewGovernanceFinancialsStrategic ReportBTG plc Annual Report and Accounts 2018 Notes to the consolidated
financial statements
continued

11. Intangible assets continued
The recoverable amount of the PneumRx® Coils intangible assets has been determined under a fair value less cost
to sell approach, which utilises risk-adjusted discounted cash flows over a 10-year period and a terminal decline
in growth thereafter. The key assumptions on which fair value less costs to sell has been determined, and the
sensitivity of the valuation to changes in these key assumptions are are as follows:

Key Assumption
Discount rate

Sales forecasts

Utilised in
valuation
13%
Management projections of
market penetration and pricing 5% decrease in sales price

Sensitivity
factor
1% increase

Terminal growth rate

-15%

5% decrease in peak penetration1
5% faster decline

Reduction in
recoverable
value of the
developed
technology
asset
£2.7m

£6.5m
£4.5m
£2.7m

Reduction in
recoverable
value of the
IPR&D asset
£2.9m

£3.8m
£3.5m
£2.3m

1. Penetration represents the percentage of total addressable patient population which management estimates will be treated by

PnuemRx® Coils.

In addition to the above assumptions:

– the recoverable value of the IPR&D asset reflects the probability of approval by the FDA. If approval is not

granted, the recoverable value of the IPR&D asset would likely be fully impaired, conversely if FDA approval is
granted a reversal of some or all of the previously recorded impairment charge is likely.

– the recoverable value of both the developed technology and IPR&D assets reflects the probability of success of
the ELEVATE trial. Depending on the outcome of the ELEVATE trial, the recoverable value of both assets may be
increased or further reduced.

Reasonably possible changes in the future recoverability of assets
Following the impairments of the PneumRx® coils intangible assets, there is now no headroom between the
carrying values of these assets and their recoverable amounts. Accordingly, it is reasonably possible that changes to
any of the key assumptions in future periods could result in future impairments, or reversals of previously recorded
impairment charges.

More generally, the recoverability of intangible assets for Developed Technology and Purchased contractual rights
is potentially at risk if pricing, reimbursement and/or market penetration are at lower levels than the Group’s
current assumptions. In particular, while the introduction of new reimbursement codes for Varithena® in the US in
January 2018 has led to renewed physician interest in the product, it will take time to see the impact of the codes
on physician and insurer practice. The Group expects to have a better understanding of physician ordering patterns
and insurer practice by the end of 2018. If the effect of the new reimbursement codes on Varithena® performance
is significantly less than management anticipates, it is reasonably possible that the carrying value of the Varithena®
intangible asset (£16.4m) could be impaired.

Additionally, IPR&D assets (including the Targeted Therapies IPR&D asset for TheraSphere®) carry inherent
development and regulatory risks, such that these assets are particularly at risk of impairment in full if the relevant
development programmes do not obtain the requisite regulatory approval or reach commercialisation, and there is
no alternative use for these assets. Given their nature, impairment charges which may be triggered by future events
that have yet to occur could significantly impact the Group’s financial results.

134

BTG plc Annual Report and Accounts 2018Financials12. Property, plant and equipment

Group
Cost or valuation
At 31 March 2016
Acquisitions
Additions
Disposals
Transfers
Foreign exchange differences
At 31 March 2017
Acquisitions
Additions
Disposals
Transfers
Foreign exchange differences
At 31 March 2018

Depreciation
At 31 March 2016
Depreciation charged
Impairment charge
Disposals
Foreign exchange differences
At 31 March 2017
Depreciation charged
Impairment charge
Disposals
Foreign exchange differences
At 31 March 2018
Net book value at 31 March 2018
Net book value at 31 March 2017
Net book value at 31 March 2016

13. Inventories

Raw materials and consumables
Work in progress
Finished goods

Leasehold
improvements
£m

Freehold land
and buildings
£m

Plant and
machinery
Furniture and
equipment
£m

Assets in the
course of
construction
£m

10.5
–
1.2
(0.2)
1.8
0.6
13.9
0.1
2.7
(0.4)
0.5
(0.6)
16.2

2.9
1.4
–
(0.2)
0.2
4.3
1.7
–
(0.3)
(0.3)
5.4
10.8
9.6
7.6

16.1
–
0.1
–
0.1
1.6
17.9
–
–
(0.1)
0.3
(1.4)
16.7

3.7
0.5
–
–
0.5
4.7
0.6
–
(0.1)
(0.4)
4.8
11.9
13.2
12.4

24.2
1.0
3.4
(2.0)
3.8
2.5
32.9
0.1
5.2
(4.5)
2.1
(1.5)
34.3

15.4
4.7
–
(1.9)
3.2
21.4
6.0
0.6
(4.3)
(2.3)
21.4
12.9
11.5
8.8

7.0
–
4.2
–
(5.7)
0.4
5.9
–
2.5
(0.2)
(2.9)
–
5.3

0.1
–
–
–
–
0.1
–
0.1
–
–
0.2
5.1
5.8
6.9

Total
£m

57.8
1.0
8.9
(2.2)
–
5.1
70.6
0.2
10.4
(5.2)
–
(3.5)
72.5

22.1
6.6
–
(2.1)
3.9
30.5
8.3
0.7
(4.7)
(3.0)
31.8
40.7
40.1
35.7

31 March
2018
£m
24.9
27.6
8.5
61.0

31 March
2017
£m
23.5
20.6
14.3
58.4

135

Inventory to the value of £1.1m (2017: £1.8m) was written off through Cost of sales.

OverviewGovernanceFinancialsStrategic ReportBTG plc Annual Report and Accounts 2018 Notes to the consolidated
financial statements
continued

14. Trade and other receivables

Due within one year
Trade receivables, net of provisions for bad and doubtful debts
Other receivables
Prepayments and accrued income

The ageing of these amounts was as follows:

£m
Not past due
0-30 days
31-90 days
> 90 days
Total

31 March
2018
£m

31 March
2017
£m

64.6
10.9
58.5
134.0

2017
Gross
49.2
7.5
2.5
2.2
61.4

61.1
13.5
51.1
125.7

2017
Provision
–
–
–
(0.3)
(0.3)

2018
Gross
52.3
7.3
3.2
2.0
64.8

2018
Provision
–
–
–
(0.2)
(0.2)

Provisions for bad and doubtful debts of £0.2m (2017: £0.3m) write down the value of receivables to their estimated
recoverable amounts. The charge for the year to 31 March 2018 in respect of provisions for bad and doubtful debts
was less than £0.1m (2017: £0.2m).

15. Equity
The issued and fully paid share capital of the Company is shown below:

Ordinary shares of 10p each
At 1 April
Issued for cash
At 31 March

Number
385,127,525
1,365,050
386,492,575

2018
£m

Number
38.5 382,991,577
2,135,948
38.6 385,127,525

0.1

2017
£m
38.3
0.2
38.5

The shares issued during the year ended 31 March 2018 were as a result of the exercise of share options.

Other reserves are analysed as follows:

At 31 March 2016
Total recognised income and expense
At 31 March 2017
Total recognised income and expense
At 31 March 2018

Share options
Details of outstanding share options are set out in Note 20.

Translation
reserve
£m
28.0
91.7
119.7
(89.9)
29.8

Fair value
reserve
£m
0.1
–
0.1
–
0.1

Total other
reserves
£m
28.1
91.7
119.8
(89.9)
29.9

136

BTG plc Annual Report and Accounts 2018Financials16. Trade and other payables

Amounts falling due within one year
Trade payables
Accruals and deferred income
Contingent consideration liabilities
Other creditors
Corporation tax payable

Amounts falling due after more than one year
Accruals and deferred income
Contingent consideration liabilities
Provisions

17. Derivative financial instruments

Contracts in an asset position:
Forward foreign exchange contracts due within one year
Derivative assets

Contracts in a liability position:
Forward foreign exchange contracts due within one year
Forward foreign exchange contracts due after more than one year
Derivative liabilities

Note

31 March
2018
£m

31 March
2017
£m

20.3
98.5
5.0
4.0
0.1
127.9

2.4
–
2.7
5.1

14.2
105.1
28.2
4.5
–
152.0

2.0
3.9
2.6
8.5

31 March
2018
£m

31 March
2017
£m

2.9
2.9

0.6
0.1
0.7

0.1
0.1

7.9
–
7.9

The Group utilises foreign currency derivatives to economically hedge significant future transactions and cash
flows. The Group does not currently utilise hedge accounting for outstanding foreign exchange derivatives.

At 31 March 2018 the Group had forward contracts to sell US$121.6m in the period to June 2019 at a weighted
average rate of £1:US$1.38. The fair value of these derivative financial instruments at 31 March 2018 was an asset
of £2.2m (31 March 2017: £7.8m liability).

The unrealised gain of £10.1m (2017: £8.1m unrealised loss) for the year associated with the remeasurement of
forward contracts to their fair value was included within Financial income (2017: Financial expense).

A 5% strengthening of the US dollar against Sterling as at 31 March 2018 would result in an incremental charge of
£4.8m within ‘Financial Expense’ in the income statement and a derivative liability of £2.6m. Correspondingly a 5%
weakening of the US dollar against Sterling would result in a £3.7m credit within ‘Financial Expense’ and an
increase of the derivative asset to £5.9m.

137

OverviewGovernanceFinancialsStrategic ReportBTG plc Annual Report and Accounts 2018 Notes to the consolidated
financial statements
continued

18. Provisions
On 2 November 2017 a Final Order and Judgment was issued by the Court of Chancery of Delaware ruling against
BTG in its litigation with Wellstat Therapeutics Corporation concerning the commercialisation of Vistogard®.
The Court found that BTG has breached the distribution agreement and that Wellstat is entitled to damages plus
interest and costs, and requiring that BTG return the US distribution rights for Vistogard® to Wellstat, which took
place in February 2018 after a transition period.

In the year to 31 March 2018, BTG has recorded a provision for £57.7m expensed within SG&A, with the amount
of this provision based on the damages awarded and pre- and post-judgement interest calculated pursuant to
the Final Order. At 31 March 2018, the amount provided in the Group’s balance sheet, after foreign exchange
translation, was £53.9m. BTG has appealed the quantum of damages. Whilst the appeal is ongoing, BTG has entered
into a supersedeas bond which guarantees the payment of damages plus interest and costs as per the Final Order
issued.

19. Retirement benefit schemes
Defined benefit scheme
For eligible UK employees the Group operates a funded pension plan providing benefits based on final pensionable
emoluments. The plan was closed to new entrants as of 1 June 2004. The plan is a registered scheme under the
provisions of Schedule 36 of the Finance Act 2004 and the assets are held in a legally separate, trustee-
administered fund. The trustees are required by law to act in the best interest of the plan participants and are
responsible for setting the plan’s investment and governance policies.

The results of the formal valuation of the plan as at 31 March 2016 were updated to the accounting date by an
independent qualified actuary in accordance with IAS19.

The plan exposes the Group to a number of risks:

Risk
Uncertainty in benefit payments

Volatility in asset values

Uncertainty in cash funding

Detail
The value of the Group’s liabilities for post-retirement benefits will ultimately depend
on the amount of benefits paid out. This in turn will depend on the level of future pay
increases, the level of inflation (for those benefits that are subject to some form of
inflation protection) and how long individuals live.
The Group is exposed to future movements in the values of assets held in the plan to
meet future benefit payments.
Movements in the values of the obligations or assets may result in the Group being
required to provide higher levels of cash funding, although changes in the level of cash
required can often be spread over a number of years. In addition the Group is also exposed
to adverse changes in pension regulation.

The Group is not exposed to any unusual, entity specific or plan specific risks. The plan has a history of granting
increases to pensions in line with price inflation, and these increases are reflected in the measurement of the
obligation.

In July 2010, the government announced its intention that future statutory minimum pension indexation would be
measured by the Consumer Prices Index, rather than the Retail Prices Index (‘RPI’). The Group continues to value its
pension fund liability on the basis of RPI.

The IAS19 position of the plan is generally expected to be different to the triennial funding valuation assessment.
The two main drivers of this difference are the requirement for prudence in the funding basis (compared to the
IAS19 best-estimate principle), and the IAS19 requirements to use a discount rate based on high quality corporate
bonds (compared to a prudent expectation of actual asset returns for funding). This can sometimes lead to a
situation where the IAS19 measure shows a surplus while the funding measure shows a deficit, with associated
deficit recovery contributions payable by the Group.

138

BTG plc Annual Report and Accounts 2018FinancialsIn particular, the latest triennial funding valuation as at 31 March 2016 showed a deficit of £4.3m, whereas the
accounting position at the same date was a surplus of £19.3m. Deficit contributions of £1.2m every six months from
April 2016 to April 2018, inclusive, and a final contribution of £0.4m by 31 October 2018, were agreed.

The estimated amount of total employer contributions expected to be paid to the plan during 2018/19 is £2.0m
(2017/18 actual: £2.8m). Contributions are set based upon funding valuations carried out every three years with the
next valuation is due to be carried out as at 31 March 2019.

The Group has taken professional advice and concluded that it has no requirement to adjust the balance sheet in
respect of either a current surplus or a minimum funding requirement under IFRIC14. This is on the basis that the
Group has an unconditional right to a refund of a current or projected future surplus at some point in the future.

The following table sets out the key IAS 19 assumptions used for the plan:

Retail price inflation
Discount rate
Life expectancy at age 60 of a male age 60 at the accounting date
Life expectancy at age 60 of a male age 40 at the accounting date

31 March
2018
3.4% p.a.
2.6% p.a.
88.2
90.4

31 March
2017
3.4% p.a.
2.5% p.a.
89.0
91.8

31 March
2016
3.0% p.a.
3.4% p.a.
88.7
91.1

The discount rate as at 31 March 2018 has been set in line with a ‘single-agency’ approach, whereby bonds are
included in deriving the discount rate if they are rated AA by one or more of the main rating agencies (2017: bonds
are included if their average rating across the agencies was AA).

Assumptions regarding future mortality experience are set based on actuarial advice and in accordance with
published statistics. The mortality tables used at year-end 2018 were the S2NA tables based on year of birth, with a
multiplicative adjustment factor to reflect the Group’s assessment of the average current mortality rates of the plan
members relative to the tables. Amongst the UK population, there is a continuing trend for a generation to live
longer than the preceding generation, and this has been reflected in the longevity assumption by adopting CMI
core projections and also incorporating a minimum long-term rate of improvement in longevity of 1.75%/1.5% for
males and females respectively. These are the same assumptions adopted at year-end 2017, with the exception of
the CMI core projections, which have been updated to reflect the latest available.

The following table sets out related IAS 19 assumptions used:

Pension increases in deferment – RPI inflation
Pension increases in payment – RPI inflation
Pension increases in payment – inflation capped at 2.5%
General salary increases

31 March
2018
3.4% p.a.
3.4% p.a.
2.1% p.a.
3.4% p.a.

31 March
2017
3.4% p.a.
3.4% p.a.
2.1% p.a.
3.4% p.a.

31 March
2016
3.0% p.a.
3.0% p.a.
2.0% p.a.
3.0% p.a.

The amount included in the statement of financial position arising from the Group’s obligations in respect of the
plan is as follows:

Present value of defined benefit obligation
Fair value of scheme assets
Net asset recognised in the statement of financial position

31 March
2018
£m
(128.4)
150.3
21.9

31 March
2017
£m
(142.1)
159.3
17.2

31 March
2016
£m
(119.0)
138.3
19.3

A net asset is presented in the statement of financial position within non-current assets.

The IAS 19 expense is made up of the current service cost, plan administrative expenses, interest cost on the
defined benefit obligation, and interest income on plan assets, all of which are shown in the change in defined
benefit obligation and assets tables below. The expense has been included in ‘Operating expenses: Selling, general
and administrative expenses’.

139

OverviewGovernanceFinancialsStrategic ReportBTG plc Annual Report and Accounts 2018 Notes to the consolidated
financial statements
continued

19. Retirement benefit schemes continued
The allocation of the plan’s assets is as follows:

Equity instruments
Diversified growth funds
Liability driven investment
Absolute return bonds
Illiquid inflation assets
Insurance Policy
Cash and short-term marketable securities

31 March
2018
0%
5%
18%
0%
17%
27%
33%

31 March
2017
4%
6%
23%
8%
16%
0%
43%

31 March
2016
10%
9%
31%
19%
16%
0%
15%

There are no direct investments in the Group’s own shares or property occupied by any member of the Group.

In October 2017, the Trustees of the plan entered into a ‘buy-in’ to secure some of the larger pensioner liabilities
with an insurer, resulting in a reduction in longevity and other risks.

At 31 March 2018, all asset classes are traded in active markets, with the exception of the illiquid inflation assets
which are priced and traded on a monthly basis (2017: same), and the buy-in insurance policy (which does not have
a redemption value, but fully matches the liabilities of certain pensioners and is valued equal to the IAS 19
liabilities for these members).

Part of the investment objective of the plan is to minimise fluctuations in the plan’s funding levels due to changes
in the value of the liabilities. This is primarily achieved through the use of ‘liability driven investments’ (LDI), whose
main goal is to hedge movements in the liabilities due to changes in interest rate and inflation expectations.
Currently, the plan targets hedging of around 100% to both interest rate and inflation expectation changes.

LDI primarily involves the use of government bonds (including re-purchase agreements) and derivatives such as interest
rate and inflation swaps. There are no annuities or longevity swaps. These LDI instruments are typically priced and
collateralised daily by the plan’s LDI manager and/or central clearing houses. Given that the purpose of LDI is to hedge
corresponding liability exposures, the main risk is that the investments held move differently to the liability exposures.
This risk is managed by the Trustees, their advisers and the plan’s LDI manager, who regularly assess the position.

In setting the investment strategy the trustees considered the views of the Group, their assessment of the Group’s
covenant supporting the actuarial risks faced by the plan, the risks and rewards of a number of possible asset
allocation options, the suitability of a wide-range of asset classes within each strategy across and within asset
classes, and the need for appropriate diversification amongst different asset classes.

Changes in the present value of the defined benefit obligation, the fair value of the plan assets and the net asset/
liability over the year ending 31 March 2018 are as follows:

Year ended 31 March 2018
Beginning of the year
Employer’s part of the current service cost
Interest (cost)/income
Administrative costs
Contributions by the employer
Contributions from plan members
Actuarial gain/(loss) – experience
Actuarial gain – financial assumptions
Actuarial gain – demographic assumptions
Benefits paid
End of the Year

140

Obligation
£m
(142.1)
(0.5)
(3.4)
–
–
(0.1)
1.3
4.2
5.0
7.2
(128.4)

Plan assets
£m
159.3
–
3.9
–
2.8
0.1
(8.6)
–
–
(7.2)
150.3

Net asset/
(liability)
£m
17.2
(0.5)
0.5
–
2.8
–
(7.3)
4.2
5.0
–
21.9

BTG plc Annual Report and Accounts 2018FinancialsChanges in the present value of the defined benefit obligation, the fair value of the plan assets and the net asset/
liability over the year ending 31 March 2017 are as follows:

Year ended 31 March 2017
Beginning of the year
Employer’s part of the current service cost
Interest (cost)/income
Administrative costs
Contributions by the employer
Contributions from plan members
Actuarial gain – experience
Actuarial gain – financial assumptions
Actuarial loss – demographic assumptions
Benefits paid
End of the Year

Obligation
£m
(119.0)
(0.4)
(4.0)
–
–
(0.1)
0.2
(24.5)
0.6
5.1
(142.1)

Plan assets
£m
138.3
–
4.7
–
2.8
0.1
18.5
–
–
(5.1)
159.3

Net asset/
(liability)
£m
19.3
(0.4)
0.7
–
2.8
–
18.7
(24.5)
0.6
–
17.2

The actual return on the plan’s assets over 2017/18 was a loss of £4.7m (2016/17: gain of £23.2m).

The weighted average duration of the defined benefit obligation at the end of the reporting period is around
16 years (2017: 16 years).

The administrative costs shown above are nil as they are paid directly by the Group and are expensed separately
outside IAS19.

The sensitivities regarding the principal assumptions used to measure the plan obligations are:

Discount rate
RPI inflation
Life expectancy

Change in
assumption
Decrease 0.1%
Increase 0.1%
Increase 1 year

Increase in obligation

Increase in plan assets

Increase in net liability

31 March
2018
£m
1.9
1.7
4.2

31 March
2017
£m
2.4
2.1
4.7

31 March
2018
£m
2.0
1.8
1.3

31 March
2017
£m
2.4
2.0
–

31 March
2018
£m
(0.1)
(0.1)
2.9

31 March
2017
£m
–
0.1
4.7

The sensitivity information has been derived using projected cash flows valued using the relevant assumptions as
at 31 March 2018. The sensitivity methodology has not changed from prior years. Extrapolation of these results
beyond the sensitivity figures shown may not be appropriate.

Defined contribution schemes
The Group offers defined contribution pension schemes for its employees. The total income statement charge in
relation to these schemes was £7.2m (2017: £6.7m).

The Group’s defined contribution schemes are operated by external providers. The only obligation of the Group
with respect to these schemes is to make the specified contributions.

20. Share based payments
Share options
The Group makes awards under an equity-settled share option plan that entitles employees to purchase shares in
the Company. In accordance with the rules of the plan, options are granted at the market price of the shares on the
date of grant with a vesting period of generally three years. They may only be exercised upon the attainment of
service, market and non-market criteria. If the performance criteria are not met by the date specified at the time of
grant, the options do not vest and will lapse. Furthermore, options are forfeited if the employee leaves the Group
before the options vest unless the conditions under which they leave are such that they are considered to be a
‘good leaver’. In this case their options remain exercisable for a limited period of time. For further details of current
awards, see the Remuneration Report on pages 69 to 94.

141

OverviewGovernanceFinancialsStrategic ReportBTG plc Annual Report and Accounts 2018 Notes to the consolidated
financial statements
continued

20. Share based payments continued
The Group also operates savings related share option schemes, whereby options are granted to employees to
acquire shares in the Company at a discounted price.

Option pricing
For the purposes of valuing options to arrive at the share-based compensation charge, a Black-Scholes or alternate
valuation model has been used. The assumptions used in the model are as follows:

Risk-free interest rate
Dividend yield
Volatility
Expected lives of options and awards granted under:
— Share option plan
— Sharesave plan
— US Stock purchase plan
— Performance share plan
— Deferred share bonus plan
Weighted average fair value for share option plan grants in the year
Weighted average fair value for sharesave grants in the year
Weighted average fair value for stock purchase plan grants in the year
Weighted average fair value for performance share awards in the year
Weighted average fair value for deferred share bonus awards in the year

31 March
2018

31 March
2017
0.1% – 0.3% 0.1% – 0.4%
Nil
28% – 30% 28% – 30%

Nil

3 years
3.37 years
2.12 years
2-3 years
3 years
131.5p
186.2p
164.2p
571.1p
674.5p

3 years
3.37 years
2.12 years
2-3 years
3 years
133.0p
215.0p
160.6p
549.8p
673.5p

The expected volatility is based on the historical volatility (calculated based on the weighted average remaining
life of the share options, restricted or performance shares), adjusted for any expected changes to future volatility
due to publicly-available information.

Share options and performance shares are granted under a service condition, a non-market condition and a market
condition. Service and non-market conditions are not taken into account in calculating the fair value measurement
of the services received.

Since 2009, awards of share options and performance share awards have a market condition based on a Total
Shareholder Return (‘TSR’) measure. From 2009 the 2012 the TSR measure was calculated using the FTSE 250
companies excluding investment trusts, companies in the financial services sector (banks, life & non-life insurance,
equity & non-equity investment trusts, financial services, real estate investment & services and real estate
investment trusts etc.) and companies in the consumer discretionary sector (general retailers, media, travel &
leisure, and leisure goods). Since 2013 the Total Shareholder Return is measured against the FTSE 250 index as a
whole. If the Company’s TSR at least matches the performance of the relevant index over the vesting period, the
market-based performance condition will be considered to have been achieved. The fair value of an award of shares
under the share option and performance share plans have been adjusted to take into account this market-based
performance condition using a pricing model based on expectations about volatility and the correlation of TSR in
the relevant index and which incorporates into the valuation the interdependency between TSR and index
performance. See the Remuneration Report on pages 69 to 94 for further information.

142

BTG plc Annual Report and Accounts 2018FinancialsDetails of options and awards under the Group’s share plans are shown in the tables below.

Share options
Outstanding at 1 April
Granted during year
Lapsed during year
Exercised during year
Outstanding at 31 March
Exercisable at 31 March

Sharesave plan
Outstanding at 1 April
Granted during year
Lapsed during year
Exercised during year
Outstanding at 31 March
Exercisable at 31 March

US Stock purchase plan
Outstanding at 1 April
Granted during year
Lapsed during year
Exercised during year
Outstanding at 31 March
Exercisable at 31 March

Options outstanding at 31 March 2018:

Share options granted in year ended 31 March
2010
2011
2012
2013
2016
2017
2018

Sharesave plan options granted in year ended 31 March
2016
2017
2018

US Stock purchase plan options granted in year ended 31 March
2017
2018

2018
Number of
share options
(000)

2018
Weighted
average
exercise
price (p)

2017
Number of
share options
(000)

2017
Weighted
average
exercise
price (p)

1,323
8
(45)
(443)
843
662

546
286
(83)
(213)
536
–

221
142
(95)
(21)
247
–

329.6
672.5
662.6
275.1
343.9
251.8

505.8
565.1
530.3
496.1
537.3
–

559.2
525.6
568.6
617.0
531.5
–

1,311
55
(25)
(18)
1,323
1,085

617
193
(98)
(166)
546
3

229
174
(168)
(14)
221
–

322.4
665.3
644.3
395.1
329.6
254.4

442.9
520.5
491.8
297.6
505.8
289.5

543.3
573.3
538.1
530.0
571.1
–

Number
(000)

Weighted
exercise
price (p)

Latest exercise
date year ended
31 March

187
199
153
123
125
48
8
843

144
137
255
536

130
117
247

179.3
201.3
298.9
386.0
688.5
663.3
672.5

504.4
520.5
565.1

2020
2021
2022
2023
2019
2020
2021

2019
2020
2021

536.7
525.6

2019
2020

143

OverviewGovernanceFinancialsStrategic ReportBTG plc Annual Report and Accounts 2018 Notes to the consolidated
financial statements
continued

20. Share based payments continued
Performance share awards
Following approval of the Performance Share Plan by shareholders at the 2006 AGM, the Company has made
awards to the executive directors and other employees with a vesting period of three years. In 2013, amendments
to the rules of the Plan and the terms of new performance conditions were approved at the AGM. These included
the opportunity for executive directors only to voluntarily elect to carry-forward and put at risk for a further two
years shares that would have vested under the core award after three years into a multiplier award. In 2016, a new
Performance Share Plan was approved at the AGM for executive directors and other employees, with a vesting
period of three years. No multiplier awards were attached to this scheme.

A Senior Management Performance Share Plan was approved by the Board in 2012 in order to award shares to
certain senior employees below board level. The shares will vest on the second anniversary of the grant date or any
other date determined by the Remuneration Committee at the time of grant.

Movement in the number of performance share awards is as follows:

Performance share awards
Outstanding at 1 April
Granted during year
Lapsed during year
Exercised during year
Outstanding at 31 March
Exercisable at 31 March
Senior Management Performance Share Plan
Outstanding at 1 April
Granted during year
Lapsed during year
Exercised during year
Outstanding at 31 March
Exercisable at 31 March

2018
Number of
share awards
(000)

2017
Number of
share awards
(000)

4,760
1,783
(1,634)
(688)
4,221
–

163
–
(68)
(56)
39
–

5,639
1,560
(502)
(1,937)
4,760
–

112
51
–
–
163
–

Deferred share bonus plan
The Company operates a deferred share bonus plan pursuant to which executive directors, members of the
leadership team and certain other senior staff have part of their bonus awarded in shares. The shares will vest on
the third anniversary of the grant date.

Movement in the number of deferred bonus shares awarded is as follows:

Outstanding at 1 April
Granted during year
Lapsed during year
Exercised during year
Outstanding at 31 March
Exercisable at 31 March

144

2018
Number of
share awards
(000)
124
122
–
(39)
207
–

2017
Number of
share awards
(000)
259
37
–
(172)
124
–

BTG plc Annual Report and Accounts 2018FinancialsPerformance share awards and deferred share bonus plan awards are forfeited if the director or other employee
leaves the Group before the awards vest, unless the conditions under which they leave are such that they are
considered to be a ‘good leaver’. If the Remuneration Committee decide that a departing beneficiary of an award is
a ‘good leaver’, the number of share awards outstanding will typically be subject to proration for time and ultimate
vesting will remain subject to the achievement of the performance conditions set out at the time of the granting of
the award, at the discretion of the Committee. Under exceptional circumstances, the Remuneration Committee can
elect to release the award early. For further details see the Remuneration Report on pages 69 to 94.

21. Financial risk management objectives and policies
Overview
The Group has exposure to credit, liquidity and market risks from its use of financial instruments. This note sets out
the Group’s key policies and processes for managing these risks.

Credit risk
Credit risk is the risk of financial loss to the Group if a licensee fails to meet its contractual obligations or a
customer fails to pay for goods received. The Group’s primary objective with respect to credit risk is to minimise
the risk of default by licensees or customers.

A substantial element of the Group’s revenue is derived from royalties which are only payable if a licensee is
generating income from sales of licensed products. In such instances the Group’s exposure to credit risk is
considered to be inherently low, although is influenced by the unique characteristics of individual licensees.
The Group’s policy is to provide against bad debts on a specific licence by licence basis.

Product revenues are generated from direct sales as well as sales to several key wholesalers. Management
maintains regular communication with the customers and monitors both sales to and payments from customers
to minimise the credit risk exposure.

Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s
approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its
liabilities as they fall due, under both normal and stressed conditions, without incurring unacceptable losses or
risking damage to the Group’s reputation.

The Group has substantial cash balances to fund its operations. On 7 November 2017, the Group refinanced its
multi-currency revolving credit facility (‘RCF’) which was otherwise due to expire in November 2018. Following the
refinancing, BTG has a £150m multi-currency RCF, with an option to increase the RCF by a further £150m. The RCF
has a three-year term which expires in November 2020, although the Group has the option to extend the term of
the RCF for up to an additional two years. The RCF currently remains undrawn.

The Group’s policy is to place surplus cash resources on short- and medium-term fixed interest deposits, to the
extent that cash flow can be reasonably predicted. Term deposits are denominated in Sterling with institutions
rated as A or higher by both Moody’s and Standard & Poor’s.

Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices
will affect the Group’s income or the value of its holdings in financial instruments. The Group has little exposure to
interest rate risk other than that returns on short-term fixed interest deposits will vary with movements in underlying
bank interest rates. The Group’s principal market risk exposure is to movements in foreign exchange rates.

145

OverviewGovernanceFinancialsStrategic ReportBTG plc Annual Report and Accounts 2018 Notes to the consolidated
financial statements
continued

21. Financial risk management objectives and policies continued
Foreign currency risk
The Group’s principal foreign currency exposure is to US dollar, as the majority of the Group’s revenues and
operating costs are denominated in US dollar (although a significant proportion of the Group’s operating costs
remain denominated in Sterling). The Group is also exposed, albeit to a lesser extent, to the Euro, Canadian dollars
and Australian dollars. As a result the Group’s Sterling income statement, balance sheet and cash flows may be
affected by movements in Sterling exchange rates with these currencies.

The Group’s primary objective with respect to managing foreign exchange risk is to provide an appropriate level of
certainty over the value of future cash flows. Where possible, anticipated foreign currency operating expenses are
matched to foreign currency revenues. The Group economically hedges sufficient US dollar to cover anticipated
Sterling’s net operating cash outflows.

Sensitivity analysis
Excluding the impact of foreign exchange forward contracts, a 5% weakening of the US dollar would have resulted
in the following decrease in profit before tax:

Decrease in profit before tax

31 March
2018
£m
3.2

31 March
2017
£m
4.4

Interest rate risk
The Group does not consider the impact of interest rate risk to be material to its results or operations and
accordingly no sensitivity analysis is shown.

Capital management
The Group defines the capital that it manages as the Group’s total equity. The Group’s objectives when managing
capital are:

– To safeguard the Group’s ability to continue as a going concern;

– To provide an adequate return to investors based on the level of risk undertaken;

– To have available the necessary financial resources to allow the Group to invest in areas that may deliver future

benefits for inventive sources and returns to investors; and

– To maintain sufficient financial resources to mitigate against risks and unforeseen events.

The Group believes it has sufficient ongoing cash and cash equivalents to meet its stated capital management
objectives. The Group’s capital and equity ratio are shown in the table below.

Total equity – capital and reserves attributable to BTG shareholders
Total assets
Equity ratio

31 March
2018
£m
914.7
1,162.7
78.7%

31 March
2017
£m
979.9
1,311.1
74.7%

The Group is not subject to regulatory capital adequacy requirements as known in the financial services industry.

Financial instruments
The Group’s financial instruments comprise cash, short- and medium-term deposits, foreign currency forward
contracts, contingent consideration liabilities and various items such as trade debtors and creditors which arise
directly from operations.

146

BTG plc Annual Report and Accounts 2018FinancialsFair values
The fair values of the Group’s financial assets and liabilities, together with the carrying values shown in the
statement of financial position, are as follows:

31 March 2018
Cash and cash equivalents
Forward contracts
Trade and other receivables
Trade and other payables (excluding contingent consideration liabilities)
Contingent consideration liabilities
31 March 2017
Cash and cash equivalents
Forward contracts
Trade and other receivables
Trade and other payables (excluding contingent consideration liabilities)
Contingent consideration liabilities

Fair value
through profit
and loss
£m

Amortised
cost
£m

Total carrying
value
£m

Fair value1
£m

–
2.2
–
–
(5.0)

–
(7.8)
–
–
(32.1)

210.0
–
118.2
(116.8)
–

155.5
–
125.7
(125.8)
–

210.0
2.2
118.2
(116.8)
(5.0)

155.5
(7.8)
125.7
(125.8)
(32.1)

–
2.2
–
–
(5.0)

–
(7.8)
–
–
(32.1)

1. The Group has not disclosed the fair values for financial instruments such as trade receivables and trade payables because their carrying

amounts are a reasonable approximation of their fair value.

The following table provides an analysis of financial instruments that are measured subsequent to initial
recognition at fair value, grouped into Levels 1 to 3 based on the degree to which the fair value is observable:

Level 1 – quoted prices in active markets for identical assets and liabilities

Level 2 – observable inputs other than quoted prices in active markets for identical assets and liabilities

Level 3 – unobservable inputs

Fair value hierarchy of financial assets and liabilities

At 31 March 2018
Financial assets recognised at fair value
Forward foreign exchange contracts
Financial liabilities recognised at fair value
Forward foreign exchange contracts
Fair value of contingent consideration liabilities

At 31 March 2017
Financial assets recognised at fair value
Forward foreign exchange contracts
Financial liabilities recognised at fair value
Forward foreign exchange contracts
Fair value of contingent consideration liabilities

Level 1
£m

Level 2
£m

Level 3
£m

–

–
–

–

–
–

2.9

(0.7)
–

0.1

(7.9)
–

–

–
(5.0)

–

–
(32.1)

Total
£m

2.9

(0.7)
(5.0)

0.1

(7.9)
(32.1)

Level 2 financial assets and liabilities represent forward foreign exchange contracts to sell US dollars which are
remeasued to their fair value at each balance sheet date.

147

OverviewGovernanceFinancialsStrategic ReportBTG plc Annual Report and Accounts 2018 Notes to the consolidated
financial statements
continued

21. Financial risk management objectives and policies continued
Details of the movement of Level 3 fair value financial liabilities are set out below:

At 1 April
Acquisitions
Change in fair value
Foreign exchange differences
At 31 March

Note

2018
£m
(32.1)
–
24.9
2.2
(5.0)

2017
£m
(27.2)
(1.6)
0.7
(4.0)
(32.1)

Level 3 financial liabilities predominantly represent contingent consideration liabilities. The Group is party to
certain contingent consideration arrangements arising from business combinations, which include milestones
which are potentially payable on the achievement of certain development, regulatory and revenue targets. The fair
values of these contingent consideration liabilities are determined by assessing the probability of expected future
payments and discounting these risk adjusted payments to their present value. As at 31 March 2018, the fair value
of all contigent consideration milestones are nil other than those explained below.

PneumRx®
The PneumRx® contingent consideration liability at 31 March 2017 related to a $60m regulatory milestone which
was payable if FDA approval for PneumRx® Coils was received by 31 December 2017. During the year, the Group
recognised a credit of £26.5m relating to the full release of the PneumRx® contingent consideration liability as
the FDA approval for PneumRx® Coils was not received by 31 December 2017.

Galil Medical
The Galil contingent consideration liability of £5.0m (2017: £3.9m) relates to two regulatory milestones. The
first regulatory milestone of $10m is payable to former shareholders of Galil Medical if FDA approval for lung
metastases is received by 31 December 2018. The second regulatory milestone of $5m is payable to former
shareholders of Galil Medical if FDA approval for bone metastases is received by 31 December 2018.

The Group recognised a charge of £1.6m relating to the fair value of the Galil contingent consideration liabilities
in the year to 31 March 2018, reflecting the Group’s latest expectations over the probability and timing of achieving
these regulatory milestones within the earn-out period.

Contractual maturity analysis of financial assets/(liabilities)

Forward foreign exchange contracts that mature within:
0-3 months
3-6 months
6-12 months
>12 months
Total

31 March
2018
£m
0.9
1.2
0.2
(0.1)
2.2

31 March
2017
£m
(3.5)
(1.6)
(2.7)
–
(7.8)

Net gains and losses on financial assets and liabilities
Foreign exchange losses of £1.1m (2017: gains of £4.3m) were recognised within operating profit.

The Group recognised a net gain of £8.8m relating to forward foreign exchange contracts with financial income
in the year to 31 March 2018. This gain comprises a reversal of unrealised losses from the prior year of £7.9m,
net unrealised gains of £2.2m and net realised losses of £1.3m.

For the year to 31 March 2017, the Group recognised a loss of £25.2m relating to forward foreign exchange
contracts with financial expense in the year to 31 March 2018. This loss comprises realised FX losses of £17.1m
and unrealised FX losses of £8.1m.

148

BTG plc Annual Report and Accounts 2018FinancialsEstimation of fair values
The following summarises the methods and assumptions used in estimating the fair values of financial instruments
reflected in the table.

Trade receivables, trade payables and cash and cash equivalents
Trade payables and receivables have a remaining life of less than one year, such that carrying value is considered
to be a reasonable approximation of fair value.

Contingent consideration liabilities
Contingent consideration liabilities are re-measured to fair value at each reporting period, to reflect changes in
assumptions underlying the fair value of these liabilities, which includes the probability of technical success, any
timing risk to achieving the relevant milestones and the appropriate discount rate.

22. Operating leases
Total non-cancellable operating lease rentals are due in the following periods:

Within one year
Between two and five years
Greater than five years

31 March
2018
Property
£m
3.7
11.9
8.8
24.4

31 March
2017
Property
£m
3.8
7.2
6.1
17.1

Operating lease payments represent rentals payable for certain of its office properties under non-cancellable
operating lease agreements. The Group leases a number of offices and facilities primarily in the UK, the US, Canada,
Germany, Asia-Pacific and Australia. The leases contain options to extend for further periods. In the event of
renewal, the lease contracts contain market review clauses. None of the property leases provide the Group with
an option to purchase the leased asset at the expiry of the lease period.

23. Related parties
Identity of related parties
In relation to the related party relationship identified on page 53 concerning Giles Kerr, payments made by
BTG to Oxford University and Oxford University Innovation Limited under the relevant licence agreements were
£18,000 for the year ended 31 March 2018 (£19,000 for the year ended 31 March 2017). There are no amounts still
outstanding and payable by BTG under these agreements as at 31 March 2018 (2017: nil).

Key management personnel are considered to be the directors and their remuneration is disclosed within the
Remuneration Report on pages 69 to 94.

149

OverviewGovernanceFinancialsStrategic ReportBTG plc Annual Report and Accounts 2018 Notes to the consolidated
financial statements
continued

24. Group entities
The subsidiary undertakings of BTG plc at 31 March 2018 are all wholly owned with the exception of Oncoverse LLC
and Vetex Medical Limited, incorporated in the United Kingdom and registered in England and Wales, unless shown
otherwise. All subsidiary undertakings operate in their country of incorporation and are consolidated in the Group’s
financial statements.

BTG International (Holdings) Ltd *

Registered Office
5 Fleet Place, London EC4M 7RD

Class of capital
Ordinary

Provensis Ltd *

5 Fleet Place, London EC4M 7RD

BTG International Ltd

5 Fleet Place, London EC4M 7RD

BTG Management Services Ltd

5 Fleet Place, London EC4M 7RD

Protherics Medicines Development Ltd 5 Fleet Place, London EC4M 7RD

BTG International Inc.
Delaware, USA

Protherics UK Ltd

BTG Australasia Pty Ltd
Australia
Biocompatibles International Ltd*

Biocompatibles UK Ltd

Biocompatibles, Inc.
Delaware, USA

BTG International Germany GmbH
Germany
BTG International Canada Inc.
Canada
BTG International Asia Limited
Hong Kong, China

EKOS Corporation
Delaware, USA
PneumRx, Inc.
Delaware, USA

300 Four Falls Corporate Center, 300
Conshohocken State Road, Suite 300,
West Conshohocken, PA 19428-2998,
United States
Blaenwaun Ffostrasol, Llandysul,
Ceredigion, Wales SA44 5JT
Turretfield Research Centre, 129 Holland
Road, Rosedale SA 5350, Australia
Chapman House, Farnham Business Park,
Weydon Lane, Farnham, Surrey GU9 8QL
Chapman House, Farnham Business Park,
Weydon Lane, Farnham, Surrey GU9 8QL
300 Four Falls Corporate Center, 300
Conshohocken State Road, Suite 300,
West Conshohocken, PA 19428-2998,
United States
Hansaallee 101, 40549, Düsseldorf,
Germany
11 Hines Road, Suite 200, Ottawa ON
K2K 2X1, Canada
Room 2905, 29/Floor, Chubb Tower,
Windsor House, 311 Gloucester Road,
Causeway Bay, Hong Kong
11911 N. Creek Parkway S., Bothell WA
98011, United States
4255 Burton Drive, Santa Clara, CA 95054,
United States

Ordinary

Common stock

Ordinary

Common stock

Common shares

Ordinary

Common stock

PneumRx Ltd

5 Fleet Place, London EC4M 7RD

Ordinary

Principal activity
Investment in IPR management
companies
Development and commercialisation
of IPR
Development, management and
commercialisation of IPR
Investment and management of
Group companies
Development, management and
commercialisation of IPR
Research, development and sale of
Pharmaceuticals products

Research, development, manufacture
and sale of Pharmaceuticals products
Manufacture and sale of
Pharmaceuticals products
Investment and management of
Group companies
Development, management and
commercialisation of IPR
Distribution of Bead products,
TheraSphere® and Varithena®

Support of Interventional Medicine
business
Sales support for the Interventional
Medicine business

Manufacture and commercialisation
of therapeutic ultrasound devices
Development, manufacture and
commercialisation of the PneumRx®
Coil System
Commercialisation and sale of the
PneumRx® Coil System
Commercialisation and sale of the
PneumRx® Coil System
Group financing
Group financing

Hansaallee 101, 40549, Düsseldorf,
Germany
5 Fleet Place, London EC4M 7RD
300 Four Falls Corporate Center, 300
Conshohocken State Road, Suite 300,
West Conshohocken, PA 19428-2998,
United States
300 Four Falls Corporate Center, 300
Conshohocken State Road, Suite 300,
West Conshohocken, PA 19428-2998,
United States
5 Fleet Place, London EC4M 7RD

PneumRx GmbH
Germany
BTG International Healthcare Ltd
BTG International Healthcare Inc.
Delaware, USA

BTG International Healthcare LLC
Delaware, USA

IO2 Limited

150

No par value shares

Ordinary
Common stock

Ordinary

Group financing

Ordinary

Dormant company

No par value shares

Research and development

BTG plc Annual Report and Accounts 2018FinancialsBTG IM Holdings Ltd
Israel
Galil Medical Inc.
Delaware, USA
Galil Medical Ltd
Israel

Galil Medical UK Ltd
Oncoverse LLC
Delaware, USA
BTG Medikal Ltd. ŞtÍ
Turkey

Roxwood Medical, Inc.
Delaware, USA
Vetex Medical Limited
Ireland

Registered Office

Tavor Building 1, Yokneam Illit Industrial
Park, PO Box 224, Yokneam, 2069203, Israel
4364 Round Lake Road, Arden Hills MN
55112, United States
Tavor Building 1, Yokneam Illit Industrial
Park, PO Box 224, Yokneam, 2069203, Israel

5 Fleet Place, London EC4M 7RD
600 California St, 11th Floor, Suite 12-040,
San Francisco, CA 94108, United States
Barbaros Mah, Çiǧdem Sok,
MY Ofis Apt, No: 1/50, Ataşehir,
Istanbul 34746, Turkey
400 Seaport Court, Suite 103, Redwood City,
CA 94063, United States
Unit 218 Business Innovation Centre, NUI
Galway, Ireland

Class of capital

Ordinary

Common Stock

Ordinary
Series A-1 Preferred Shares
Series A-2 Preferred Shares
Series B Preferred Shares
Ordinary
Preferred Stock

Ordinary

Common Stock

N/A: see Note 25

Principal activity

Investment in Galil companies

Manufacture, commercialisation and
sale of the GALIL™ System
Manufacture, commercialisation and
sale of the GALIL™ System

Distribution of the GALIL™ System
Collaboration and notification of
information for medical experts
Commercialisation and sale of
TheraSphere® and Beads

Manufacture, commercialisation and
sale of the Roxwood System
Development of venous thrombus
management devices

* Indicates direct subsidiary of BTG plc.

25. Business combinations
Acquisitions during the year ended 31 March 2018
Roxwood Medical Inc. (‘Roxwood Medical’) acquisition
On 5 October 2017 BTG completed the acquisition of 100% of Roxwood Medical for an aggregate cash
consideration of $64.9m, subject to customary closing adjustments, and contingent consideration of up to $15m
which may be payable based on the achievement of specified sales based milestones.

The total consideration for the acquisition of Roxwood Medical was £44.7m ($58.9m), representing the up-front
cash consideration paid after customary closing adjustments. The acquisition date fair value of the contingent
consideration payables was assessed as nil.

Roxwood Medical’s results of operations have been consolidated from 5 October 2017, and the preliminary fair
value of assets acquired and liabilities assumed have been determined as of that date. The final determination of
these fair values will be completed as soon as possible but no later than one year from acquisition date.

Roxwood Medical is an innovative provider of advanced cardiovascular specialty catheters used in the treatment of
patients with severe coronary and peripheral artery disease. The acquisition continues to build BTG’s strength in the
vascular space, further expanding BTG’s portfolio of differentiated minimally invasive vascular technologies.

Intangible assets of £45.6m relate to Roxwood’s developed technology. An estimated useful life of 12 years has
been assigned to this developed technology, and associated amortisation expense will be recorded on a straight-
line basis. Goodwill arising of £14.9m ($19.6m), which is not deductible for tax purposes, has been assigned to the
Interventional Medicine operating segment. Goodwill represents the value of Roxwood’s workforce which has not
been reflected as a separate intangible asset, together with the recognition for accounting purposes of a deferred
tax liability of £17.3m ($22.9m) relating to the developed technology.

151

OverviewGovernanceFinancialsStrategic ReportBTG plc Annual Report and Accounts 2018 Notes to the consolidated
financial statements
continued

25. Business combinations continued

ASSETS
Non-current assets
Deferred tax asset
Intangible assets
Goodwill
Property, plant and equipment
Current assets
Inventories
Trade and other receivables
Cash and cash equivalents

LIABILITIES
Non-current liabilities
Deferred tax liabilities
Current liabilities
Trade and other payables
Book value and fair value of assets and liabilities acquired
Cash consideration
Total consideration

Book value
£m

Fair value
adjustment
£m

Fair value
£m

–
–
–
0.1

0.7
1.2
1.1

–

(6.0)
(2.9)

4.2
45.6
14.9
–

0.2
–
–

(17.3)

–
47.6

4.2
45.6
14.9
0.1

0.9
1.2
1.1

(17.3)

(6.0)
44.7
44.7
44.7

During the period ended 31 March 2018, sales of Roxwood Medical products totalled £0.8m and an operating
loss (including acquired intangible asset amortisation of £1.8m) of £3.8m has been recognised in the period
since acquisition.

Oncoverse LLC (‘Oncoverse’) acquisition
On 20 April 2017, BTG acquired a 55% equity stake in Oncoverse, a US company, for cash consideration of £1.9m
($2.5m). Oncoverse is developing a digital health platform designed to allow cancer patients’ care teams to
collaborate and allow clinicians across all disciplines to work together to determine the most effective treatment
plan for their patients. Oncoverse’s results of operations have been consolidated from 20 April 2017, with that
portion attributable to the 45% of Oncoverse equity not owned by BTG recorded within ‘Non-controlling interests’.

The impact of Oncoverse’s operations on the Group’s income statement is immaterial. The fair values of assets
acquired and liabilities assumed have also been determined as of 20 April 2017. As at 31 March 2018 the Group and
the non-controlling interest have agreed to cease commercialisaton of the Oncoverse technology and are assessing
the future of the business. Accordingly an impairment charge of £2.1m has been recorded within ‘Research and
development’ within the income statement.

Consolidation of Vetex Medical Limited (‘Vetex’)
On 17 July 2017 BTG provided Vetex, a development-stage medical device company based in Ireland, with £2.0m
($2.7m) cash in exchange for a convertible loan note and a call option over 100% of Vetex’s share capital. As a
result of these transactions, it is deemed that BTG has the current ability (irrespective of intent) to exercise power
over Vetex’s primary value generating activities. Accordingly, the results of Vetex have been consolidated from
17 July 2017, with that portion attributable to the 100% of Vetex equity not owned by BTG recorded within
‘Non-controlling interests’.

The impact of Vetex on the Group’s income statement is immaterial. The fair values of assets acquired and
liabilities assumed have also been determined as of 17 July 2017. The final determination of these fair values
will be completed as soon as possible but no later than one year from the date of acquisition.

152

BTG plc Annual Report and Accounts 2018FinancialsAcquisitions during the year ended 31 March 2017
Galil Medical acquisition
On 15 June 2016 BTG completed the acquisition of 100% of Galil Medical for an aggregate consideration of $84.5m,
subject to adjustment for cash and debt assumed at acquisition. Contingent consideration of up to $25.5m may also
be payable in future periods based upon the achievement of regulatory and sales based milestones.

The total equity consideration for the acquisition of Galil Medical was £39.1m ($55.1m), representing up-front cash
consideration of £37.5m ($52.9m) and the fair value of contingent consideration of £1.6m ($2.2m). The remainder
of the aggregate consideration was used to settle debt and other obligations assumed on acquisition.

Galil Medical’s results of operations have been consolidated from 15 June 2016, and the fair value of acquired
assets and liabilities has been determined as of that date.

In the US, Galil Medical’s products are indicated for the treatment and palliative care of kidney and other cancers,
in addition to a number of other uses, including in urology. Galil Medical is also conducting two clinical studies
assessing safety and efficacy of these products for the treatment of lung and bone metastases. The acquisition
complements BTG’s Interventional Medicine platform, building on the Group’s Interventional Oncology
business area.

Intangible assets of £47.7m relate to developed cryoablation technology. An estimated useful life of 15 years
has been assigned to this developed technology, and associated amortisation expense is being recorded on a
straight-line basis. Goodwill arising of £16.4m, which is not deductible for tax purposes, has been assigned to
the Interventional Medicine operating segment. Goodwill represents future developments to the cryoablation
technology and the value of Galil’s workforce which have not been reflected as separate intangible assets,
together with the recognition for accounting purposes of a deferred tax liability of £17.0m relating to recognised
developed technology.

Book value
£m

Fair value
adjustment
£m

Fair value
£m

ASSETS
Non-current assets
Intangible assets
Goodwill
Property, plant and equipment
Current assets
Inventories
Trade and other receivables
Cash and cash equivalents

LIABILITIES
Non-current liabilities
Net deferred tax liabilities
Current liabilities
Trade and other payables
Debt obligations
Book value and fair value of assets and liabilities acquired
Cash consideration
Fair value of contingent consideration
Total consideration

0.4
–
0.4

2.6
3.7
1.3

–

(9.4)
(18.9)
(19.9)

47.3
16.4
0.6

0.8
–
–

(6.1)

–
–
59.0

47.7
16.4
1.0

3.4
3.7
1.3

(6.1)

(9.4)
(18.9)
39.1
37.5
1.6
39.1

153

OverviewGovernanceFinancialsStrategic ReportBTG plc Annual Report and Accounts 2018 Company financial statements
Statement of financial position

ASSETS
Non-current assets
Investment in subsidiaries
Deferred tax asset

Current assets
Trade and other receivables
Cash and cash equivalents

Total assets
EQUITY
Share capital
Share premium
Merger reserve
Retained earnings
Total equity
LIABILITIES
Current liabilities
Trade and other payables
Total liabilities
Total equity and liabilities

31 March
2018
£m

31 March
2017
£m

Note

6
6
6
6
6

779.7
0.5
780.2

78.6
0.5
79.1
859.3

38.6
437.7
317.8
62.1
856.2

3.1
3.1
859.3

775.1
–
775.1

69.2
0.5
69.7
844.8

38.5
435.4
317.8
37.6
829.3

15.5
15.5
844.8

The notes on pages 157 to 160 form part of these financial statements.

The financial statements were approved by the Board on 14 May 2018 and were signed on its behalf by:

Dame Louise Makin
Chief Executive Officer Chief Financial Officer

Duncan Kennedy

Registered No: 2670500

154

BTG plc Annual Report and Accounts 2018Financials Statement of
cash flows

Profit/(loss) after tax for the year
(Increase) in trade and other receivables
(Decrease)/Increase in trade and other payables
Other
Net cash outflow from operating activities
Investing activities
Increase of investment in subsidiary companies
Net cash outflow from investing activities
Cash flows from financing activities
Proceeds of share issues
Net cash inflow from financing activities
Increase in cash and cash equivalents
Cash and cash equivalents at start of year
Cash and cash equivalents at end of year

The notes on pages 157 to 160 form part of these financial statements.

Note
2
5
7

Year ended
31 March
2018
£m
18.7
(9.4)
(12.4)
0.7
(2.4)

Year ended
31 March
2017
£m
(11.1)
(0.1)
9.6
0.8
(0.8)

–
–

2.4
2.4
–
0.5
0.5

–
–

0.8
0.8
–
0.5
0.5

155

OverviewGovernanceFinancialsStrategic ReportBTG plc Annual Report and Accounts 2018 Statement of
changes in equity

At 1 April 2016
Loss for the year
Other comprehensive income
Total comprehensive loss for the year

Transactions with owners:
Issue of BTG plc ordinary shares
Movement in shares held by the Employee Share
Ownership Trust
Share-based payments
At 31 March 2017

At 1 April 2017
Profit for the year
Other comprehensive income
Total comprehensive income for the year

Transactions with owners:
Issue of BTG plc ordinary shares
Movement in shares held by the Employee Share
Ownership Trust
Share-based payments
At 31 March 2018

Share
capital
£m
38.3
–
–
–

0.2

–
–
38.5

Share
capital
£m
38.5
–
–
–

0.1

–
–
38.6

Share
premium
£m
434.8
–
–
–

0.6

–
–
435.4

Share
premium
£m
435.4
–
–
–

2.3

–
–
437.7

Merger
reserve
£m
317.8
–
–
–

–

–
–
317.8

Merger
reserve
£m
317.8
–
–
–

–

–
–
317.8

Retained
earnings
£m
41.5
(11.1)
–
(11.1)

–

(1.3)
8.5
37.6

Retained
earnings
£m
37.6
18.7
–
18.7

–

(0.7)
6.5
62.1

Total
equity
£m
832.4
(11.1)
–
(11.1)

0.8

(1.3)
8.5
829.3

Total
equity
£m
829.3
18.7
–
18.7

2.4

(0.7)
6.5
856.2

The notes on pages 157 to 160 form part of these financial statements.

156

BTG plc Annual Report and Accounts 2018Financials Notes to the Company
financial statements

1. Accounting policies
The accounting policies adopted in the preparation of these Company financial statements are the same as those
set out in Note 2 to the Group financial statements with the addition of the following:

Investments
Investments in subsidiaries are stated at cost less provision for impairment.

Accounting for transactions under common control
Where the Company acquires or disposes of shares in another Group company either in a share for share exchange
or as an acquisition or disposal of part of the business, the cost or proceeds are determined by reference to the fair
value of the consideration received (i.e. the fair value of the company in which shares have been received) at the
date of transfer.

If the Company receives shares following the sale of its subsidiary or part of its business, any gain or loss is credited
or charged to the income statement. Where the Company issues shares following the acquisition of a subsidiary or
part of another business, any gain or loss is credited or charged to reserves.

Share-based payments
The Company has elected to apply IFRS 2 to all share-based awards and options granted post 7 November 2002
that had not vested by 1 January 2005. The carrying amount of an investment in a subsidiary is increased to the
extent that share-based payments relate to employees of that subsidiary. Share-based payment expenses relating
to employees of the Company are expensed within the income statement.

These policies have been applied consistently to the periods presented.

The functional currency of the Company is Sterling and all values are rounded to the nearest £0.1m except where
otherwise indicated.

2. Profit/(loss) for the year
As permitted by section 408 of the Companies Act 2006, the Company has elected not to present its own income
statement for the year. The profit after tax of the Company amounted to £18.7m (2017: loss of £11.1m) which
includes dividend income of £30.0m (2017: nil).

The analysis of the auditor’s remuneration is as follows:

The auditing of accounts of the Company
Audit related assurance services

3. Staff costs
The employees are based in the United Kingdom.

Year ended
31 March
2018
£’000
130
61

Year ended
31 March
2017
£’000
128
60

Disclosures of individual director’s remuneration and associated costs required by the Companies Act 2006 and
specified by the Financial Conduct Authority are on pages 69 to 94 within the Remuneration Report and form part
of these audited accounts.

The employees of the Company are members of the Group pension schemes as detailed in Note 19 of the Group
financial statements.

157

OverviewGovernanceFinancialsStrategic ReportBTG plc Annual Report and Accounts 2018 Notes to the Company
financial statements
continued

4. Investment in subsidiary undertakings

Cost
At 1 April 2016
Increase of investments in subsidiary companies
Share based payments
At 1 April 2017
Increase of investments in subsidiary companies
Share based payments
At 31 March 2018

£m

768.7
–
6.4
775.1
–
4.6
779.7

A list of the Company’s principal subsidiary undertakings is shown in Note 24 to the Group financial statements.

5. Trade and other receivables

Due within one year
Prepayments
Other debtors
Amounts owed by subsidiary undertakings

31 March
2018
£m

31 March
2017
£m

1.3
0.4
76.9
78.6

0.6
–
68.6
69.2

6. Capital and reserves
Details of Company share capital are disclosed in Note 15 to the Group financial statements. Details of share
options granted by the Company are set out in Note 20 to the Group financial statements. Details of shares in the
Company held by subsidiaries are shown in Note 24 to the Group financial statements.

7. Trade and other payables

Due within one year
Accruals and deferred income
Amounts owed to subsidiary undertakings

31 March
2018
£m

31 March
2017
£m

3.1
–
3.1

3.9
11.6
15.5

The directors consider the fair value of trade and other payables to be equal to their book value.

158

BTG plc Annual Report and Accounts 2018Financials8. Financial assets and liabilities

31 March 2017
Cash and cash equivalents
Trade and other receivables
Trade and other payables
31 March 2018
Cash and cash equivalents
Trade and other receivables
Trade and other payables

Amortised
cost
£m

0.5
69.2
(15.5)

0.5
77.3
3.1

Total
carrying
value
£m

0.5
69.2
(15.5)

0.5
77.3
3.1

The Company considers that the carrying amounts of cash and cash equivalents, trade and other receivables and
trade and other payables are a reasonable approximation of their fair value.

Credit risk
The Company’s credit risk relates to the risk that one of its subsidiaries is unable to repay intercompany amounts
owing. The recoverability of the Company’s intercompany receivable is considered at each balance sheet date.

Liquidity risk
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The
Company does not hold significant cash balances as cash is managed centrally within its subsidiaries. Accordingly
the Company is funded by its subsidiaries as its liabilities fall due. On 7 November 2017, the Group refinanced its
multi-currency revolving credit facility (‘RCF’) which was otherwise due to expire in November 2018. Following the
refinancing, BTG has a £150m multi-currency RCF, with an option to increase the RCF by a further £150m. The RCF
has a three-year term which expires in November 2020, although the Group has the option to extend the term of
the RCF for up to an additional two years. The RCF currently remains undrawn.

Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices
will affect the Group’s income or the value of its holdings in financial instruments. As the holding company of the
BTG Group, the Company does not have significant exposure to movements in market prices and accordingly no
additional disclosure is provided. There are no foreign currency balances within the Company’s statement of
financial position.

Capital Management
Details of the Company’s objectives with respect to managing capital are disclosed in Note 21 to the Group
financial statements.

9. Guarantees and contingent liabilities
The Company has provided a Guarantee to certain subsidiary undertakings in respect of the BTG Pension Fund up to
a maximum amount equal to the lowest non-negative amount which, when added to the assets of the Fund, would
result in the Fund being at least 105% funded on the date on which any liability arose, calculated on the basis set
out in section 179 of the Pensions Act 2004, were a valuation to be conducted as at that date. The Company has
additionally guaranteed the payment obligations of BTG International Limited in respect of its obligations in
relation to the fund, up to a maximum of £12m.

159

OverviewGovernanceFinancialsStrategic ReportBTG plc Annual Report and Accounts 2018Notes to the Company
financial statements
continued

10. Related party transactions
The Company has a related-party relationship with its subsidiary undertakings and its directors.

In relation to the related party relationship identified on page 53 concerning Giles Kerr, payments made by
BTG to Oxford University and Oxford University Innovation Limited under the relevant licence agreements were
£18,000 for the year ended 31 March 2018 (£19,000 for the year ended 31 March 2017). There are no amounts still
outstanding and payable by BTG under these agreements as at 31 March 2018 (2017: nil).

Key management personnel are considered to be the directors and their remuneration is disclosed within the
Remuneration Report on pages 69 to94.

11. Pensions
Certain employees of the Company participate in the Group’s defined benefit plan. Further information on the
defined benefit plan can be found in Note 19 of the Group financial statements.

160

BTG plc Annual Report and Accounts 2018Financials
Five-year financial record –
GBP presentational currency
For the years ended 31 March

Consolidated income statement

Revenue
Cost of sales
Gross profit
Selling, general and administrative expenses
Research and development
Other operating (expense)/income
Amortisation of acquired intangible assets
Acquisition and reorganisation costs
Operating (loss)/profit
Financial income
Financial expense
(Loss)/profit before tax
Tax credit/(charge)
Profit for the year
Attributable to non-controlling interests
Attributable to owners of the parent
Profit for the year
Earnings per share
Basic
Diluted

20181
£m
620.5
(185.9)
434.6
(325.5)
(165.5)
(1.3)
(43.8)
(1.3)
(102.8)
41.5
(9.3)
(70.6)
83.3
12.7
(2.3)
15.0
12.7

3.9p
3.9p

20172
£m
570.5
(179.9)
390.6
(206.6)
(87.8)
4.4
(42.0)
(1.1)
57.5
3.3
(29.2)
31.6
2.0
33.6
–
33.6
33.6

8.7p
8.6p

2016
£m
447.5
(140.8)
306.7
(141.4)
(77.2)
3.4
(35.0)
–
56.5
4.4
(3.4)
57.5
3.0
60.5
–
60.5
60.5

15.8p
15.6p

20153
£m
367.8
(114.7)
253.1
(124.8)
(68.3)
7.0
(28.4)
(3.7)
34.9
0.1
(8.3)
26.7
6.9
33.6
–
33.6
33.6

9.1p
9.0p

20144
£m
290.5
(95.0)
195.5
(84.0)
(47.2)
(3.9)
(23.3)
(9.8)
27.3
8.2
(2.2)
33.3
(9.0)
24.3
–
24.3
24.3

6.8p
6.7p

1. The results for the year ended 31 March 2018 include the results of Roxwood Medical from the date of acquisition, being 5 October 2017.
2. The results for the year ended 31 March 2017 include the results of Galil Medical from the date of acquisition, being 15 June 2016.
3. The results for the year ended 31 March 2015 include the results of PneumRx, Inc. from the date of acquisition, being 7 January 2015.
4. The results for the year ended 31 March 2014 include the results of EKOS Corporation and the Targeted Therapies Division of Nordion Inc.

from the date of acquisition, being 5 July 2013 and 13 July 2013 respectively.

161

OverviewGovernanceFinancialsStrategic ReportBTG plc Annual Report and Accounts 2018 Five-year financial record – GBP presentational currency
For the years ended 31 March
continued

Consolidated statement of financial position
20181
£m
223.1
463.7
40.7
1.7
3.6
21.9
–
754.7
408.0
1,162.7

Goodwill
Intangible assets
Property, plant and equipment
Other non-current assets
Deferred tax asset
Employee benefits
Derivative financial instruments
Total non-current assets
Current assets
Total assets

Equity
Share capital
Share premium
Merger reserve
Reserves
Retained earnings
Attributable to owners of the parent
Attributable to non-controlling interests
Total equity
Total non-current liabilities
Total current liabilities
Total liabilities
Total equity and liabilities

38.6
437.7
317.8
29.9
90.7
914.7
(1.9)
912.8
59.8
190.1
249.9
1,162.7

20172
£m
225.6
678.9
40.1
1.7
5.3
17.2
–
968.8
342.3
1,311.1

38.5
435.4
317.8
119.8
68.4
979.9
–
979.9
165.7
165.5
331.2
1,311.1

2016
£m
187.9
599.2
35.7
1.4
6.8
19.3
1.0
851.3
297.5
1,148.8

38.3
434.8
317.8
28.1
28.7
847.7
–
847.7
176.1
125.0
301.1
1,148.8

20153
£m
183.8
597.9
35.5
3.0
4.9
13.2
–
838.3
207.6
1,045.9

38.2
433.8
317.8
9.4
(40.6)
758.6
–
758.6
171.7
115.6
287.3
1,045.9

20144
£m
123.6
397.9
31.3
3.0
0.8
8.0
0.9
565.5
146.2
711.7

36.1
288.7
317.8
(32.2)
(80.0)
530.4
–
530.4
93.5
87.8
181.3
711.7

1. The statement of financial position for 31 March 2018 includes the assets and liabilities acquired from Roxwood Medical during the year.
2. The statement of financial position for 31 March 2017 includes the assets and liabilities acquired from Galil Medical during the year.
3. The statement of financial position for 31 March 2015 includes the assets and liabilities acquired from PneumRx, Inc. during the year.
4. The statement of financial position for 31 March 2014 includes the assets and liabilities acquired from EKOS Corporation and the Targeted

Therapies Division of Nordion Inc. during the year.

Consolidated cash flow statement

Net cash from operating activities
Net cash used in investing activities
Net cash from/(used in) financing activities
Increase/(decrease) in cash and cash equivalents
Effect of exchange rate fluctuations on cash held
Cash and cash equivalents at start of year
Cash and cash equivalents at end of year

20181
£m
120.7
(56.4)
(1.0)
63.3
(8.8)
155.5
210.0

20172
£m
74.2
(45.3)
(19.7)
9.2
5.9
140.4
155.5

2016
£m
95.6
(29.9)
–
65.7
0.9
73.8
140.4

20153
£m
47.5
(158.9)
146.2
34.8
0.8
38.2
73.8

20144
£m
48.5
(269.4)
102.7
(118.2)
(2.3)
158.7
38.2

from the date of acquisition, being 5 July 2013 and 13 July 2013 respectively.

162

BTG plc Annual Report and Accounts 2018Financials Five-year financial record –
US dollar presentational
currency

Starting with the 2018/19 financial year, BTG will change its presentational currency to US dollar. This change is
reflective of the majority of the Group’s revenues and a significant proportion of its operating costs now being
denominated in US dollar.

This change to report financial information in US dollar will take effect from 1 April 2018.

Historical income statements for the last five full years have been restated into US dollar below.

For the years ended 31 March.

Consolidated income statement (unaudited)
20181
$m
822.8
(246.3)
576.5
(437.9)
(224.7)
(1.9)
(58.2)
(1.8)
(148.0)
55.3
(12.4)
(105.1)
118.0
12.9

Revenue
Cost of sales
Gross profit
Selling, general and administrative expenses
Research and development
Other operating income/(expense)
Amortisation of acquired intangible assets
Acquisition and reorganisation costs
Operating (loss)/profit
Financial income
Financial expense
(Loss)/profit before tax
Tax credit/(charge)
Profit for the year
(Loss)/profit
Attributable to non-controlling interests
Attributable to the owners of the parent
Profit for the year
Earnings per share
Basic
Diluted

(3.1)
16.0
12.9

4.1c
4.1c

20172
$m
743.8
(235.2)
508.6
(270.1)
(114.8)
5.8
(54.9)
(1.4)
73.2
4.3
(38.2)
39.3
2.7
42.0

–
42.0
42.0

10.9c
10.8c

2016
$m
673.8
(212.3)
461.5
(213.2)
(116.4)
5.1
(52.8)
–
84.2
6.6
(5.1)
85.7
4.6
90.3

–
90.3
90.3

23.6c
23.3c

20153
$m
591.0
(185.0)
406.0
(201.2)
(110.1)
11.3
(45.8)
(6.0)
54.2
0.2
(13.4)
41.0
11.1
52.1

–
52.1
52.1

14.2c
13.9c

20144
$m
462.0
(151.1)
310.9
(133.6)
(75.1)
(6.2)
(37.1)
(15.6)
43.3
13.0
(3.5)
52.8
(14.2)
38.6

–
38.6
38.6

10.9c
10.7c

from the date of acquisition, being 5 July 2013 and 13 July 2013 respectively.

163

OverviewGovernanceFinancialsStrategic ReportBTG plc Annual Report and Accounts 2018 Shareholder information

Financial calendar
Circulation of annual report for the year ended 31 March 2018

Annual General Meeting

Announcement of interim results for the six months ended 30 September 2018

Preliminary announcement of annual results for the year ended 31 March 2019

15 June 2018

18 July 2018

November 2018

May 2019

Shareholders
At 31 March 2018 there were 8,147 holders of ordinary shares in the Company. Their shareholdings are analysed as
follows:

Size of shareholding
1 – 5,000
5,001 – 50,000
50,001 – 100,000
100,001 – 500,000
Over 500,000
Total

Number of
shareholders
7,415
471
65
107
89
8,147

Shareholders are further analysed as follows:

Type of owner
Bank and nominee companies
Private shareholders
Limited companies
BTG Employee Share Trust
Insurance companies and
pension funds

Number of
shareholders
948
7,015
47
1

136
8,147

Percentage of total
number of shareholders
91.0
5.8
0.8
1.3
1.1
100.0

Percentage of total
number of shareholders
11.6
86.1
0.6
–

1.7
100.0

Number of
ordinary shares
4,872,504
7,271,119
4,654,534
25,811,886
343,882,532
386,492,575

Number of
ordinary shares
376,776,336
8,511,011
320,621
66,053

818,554
386,492,575

Percentage of
ordinary shares
1.2
1.9
1.2
6.7
89.0
100.0

Percentage of
ordinary shares
97.5
2.2
0.1
–

0.2
100.0

Mutual funds and other institutions, and private shareholders holding their shares within PEPs and ISAs, are
included within ‘Bank and nominee companies’.

Link share dealing services
A quick and easy share dealing service is available from Link Asset Services, to either buy or sell more shares. An
online and telephone dealing facility is available providing shareholders with an easy-to-access and simple-to-use
service. For further information on this service, or to buy and sell shares, please contact: www.capitadeal.com
(online dealing) or 0371 664 0445 (telephone dealing – calls are charged at the standard geographic rate and will
vary by provider. Calls outside the United Kingdom are charged at the applicable international rate. Lines are open
between 8.00am to 4.30pm, Monday to Friday excluding public holidays in England and Wales). Full terms,
conditions and risks apply and are available on request or by visiting www.linksharedeal.com.

This is not a recommendation to buy or sell shares. The price of shares can go down as well as up, and you are not
guaranteed to get back the amount that you originally invested.

Shareholder change of address
The Company offers the facility, in conjunction with LinkAsset Services, our Registrars, to conduct a number of
routine matters via the web including the ability to notify any change of address. If you are a shareholder and
are either unable or would prefer not to use this facility, please do not send the notification to the Company’s
registered office. Please write direct to Link, at their address shown below, where the register is held.

164

BTG plc Annual Report and Accounts 2018FinancialsCautionary note regarding
forward-looking statements
This Annual Report and Accounts contains certain forward-looking
statements with respect to BTG’s business, performance and
prospects. Statements and other information included in this
report that are not historical facts are forward-looking statements.
Words such as ‘expects’, ‘anticipates’, ‘intends’, ‘plans’, ‘believes’,
‘seeks’, ‘estimates’ and ‘potential’, variations of these words and
similar expressions are intended to identify forward-looking
statements. These statements are based on current expectations
and involve risk and uncertainty because they relate to events and
depend upon circumstances which may or may not occur in the future.
There are a number of factors which could cause actual results or
developments to differ materially from those expressed or implied
by these forward-looking statements. Current principal risks and
uncertainties are described on pages 62 to 67 of this report.
Any of the assumptions underlying these forward-looking
statements could prove inaccurate or incorrect and therefore
any results contemplated in the forward-looking statements may
not actually be achieved. BTG undertakes no obligation to update
publicly any forward-looking statement, whether as a result of new
information, future events or otherwise.
“Imagine where we can go”, BTG and the BTG roundel logo are
trademarks of BTG International Ltd. DC Bead, DC Bead LUMI,
LC Bead, LC Bead LUMI, and Simplicit90Y are trademarks of
Biocompatibles UK Ltd. CenterCross, MicroCross and MultiCross
are trademarks of Roxwood Medical, Inc. EKOS is a trademark of
EKOS Corporation. GALIL and Visual-ICE are trademarks of Galil
Medical Ltd. PneumRx is a trademark of PneumRx, Inc. TheraSphere
is a trademark of Theragenics Corporation used under license by
Biocompatibles UK Ltd. Varithena is a trademark of Provensis Ltd.
CroFab and DigiFab are trademarks of BTG International Inc. Voraxaze
is a trademark of Protherics Medicines Development Ltd. Lemtrada
is a trademark of Genzyme Corporation. Vistogard is a trademark of
Wellstat Therapeutics Corporation. Zytiga is a trademark of Johnson &
Johnson. Oncoverse is a trademark of Oncoverse LLC. Biocompatibles
UK Ltd, EKOS Corporation, Galil Medical Ltd, PneumRx, Inc.,
Protherics Medicines Development Ltd, Provensis Ltd, and
Roxwood Medical, Inc. are all BTG International group companies.

Registered office and head office
BTG plc
5 Fleet Place
London
EC4M 7RD

Tel +44 (0)20 7575 0000
Fax +44 (0)20 7575 0010

Email: info@btgplc.com
Website: www.btgplc.com

Registered number 2670500

Advisers
Stockbrokers
J.P. Morgan Cazenove
25 Bank Street
Canary Wharf
London E14 5JP

Tel +44 (0)20 7742 4000
Fax +44 (0)20 3493 0684

Deutsche Bank AG London
Winchester House
1 Great Winchester Street
London EC2N 2DB

Tel +44 (0)20 3142 8700
Fax +44 (0)20 3142 8735

Auditor
KPMG LLP
15 Canada Square
London E14 5GL

Tel +44 (0)20 7311 1000
Fax +44 (0)20 7311 3311

Registrars
Link Asset Services
The Registry
34 Beckenham Road
Beckenham
Kent BR3 4TU

Callers from the UK:
Tel 0871 664 0300
(please note that calls cost 12p per minute,
plus network extras. Lines are open from,
Monday to Friday 9.00am to 5.30pm GMT,
excluding public holidays in England and Wales.)

Callers from outside the UK:
Tel +44 (0) 37 1664 0300

This report is printed on Revive 50 Silk which is produced using
50% recycled post-consumer waste and 50% wood fibre from fully
sustainable forests with FSC® certification. All pulps used are
Elemental Chlorine Free (ECF).

Printed in the UK by Pureprint which is a CarbonNeutral® company.
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BTG plc
5 Fleet Place
London EC4M 7RD
UK
Tel: +44 (0)20 7575 0000
Email: info@btgplc.com

btgplc.com