ANNUAL REPORT
FOR THE YEAR ENDED
31 JANUARY 2011
Tissue Regenix Group plc
The Biocentre
Innovation Way
Heslington
York, YO10 5NY
United Kingdom
www.tissueregenix.com
145733 Tissue Regenix Group Annual Report (Inner Cover)_145733 Tissue Regenix Group Annual Report (Inner Cover) 05/05/2011 11:28 Page I
Tissue Regenix Group plc
DIRECTORS
John Samuel (Executive Chairman)
Antony Odell (Managing Director)
Michael Bretherton (Finance Director)
Alan Aubrey (Non-Executive Director)
Alan Miller (Non-Executive Director)
Alexander Stevenson (Non-Executive Director)
COMPANY SECRETARY
Michael Bretherton
COMPANY WEBSITE
www.tissueregenix.com
COMPANY NUMBER
5969271 (England & Wales)
REGISTERED OFFICE
The Biocentre
Innovation Way
Heslington
York
North Yorkshire
YO10 5NY
AUDITOR
Baker Tilly UK Audit LLP
2 Whitehall Quay
Leeds
LS1 4HG
NOMINATED ADVISER AND BROKER
Peel Hunt Limited
111 Old Broad St,
London
EC2N 1PH
REGISTRAR
Capita Registrars Limited
The Registry
34 Beckenham Road
Beckenham
Kent
BR3 4TU
LEGAL ADVISER
DLA Piper UK LLP
Princes Exchange
Princes Square
Leeds
LS1 4BY
Tissue Regenix Group plc
Contents
Chairmans’ Statement 2
5
Directors’ Report
10
Directors’ Remuneration Report
14
Corporate Governance Statement
Statement of Directors’ Responsibilities
15
Auditor’s Report 16
18
Consolidated Statement of Comprehensive Income
19
Consolidated Statement of Changes in Equity
20
Consolidated Statement of Financial Position
21
Consolidated Statement of Cash Flows
22
Notes to the Financial Statements
40
Company Statement of Changes in Equity
41
Company Statement of Financial Position
42
Company Statement of Cash Flows
43
Notes to the Company Information
45
Notice of Annual General Meeting
Annual Report for the year ended 31 January 2011 1
Tissue Regenix Group plc
Chairman’s Statement
I am pleased to present our first Annual Report as a public Company. Tissue Regenix
was formed in 2006 to commercialise innovative new technology in the field of tissue
decellularisation developed by Leeds University. Using this proprietary technology
platform (dCELL®) our goal is to build a global leader in the field of regenerative
medicine.
The dCELL® Process
The dCELL® process involves the creation of biological scaffolds from decellularised
human or animal tissue. When implanted into the human body in order to replace
damaged or diseased body parts these scaffolds are able to regenerate and become
natural parts of the body without requiring anti rejection drugs. Also, because the
regeneration process is itself a natural function of the body and on implant the
scaffolds are essentially inert and therefore safe, they are therefore classified as
medical devices. This means that our products are typically subject to faster and less
costly regulatory approval procedures than, for example, pharmaceutical products.
Intellectual Property
dCELL® technology is a platform from which we are able to develop a number of
products in a number of therapy areas. It is protected by a library of patents which
form a comprehensive intellectual property portfolio. As we continue to develop we
will continue to file for patents in order to protect our growing IP base. As an example,
in August 2010 we received two new patents in the USA and Australia.
Product Pipeline
Vascular
In August 2010 we received a CE mark for our first product, the dCELL® vascular
patch, which enables us to begin to commercialise the product within Europe and
certain other countries. Since that time we have started to appoint distributors and
have excellent clinical trial results to support that effort. In addition we are working on
extending the applications for its use to include for example cardiac and dura and
will be applying for FDA approval in the USA later this year via 510k. Finally, another
vascular product, the Arterial-Vascular graft, which can be used to replace damaged
veins and arteries, is currently undergoing preclinical trials. If successful, we are
planning a full clinical trial later this year.
Dermis
Towards the end of the financial year we announced that with our UK development
partner, NHS Blood and Transplant, (NHSBT) we had initiated a pilot study to evaluate
the use of decellularised skin from human donor sources (HdCELL®) in the treatment
of chronic non-healing wounds. These wounds represent a significant burden on
global healthcare systems, costing the NHS alone over £1 billion per annum. We are
also examining the application of HdCELL® to burns and for use in plastic surgery.
Preliminary work on a porcine version is also underway.
Orthopaedic
The development of our porcine Meniscal repair product is proceeding well. The pilot
programme is now essentially and successfully complete and we are moving to pre
clinical trials later this year. At the same time we are planning to begin a pilot study of
a porcine ligament repair product. Both products also have an equivalent using
human donor tissue and we are examining the possibilities of clinical studies for both.
2 Annual Report for the year ended 31 January 2011
Tissue Regenix Group plc
Cardiac
In April 2011 we announced a major advance in our dCELL® heart valve development
programme. We have entered into a commercialisation and IP agreement with our
development partners in Brazil, the Pontifical Catholic University of Parana and
Cardioprotese Ltd (Representing Professor da Costa – a leading heart surgeon). This
agreement gives us worldwide rights (excluding Brazil) to the clinical data which will
support commercialisation of the dCELL® heart valve and will enable us to accelerate
our dCELL® heart valve programme. In addition, by using the world class facilities
available to us in Brazil, we will also accelerate and lower the cost of the development
of other products using our proprietary technology.
Thus far over 140 patients have benefitted from being implanted with the human donor
dCELL® heart valve including over 40 aortic valves. A sample of those patients was
the subject of a paper published recently in the journal of The Society of Thoracic
Surgeons. The findings were most encouraging and we are working with the NHSBT
to transfer the technology to the NHS and commercialise it via a licensing programme
elsewhere in the world.
In addition, Cardioprotese have developed a commercially available bioprosthetic
bovine heart valve which has over 5 years of clinical data and has been implanted in
over 1,200 patients. We are developing a dCELL® version of this product and we are
planning to begin clinical trials within a year.
We are also at an early stage in the evaluation of the possible delivery of dCELL®
heart valves by stent, thus enabling minimally invasive surgical techniques to be used.
Finally, we have successfully completed a pilot study of decellularised porcine heart
valves and are planning further work prior to a full preclinical study. If successful the
development of a decellularised porcine replacement heart valve has the potential to
revolutionise this market.
Financial Review
In June 2010 we were admitted to AIM, a market operated by the London Stock
Exchange by way of a reverse takeover. As part of the admission, which was achieved
in difficult market conditions, we raised £4.5m of new funds to add to the £2.3m
brought in via the reverse. In the year to 31 January 2011 we recorded a loss after tax
of £5.4m of which £3.7m is a deemed non cash loss arising from the reverse
acquisition. Excluding that cost the after tax loss was £1.7m. Net assets increased to
£6.2m (2010: £1.3m) mainly reflecting the additional funds raised via the placing.
Group cash balances at 31 January 2011 were £5.9m (2010 £1.1m).
The Board
On 29 March 2011 we announced the appointment of Ian Jefferson as Chief Financial
Officer. He will commence his appointment within the next six weeks and replaces
Mike Bretherton, who will remain as a Non-Executive Director. I would like to thank
Mike who has served our needs extremely well as Finance Director since flotation as
well as welcoming Ian from COE Group Plc where he was latterly Chief Executive
Officer having previously been Chief Financial Officer.
Annual Report for the year ended 31 January 2011 3
Tissue Regenix Group plc
Chairman’s Statement
Outlook
Our strategy of working with development partners to create a strong product pipeline
at low cost and minimum risk has served us well and we now have a number of
exciting products, which address the needs of very large global markets, proceeding
rapidly through various regulatory processes. It will of course take time to fully exploit
the potential of this pipeline but we have an experienced and talented team working
towards that end.
It has been an exciting year in which much has been achieved and we are well on
our way to achieving our goal of creating a major player in regenerative medicine.
John Samuel
Executive Chairman
3 May 2011
4 Annual Report for the year ended 31 January 2011
Tissue Regenix Group plc
Directors’ Report
The Directors present their report and consolidated financial statements for the year
ended 31 January 2011.
Acquisition and re-admission to AIM
On 29 June 2010, Oxeco plc completed the acquisition of Tissue Regenix Limited in
a share for share consideration exchange as detailed in note 16, at which time the
Company also changed its name to Tissue Regenix Group plc.
As explained in note 2, these financial statements for the year ended 31 January 2011
have been presented using reverse acquisition accounting under which the Group’s
activity has been presented as a continuation of that of the legal subsidiary, Tissue
Regenix Limited . Comparative Group information therefore also reflects the results of
Tissue Regenix Limited in the prior period.
The accounting period for Tissue Regenix Limited was changed from 31 July to
31 January to be co-terminous with the Company and a short period of accounts is
therefore included in these financial statements for the Tissue Regenix Limited
comparative period covering the six months ended 31 January 2010.
Principal activity
The principal activity of the Group was that of exploiting innovative platform
technologies in the field of tissue engineering and regenerative medicine. The
Company is incorporated and domiciled in the UK.
Review of the business and future developments
A review of the Group’s performance and future prospects is included in the
Chairman’s statement on pages 2 to 4.
Key performance indicators
Key Group performance indicators are set out below:
31 January 2011 31 January 2010
£’000 £’000
Net assets 6,218 1,287
Loss attributable to equity holders pre cost of acquisition (1,678) (664)*
Deemed cost of reverse acquisition (3,749) –
Total loss attributable to equity holders (5,427) (664)*
Cash and cash equivalents 5,889 1,083
* 6 months to 31 January 2010.
Results and dividends
The loss for the year attributable to equity holders pre exceptional items was £1,678k
(6 months to 31 January 2010: £664k) increasing to a loss of £5,427k after a deemed
cost on reverse acquisition. The directors do not recommend the payment of a
dividend (2010: nil).
Share capital and funding
Full details of the Group and Company’s share capital movements during the period
are given in note 13 of the financial statements.
Annual Report for the year ended 31 January 2011 5
Tissue Regenix Group plc
Directors’ Report
Directors and their interests
The following directors held office in the period.
John Samuel
Antony Odell
Michael Bretherton
Alan Aubrey
Alan Miller
Alexander Stevenson
Gordon Hall
William Richards
(appointed 29 June 2010)
(appointed 29 June 2010)
(appointed 29 June 2010)
(appointed 29 June 2010)
(appointed 29 June 2010)
(resigned 29 June 2010)
(resigned 29 June 2010)
Directors’ interests in the shares of the Company, including family interests are
included in the Remuneration Report on pages 10 to 13.
Directors’ indemnity insurance
The Group has maintained insurance throughout the period for its directors and
officers against the consequences of actions brought against them in relation to their
duties for the Group.
Profile of the directors
John Samuel, Executive Chairman
John Samuel joined Tissue Regenix Limited as Chairman in March 2008. John
qualified as a Chartered Accountant with Pricewaterhouse and has held a number of
senior finance positions in industry, including as Financial Director of Whessoe plc
and Ellis & Everard plc. He was formerly the CEO of the Molnlycke Health Care Group,
a global provider of single use surgical and wound care products to the healthcare
sector. Until January 2010 he was a Partner with Apax Partners Llp.
Antony Odell, Managing Director
Antony Odell joined Tissue Regenix Limited as a consultant from January 2008 and
was appointed to the Board of Tissue Regenix Limited in October 2008. Antony has
extensive commercial experience in the medical technology sector. As well as working
as co-director of Xeno Medical, a medical technology consultancy, he was CEO for a
UK NHS cardiovascular device spin-out, Tayside Flow Technologies Ltd. Antony has
a strong corporate sector background having worked for J&J Medical for almost
10 years in European business development roles for Drug Delivery & Vascular
Access and General Manager (UK) for Fresenius (Critical Care & Diagnostics).
Michael Bretherton, Finance Director
Michael Bretherton graduated in Economics from the University of Leeds and then
worked as an accountant and manager with Pricewaterhouse for 7 years in both
London and the Middle East. He subsequently worked for the Plessey Company Plc
before being appointed Finance Director of Bridgend Group Plc in 1988 where he
held the position for 12 years. More recently, he has worked at the property and
services company, Mapeley Limited as Financial Operations Director and then at the
entertainment software games developer, Lionhead Studios Limited. Michael currently
is a director of ORA Capital Partners Limited, which is one of the significant investors
in Tissue Regenix, as well as a number of other AIM listed companies.
6 Annual Report for the year ended 31 January 2011
Tissue Regenix Group plc
Alan Aubrey, Non-Executive Director
Alan is the Chief Executive Officer of IP Group Plc, a company that specialises in
commercialising intellectual property originating from research intensive institutions.
He is a non-executive director of PROACTIS Holdings Plc and Energetix Group Plc,
and is a non-executive director of Avacta Group Plc. Previously, Alan was the founder
and CEO of Techtran Group Limited that was sold to IP Group in 2005. He was also
a partner at KPMG where he specialised in providing corporate finance advice to fast
growing technology businesses. He is a fellow of the Institute of Chartered
Accountants.
Alan Miller, Non-Executive Director
Alan Miller is a founding partner of SCM Private, the wealth management company,
which was set up in 2009. He was formerly the Chief Investment Officer and founding
shareholder of New Star Asset Management from 2001 until 2007. Prior to that, he
was a Director at Jupiter Asset Management having spent his early career as a senior
fund manager at Gartmore Investment Management. Alan is also a non-executive
director of several private companies including Pharminox Ltd, a pharmaceutical
company specialising in cancer research. Alan has a degree in Commerce
(Accounting) from Birmingham University and is a member of the Chartered Institute
of Management Accountants.
Alexander Stevenson, Non-Executive Director
Alex Stevenson joined Tissue Regenix Limited as a non-executive director in
December 2007. Alex is a director of Aquarius Equity Partners, one of the significant
investors in Tissue Regenix. He began his career as a scientist, before focusing on
identification, establishment and growth of high value technology businesses. Alex
worked for Techtran from formation through to its sale to main market listed IP Group
in 2005. Following the acquisition, Alex worked in a variety of roles within IP Group
and managed investments in portfolio companies including Avacta and Syntopix
(where he was also CEO), both of which listed on AIM in 2006. Most recently, Alex
was a founder and Chief Operating Officer of Modern Biosciences plc, the drug
development subsidiary of IP Group.
Substantial shareholders
As at 19 April 2011, shareholders holding more than 3% of the share capital of Tissue
Regenix Group plc were:
Name of shareholder Number of shares % of voting rights
ORA (Guernsey) Limited
Techtran Group Limited
The Northern Entrepreneurs Fund LLP
Nora Powell
IP Venture Fund
University of Leeds
Alan Miller
John Samuel*
129,435,476
71,703,123
30,512,434
27,066,667
24,794,730
24,509,873
21,486,988
22,861,655
27.59
15.29
6.50
5.77
5.29
5.22
4.58
4.87
* Includes 10,740,000 shares held jointly by the director and the Tissue Regenix Employee Share Trust.
Annual Report for the year ended 31 January 2011 7
Tissue Regenix Group plc
Directors’ Report
Risk management
Details of the Group’s financial risk management objectives and policies are disclosed
in note 11 to the financial statements.
The main risks arising from the Group’s activities are market risk and liquidity risk.
The Directors review and agree policies for managing risk at least annually.
Market risk
Interest rate risk
The Group has no external financing facilities therefore its interest rate risk is limited
to the level of interest received on its cash surpluses. Interest rate risk is partially
mitigated by using an element of fixed rate deposit accounts.
Liquidity risk
The Company seeks to manage liquidity by ensuring sufficient funds are available to
meet foreseeable needs and to invest cash assets safely and profitably. The Group
had cash balances of £5,889k as at 31 January 2011 (2010: £1,083k) which the
Directors consider to be sufficient to continue in business for the foreseeable future.
In order to minimise risk to the Group’s capital, funds are invested across a number
of financial institutions with strong credit ratings. Cash forecasts are updated regularly
to ensure that there is sufficient cash available for foreseeable requirements.
Credit risk
The Company’s principal financial asset is cash. The credit risk associated with cash
is limited because the Group only holds cash with banks with high credit ratings.
Donations
No charitable or political donations were made in the period (2010: nil).
Policy on payment of suppliers
The Group does not follow any code or standard payment practice. The Group’s policy
is to agree the terms of payment with key suppliers. For all other suppliers, terms are
agreed for each transaction. The Group endeavours to abide by the terms of payment
with suppliers.
Employment policies
The Group supports employment of disabled people where possible through
recruitment, by retention of those who become disabled and generally through
training, career development and promotion.
The Group is committed to keeping employees as fully-informed as possible with
regard to the Group’s performance and prospects and seeks their views, wherever
possible, on matters which affect them as employees.
Statement as to disclosure of information to the auditor
The Directors who were in office on the date of approval of these financial statements
have confirmed, that as far as they are aware, that there is no relevant audit information
of which the auditor is unaware. Each of the Directors have confirmed that they have
taken all the steps that they ought to have taken as directors in order to make
8 Annual Report for the year ended 31 January 2011
Tissue Regenix Group plc
themselves aware of any relevant audit information and to establish that it has been
communicated to the auditor.
Auditor
In accordance with section 489 of the Companies Act 2006, a resolution to re-appoint
Baker Tilly UK Audit LLP will be put to the members at the Annual General Meeting.
On behalf of the Board
Antony Odell
Director
3 May 2011
Annual Report for the year ended 31 January 2011 9
Tissue Regenix Group plc
Directors’ Remuneration Report
It is the Company’s policy that executive Directors should have contracts with an
indefinite term providing for a maximum of six months notice. In the event of early
termination, the Directors’ contracts provide for compensation up to a maximum of
basic salary for the notice period.
Non-executive Directors are employed on letters of appointment which may be
terminated on not less than three months notice.
Companies with securities listed on AIM do not need to comply with the UKLA Listing
Rules. The Remuneration Committee is however committed to maintaining high
standards of corporate governance and disclosure and has applied the guidelines
as far as practical given the current size and development of the Company.
Remuneration Committee
The remuneration committee’s primary responsibilities are to review the performance
of the executive directors of the Company and to determine the broad policy and
framework for their remuneration and the terms and conditions of their service and
that of senior management (including the remuneration of and grant of options to
such persons under any share scheme adopted by the Company). The remuneration
committee comprises Alexander Stevenson, who is chairman of the committee, and
the two other non-executive directors. The committee meets no less than twice in
each financial year.
The main elements of the remuneration packages for Executive Directors and senior
management are:
Basic annual salary (including directors’ fees)
The base salary is reviewed annually at the beginning of each year. The review
process is undertaken by the Remuneration Committee and takes into account several
factors, including the current position and development of the Group, individual
contribution and market salaries for comparable organisations.
Discretionary annual bonus
All Executive Directors and senior managers are eligible for a discretionary annual
bonus which is paid in accordance with a bonus scheme developed by the
Remuneration Committee. This takes into account individual contribution, business
performance and commercial progress, along with financial results.
Share incentive schemes
The Group operates a share option plan, under which certain directors’ and senior
management have been granted options to subscribe for ordinary shares. All options
are equity settled. The options are subject to service and performance conditions,
have an exercise price of between 0.5p and 5p and the vesting period is generally
1-3 years. If the options remain unexercised after a period of 10 years from the date
of grant, the options expire. The Group has no legal or constructive obligation to
repurchase or settle the options in cash.
In addition, certain Executive Directors are eligible to acquire interests in ordinary
shares in the Company to be owned jointly with the trustee of the Tissue Regenix
Group Employee Share Trust (EBT) and under which, subject to meeting performance
criteria conditions, most of any future increase in the value of the shares will accrue
to the employees.
10 Annual Report for the year ended 31 January 2011
Tissue Regenix Group plc
Remuneration Policy for Non-Executive Directors
Remuneration for Non-Executive Directors is set by the Chairman and the Executive
Members of the Board. Non-executives do not participate in bonus schemes or share
incentive schemes.
Directors’ remuneration
The remuneration of the main Board Directors’ of Tissue Regenix who served in the
year to 31 January 2011 was:
Salary & Total Total
fees Benefits 2011 2010
£000 £000 £000 £000
Antony Odell* 126 10 136 130
John Samuel* 65 – 65 15
Michael Bretherton* 11 – 11 10
Alan Aubery 9 – 9 –
Alexander Stevenson 13 – 13 4
Alan Miller 13 – 13 4
Total 237 10 247 163
*
In addition certain directors hold employee share scheme interests in the company. Fair value share
based payment charges recognised in the consolidated statement of comprehensive income attributable
to these directors are; John Samuel £53,000 (2010: £nil), Antony Odell £203,000 (2010: £nil) and Michael
Bretherton £2,000 (2010: £nil).
The chairman, John Samuel, has informed the company that were it to be proposed,
it is his intention to decline any increase in remuneration whether by way of salary or
bonus.
Directors’ shareholdings
Directors’ interests in the shares of the Company, including family interests at
31 January 2011 were:
Ordinary shares of 0.5p each
2011 2011 2010 2010
Number % Number (note 4) %
John Samuel (note 1) 22,861,655 4.87% – –
Antony Odell (note 1) 5,572,800 1.19% – –
Michael Bretherton (note 1) 1,200,000 0.26% 400,000 0.33%
Alan Aubrey (note 2&3) 2,389,259 0.51% – –
Alan Miller 21,486,988 4.57% – –
Alexander Stevenson (note 3) – – – –
Note 1
Note 2
Note 3
Note 4
Includes shares held jointly by the director and EBT as set out below.
Shares are held through IP2IPO Nominees Limited.
Alan Aubrey holds approximately 0.4 per cent. of the issued share capital of IP Group plc, the
holding company of Techtran Group Limited and a 0.17 per cent. limited partnership interest in
IP Venture Fund. In addition, Alan Aubrey has a 3 per cent. direct interest in the Northern
Entrepreneurs Fund LLP and approximately a 0.24 per cent. indirect interest in the same through
his shareholding in Axiomlab Group plc, the parent company of Inhoco 2835 Limited which has
a 3 per cent. interest in the Northern Entrepreneurs Fund LLP. Further, Alan Aubrey and
Alexander Stevenson are participants in the Northern Entrepreneurs Fund Co-investment LLP
which holds 1,731,665 shares in Tissue Regenix Group Plc. Alan and Alexander would be entitled
to 12.5% and 25% respectively of any shares (or proceeds thereof) distributed by the Northern
Entrepreneurs Fund Co-investment LLP.
2010 Comparatives are as adjusted for the 1 for 5 share consolidation on 29 June 2010.
Annual Report for the year ended 31 January 2011 11
Tissue Regenix Group plc
Directors’ Remuneration Report
Directors’ interests in jointly owned EBT shares and share options
Directors interests in shares owned jointly with the Trustees of the Tissue Regenix
Group Employee Share Trust (EBT) and in share options to acquire ordinary shares
of 0.5p each in the Company at 31 January 2011 were:
At Granted Adjustment Granted At
1 February during year on reverse during year 31 January Exercise
2010 pre reverse acquisition post reverse 2011 price
Approved EMI
scheme options
Antony Odell – 379 8,307,229 – 8,307,608 0.73 pence
Antony Odell – – – 1,187,200 1,187,200 5.00 pence
John Samuel – – – 2,400,000 2,400,000 5.00 pence
EBT scheme shares
Antony Odell – – – 5,372,800 5,372,800 5.00 pence
John Samuel – – – 10,740,000 10,740,000 5.00 pence
Michael Bretherton – – – 600,000 600,000 5.00 pence
On 29 June 2010 the Company acquired 100 per cent. of the share capital of Tissue
Regenix Limited for a consideration satisfied by the issue of 241,885,103 ordinary
shares of 0.5p each in a ratio of 21,919.81 for 1. Consequently the share options
awarded by Tissue Regenix Limited were replaced by share options in Tissue Regenix
Group. The options were increased by a factor of 21,919.81 and the exercise price has
decreased by a factor of 21,919.81 to retain the benefits that employees and directors
had accrued. See note 17 for further details. None of the other terms and conditions
of the options were affected by this change.
There are no performance conditions outstanding in relation to the 8,307,608 options
granted to Antony Odell prior to the reverse acquisition all of which were eligible to
be exercised at 31 January 2011.
All of the other options and EBT share interests are subject to employment period
and performance conditions which allows for vesting in three equal proportions on or
after the three consecutive annual anniversaries from the date of grant subject to the
Company’s share price reaching 10 pence per share, 15 pence per share and
20 pence per share by the respective three vesting dates.
At 31 January 2011, none of the 3,857,200 options were eligible to be exercised and
none of the benefit of the increase in value on the 16,712,800 jointly held EBT shares
was eligible to vest, because the related employment period conditions and some of
the performance conditions had not been met.
The Tissue Regenix Group Employee Share Trust (“the EBT”) was established with
Osiris Management Services Limited appointed as trustee (“the Trustee”) to enable
the Trust to acquire ordinary shares in the Company and to make interests in those
shares available for the benefit of current and future employees of the Company and
its subsidiaries.
12 Annual Report for the year ended 31 January 2011
Tissue Regenix Group plc
Antony Odell, John Samuel and Michael Bretherton have interests in ordinary shares
in the Company which were acquired jointly with the Trustee in the market on 29 June
2010 at a price of 5p per share. The shares were acquired pursuant to certain
conditions set out in Joint Ownership Agreement’s (“JOA’s”). Subject to meeting the
performance criteria conditions set out in the JOA’s, most of any future increase in
the value of the shares will accrue to the employees provided that they have not
ceased employment with the Group on or before the date that these conditions are
met.
The employees are also under certain circumstances able to benefit from an increase
in the value of the Shares on a takeover, change of control, scheme of arrangement
or a voluntary winding-up of the Company. Where the performance conditions are
not met, the Trustee has an option to acquire the interests of the employees in the
Shares at a price equal to the original purchase cost they paid so that none of any
increase in the value of the Shares will accrue to them.
The market price of the shares at 31 January 2011 was 11.75 pence per share, the
highest and lowest prices during the year were 16.5 pence and 5 pence respectively.
Further details of all share options and jointly owned shares held by the Trustee are
set out in note 17 to the financial statements.
On behalf of the Board
Alexander Stevenson
Chairman of the Remuneration Committee
3 May 2011
Annual Report for the year ended 31 January 2011 13
Tissue Regenix Group plc
Corporate Governance Statement
Corporate governance
The Directors recognise the importance of sound corporate governance and observe
the principals of the Combined Code, to the extent that they consider them appropriate
for the Group’s size.
The Board
The Board currently comprises three executive directors and three non-executive
directors.
Audit committee
The audit committee’s primary responsibilities are to monitor the integrity of the
financial affairs and statements of the Company, to ensure that the financial
performance of the Company and any subsidiary of the Company is properly
measured and reported on, to review reports from the Companies auditors relating to
the accounting and internal controls and to make recommendations relating to the
appointment of the external auditors.
The audit committee comprises Alan Miller, who acts as chairman of the committee,
and the other two non-executive directors.
Internal Control
The Board is responsible for maintaining a sound system of internal control. The
Board’s measures are designed to manage, not eliminate risk, and such a system
provides reasonable but not absolute assurance against material misstatement or
loss.
Some key features of the internal control system are:
(i) Management accounts information, budgets, forecasts and business risk issues
are regularly reviewed by the Board who meet at least ten times per year;
(ii)
The Company has operational, accounting and employment policies in place;
(iii) The Board actively identifies and evaluates the risks inherent in the business
and ensures that appropriate controls and procedures are in place to manage
these risks; and
(iv) There is a clearly defined organisational structure and there are well-established
financial reporting and control systems.
Going Concern
At 31 January 2011, the Group had £5,889k of cash and cash equivalents available to
it. The Directors have considered their obligation, in relation to the assessment of the
going concern of the Group and each statutory entity within it and have reviewed the
current budget cash forecasts and assumptions as well as the main risk factors facing
the Group.
After due enquiry, the Directors consider that the Group has adequate resources to
continue in operational existence for the foreseeable future. Accordingly, they continue
to adopt the going concern basis in preparing the financial statements.
14 Annual Report for the year ended 31 January 2011
Tissue Regenix Group plc
Statement of Directors’ Responsibilities
Statement of Directors’ responsibilities
The directors are responsible for preparing the Directors’ Report and the financial
statements in accordance with applicable law and regulations.
Company law requires the directors to prepare Group and Company financial
statements for each financial year. The directors are required by the AIM rules of the
London Stock Exchange to prepare Group financial statements in accordance with
International Financial Reporting Standards (“IFRS”) as adopted by the European
Union (“EU”) and have elected under company law to prepare the Company financial
statements in accordance with IFRS as adopted by the EU.
The financial statements are required by law and IFRS as adopted by the EU to
present fairly the financial position of the Group and Company and the financial
performance of the Group. The Companies Act 2006 provides in relation to such
financial statements that references in the relevant part of that Act to financial
statements giving a true and fair view are references to their achieving a fair
presentation.
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 the Company and of the profit or loss of the Group for that period.
In preparing each of the Group and Company financial statements, the directors are
required to:
a.
select suitable accounting policies and then apply them consistently;
b. make judgements and estimates that are reasonable and prudent;
c.
d.
state whether they have been prepared in accordance with IFRS as adopted by
the EU;
prepare the financial statements on the going concern basis unless it is
inappropriate to presume that the Group and the Company will continue in
business;
The directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the Group’s and the Company’s transactions and
disclose with reasonable accuracy at any time the financial position of the Group and
Company and to enable them to ensure that the financial statements comply with the
Companies Act 2006. They are also responsible for safeguarding the assets of the
Group and Company and hence for taking reasonable steps for the prevention and
detection of fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of the corporate and
financial
the Tissue Regenix Group website,
information
www.tissueregenix.com.
included on
Legislation in the United Kingdom governing the preparation and dissemination of
financial statements may differ from legislation in other jurisdictions.
Annual Report for the year ended 31 January 2011 15
Tissue Regenix Group plc
Report of the Independent Auditor to the
Members of Tissue Regenix Group Plc
We have audited the group and parent company financial statements (“the financial
statements”) which comprise, the Consolidated and Parent Company Statements of
Financial Position, the Consolidated Statement of Comprehensive Income, the
Consolidated and Parent Company Statements of Cash Flows, the Consolidated and
Parent Company Statements of Changes in Equity and the related notes. The financial
reporting framework that has been applied in their preparation is applicable law and
International Financial Reporting Standards (IFRSs) as adopted by the European
Union and, as regards the parent company financial statements, as applied in
accordance with the provisions of the Companies Act 2006.
This report is made solely to the company’s members, as a body, in accordance with
Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken
so that we might state to the company’s members those matters we are required to
state to them in an auditor’s report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone other than the
company and the company’s members as a body, for our audit work, for this report,
or for the opinions we have formed.
Respective responsibilities of directors and auditor
As more fully explained in the Directors’ Responsibilities Statement set out on 11, the
directors are responsible for the preparation of the financial statements and for being
satisfied that they give a true and fair view. Our responsibility is to audit and express
an opinion on the financial statements in accordance with applicable law and
International Standards on Auditing (UK and Ireland). Those standards require us to
comply with the Auditing Practices Board’s (APB’s) Ethical Standards for Auditors.
Scope of the audit of the financial statements
A description of the scope of an audit of financial statements is provided on the APB’s
website at www.frc.org.uk/apb/scope/private.cfm.
Opinion on financial statements
In our opinion
• the financial statements give a true and fair view of the state of the group’s and
the parent’s affairs as at 31 January 2011 and of the group’s loss for the year
then ended;
• the group financial statements have been properly prepared in accordance with
IFRSs as adopted by the European Union;
• the parent financial statements have been properly prepared in accordance with
IFRSs as adopted by the European Union and as applied in accordance with
the Companies Act 2006; and
• the financial statements have been prepared in accordance with the
requirements of the Companies Act 2006.
Opinion on other matter prescribed by the Companies Act 2006
In our opinion the information given in the Directors’ Report for the financial year for
which the financial statements are prepared is consistent with the financial statements.
16 Annual Report for the year ended 31 January 2011
Tissue Regenix Group plc
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the Companies
Act 2006 requires us to report to you if, in our opinion:
• adequate accounting records have not been kept by the parent company, or
returns adequate for our audit have not been received from branches not visited
by us; or
• the parent company financial statements are not in agreement with the
accounting records and returns; or
• certain disclosures of directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our
audit.
Richard King (Senior Statutory Auditor)
For and on behalf of BAKER TILLY UK AUDIT LLP, Statutory Auditor
Chartered Accountants
2 Whitehall Quay
Leeds
LS1 4HG
3 May 2011
Annual Report for the year ended 31 January 2011 17
Tissue Regenix Group plc
Consolidated Statement of Comprehensive Income
For the year ended 31 January 2011
2011 2010*
Notes £’000 £’000
OPERATING INCOME 4 173 74
Administrative expenses 4 (2,117) (877)
Deemed cost on reverse acquisition 16 (3,749) –
Operating loss (5,693) (803)
Finance income 6 28 64
Loss before taxation (5,665) (739)
Taxation 7 238 75
Loss after tax attributable to equity holders of the parent (5,427) (664)
Loss and total comprehensive expense for the year (5,427) (664)
Loss per share
Basic and diluted on loss from continuing operations
– Post deemed cost on reverse acquisition 8 (1.48)p (0.27)p
– Pre deemed cost on reverse acquisition 8 (0.46)p (0.27)p
* Comparative figures are for the six month short accounting period to 31 January 2010.
There are no items of other comprehensive income. The loss for the year arises from the Group’s continuing
operations.
18 Annual Report for the year ended 31 January 2011
Tissue Regenix Group plc
Consolidated Statement of Changes in Equity
For the year ended 31 January 2011
Share
Reverse Issued Based Revenue
Share Share Merger Acquisition Equity Payment Deficit
Capital Premium Reserve Reserve Capital Reserve Reserve Total
£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000
– 3,879 – – 3,879 – (1,158) 2,721
– – – – – – (771) (771)
– 3,879 – – 3,879 – (1,929) 1,950
– – – – – – (664) (664)
– – – – – 1 – 1
600 454 – (1,054) – – – –
600 4,333 – (1,054) 3,879 1 (2,593) 1,287
– – – – – – (5,427) (5,427)
1,210 – 10,884 (6,094) 6,000 – – 6,000
533 4,803 – – 5,336 – (836) 4,500
– (481) – – (481) – – (481)
– – – – – – 8 8
– – – – – 331 – 331
At 31 January 2009
Loss and comprehensive expense
for the year
At 31 July 2009
Loss and total comprehensive
expense for the year
Share based payment expense
Retrospective adjustment on
reverse acquisition in 2010/11
At 31 January 2010
Loss and total comprehensive
expense for the year
Reverse acquisition
Issue of shares
Expenses on issue of shares
Employee interest in jointly
owned shares
Share based payment expense
At 31 January 2011
2,343 8,655 10,884 (7,148) 14,734 332 (8,848) 6,218
Annual Report for the year ended 31 January 2011 19
Tissue Regenix Group plc
Consolidated Statement of Financial Position
As at 31 January 2011
2011 2010
Notes £’000 £’000
Assets
Non-current assets
Property, plant and equipment 9 189 135
Total non-current assets 189 135
Current assets
Trade and other receivables 10 393 255
Cash and cash equivalents 11 5,889 1,083
Total current assets 6,282 1,338
Total assets 6,471 1,473
Liabilities
Current liabilities
Trade and other payables 12 (253) (186)
Total liabilities (253) (186)
Net assets 6,218 1,287
Equity
Share capital 13 2,343 600
Share premium 13 8,655 4,333
Merger reserve 13 10,884 –
Reverse acquisition reserve 13 (7,148) (1,054)
Issue equity capital 14,734 3,879
Share based payment reserve 17 332 1
Revenue reserve 14 (8,848) (2,593)
Total equity 6,218 1,287
Approved by the Board of Directors and authorised for issue on 3 May 2011.
John Samuel
Executive Chairman
Michael Bretherton
Finance Director
Company number: 5969271
20 Annual Report for the year ended 31 January 2011
Tissue Regenix Group plc
Consolidated Statement of Cash Flows
For the year ended 31 January 2011
2011 2010*
Notes £’000 £’000
Operating activities
Operating loss (5,693) (803)
Adjustment for non-cash items:
Depreciation of property, plant and equipment 9 46 18
Share based payment 17 331 1
Deemed cost of reverse acquisition 16 3,749 –
Tax refunded 183 –
Operating cash outflow (1,384) (784)
(Increase)/decrease in trade and other receivables (68) 33
Decrease in trade and other payables (24) (4)
Net cash outflow from operations (1,476) (755)
Investing activities
Interest received 28 64
Purchases of property, plant and equipment 9 (100) (23)
Net cash (out)/inflow from investing activities (72) 41
Financing activities
Cash acquired on reverse acquisition 16 2,327 –
Proceeds from issue of share capital 13 4,500 –
Sale of joint interest in shares to employees 14 8 –
Expense of issue of share capital 13 (481)
Net cash inflow from financing activities 6,354 –
Increase/(decrease) in cash and cash equivalents 4,806 (714)
Cash and cash equivalents at start of year 1,083 1,797
Cash and cash equivalents at end of year 5,889 1,083
* Comparative figures are for the six month short accounting period to 31 January 2010.
Annual Report for the year ended 31 January 2011 21
Tissue Regenix Group plc
Notes to the Financial Statements
For the year ended 31 January 2011
1. BASIS OF PREPARATION
The financial statements of Tissue Regenix Group plc are audited consolidated financial statements for the year to
31 January 2011. These include audited comparatives for the six months to 31 January 2010.
The Group financial statements consolidate the financial statements of Tissue Regenix Group plc and the entities it
controls, its subsidiaries.
On 29 June 2010, Oxeco plc completed the acquisition of Tissue Regenix Limited in a share for share consideration
exchange as detailed in note 17, at which time the Company also changed its name to Tissue Regenix Group plc.
The above combination has been accounted for as a reverse acquisition equity transaction as if Tissue Regenix
Limited had issued new shares in exchange for Oxeco’s cash and other assets. Under this method of accounting,
the Group’s activity has been treated as a continuation of that of the legal subsidiary, Tissue Regenix Limited and
comparative numbers presented in these financial statements are those of the legal subsidiary, Tissue Regenix
Limited, for the six month short accounting period to 31 January 2010 (audited).
Going Concern
As at 31 January 2011, the Group had £5.9 million of cash and cash equivalents available to it. The Directors have
considered their obligation, in relation to the assessment of the going concern of the Group and each statutory entity
within it and have reviewed the current budget cash forecasts and assumptions as well as the main risk factors
facing the Group as set out on pages 31 to 32.
After due enquiry, the Directors consider that the Group has adequate resources to continue in operational existence
for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the financial
statements.
2. SIGNIFICANT ACCOUNTING POLICIES
The consolidated financial statements have been prepared under the historical cost convention in accordance with
International Financial Reporting Standards as adopted by the European Union.
Historical Cost Convention
The financial information has been prepared on the historic cost basis. The principal accounting policies applied
are set out below.
Basis of consolidation and reverse acquisition of Oxeco plc
The acquisition of Tissue Regenix Limited by Oxeco plc on 29 June 2010 has been accounted for as a reverse
acquisition equity transaction as if Tissue Regenix Limited had issued new shares in exchange for Oxeco’s cash
and other assets. Although these Group financial statements have been issued in the name of the legal parent, the
Group’s activity is in substance a continuation of that of the legal subsidiary, Tissue Regenix Limited, because after
the transaction the former Board of Tissue Regenix Limited were deemed to have control of the Group and of the
legal parent. The following accounting treatment has therefore been applied in respect of the transaction.
• The retained loss and other equity balances recognised in the Group financial statements reflect the retained
loss and other equity balances of Tissue Regenix Limited immediately before the transaction, and the
consolidated results for the period from 1 February 2010 to the date of the transaction are those of Tissue
Regenix Limited. However, the equity structure appearing in the Group financial statements reflects the equity
structure of the legal parent, including the equity instruments issued under the share for share exchange to
effect the transaction. The effect of using the equity structure of the legal parent gives rise to an adjustment to
the Group’s issued equity capital (“the reverse acquisition reserve”), see note 13.
22 Annual Report for the year ended 31 January 2011
Tissue Regenix Group plc
• Comparative Group numbers presented in the Annual Report are those of the legal subsidiary, Tissue Regenix
Limited but with the issued share capital and share premium adjusted retrospectively to reflect that of the legal
parent, for the six month short accounting period to 31 January 2010 (audited).
• The fair value of the deemed shares issued by Tissue Regenix Limited to acquire Oxeco plc, has been
determined from the perspective of Tissue Regenix Limited on the basis set out in note 16.
SEGMENTAL REPORTING
The reportable disclosures are identified by the chief operating decision maker by the way management has
organised the firm. The firm operates out of one location and develops one product.
The chief operating decision maker reviews the performance of the Company based on total costs and not by any
segmental reporting.
REVENUE
Revenue is measured as the fair value of the consideration received or receivable in the normal course of business,
net of discounts, VAT and other sales related taxes and is recognised to the extent that it is probable that the economic
benefits associated with the transaction will flow in to the Company.
Grant income is recognised as earned based on contractual conditions, generally as expenses are incurred.
FOREIGN CURRENCIES
Transactions in foreign currencies are initially recorded at the rates of exchange prevailing on the dates of the
transactions. At each reporting date, monetary assets and liabilities that are denominated in foreign currencies are
retranslated at the rates prevailing on the reporting date. Gains and losses arising on retranslation are charged to
profit or loss as they are incurred.
The functional and presentational currency of the Group is British pounds.
RESEARCH AND DEVELOPMENT
Research costs are charged to profit or loss as they are incurred. An intangible asset arising from development
expenditure on an individual project is recognised only when all of the following criteria can be demonstrated.
The criteria for recognising expenditure as an asset are:
• it is technically feasible to complete the product and the Company is satisfied that appropriate regulatory hurdles
have been, or will be achieved;
• management intends to complete the product and use or sell it;
• there is an ability to use or sell the product;
• it can be demonstrated how the product will generate probable future economic benefits;
• adequate technical, financial and other resources are available to complete the development, use or sell the
product; and
• expenditure attributable to the product can be reliably measured.
Such intangible assets are amortised on a straight-line basis from the point at which the assets are ready for use
over the period of the expected benefit, and are reviewed for an indication of impairment at each reporting date.
Annual Report for the year ended 31 January 2011 23
Tissue Regenix Group plc
Notes to the Financial Statements
Other development costs are charged against profit or loss as incurred since the criteria for their recognition as an
asset are not met.
The costs of an internally generated intangible asset comprise all directly attributable costs necessary to create,
produce and prepare the asset to be capable of operating in the manner intended by management. Directly
attributable costs include employee costs incurred on technical development, testing and certification, materials
consumed and any relevant third party cost. The costs of internally generated developments are recognised as
intangible assets and are subsequently measured in the same way as externally acquired intangible assets. However,
until completion of the development project, the assets are subject to impairment testing only.
No development costs to date have been capitalised as intangible assets.
LEASES
Rentals payable under operating leases, which are leases where the lessor retains a significant proportion of the
risks and benefits of the asset are charged in the statement of comprehensive income on a straight line basis over
the expected lease term.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment assets are stated at historical cost.
Depreciation is provided on all property, plant and equipment assets at rates calculated to write each asset down to
its estimated residual value evenly over its expected useful life, as follows:
Laboratory equipment
Computer equipment
Office furniture and equipment:
over 5 years
over 3 years
over 5 years
IMPAIRMENT OF PROPERTY, PLANT AND EQUIPMENT
At each reporting date, the Group reviews the carrying amounts of its property, plant and equipment and intangible
assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such
indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment
loss (if any).
Discounted cash flow valuation techniques are generally applied for assessing recoverable amounts using 3 year
forward looking cash flow projections and terminal value estimates, together with discount rates appropriate to the
risk of the related cash generating units.
If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the
asset is reduced to its recoverable amount. An impairment loss is recognised as an expense immediately.
SHARE BASED PAYMENTS
Share options
Equity settled share-based payment transactions are measured with reference to the fair value at the date of grant,
recognised on a straight line basis over the vesting period, based on the company’s estimate of shares that will
eventually vest. Fair value is measured using the Black-Scholes model unless the options are subject to market
conditions when the binomial model is used.
At each reporting date before vesting, the cumulative expense is calculated, representing the extent to which the
vesting period has expired and management’s best estimate of the achievement or otherwise of non-market
24 Annual Report for the year ended 31 January 2011
Tissue Regenix Group plc
conditions and the number of equity instruments that will ultimately vest. The movement in cumulative expense since
the previous reporting date is recognised in the statement of comprehensive income, with a corresponding entry in
equity.
Jointly held shares
Where an employee acquires an interest in shares in the Company jointly with the Tissue Regenix Employee Share
Trust, the fair value benefit at the purchase date is recognised as an expense, with a corresponding increase to
equity share based payment reserve on a straight-line basis, over the vesting period.
The fair value benefit is measured using a Binomial valuation model, taking into account the terms and conditions
upon which the jointly owned shares were purchased.
The expected life used in the model has been adjusted, based on management’s best estimate, for the effect of
non-transferability, sale restrictions, and behavioral considerations.
FINANCIAL ASSETS AND LIABILITIES
Trade and other receivables
Trade and other receivables do not carry any interest and are initially recognised at fair value. They are subsequently
measured at amortised cost using the effective interest rate method, less any provision for impairment.
Impairment provisions are recognised when there is objective evidence that the Group will be unable to collect all
of the amounts due under the terms receivable, the amount of such a provision being the difference between the
net carrying amount and the present value of the future expected cash flows associated with the impaired receivable.
Trade and other payables
Trade and other payables are not interest bearing and are initially recognised at fair value. They are subsequently
measured at amortised cost using the effective interest method.
Cash and cash equivalents
Cash and cash equivalents comprise cash at hand and deposits on a term of not greater than 3 months.
Share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options
are shown in equity as a deduction, net of tax from proceeds.
TAXATION
The tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit for the period. The Group’s liability for current tax is calculated
by using tax rates that have been enacted or substantively enacted by the reporting date.
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amount of assets
and liabilities in the financial information and the corresponding tax bases used in the computation of taxable profit,
and is accounted for using the balance sheet liability method. Deferred tax liabilities are recognised for all taxable
temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will
be available against which deductible temporary differences can be utilised. Deferred tax is calculated at the tax
rates that are expected to apply to the period when the asset is realised or the liability is settled using tax rates that
have been enacted or substantively enacted by the reporting date. Deferred tax is charged or credited to profit or
loss, except when it relates to items credited or charged directly to equity, in which case the deferred tax is also
dealt with in equity.
Annual Report for the year ended 31 January 2011 25
Tissue Regenix Group plc
Notes to the Financial Statements
CRITICAL ACCOUNTING ESTIMATES AND AREAS OF JUDGEMENT
Estimates and judgements are continually evaluated and are based on historical experience and other factors,
including expectations of future events that are believed to be reasonable under the circumstances. Actual results
may differ from these estimates. The estimates and assumptions that have the most significant effects on the carrying
amounts of the assets and liabilities in the financial information are discussed below:
Equity settled share-based payments
The estimation of share-based payment costs requires the selection of an appropriate valuation method,
consideration as to the inputs necessary for the valuation model chosen and the estimation of the number of awards
that will ultimately vest. Inputs subject to judgement relate to the future volatility of the share price of comparable
companies, the Group’s expected dividend yields, risk free interest rates and expected lives of the options. The
Directors draw on a variety of sources to aid in the determination of the appropriate data to use in such calculations.
The share based payment charge for the year was £331,000 (six months to 31 January 2010: £1,000).
Research and development costs
Careful judgement by the Directors is applied when deciding whether the recognition requirements for capitalising
development costs have been met. This is necessary as the economic success of any product development is
uncertain and may be subject to future technical problems. Judgements are based on the information available at
each reporting date which includes the progress with testing and certification and progress on, for example,
establishment of commercial arrangements with third parties. In addition, all internal activities related to research
and development of new products are continuously monitored by the Directors. To date, no development costs have
been capitalised.
ACCOUNTING STANDARDS AND INTERPRETATIONS NOT APPLIED
At the date of authorisation of these financial statements, the following standards and interpretations relevant to the
Group that have not been applied in these financial statements were in issue but not yet effective or endorsed (unless
otherwise stated):
IFRS 7
IFRS 1
IAS 12
IFRS 9
IAS 32*
IAS 24*
IFRIC 19*
IFRIC 14*
IFRS 1
IFRS 3
IFRS 7
IAS 1
IAS 27
IFRIC 13
IAS 34
* endorsed by the EU.
Financial Instruments: Disclosures (amendments)
First Time Adoption of IFRS (amendments)
Income Taxes (amendments)
Financial Instruments
Financial Instruments: Presentation (amendments)
Revised IAS24 Related Party Transactions
Extinguishing Financial Liabilities with Equity Instruments
Prepayments of a Minimum Funding Requirement
First Time Adoption of International Financial Reporting Standards
Business combinations
Financial Instruments: Disclosures
Presentation of Financial Statements
Consolidated and Separate Financial Statements
Customer Loyalty Programmes
Interim Financial Reporting
Effective Date
1 July 2011
1 July 2011
1 January 2012
1 January 2013
1 February 2010
1 January 2011
1 July 2010
1 January 2011
1 January 2011
1 July 2010
1 January 2011
1 January 2011
1 July 2010
1 January 2011
1 January 2011
The Directors anticipate that the adoption of these Standards and Interpretations in future periods will have no
material impact on the financial statements of the Group.
No Standards or Interpretations adopted in the year had any material impact on the financial statements of the
Group.
26 Annual Report for the year ended 31 January 2011
Tissue Regenix Group plc
3. SEGMENTAL REPORTING
At 31 January 2011, the Group operated in one business segment, that of the development and commercialisation
of innovative platform technologies in the field of tissue engineering and regenerative medicine.
All of the Group’s assets are held in the UK and all of its capital expenditure arises in the UK.
4. LOSS FROM OPERATIONS
Loss from operations is stated after crediting: Grant income
Loss from operations is stated after charging to administrative
expenses:
Depreciation of plant and equipment (see note 9)
Operating lease rentals – land and buildings
Staff costs
Foreign exchange losses
Research and development (inclusive of research and development personnel)
Auditors remuneration:
– fees payable to Company’s auditor for the audit of the
Company’s accounts
– auditing the accounts of subsidiaries pursuant to legislation
Other services
– fees in relation to subsidiary acquisition and AIM listing
– fees in relation to establishing the issue Regenix Employee Share Trust
Total auditor’s remuneration
5. STAFF COSTS
The average monthly number of persons (including directors)
employed by the Group during the period was:
Directors
Laboratory and administration staff
Year to
31 January
2011
£’000
173
46
95
1,108
2
653
12
10
50
30
102
Six months to
31 January
2010
£’000
74
18
36
350
4
423
–
10
–
–
10
Year to
31 January
2011
Number
Six months to
31 January
2010
Number
6
13
19
9
12
21
Annual Report for the year ended 31 January 2011 27
Tissue Regenix Group plc
Notes to the Financial Statements
The aggregate remuneration, including directors, comprised:
Wages and salaries
Share based expense (see note 17)
Social security costs
Directors’ remuneration included comprised: Emoluments for qualifying services
Year to
31 January
2011
£’000
Six months to
31 January
2010
£’000
704
331
73
1,108
505
326
1
34
361
163
Directors’ emoluments disclosed above include £126,000 paid to the highest paid director (2010: £120,000) as well as share based payments benefit of £203,000
(2010: nil). There are no pension benefits for directors.
6. FINANCE INCOME
Bank interest receivable
7. TAXATION
Tax on loss on ordinary activities
Current tax:
UK corporation tax credit on losses of period
Tax credits received in respect of prior periods
Deferred tax:
Origination and reversal of temporary timing differences
Tax credit on loss on ordinary activities
Year to
31 January
2011
£’000
Six months to
31 January
2010
£’000
28
64
Year to
31 January
2011
£’000
Six months to
31 January
2010
£’000
(167)
(71)
(238)
–
(238)
(75)
–
(75)
–
(75)
28 Annual Report for the year ended 31 January 2011
Tissue Regenix Group plc
The charge for the period can be reconciled to the loss before tax per the Statement of Comprehensive Income as
follows:
Factors affecting the current tax charges
The tax assessed for the period varies from the small company rate of corporation tax as explained below:
The tax assessed for the period varies from the small company
rate of corporation tax as explained below:
Loss on ordinary activities before tax
Tax at the standard rate of corporation tax (21%)
Effects of:
Expenses not deductable for tax purposes
Capital allowances in excess of depreciation
Research and development tax credits received
Surrender of research and development relief for repayable tax credit
Research and development enhancement
Adjustment to prior year research and development relief
Unutilised tax losses
Tax credit for the period
Deferred Tax
Tax losses
Losses available to carry forward against future trading profits
Deferred tax asset – unrecognised*
Year to
31 January
2011
£’000
Six months to
31 January
2010
£’000
(1,959)
(411)
69
(14)
(167)
250
(118)
(71)
224
(238)
(739)
(155)
3
–
–
–
77
(75)
Year to
31 January
2011
£’000
Six months to
31 January
2010
£’000
2,806
589
1,905
401
* The Company has not recognised a deferred tax asset relating to these losses as their recoverability is uncertain.
Annual Report for the year ended 31 January 2011 29
Tissue Regenix Group plc
Notes to the Financial Statements
8. LOSS PER SHARE (BASIC AND DILUTED)
Basic loss per share is calculated by dividing the loss attributable to equity holders of the parent by the weighted
average number of ordinary shares in issue during the period excluding own shares held jointly by the Tissue
Regenix Employee Share Trust and certain employees. Diluted loss per share is calculated by adjusting the weighted
average number of ordinary shares in issue during the period to assume conversion of all dilutive potential ordinary
shares.
Loss attributable to the equity holders of the parent
Pre deemed cost on reverse acquisition
Deemed cost on reverse acquisition
Total loss attributable to the equity holders of the parent
Weighted average number of ordinary shares in issue
during the period
Loss per share
Basic and diluted on loss for the period
Pre deemed cost on reverse acquisition
Post deemed cost on reverse acquisition
Year to
31 January
2011
£’000
Six months to
31 January
2010
£’000
(1,678)
(3,749)
(5,427)
No.
(664)
–
(664)
No.
366,159,076
241,885,103
(0.46)p
(1.48)p
(0.27)p
(0.27)p
The weighted average number of shares for the for the six months ended 31 January 2010 is based on the number
of shares issued by Tissue Regenix Group plc to acquire Tissue Regenix Limited under the reverse acquisition as
set out in note 16 to these financial statements. The weighted average number of shares for the year ended 31
January 2011 reflects the number of ordinary shares issued by Tissue Regenix Group plc to acquire Tissue Regenix
Limited up to the acquisition date and the total number of shares in issue for the period post the acquisition.
The Company has issued employee options over 16,154,523 ordinary shares and there are 16,712,800 jointly owned
shares which are potentially dilutive. There is however, no dilutive effect of these issued options as there is a loss for
each of the periods concerned.
30 Annual Report for the year ended 31 January 2011
Tissue Regenix Group plc
9. PROPERTY, PLANT AND EQUIPMENT
Laboratory Fixtures & Computer
Equipment Fittings Equipment Total
£’000 £’000 £’000 £’000
Cost
At 31 July 2008 21 – 3 24
Additions 88 32 11 131
Disposals (7) – – (7)
At 31 July 2009 102 32 14 148
Additions 22 – 1 23
At 31 January 2010 124 32 15 171
Additions 76 4 20 100
At 31 January 2011 200 36 35 271
Depreciation
At 31 July 2008 2 – 1 3
Disposals (2) – – (2)
Charge for the period 13 1 3 17
At 31 January 2009 13 1 4 18
Charge for the period 14 2 2 18
At 31 January 2010 27 3 6 36
Charge for the year 33 7 6 46
At 31 January 2011 60 10 12 82
Net book value
At 31 January 2011 140 26 23 189
At 31 January 2010 97 29 9 135
At 31 July 2009 89 31 10 130
10. TRADE AND OTHER RECEIVABLES
2011 2010
£’000 £’000
Other receivables 351 243
Prepayments and accrued income 42 12
393 255
The Directors consider that the carrying amount of trade and other receivables approximates to their fair value.
No provisions are held against receivables and no amounts past due have been impaired.
11. RISK MANAGEMENT OF FINANCIAL ASSETS AND LIABILITIES
The Company’s activities expose it to a variety of financial risks: market risk, specifically interest rate risk, credit risk
and liquidity risk. The Company’s overall risk management programme focuses on the unpredictability of financial
markets and seeks to minimise potential adverse effects on the Company’s financial performance.
Annual Report for the year ended 31 January 2011 31
Tissue Regenix Group plc
Notes to the Financial Statements
The management of these risks is vested in the Board of Directors. The policies for managing each of these risks
are summarised below:
Management of market risk
(i) Interest rate risk
As the Company has no significant borrowings the risk is limited to the potential reduction in interest received on
cash surpluses held. Interest rate risk is managed in accordance with the liquidity requirement of the Group, with a
minimal amount of its cash surpluses held within an instant access account, which has a variable interest rate
attributable to it, to ensure that sufficient funds are available to cover the working capital requirements of the Company.
Interest rate sensitivity
The principal impact to the Company is the result of interest-bearing cash and cash equivalent balances held as set
out below:
Fixed rate Floating rate Total
£’000 £’000 £’000
Cash and cash equivalents 5,850 39 5,889
31 January 2011
Fixed rate Floating rate Total
£’000 £’000 £’000
Cash and cash equivalents 1,075 8 1,083
31 January 2010
Due to the high proportion of funds held on a fixed deposit, the impact of a 5 per cent. increase/decrease in interest
rates would have an immaterial impact on the loss in each period.
Management of credit risk
The Company is exposed to credit risk from its operating activities, it principally arises from short term bank deposits.
The Company seeks to minimise this risk by only depositing funds with banks with a high credit rating.
The maximum exposure to credit risk on the Company’s financial assets is represented by their carrying amounts
as outlined in the categorisation of financial instruments table below.
The Company does not consider that any changes in fair value of financial assets or liabilities in the year are
attributable to credit risk.
Management of liquidity risk
The Company seeks to manage liquidity risk to ensure that sufficient liquidity is available to meet foreseeable needs
and to invest cash assets safely and profitably.
No maturity analysis for financial liabilities is presented, as the Directors consider that liquidity risk is not material.
32 Annual Report for the year ended 31 January 2011
The Company had cash and cash equivalents at each reporting date is set out below.
Cash and cash equivalents
AA
A
BBB
Tissue Regenix Group plc
2011
£’000
3,353
1,022
1,514
5,889
2010
£’000
19
1,064
–
1,083
Capital risk management
The Company manages its capital to ensure that the Company will be able to continue as a going concern while
maximising the return to stakeholders. The Company’s overall strategy is to minimise costs and liquidity risk.
The capital structure of the Company consists of equity attributable to the owners of the Company, comprising issued
capital, reserves and retained earnings as disclosed in note 13 and 14 and in the Statement of Changes in Equity.
Categorisation of financial instrument
Financial assets/(liabilities)
At 31 January 2011
Trade and other receivables
Cash and cash equivalents
Trade and other payables
TOTAL
Financial assets/(liabilities)
At 31 January 2010
Trade and other receivables
Cash and cash equivalents
Trade and other payables
TOTAL
The Company had no financial instruments measured at fair value.
12. TRADE AND OTHER PAYABLES
Trade payables
Other payables
Taxes and social security
Accruals
Financial
liabilities at
Loans and
receivables amortised cost
£’000
£’000
351
5,889
–
6,240
–
–
(199)
(199)
Financial
Loans and
liabilities at
receivables amortised cost
£’000
£’000
5
1,083
–
1,088
–
–
(166)
(166)
2011
£’000
168
–
32
53
253
Total
£’000
351
5,889
(199)
6,041
Total
£’000
5
1,083
(166)
922
2010
£’000
112
–
20
54
186
The Directors consider that the carrying amount of trade and other payables approximates to their fair value.
Annual Report for the year ended 31 January 2011 33
Tissue Regenix Group plc
Notes to the Financial Statements
Trade payables, split by the currency they will be settled are shown below:
Sterling
US Dollars
Euros
Trade payables
13. SHARE CAPITAL
2011
£’000
144
3
21
168
Share
capital
£’000
Share
premium
£’000
Merger
reserve
£’000
Number
Reverse
acquisition
reserve
£’000
2010
£’000
60
9
43
112
Total
£’000
Allotted, issued and fully paid shares
Tissue Regenix Limited
Ordinary shares of 1p each
as at 31 January 2009 and
31 July 2009
Retrospective adjustment on
reverse acquisition in 2010
10,949
–
3,879
599,989,051
600
454
600,000,000
600
4,333
600,000,000
600
4,333
(480,000,000)
–
–
241,885,103
90,000,000
1,210
450
–
4,050
10,884
–
16,712,800
–
–
83
–
–
753
–
(481)
–
–
–
–
–
–
–
–
–
3,879
(1,054)
–
(1,054)
3,879
–
–
–
–
–
4,933
–
12,094
4,500
836
(7,148)
–
(7,148)
(481)
Ordinary shares of 0.1p each
as at 31 January 2010
Tissue Regenix Group plc
Ordinary shares of 0.1 p each
as at 31 January 2009 and 2010
Share consolidation 1 for 5 in to
Ordinary shares of 0.5p each
Issued to acquire the entire
issued share capital of
Tissue Regenix Limited
Issued for cash
Issued to Tissue Regenix
Employee Share Trust
Arising on reverse acquisition of
Tissue Regenix Limited
Expenses of issue of shares
Total Ordinary shares of 0.5p
each as at 31 January 2011
468,597,903
2,343
8,655
10,884
(7,148)
14,734
As permitted by the provisions of the Companies Act 2006, the Company does not have an upper limit to its
authorised share capital.
The acquisition of Tissue Regenix Limited by Oxeco plc on 29 June 2010 has been accounted for as a reverse
acquisition equity transaction as outlined in notes 2 and 16. The retained loss and other equity balances recognised
in the Group financial statements reflect the consolidated retained loss and other equity balances of Tissue Regenix
Limited immediately before the business combination and the consolidated results for the period from 1 February
2010 to the date of the acquisition are those of Tissue Regenix Limited. However, the equity structure appearing in
34 Annual Report for the year ended 31 January 2011
Tissue Regenix Group plc
the Group financial statements reflects the equity structure of the legal parent, including the equity instruments issued
under the share for share exchange to effect the transaction. The effect of using the equity structure of the legal
parent gives rise to an adjustment to the Group’s issued equity capital in the form of a reverse acquisition reserve.
The substance of the transaction is that of a share issue fund raising under which Tissue Regenix Limited received
cash and bank balances of £2,327,000 representing 103 per cent. of the value of the net assets of Oxeco plc and
the associated costs of the transaction have therefore been charged directly against equity share premium.
On 29 June 2010 the Company issued 90,000,000 ordinary shares of 0.5 pence each for a cash price of 5 pence
per share raising a gross amount of £4,500,000.
On 29 June 2010 the Company issued 16,712,800 ordinary shares of 0.5 pence each to the Trustee of the Tissue
Regenix Employee Share Trust at a price of 5 pence per share, more details of which are set out in notes 14 and 17.
14. MOVEMENT IN REVENUE RESERVE AND OWN SHARES
At 31 January 2009
Loss for the period
At 31 January 2010
Purchase of own shares
Employee interest in jointly owned shares
Loss for the period
At 31 January 2011
Retained
Earnings
Deficit
£’000
(1,158)
(1,435)
(2,593)
–
–
(5,427)
(8,020)
Own shares
£’000
–
–
–
(836)
8
–
(828)
Deficit
Revenue
Reserve
£’000
(1,158)
(1,435)
(2,593)
(836)
8
(5,427)
(8,848)
Own shares
On 29 June 2010, the Trustee of the Tissue Regenix Employee Share Trust purchased by way of subscription
16,712,800 ordinary shares of 0.5 pence each at a price of 5 pence per share. The shares were acquired jointly with
a number of directors of the Company pursuant to certain conditions set out in Joint Ownership Agreements (“JOA’s”).
Purchase of all the shares was funded by way of a loan contribution from the Company of £836,000 to the Trustee
and the directors paid to the Trustee Company the 1 per cent. of the purchase cost attributable to their initial interest
in the jointly owned shares, amounting to £8,398. Details of the performance conditions set out in the JOA’s is given
in note 17.
The Trust’s interest in the above shares have been classified as own shares.
15. COMMITMENTS
Operating lease commitments
The Group leases premises under non-cancellable operating lease agreements. The future aggregate minimum
lease and service charge payments under non-cancellable operating leases are as follows:
Land and buildings:
Amounts due within one year
Amounts due in one to five years
2011
£’000
2010
£’000
51
–
51
12
–
12
Annual Report for the year ended 31 January 2011 35
Tissue Regenix Group plc
Notes to the Financial Statements
16. ACQUISITION OF SUBSIDIARY UNDERTAKING
On 29 June 2010 the Company acquired 100 per cent. of the issued share capital of Tissue Regenix Limited for
consideration satisfied by the issue of 241,885,103 ordinary shares of 0.5 pence each.
As described in note 2, the transaction has been accounted for as a reverse acquisition equity transaction as if
Tissue Regenix Limited had issued new shares in exchange for Oxeco plc’s cash and other assets. The substance
of the transaction is that of a share issue fund raising under which Tissue Regenix Limited received cash and bank
balances of £2,327,000 representing 103 per cent. of the value of the net assets of Oxeco plc and the associated
costs of the transaction have therefore been charged directly against equity share capital.
The fair value of the shares issued has been determined from the perspective of Tissue Regenix Limited as the
market capitalisation value of Oxeco plc immediately prior to the acquisition. Based on an Oxeco plc market price
of 5 pence per share, being the market price at which new money was also raised by the Company by the issue of
shares for cash on the acquisition date, gives an implied fair value of Oxeco plc at acquisition of £6,000,000 which
is £3,749,000 higher than the value of the net assets deemed acquired as set out below:
Net assets acquired:
Bank and cash
Trade and other receivables
Trade and other payables
Deemed cost on reverse acquisition
Fair value of reverse acquisition
Oxeco plc
£’000
2,327
16
(92)
2,251
3,749
6,000
The difference between the fair value of the consideration and the fair value of the net assets deemed acquired has
been recorded as a deemed cost on reverse acquisition in the statement of comprehensive income.
The fair value of the assets deemed to have been acquired has been assessed as the book value on the acquisition
date.
Oxeco plc changed its name to Tissue Regenix Group plc on completion of the acquisition on 29 June 2010 and
was re-admitted to AIM on that same day.
17. SHARE BASED PAYMENTS
Share options and shares held in employee benefit trust (“EBT”)
The Company operates a share option plan, under which certain employees have been granted options to subscribe
for ordinary shares. All options are equity settled. The options have an exercise price of between 0.5p to 5p and a
vesting period between 1 and 4 years. If the options remain unexercised after a period of 10 years from the date of
grant, the options expire. The Group has no legal or constructive obligation to repurchase or settle the options in
cash.
The Group also operates a jointly owned EBT share scheme for senior management under which the trustee of the
Group sponsored EBT has acquired shares in the Group jointly with a number of employees. The shares were
acquired pursuant to certain conditions, set out in Jointly Owned Equity agreements (“JOE’s”). Subject to meeting
the performance criteria conditions set out in the JOE’s, the employees are able to benefit from most of any future
increase in the value of the jointly owned EBT shares. The fair value benefit is measured using the Binomial model,
taking into account the terms and conditions upon which the jointly owned shares were purchased.
36 Annual Report for the year ended 31 January 2011
Tissue Regenix Group plc
The number and weighted average exercise prices of share options and EBT shares are as follows:
Weighted
average
Number of share interests exercise
EMI Unapproved EBT price
options options shares Total per share (£)
At 31 July 2009 29 114 – 143 0.010
Granted during the year 495 15 – 510 160.000
At 31 January 2010 524 129 – 653 125.000
Exercised in the year (29) (57) – (86) 0.01
Adjustment on reverse acquisition 10,849,809 1,716,947 – 12,566,756 (124.430)
Issued in the year 3,587,200 – 16,712,800 20,300,000 0.050
At 31 January 2011 14,437,504 1,717,019 16,712,800 32,867,323 0.033
On 29 June 2010 the Company acquired 100 per cent. of the share capital of Tissue Regenix Limited for a
consideration satisfied by the issue of 241,885,103 ordinary shares of 0.5p each in a ratio of 21,919.81 for 1.
Consequently the share options issued by Tissue Regenix Limited were replaced with share options in Tissue Regenix
Group plc. No changes were made to the options other than an adjustment to the number of options, which were
increased by a factor of 21,919.81 and the adjustment to the exercise price which was decreased by a factor of
21,919.81. See note 13 for further details.
There were 12,567,323 share options outstanding at 31 January 2011 which were eligible to be exercised. The
remaining 3,857,200 options were not eligible to be exercised as these are subject to employment period and market
based vesting conditions, some of which had not been met at 31 January 2011.
The performance conditions in relation to these options allows for vesting in three equal proportions on or after the
three consecutive annual anniversaries from the date of grant subject to the Company’s share price reaching
10 pence per share, 15 pence per share and 20 pence per share by the respective vesting dates.
At 31 January 2011, none of the benefit of the increase in value on the 16,712,800 jointly held EBT shares was eligible
to vest, because the related employment period conditions and some of the performance conditions under the JOA’s
had not been met.
Under the terms of the JOA’s the employees are in certain circumstances able to benefit from most of any increase
in value above the 5 pence market value per share on or after 29 June 2011 in the case of 5,570,933 shares (provided
that the market price of the shares increase to at least 10 pence per share), on or after 29 June 2012 in the case of
a further 5,570,933 shares (provided that the market price of the shares increase to at least 15 pence per share) and
or after 29 June 2013 in the case of the remaining 5,570,934 shares (provided that the market price of the shares
increase to at least 20 pence per share).
The fair value benefit received on share options granted is measured using either the Black Scholes model or the
Binomial model as appropriate taking in to account the effects of the vesting and performance conditions, expected
exercise price and the payment of the dividends by the Company. The fair value benefit received on EBT shares is
measured using the Binomial model, taking into accounts the terms and conditions upon which the jointly owned
shares were purchased. The following table lists the inputs to the models used:
Annual Report for the year ended 31 January 2011 37
Tissue Regenix Group plc
Notes to the Financial Statements
Options
EBT shares
Options
Granted year Granted year Granted year
to 31 January
to 31 January
to 31 January
2010
2011
2011
Dividend yield
Expected volatility*
Risk free interest rate (%)
Expected vesting life of EBT shares and options (years)
Weighted average share price (£)
* Expected volatility is based on the similar start up technology companies.
–
50%
0.9
3
0.05
–
50%
0.5
1
0.05
–
50%
0.5
1
633
Any share options and employee interests in jointly owned EBT shares which are not exercised within 10 years from
the date of grant will expire.
A charge has been recognised in the statement of comprehensive income for each period as follows:
Granted year Granted period
to 31 January to 31 January
2011 2010
£’000 £’000
Share options 264 1
Jointly owned shares 67 –
Total share based payments 331 1
18. RELATED PARTY TRANSACTIONS
Trading transactions with
Six months
Year ended ended
31 January 31 January
2011 2010
£’000 £’000
Transactions with significant shareholders:
Staff secondment and sundry office running costs 7 2
Patent support costs 30 12
Laboratory facility costs 3 8
Rent – 36
Reverse acquisition fees 19 –
Management fees 5 –
Amounts due to related parties at the period end 7 4
Transactions with Key Management Personnel
The Company’s key management personnel comprise only the Directors of the Company.
38 Annual Report for the year ended 31 January 2011
Tissue Regenix Group plc
During the period the Company entered into the following transactions in which the Directors had an interest:
Directors’ remuneration:
Remuneration received by the Directors from the Company is set out below:
Year ended Year ended
31 January 31 January
2011 2010
£’000 £’000
Short-term employment benefits* 272 182
* In addition, certain directors hold share options and jointly owned shares in the Company for which a fair value share based charge of £258,000
has been recognised in the consolidated statement of comprehensive income (2010: £1,000).
During the year ended 31 January 2011, the Company entered into numerous transactions with its subsidiary
company which net off on consolidation – these have not been shown above.
19. ULTIMATE CONTROLLING PARTY
The directors believe that there is no ultimate controlling party.
Annual Report for the year ended 31 January 2011 39
Tissue Regenix Group plc
Company Statement of Changes in Equity
Attributable to the equity holders of the Company
At 31 January 2009
Total expense and other comprehensive
loss for the year
At 31 January 2010
Total expense and other comprehensive
loss for the year
Shares issued to acquire Tissue
Regenix Limited
Shares issued for cash
Shares issued to the Tissue Regenix
Employee Share Trust
Expenses on issue of shares
Share based payment expense
Share
Capital
£’000
Share
Premium
£’000
Merger
reserve
£’000
600
4,333
–
600
–
–
4,333
–
–
–
–
–
1,210
450
–
4,050
10,884
–
83
–
–
753
(481)
–
–
–
–
At 31 January 2011
2,343
8,655
10,884
Share
Based
Payment
Reserve
£’000
Revenue
Deficit
Reserve
£’000
Total
£’000
–
–
–
–
–
–
–
–
259
259
(2,411)
2,522
(227)
(227)
(2,638)
2,295
(582)
(582)
–
–
–
–
–
12,094
4,500
836
(481)
259
(3,220)
18,921
40 Annual Report for the year ended 31 January 2011
Tissue Regenix Group plc
Company Statement of Financial Position
2011 2010
Notes £’000 £’000
Assets
Non-current assets
Investment in subsidiary undertaking C3 12,930 –
Total non-current assets – 12,930 –
Current assets
Trade and other receivables C4 72 11
Intercompany loan balance C5 544 –
Cash and cash equivalents 5,459 2,316
6,075 2,327
Total Assets 19,005 2,327
Liabilities
Current liabilities
Trade and other payables C6 (84) (32)
Total Liabilities (84) (32)
Net Assets 18,921 2,295
Equity
Share capital 13 2,343 600
Share premium 13 8,655 4,333
Merger reserve 13 10,884
Issue equity capital 21,882 4,933
Share based payment reserve 17 259 –
Revenue reserve (3,220) (2,638)
Total Equity 18,921 2,295
Approved by the Board of Directors and authorised for issue on 3 May 2011.
John Samuel
Executive Chairman
Company number: 5969271
Michael Bretherton
Finance Director
Annual Report for the year ended 31 January 2011 41
Tissue Regenix Group plc
Company Statement of Cash Flows
2011 2010
Notes £’000 £’000
Operating activities
Loss before interest and tax (602) (238)
Adjustment for non-cash items:
Share based payments 17 259 –
Tax received – 2
Impairment of loan to subsidiary undertaking – 107
Operating cash outflow (343) (129)
(Increase)/decrease in trade and other receivables (61) (97)
Increase/(decrease) in trade and other payables 52 9
Net cash generated from operations (352) (217)
Investing Activities
Interest received 20 9
Loan to subsidiary undertaking C6 (544) –
Net cash generated from investing activities (524) 9
Financing Activities
Proceeds from issue of share capital 13 4,500 –
Expense of issue of share capital 13 (481) –
Net cash used in financing activities 4,019 –
Decrease in cash and cash equivalents 3,143 (208)
Cash and cash equivalents at start of year 2,316 2,524
Effect of foreign exchange rate changes – –
Cash and cash equivalents at end of year 5,459 2,316
*
In addition, the Company has increased its investment in subsidiaries through non-cash transactions settled by the issue of shares with a
value of £12,094,000 to acquire Tissue Regenix Limited as set out in note 16 and by the issue of shares with a value of £836,000 to the Tissue
Regenix Employee Share Trust as set out in note 14.
42 Annual Report for the year ended 31 January 2011
Tissue Regenix Group plc
Notes to the Company Information
C1. PRINCIPAL ACCOUNTING POLICIES
The separate financial statements of the Company are presented as required by the Companies Act 2006 and in
accordance with IFRS.
The principal accounting policies adopted are the same as for those set out in the Group’s financial statements.
C2. COMPANY RESULTS
The Company was incorporated and registered in England and Wales as a public company on 29 June 2010. The
result and cash flow are for the period from incorporation to 31 January 2011.
The Company has elected to take the exemption under section 408 of the Companies Act 2006 not to present the
parent company’s statement of comprehensive income. The parent company’s result for the period ended 31 January
2011 was a loss of £582k.
The audit fee for the company is set out in note 4 of the Group’s financial statements.
C3. INVESTMENT IN SUBSIDIARY COMPANIES
At 31 January 2011, the Company held the following investments in subsidiaries;
Share of issued capital and voting rights
Sector 2011 2010
Undertaking
Regenerative medicine 100% nil
Tissue Regenix Limited
Dormant 85% 85%
Oxray Limited
On 27 June 2010 the Company acquired 100% of Tissue Regenix Limited, a company incorporated and registered
in the United Kingdom, by issuing 241,885,103 shares of 0.5p each.
2011 2010
Cost £’000 £’000
At 1 February 1,785 2,100
Additions 12,930 –
Disposals – (315)
At 31 January 14,715 1,785
Impairment
At 1 February (1,785) (2,100)
Reversal on disposal – 315
At 31 January (1,785) (1,785)
Carrying value at 31 January 12,930 –
The company’s investment in Oxray Limited has been written down to nil and the Company is dormant.
Annual Report for the year ended 31 January 2011 43
Tissue Regenix Group plc
Notice to the Company Information
C4. TRADE RECEIVABLES
2011 2010
£’000 £’000
Prepayments 33 9
Social Security and other taxes 39 2
72 11
C5. CURRENT ASSETS
2011 2010
£’000 £’000
Intercompany loan 544 –
A loan of £544k was advanced to Tissue Regenix Limited in the year. No interest was payable on the loan.
C6. TRADE PAYABLES
2011 2010
£’000 £’000
Trade Creditors 48 4
Social Security and other taxes 11 1
Accruals 25 27
84 32
44 Annual Report for the year ended 31 January 2011
Tissue Regenix Group plc
Notice of Annual General Meeting
Notice is given that the 2011 annual general meeting of Tissue Regenix Group plc (“Company”) will be held at DLA
Piper UK LLP, Princes Exchange, Princes Square, Leeds, LS1 4BY, on 2 June 2011 at 2.00 pm for the following
purposes:
To consider and, if thought fit, to pass the following resolutions as ordinary resolutions:
1.
To receive the Company’s annual accounts and directors’ and auditors’ reports for the year ended 31 January
2011.
2. To reappoint Michael Bretherton, who retires by rotation, as a director of the Company.
3. To reappoint Alan Aubrey, who has been appointed by the board since the last annual general meeting, as a
director of the Company.
4. To reappoint Alan Miller, who has been appointed by the board since the last annual general meeting, as a
director of the Company.
5. To reappoint Antony Odell, who has been appointed by the board since the last annual general meeting, as a
director of the Company.
6. To reappoint John Samuel, who has been appointed by the board since the last annual general meeting, as a
director of the Company.
7.
To reappoint Alexander Stevenson, who has been appointed by the board since the last annual general meeting,
as a director of the Company.
8. To reappoint Baker Tilly UK Audit Llp as auditors of the Company.
9. To authorise the directors to determine the remuneration of the auditors.
10. That, pursuant to section 551 of the Companies Act 2006 (“Act”), the directors be and are generally and
unconditionally authorised to exercise all powers of the Company to allot Relevant Securities:
10.1 comprising equity securities (as defined in section 560(1) of the Act) up to an aggregate nominal amount
of £1,563,662 (such amount to be reduced by the aggregate nominal amount of Relevant Securities allotted
pursuant to paragraph 10.2 of this resolution) in connection with a rights issue:
10.1.1
10.1.2
to holders of ordinary shares in the capital of the Company in proportion (as nearly as practicable)
to the respective numbers of ordinary shares held by them; and
to holders of other equity securities in the capital of the Company, as required by the rights of those
securities or, subject to such rights, as the directors otherwise consider necessary,
but subject to such exclusions or other arrangements as the directors may deem necessary or expedient in
relation to treasury shares, fractional entitlements, record dates or any legal or practical problems under the
laws of any territory or the requirements of any regulatory body or stock exchange; and
10.2 otherwise than pursuant to paragraph 10.1 of this resolution, up to an aggregate nominal amount of
£781,831 (such amount to be reduced by the aggregate nominal amount of Relevant Securities allotted
pursuant to paragraph 10.1 of this resolution in excess of £781,831),
provided that (unless previously revoked, varied or renewed) these authorities shall expire at the conclusion
of the next annual general meeting of the Company after the passing of this resolution or on 2 September
2012 (whichever is the earlier), save that, in each case, the Company may make an offer or agreement
before the authority expires which would or might require Relevant Securities to be allotted after the authority
Annual Report for the year ended 31 January 2011 45
Tissue Regenix Group plc
Notice of Annual General Meeting
expires and the directors may allot Relevant Securities pursuant to any such offer or agreement as if the
authority had not expired.
In this resolution, “Relevant Securities” means shares in the Company or rights to subscribe for or to convert
any security into shares in the Company; a reference to the allotment of Relevant Securities includes the
grant of such a right; and a reference to the nominal amount of a Relevant Security which is a right to
subscribe for or to convert any security into shares in the Company is to the nominal amount of the shares
which may be allotted pursuant to that right.
These authorities are in substitution for all existing authorities under section 551 of the Act (which, to the
extent unused at the date of this resolution, are revoked with immediate effect).
To consider and, if thought fit, to pass the following resolutions as special resolutions:
11. That, subject to the passing of resolution 10 and pursuant to section 570 of the Act, the directors be and are
generally empowered to allot equity securities (within the meaning of section 560 of the Act) for cash pursuant
to the authorities granted by resolution 10 as if section 561(1) of the Act did not apply to any such allotment,
provided that this power shall be limited to:
11.1 the allotment of equity securities in connection with an offer of equity securities (whether by way of a rights
issue, open offer or otherwise, but, in the case of an allotment pursuant to the authority granted by
paragraph 10.1 of resolution 10, such power shall be limited to the allotment of equity securities in
connection with a rights issue):
11.1.1
11.1.2
to holders of ordinary shares in the capital of the Company in proportion (as nearly as practicable)
to the respective numbers of ordinary shares held by them; and
to holders of other equity securities in the capital of the Company, as required by the rights of those
securities or, subject to such rights, as the directors otherwise consider necessary,
but subject to such exclusions or other arrangements as the directors may deem necessary or expedient
in relation to treasury shares, fractional entitlements, record dates or any legal or practical problems under
the laws of any territory or the requirements of any regulatory body or stock exchange; and
11.2 the allotment of equity securities pursuant to the authority granted by paragraph 10.2 of resolution 10
(otherwise than pursuant to paragraph 11.1 of this resolution) up to an aggregate nominal amount of
£351,823,
and (unless previously revoked, varied or renewed) this power shall expire at the conclusion of the next
annual general meeting of the Company after the passing of this resolution or on 2 September 2012
(whichever is the earlier), save that the Company may make an offer or agreement before this power
expires which would or might require equity securities to be allotted for cash after this power expires and
the directors may allot equity securities for cash pursuant to any such offer or agreement as if this power
had not expired.
This power is in substitution for all existing powers under section 570 of the Act (which, to the extent unused
at the date of this resolution, are revoked with immediate effect).
12. That, pursuant to section 701 of the Companies Act 2006 (“Act”), the Company be and is generally and
unconditionally authorised to make market purchases (within the meaning of section 693(4) of the Act) of
ordinary shares of 0.5p each in the capital of the Company (“Shares”), provided that:
12.1 the maximum aggregate number of Shares which may be purchased is 46,909,860;
12.2 the minimum price (excluding expenses) which may be paid for a Share is 0.5p;
46 Annual Report for the year ended 31 January 2011
Tissue Regenix Group plc
12.3 the maximum price (excluding expenses) which may be paid for a Share is an amount equal to 105 per
cent. of the average of the middle market quotations for a Share as derived from the Daily Official List of
the London Stock Exchange plc for the five business days immediately preceding the day on which the
purchase is made,
and (unless previously revoked, varied or renewed) this authority shall expire at the conclusion of the
next annual general meeting of the Company after the passing of this resolution or on 2 September 2012
(whichever is the earlier), save that the Company may enter into a contract to purchase Shares before
this authority expires under which such purchase will or may be completed or executed wholly or partly
after this authority expires and may make a purchase of Shares pursuant to any such contract as if this
authority had not expired.
By order of the board Registered office
Micheal Bretherton The Biocentre
Secretary Innovation Way
Heslington
York
YO10 5NY
3 May 2011 Registered in England and Wales No. 05969271
Annual Report for the year ended 31 January 2011 47
Tissue Regenix Group plc
Notice of Annual General Meeting
Notes
Entitlement to attend and vote
1. The right to vote at the meeting is determined by reference to the register of members. Only those
shareholders registered in the register of members of the Company as at 2.00 pm on 31 May 2011 (or, if the
meeting is adjourned, 6.00 pm on the date which is two working days before the date of the adjourned
meeting) shall be entitled to attend and vote at the meeting in respect of the number of shares registered in
their name at that time. Changes to entries in the register of members after that time shall be disregarded
in determining the rights of any person to attend or vote (and the number of votes they may cast) at the
meeting.
Proxies
2. A shareholder is entitled to appoint another person as his or her proxy to exercise all or any of his or her
rights to attend and to speak and vote at the meeting. A proxy need not be a shareholder of the Company.
A shareholder may appoint more than one proxy in relation to the meeting, provided that each proxy is
appointed to exercise the rights attached to a different share or shares held by that shareholder. Failure to
specify the number of shares each proxy appointment relates to or specifying a number which when taken
together with the numbers of shares set out in the other proxy appointments is in excess of the number of
shares held by the shareholder may result in the proxy appointment being invalid.
A proxy may only be appointed in accordance with the procedures set out in notes 3 to 4 below and the
notes to the proxy form.
The appointment of a proxy will not preclude a shareholder from attending and voting in person at the
meeting.
3. A form of proxy is enclosed. When appointing more than one proxy, complete a separate proxy form in
relation to each appointment. Additional proxy forms may be obtained by contacting the Company’s registrar
on 0871 664 0300 (calls cost 10p per minute plus network extras) or the proxy form may be photocopied.
State clearly on each proxy form the number of shares in relation to which the proxy is appointed.
To be valid, a proxy form must be received by post or (during normal business hours only) by hand at the
offices of the Company’s registrar, Capita Registrars PXS, 34 Beckenham Road, Beckenham BR3 4TU, no
later than 2.00 pm on 31 May 2011 (or, if the meeting is adjourned, no later than 48 hours before the time
of any adjourned meeting).
4. CREST members who wish to appoint a proxy or proxies for the meeting (or any adjournment of it) through
the CREST electronic proxy appointment service may do so by using the procedures described in the
CREST Manual. CREST personal members or other CREST sponsored members, and those CREST
members who have appointed a voting service provider(s), should refer to their CREST sponsor or voting
service provider(s), who will be able to take the appropriate action on their behalf.
In order for a proxy appointment or instruction made using the CREST service to be valid, the appropriate
CREST message (a “CREST Proxy Instruction”) must be properly authenticated in accordance with Euroclear
UK & Ireland Limited’s specifications and must contain the information required for such instructions, as
described in the CREST Manual. The message, regardless of whether it constitutes the appointment of a
proxy or is an amendment to the instruction given to a previously appointed proxy, must, in order to be valid,
be transmitted so as to be received by Capita Registrars (ID RA10) no later than 2.00 pm on 31 May 2011
(or, if the meeting is adjourned, no later than 48 hours before the time of any adjourned meeting). For this
purpose, the time of receipt will be taken to be the time (as determined by the timestamp applied to the
48 Annual Report for the year ended 31 January 2011
Tissue Regenix Group plc
message by the CREST Applications Host) from which Capita Registrars is able to retrieve the message by
enquiry to CREST in the manner prescribed by CREST. After this time, any change of instructions to proxies
appointed through CREST should be communicated to the appointee through other means.
CREST members and, where applicable, their CREST sponsors or voting service providers should note that
Euroclear UK & Ireland Limited does not make available special procedures in CREST for any particular
messages. Normal system timings and limitations will therefore apply in relation to the input of CREST Proxy
Instructions. It is the responsibility of the CREST member concerned to take (or, if the CREST member is a
CREST personal member or sponsored member or has appointed a voting service provider(s), to procure
that his or her CREST sponsor or voting service provider(s) take(s)) such action as shall be necessary to
ensure that a message is transmitted by means of the CREST system by any particular time. In this
connection, CREST members and, where applicable, their CREST sponsors or voting service providers are
referred, in particular, to those sections of the CREST Manual concerning practical limitations of the CREST
system and timings.
The Company may treat a CREST Proxy Instruction as invalid in the circumstances set out in Regulation
35(5)(a) of the Uncertificated Securities Regulations 2001.
Corporate representatives
5. A shareholder which is a corporation may authorise one or more persons to act as its representative(s) at
the meeting. Each such representative may exercise (on behalf of the corporation) the same powers as the
corporation could exercise if it were an individual shareholder, provided that (where there is more than one
representative and the vote is otherwise than on a show of hands) they do not do so in relation to the same
shares.
Documents available for inspection
6. The following documents will be available for inspection during normal business hours at the registered
office of the Company from the date of this notice until the time of the meeting. They will also be available
for inspection at the place of the meeting from at least 15 minutes before the meeting until it ends.
6.1 Copies of the service contracts of the executive directors.
6.2 Copies of the letters of appointment of the non executive directors.
Biographical details of directors
7. Biographical details of all those directors who are offering themselves for reappointment at the meeting are
set out on pages 6 and 7 of the annual report and accounts.
Annual Report for the year ended 31 January 2011 49
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Tissue Regenix Group plc
DIRECTORS
John Samuel (Executive Chairman)
Antony Odell (Managing Director)
Michael Bretherton (Finance Director)
Alan Aubrey (Non-Executive Director)
Alan Miller (Non-Executive Director)
Alexander Stevenson (Non-Executive Director)
COMPANY SECRETARY
Michael Bretherton
COMPANY WEBSITE
www.tissueregenix.com
COMPANY NUMBER
5969271 (England & Wales)
REGISTERED OFFICE
The Biocentre
Innovation Way
Heslington
York
North Yorkshire
YO10 5NY
AUDITOR
Baker Tilly UK Audit LLP
2 Whitehall Quay
Leeds
LS1 4HG
NOMINATED ADVISER AND BROKER
Peel Hunt Limited
111 Old Broad St,
London
EC2N 1PH
REGISTRAR
Capita Registrars Limited
The Registry
34 Beckenham Road
Beckenham
Kent
BR3 4TU
LEGAL ADVISER
DLA Piper UK LLP
Princes Exchange
Princes Square
Leeds
LS1 4BY
ANNUAL REPORT
FOR THE YEAR ENDED
31 JANUARY 2011
Tissue Regenix Group plc
The Biocentre
Innovation Way
Heslington
York, YO10 5NY
United Kingdom
www.tissueregenix.com