T
I
S
S
U
E
R
E
G
E
N
I
X
G
R
O
U
P
P
L
C
A
N
N
U
A
L
R
E
P
O
R
T
A
N
D
A
C
C
O
U
N
T
S
F
O
R
T
H
E
Y
E
A
R
E
N
D
E
D
3
1
D
E
C
E
M
B
E
R
2
0
1
7
CARING
PROGRESSIVE
DYNAMIC
TISSUE REGENIX GROUP PLC
ANNUAL REPORT AND ACCOUNTS
FOR THE YEAR ENDED 31 DECEMBER 2017
Who We Are
TISSUE REGENIX GROUP IS A
PIONEERING, INTERNATIONAL MEDICAL
TECHNOLOGY COMPANY, FOCUSING ON
THE DEVELOPMENT OF REGENERATIVE
PRODUCTS UTILISING OUR TWO
PLATFORM TECHNOLOGIES, DCELL®
TECHNOLOGY, ADDRESSING SOFT
TISSUE NEEDS, AND CELLRIGHT’S
BIORINSE®, PROVIDING INDUCTIVE
BONE ALLOGRAFTS. WE ARE HELPING
TO TRANSFORM THE TREATMENT
OF PATIENTS IN FOUR KEY AREAS:
BIOSURGERY, ORTHOPAEDICS (SPORTS
MEDICINE/SPINE), DENTAL AND CARDIAC
OUR VISION
To establish Tissue Regenix as a leader in the science and innovation of
regenerative medicine and become clinicians’ partner of choice to meet
growing clinical needs, transform patient care and deliver favourable health
economic outcomes.
OUR STRENGTHS
{ Two complementary, proven regenerative medicine platforms
addressing applications in both soft tissue and bone
{ State-of-the-art in-house manufacturing capabilities in the UK, Europe
and North America
{ Multiple development and commercialisation opportunities
{ Experienced and dedicated management and scientific teams.
dCELL® TISSUE STRATEGY
LEARN MORE ABOUT US
BIOSURGERY
ORTHOPAEDIC
CARDIAC
Porcine (X)
in pipeline
Human (H)
[THICKER DERMIS]
NAVIGATING THE REPORT
FOR FURTHER INFORMATION WITHIN THIS
DOCUMENT AND RELEVANT PAGE NUMBERS
SCAN THE QR CODE TO
LEARN MORE ABOUT OUR dCELL
TECHNOLOGY IN THIS SHORT VIDEO
OR VISIT WWW.TISSUEREGENIX.COM/
MEDIA/INNOVATIONS-IN-SOFT-TISSUE-
REGENERATIVE-MEDICAL-TECHNOLOGY
SCAN THE QR CODE TO LEARN MORE
ABOUT CELLRIGHT TECHNOLOGIES IN
THIS SHORT VIDEO
OR VISIT WWW.TISSUEREGENIX.COM/
MEDIA/HEALING-SKELETAL-DEFECTS-
THROUGH-REGENERATIVE-MEDICINE
TICKER AIM: TRX www.tissueregenix.com “ I AM VERY PLEASED WITH THE
PROGRESS THE GROUP HAS
MADE, DELIVERING AGAINST
OUR STRATEGIC OBJECTIVES
FOR THE YEAR...
FOR MORE INFORMATION SEE PAGE 02
Highlights
Z GROUP SALES INCREASED TO £5,233K
— DermaPure® sales under TRX BioSurgery increased
by 46% to £1,932K
— Increased sales from GBM-V to £1,135K
— Four months of CellRight contribution of £2,166K.
Z GROUP LOSS FOR THE YEAR OF £9.4M
— Improvement from £9.9m (11 months to December 2016)
— Investment into research and development continues.
Z COMPLETED ACQUISITION OF CELLRIGHT
TECHNOLOGIES IN AUGUST 2017
— Successfully raised £40m gross of costs through an
equity fundraising
— Provides complementary regenerative technology
platform and world-class facility
— Operational integration on track, with initial
synergies recognised.
Z POST PERIOD HIGHLIGHTS
— Strategic distribution agreements with ARMS Medical
for DermaPure®
— Long-term distribution agreement signed with Arthrex, Inc.
for CellRights BioRinse portfolio.
OVERVIEW
Highlights
Chairman’s Statement
Corporate Structure
Who are CellRight Technologies?
What is Regenerative Medicine?
Complementary Platform Technologies
STRATEGIC REPORT
CEO Operational Review
Our Strategy
DIVISIONAL OVERVIEW
TRX BioSurgery
Orthopaedics and Dental
CellRight Technologies
Cardiac
GBM-V
Financial Overview
Risks
Corporate Social Responsibility
GOVERNANCE
Profile of the current directors
Governance Framework
Directors’ Remuneration Report
Directors’ Report
Statement of Directors’ Responsibilities
FINANCIALS
Independent Auditor’s Report to the
members of Tissue Regenix Group plc
Consolidated Statement of
Comprehensive Income
01
02
03
04
05
06
07
10
12
14
15
16
17
18
19
21
22
24
26
30
31
32
36
Consolidated Statement of Changes in Equity 37
Consolidated Statement of Financial Position 38
Consolidated Statement of Cash Flows
Notes to the Financial Statements
Company Statement of Changes in Equity
Company Statement of Financial Position
Company Statement of Cash Flows
Notes to the Company Information
Notice of Annual General Meeting
Directors and Officers
39
40
60
61
62
63
65
IBC
01
OVERVIEWTISSUE REGENIX GROUP PLC ANNUAL REPORT AND ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2017
Chairman’s Statement
WE HAVE COMPLETED A TRANSFORMATIVE
ACQUISITION, DELIVERED 46% GROWTH
IN DERMAPURE® SALES AND EXPANDED
THE CLINICAL APPLICATIONS OF OUR
PRODUCTS TO ACCESS NEW HEALTHCARE
PROFESSIONALS WHILST SUCCESSFULLY
PROGRESSING INTEGRATION ACTIVITIES.
WE NOW HAVE A MORE DIFFERENTIATED
AND DIVERSE PRODUCT PORTFOLIO,
ROBUST PIPELINE AND THE ROUTE
TO MARKET FROM WHICH TO DRIVE
SUSTAINABLE LONG-TERM GROWTH.
JOHN SAMUEL, EXECUTIVE CHAIRMAN
Our Business
The Group has performed well against our strategic milestones for
the year. The acquisition of CellRight Technologies is a transformative
opportunity for the Group, combining two innovative, regenerative
platforms with large addressable markets and synergistic growth
opportunities. With the appointment of Steve Couldwell as CEO,
the Board is confident that it has the leadership in place to take
the Company to the next stage and a comprehensive review of the
development pipeline is ongoing. With our augmented, established
product portfolio generating a growing level of sales, we have
identified key development assets to focus our commercial resources
behind, and we are confident that following final product validation
and transfer of manufacturing in-house, the newly focused strategy
will drive significant shareholder returns.
Financial Performance
Overall Group performance
The Group delivered revenues of £5,233K in the 12 months to
31 December 2017, a 263% increase when compared to the
11 month period to December 2016.
Organic DermaPure® sales grew 46% in the US to £1,932K, and
the commercial traction of the European controlled joint venture
continued with increased revenues to £1,135K.
Following the equity fundraising undertaken in August 2017, the
Group has a robust cash position to fund the near term future of the
enlarged Group and we maintain our expectation that the Group will
be cash break-even during 2020.
Leadership
In November 2017, we announced the appointment of Steve
Couldwell as CEO of the Group. Steve succeeds Antony Odell who
stepped down in October 2017 after nine years leading the Group.
We would like to thank Antony for his leadership during the Group’s
early years.
Steve has experience spanning over 25 years in the Medical
Device space and a proven track record of delivering revenue and
profit growth. He has had an extensive career including Smith &
Nephew and more recently, Sanofi BioSurgery based in Boston,
Massachusetts. Having held senior commercial positions in both
02
the US and Europe, Steve has the necessary skill set to drive the
next stages of the Group’s commercial strategy required to deliver
shareholder returns.
Following the resignation of Paul Devlin on 30 November, we
have appointed an interim CFO and initiated a search for a
permanent candidate.
Our People
The Board and I would like to extend our thanks to our employees
and partners, especially throughout this year of significant change.
With the integration of CellRight Technologies, we welcomed a new
team in the US, led by CEO Jesus Hernandez, and the addition of
their experience and the ongoing commitment of all our employees
remain fundamental to our success.
FOR MORE INFORMATION ON OUR
PERFORMANCE SEE PAGES 07 TO 18
TICKER AIM: TRX www.tissueregenix.com Corporate Structure
A Tissue Regenix Group Company
CellRight Technologies
SAN ANTONIO, TEXAS
Tissue Regenix
LEEDS, UK
CellRight Technologies is based at a 13,650 sq ft
FDA accredited facility in University City, San Antonio.
Designed by CellRight CEO Jesus Hernandez in
2012, the state-of-the-art facility is now home
to both CellRight Technologies and
TRX BioSurgery (previously Tissue Regenix
Wound Care Incorporated).
This facility acts as the global hub for research and
development for human tissue and manufactures
all CellRight product lines. Over the course of the
next year, the site will commence manufacturing of
DermaPure® and OrthoPure™ HT.
The Group’s corporate headquarters sits within the Tissue Regenix UK base,
situated in Leeds at a specially modified 18,000 sq ft facility.
Responsible for all porcine tissue manufacturing, this facility currently
produces SurgiPure™ XD for export to the US, and also OrthoPure™ XT
in preparation for the European launch following the CE mark
approval anticipated later this year. With strong connections to the University
of Leeds, this facility also acts as the research and development hub for
future dCELL® applications.
The facility has submitted an approval application for a Human Tissue
Authority licence allowing it to function as the European base for the import
and distribution of CellRight’s osteobiologics portfolio.
GBM-V ROSTOCK, GERMANY
Controlled joint venture GBM-V is based at
a 135 sq ft facility in Rostock, Germany. Responsible
for human tissue production within Europe, GBM-V
is preparing for the introduction of the processing of
allograft valves, CardioPure™, decellularized aortic
and pulmonary allograft valves for the European
market. GBM-V and CellRight are also working
closely to facilitate the technology transfer of
BioRinse® and dCELL® in the respective facilities to
accommodate global processing opportunities.
03
OVERVIEWTISSUE REGENIX GROUP PLC ANNUAL REPORT AND ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2017 Who are CellRight Technologies?
A Tissue Regenix Group Company
CELLRIGHT TECHNOLOGIES IS A NEWLY ACQUIRED SUBSIDIARY OF TISSUE
REGENIX – A HIGH-GROWTH, PROFITABLE REGENERATIVE MEDICAL DEVICES
BUSINESS WITH PROPRIETARY REGENERATIVE MEDICINE TECHNOLOGY,
BIORINSE, THAT TRANSFORMS HUMAN BONE INTO A MOULDABLE MATRIX
TO STIMULATE BONE GROWTH, WITH DISTINCTIVE CHARACTERISTICS WHEN
COMPARED TO COMPETITOR PRODUCTS, MAINTAINING BONE MORPHOGENIC
PROTEINS AND GROWTH FACTORS VERIFIED TO BE OSTEOINDUCTIVE.
14 Products Launched
Since 2012
{ Key markets addressed: spine,
Benefits of the
Combination
{ Two synergistic technology platforms
orthopaedics, dental and general surgery
{ Complementary products and
{ Established distribution and private
commercial channels
label agreements
{ State-of-the-art tissue processing facility
accredited by the FDA and AATB, based
in San Antonio, Texas.
{ Potential to leverage product through
new/existing major distribution channels
{ Adds allograft processing capabilities in
the US to existing xenograft and allograft
processing in Europe
{ In-house production capabilities
reduce technology transfer times and
overhead expenditure
{ Increased market presence in the US,
EU, Canada and UK. CellRight products
are also currently available in the Middle
East, South America and South Korea.
Integration Highlights
{ Growth momentum of CellRight
portfolio maintained
{ DermaPure® manufacturing transfer
on track
{ Financial control & governance
framework implemented
{ One company customer service and
back office established
{ Initial cross-selling opportunities
being realised.
Expanded Market Opportunities
Expands commercial
presence in the US
Cross-selling and
distribution synergies in the
orthopaedic market
Estimated that 60%
of the global orthopaedic
market is derived
from sales in the US†
$
*$3.7BN
MARKET
OPPORTUNITY
Boosts position in:
$2BN*
North America orthopaedic
soft tissue market in 2015
A Tissue Regenix Group Company
New entry into:
$1.7BN†
North America bone
graft and substitutes
market in 2016
A Tissue Regenix Group Company
04
* www.grandviewresearch.com/press-release/global-orthopedic-soft-tissue-repair-market
** www.beckersspine.com/orthopedic-a-spine-device-a-implant-news/item/35889-medtronic-
depuy-synthes-stryker-lead-north-american-bone-grafts-substitutes-market-7-observations.html
† Orthoworld Annual Report 2016
TICKER AIM: TRX www.tissueregenix.com
What is Regenerative Medicine?
REGENERATIVE MEDICINE IS AN INNOVATIVE
AND EXPANDING FIELD, RESEARCHING THE
POTENTIAL OF TISSUE ENGINEERING TO OFFER
A NATURAL RECOVERY BY TRIGGERING A
RESPONSE THROUGH THE BODY’S OWN CELLS,
TO ENABLE THE NATURAL REGENERATION OF
THE PATIENT’S OWN TISSUES.
With the demand for less invasive, longer
lasting treatment modalities, regenerative
medicine is an increasingly important
approach as it removes the need for
synthetic (plastic or metal) replacements, and
reduces the risk of rejection, while offering the
potential for less time-consuming and more
cost-effective treatments.
With the potential for decellularized
xenografts, soft tissue sourced from an
animal different to the recipient, most
commonly either porcine (pig) or bovine
(cows), the need to source grafts either
from donation following death, or in some
situations from the patient themselves, can
be completely removed in certain cases.
Tissue Regenix patented dCELL®
Technology and CellRight’s proprietary
BioRinse® technology address unmet and
growing clinical needs in the regenerative
medicine market, due to increasing
demographic demands and health
economic pressures.
The Health Benefits of
Regenerative Medicine
Regenerative medicine has been effective
in multiple treatment areas, from skin and
bone to even organ repair or replacement.
Offering a solution with minimal risk of
patient rejection, reducing the need
for lifelong anticoagulation drugs and
addressing the supply issue of suitable
donated tissues, regenerative medicine has
revolutionised the healthcare landscape.
An example of this can be found in sports
medicine. With an increasing percentage of
the population living longer, the expectation
to remain physically mobile and pain free
has increased. Currently, the gold standard
treatment for knee ligament repair is to
extract a portion of the patient’s own
hamstring, permanently reducing the strength
of the muscle and leaving the patient with
two surgical sites to rehabilitate. Products
such as Tissue Regenix OrthoPure™ XT,
a decellularised porcine tendon, remove
the need to harvest the patient’s hamstring
providing the surgeon with a room
temperature, stable, off-the-shelf alternative
proven to offer equivalent tensile strength,
and due to the reduction of surgical sites, a
simplified rehabilitation programme.
TOTAL MARKET
VALUE OF
$6.5BN
What About
Health Economics?
With the increasing demand on both private
payor and nationalised health care
services, health economics is central to
all procurement decisions especially
when related to new technologies and
surgical techniques.
Adoption of new technologies will be
dependent on delivering better patient
outcomes while lowering the total treatment
cost. Both of our platform technologies offer
these benefits.
05
OVERVIEWTISSUE REGENIX GROUP PLC ANNUAL REPORT AND ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2017
Complementary Platform Technologies
A Tissue Regenix Group Company
BioRinse Technology
CellRight’s proprietary Technology, BioRinse, offers a novel
regenerative solution creating verified osteoinductive scaffolds
for the treatment of bone defects caused by trauma or disease.
The BioRinse process transforms donated human bone into a
mouldable matrix that preserves natural bone growth factors:
Bone Morphogenic Proteins (“BMPs”) and Growth Factors
(“GFs”), needed to regenerate healthy bone post implantation.
It has the ability to deliver malleable bone collagen scaffolds in
different physical forms to meet various clinical requirements.
The bone matrices and putties that CellRight has developed
have distinctive active characteristics verifying them to be
osteoinductive and, moreover, due to the BioRinse process,
key CellRight products contain 100% allograft bone, which has
been clinically proven to produce a better clinical outcome.
dCELL® Technology
dCELL® technology offers a unique approach to regenerative
medicine. The dCELL® process is gentle, efficient, effective –
and powerful. It can be applied to both donated human tissues
(allografts), or animal tissues (xenografts). It results in allograft
and xenograft tissue matrices that retain the tissues’ native
structure to allow repopulation and regeneration of the patient’s
own tissue.
The dCELL® process removes DNA and cellular material from
biological tissues, through a series of gentle washes, leaving
an intact acellular matrix upon which the patient’s cells can
populate and regenerate, creating new, native tissue, which is
recognised and accepted by the body, significantly reducing
the risk of rejection. dCELL® technology provides an enhanced
healing environment, in terms of both natural, tissue-specific
physical structure and bio-mechanical properties.
Tissue treated with dCELL® technology gives the patient
a receptive scaffold that supports cell migration following
implantation, while maintaining appropriate tissue strength.
Once repopulation is complete, the regenerated tissue is
effectively a natural part of the patient’s own body. The potential
applications of dCELL® are diverse and currently Tissue Regenix
is focusing on addressing complex and unmet needs in three
core clinical areas: Orthopaedics, BioSurgery and Cardiac.
2 Innovative
technology
platforms
4 KEY CLINICAL
FOCUS AREAS:
TRX BioSurgery*
Orthopaedics**
Dental†
Cardiac††
VALUED AT
$1.29BN
US Wound Biologics
Market 2018 forecast
VALUED AT
$1.7BN
Spine accounts
for 18% of the market,
orthobiologics 10%
OFFERING A
$400m
MARKET
OPPORTUNITY
in soft tissue and bone
Potential to be game
changing technology in
$3.1m
HEART VALVE
MARKET
06
* US Wound Biologics Market BioMedGPS, LLC. www.smarttrak.net
** www.beckersspine.com/orthopedic-a-spine-device-a-implant-news/item/35889-medtronic-depuy-synthes-stryker-lead-north-
american-bone-grafts-substitutes-market-7-observations.html
† IDATA and Straumann annual report
† † globenewswire.com/news-release/2017/05/05/979425/0/en/Global-Prosthetic-Heart-Valve-Market-will-reach-USD-5-302-1-
Million-in-2021-Zion-Market-Research.html
TICKER AIM: TRX www.tissueregenix.com STRATEGIC REPORT
CEO Operational Review
2017 WAS A TRANSFORMATIONAL YEAR
FOR THE TISSUE REGENIX GROUP.THE
ACQUISITION OF CELLRIGHT TECHNOLOGIES
AND SUCCESSFUL EQUITY FUNDRAISE
AUGMENTS OUR COMMERCIAL OPPORTUNITY,
FINANCIAL POSITION AND DISTRIBUTION
OUTREACH OF THE GROUP; COMBINING TWO
COMPLEMENTARY PLATFORM TECHNOLOGIES
ACROSS KEY CLINICAL MARKETS IN AN
EXPANDING NUMBER OF TERRITORIES.
STEVEN COULDWELL, CHIEF EXECUTIVE OFFICER
Growth in our dCELL® Technology
product portfolio was underpinned by a
46% increase in DermaPure® sales. With
its first full year of sales, controlled joint
venture GBM-V increased revenue by 8
fold to £1.1m. The contribution of CellRight
Technologies acquired on 9 August 2017,
included in the year end figure means we
have increased overall Group revenue to
over £5m.
Alongside the acquisition of CellRight
Technologies we have commenced a review
of the enlarged Group’s product pipeline
and opportunities to establish the best
strategy to drive the Group forward.
BUSINESS
DEVELOPMENTS AND
PRODUCT PIPELINES
dCELL® Technology
TRX BioSurgery
(previous Tissue Regenix Wound Care, Inc)
DermaPure® has proven successful in a
number of clinical applications outside
of the traditional advanced wound care
settings. With adoption by the acute surgical
and wound reconstruction markets, due
to its impressive clinical outcomes with a
single application, DermaPure® has seen
significant uptake in the orthopaedic trauma
and urogynaecology arenas where treatment
innovation has been in high demand.
Having identified an opportunity in this
market, we have signed an exclusive
distributor agreement with ARMS Medical, a
specialist urogynaecology distributor in the
United States to maximise this opportunity,
leveraging their strong relationships with
KOLs and surgeons. The partnership
allows our direct sales force to remain
focussed on the in-patient woundcare,
plastics, orthopaedics and general surgery
sales channels.
Alongside this, the addition of CellRight’s
advanced wound care products give the
Group a wide product portfolio in this field,
offering physicians access to DermaPure®,
a room temperature stable, decellularized
single application allograft, Matrix IQ, a frozen
or freeze dried decellularised allograft, and
AmnioWorks, derived from amniotic tissue.
Following the end of the period, Tissue
Regenix Wound Care Inc. was rebranded as
TRX BioSurgery.
FOR MORE INFORMATION ON OUR
BIOSURGERY DIVISION SEE PAGE 12
07
TISSUE REGENIX GROUP PLC ANNUAL REPORT AND ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2017 CEO Operational Review
CONTINUED
dCELL® Orthopaedics
Changes to Medical Device Regulations
have extended the timeline to receive
CE mark approval for OrthoPure™ XT
(xenograft tendon) within the EU. However,
this has resulted in the opportunity to submit
an extension to this application to include
other ligament indications accelerating the
broadening of the commercial opportunity.
Subject to approval, this would allow
OrthoPure™ XT to be utilised not only in
primary and revision ACL reconstruction,
but also procedures in small ligaments in the
knee, expanding utilisation and broadening
our label claims. We have commenced
pre-launch activities and have engaged
European distributors in selective key
markets to facilitate a timely roll-out once
country registrations have been received.
The OrthoPure™ XT clinical data collected
at one year showed the implant to be
comparable, and in some indications
preferable, to the current gold standard
treatment, an autograft harvested from
the hamstring, and without the additional
rehabilitation of an autograft procedure.
This clinical data has also been used to
validate the potential for a pre-clinical trial
in the US. As reported previously, we have
been in discussions with the FDA and it
is expected that this pre-clinical work will
commence during 2018 with the support of
our Orthopaedic Clinical Advisory Board.
The technology transfer for the production
of OrthoPure™ HT (allograft ligament), at
the CellRight facility continues according
to plan and we expect the first product
to be available in H2 2018. As this is a
human tissue derived application, it can be
approved under the HCT/P pathway for
minimally manipulated tissue thus expediting
the time to market. This would serve as a
pathfinder validating the dCELL® Technology
within the US Orthopaedic market.
FOR MORE ON OUR ORTHOPAEDIC
DIVISION SEE PAGE 14
Cardiac and GBM-V
The regulatory submission for CardioPure™
dCELL® allograft pulmonary and aortic heart
valves continues to progress through the
German regulatory authorities. The clinical
data generated by Dr Francisco da Costa,
our clinician partner in Brazil, continues
to demonstrate the clinical relevance
and advantages of these transplants even
after more than 10 years of follow-up.
Subject to the regulatory process we
anticipate that approval will be received
for launch during 2019.
In addition to the preparation and
commercialisation of CardioPure™, the
controlled joint venture in Germany has
captured a 12%1 market share in its first
year of operations with processed corneas.
We expect to release further cryo-preserved
tissues throughout the year.
FOR MORE ON OUR
CARDIAC DIVISION AND GBM-V
SEE PAGES 16-17
Orthopaedics and Dental -
CellRight Technologies
CellRight Technologies officially became
a part of the Tissue Regenix Group in
August 2017.
Based around a proprietary processing
technology ‘BioRinse®’, CellRight
produces a portfolio of inductive, verified
bone matrices in different physical forms
to address clinical indications in the
orthopaedic, spine, dental and general
surgery procedures.
BioRinse® offers a complementary platform
Technology to dCELL®, allowing the Group
to address regenerative solutions for both
soft tissue and bone.
CellRight has reached several milestones
since the completion of the acquisition. In
October they commenced the production
of AmnioWorks®, an advanced wound
care product derived from human amniotic
membrane. Alongside this, additional sizes
of their frozen and freeze dried wound care
product Matrix IQ were released to address
larger surgical site procedures.
With no direct sales force, CellRight based
their business model around establishing
strategic partnerships for distribution of
both their white label (OEM) as well as
branded products. These partnerships have
continued to gain traction and we expect
to see further partnerships develop in the
coming year.
CellRight delivered on their revenue
expectations during 2017 and we continue
to see increasing commercial traction and
momentum. We expect to report positive
advances with the CellRight portfolio
during 2018.
FOR MORE ON CELLRIGHT
SEE PAGE 15
Integration
The integration process has continued to
progress according to plan and we expect
the initial commercial and financial synergies
to materialise in H1 2018.
The technology transfer for DermaPure®
production has been initiated. The
completion of residual DNA testing returned
positive results, demonstrating over 99%
removal of DNA from the tissue. We expect
that this process will complete ahead of
schedule with our first CellRight-processed
DermaPure® becoming available during H1
2018. Having our own in-house source of
DermaPure® manufactured in the US, for
the US market, will support supply from our
relationship with CTS, removing the risk of
single sourcing and ensuring that our product
inventory can align with customer demand.
DentalFix®, a portfolio of traditional as well
as innovative dental biologics validated as
being osteoinductive, was launched. The
dental market is an area in which we see a
significant opportunity for the Group with
both dCELL® and BioRinse® products,
and currently comprises around 20% of
CellRight sales.
In October, the Tissue Regenix Wound Care
office, also based in San Antonio, TX, moved
into the CellRight facility, allowing all US
operations to be centralised in one location.
A shared services infrastructure has been
implemented and the advantages of a cross-
selling distribution and partnership network
are beginning to be realised.
1 TRG estimate.
08
TICKER AIM: TRX www.tissueregenix.com Post Period Developments
Following the reported period, the Group
reached a number of regulatory and
commercial milestones which will play an
important part in the strategy and commercial
success of the Group moving forward.
Fundamental to this was the announcement
of a long-term, multi-year distribution
agreement with Arthrex, Inc. for CellRight’s
osteobiologic products. Arthrex is one of the
world’s leading sports medicine businesses
and a premier innovator of orthopaedic
surgical solutions. This is the first agreement
of this nature to be signed since completing
the acquisition and paves the way for the
Group to pursue relationships with other
strategic partners.
In order to expedite a route to market in
Europe for the CellRight products Tissue
Regenix applied for a Human Tissue
Authority licence and we expect this to
be granted imminently, allowing for the
import of CellRight’s osteobiologics to the
manufacturing facility in Leeds for direct
distribution. It is expected that the first
sales under this approval will commence
in H2 2018.
Further to this, initial manufacturing for
commercial distribution of SurgiPure™ XD
has begun at the Leeds facility for export
to the US where it is approved under the
510(k) market clearance pathway. We are
in discussions with potential partners to
determine the optimal route to market.
We are grateful for the continued support
of our shareholders throughout the year.
Their commitment enables us to continue
to advance the strategic vision of the
Group which we are confident will create
significant value as we accelerate the
commercialisation of our product portfolio.
Sales in both CellRight and BioSurgery have
had a strong start to the year, including
shipments under two significant distributor
agreements. With the recent launch of
the CellRight DentalFix portfolio and
AmnioWorks product, the approval of the
OrthoPure™ XT CE mark and additional
BioSurgery product line extensions
expected to come on stream throughout the
year, 2018 is set to be a year of significant
newsflow, increasing commercial traction
and revenue growth.
Trading for 2018 remains in line with
Board expectations.
Outlook
The Group has reached a significant
inflection point in terms of its development
as a commercial entity. Having successfully
completed the acquisition and integration
of CellRight Technologies we now have
two complementary and highly valuable
regenerative technology platforms and
a comprehensive product portfolio.
Looking forward, we have a diverse
distribution network, a strengthened
commercial management team and
significant opportunities to increase our
commercial footprint both in the US, and
international markets.
The Group is well positioned for future
growth with a clearly defined strategy, strong
leadership and a robust product portfolio
and pipeline. The CellRight acquisition
allows for acceleration of our route to
market specifically for the dCELL® business,
and offers an enhanced product portfolio,
which strengthens our ability to increase
our market adoption and penetration.
This was demonstrated during Q1 2018
where we announced strategic distribution
agreements with ARMS Medical, a specialist
urogynaecology distributor for DermaPure®,
and Arthrex, Inc. a world leader in
orthopaedic sports medicine.
09
TISSUE REGENIX GROUP PLC ANNUAL REPORT AND ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2017STRATEGIC REPORT Our Strategy
TISSUE REGENIX GROUP HAS ESTABLISHED A GROWING PORTFOLIO
OF REGENERATIVE MEDICAL PRODUCTS TO ADDRESS CRITICAL AND
GROWING CLINICAL NEEDS, TRANSFORMING PATIENT CARE AND PROVIDING
FAVOURABLE HEALTH ECONOMIC OUTCOMES.
We aim to expand the adoption of our dCELL® and BioRinse Technologies and become a partner of choice for both clinicians and strategic
partners. Our commercial model employs both a direct and indirect sales approach, aiming to optimize the adoption of our technology and
driving additional revenues more rapidly.
The foundation of our strategy is built upon our two Regenerative Technologies:
{ dCELL® Technology – addressing multiple high need clinical areas in soft tissue regeneration
{ BioRinse Technology – a verified osteoinductive allograft bone processing technology.
FOR MORE INFORMATION ON
OUR TECHNOLOGIES SEE PAGE 06
Our Strategic Focus is:
1
{ Direct sales force to deliver our differentiated scientific message to
decision makers
COMMERCIAL
EXECUTION
{ Build scale via Regional and National Distributor partners
{ Accelerate coverage and reimbursement via IDN/GPO agreements.
2
{ Build long-term scientific and commercial collaborations with
industry leaders to drive accelerated adoption of our technologies
STRATEGIC
PARTNERSHIPS
{ Target potential partners in our 4 Strategic Focus areas:
BioSurgery, Orthopaedics, Dental and Cardiac.
3
CLINICAL
EVIDENCE
4
GEOGRAPHIC
EXPANSION
5
PORTFOLIO
DEVELOPMENT
{ Leverage Real World clinical outcomes data, our respected key
opinion leaders, and compelling Health Economic rationale across
our chosen surgical specialties.
{ Drive sales revenue in identified territories outside of US
{ Leverage Human Tissue Authority approval to build volume of
Human Tissue Portfolio in Europe
{ Establish DermaPure® distribution opportunities outside USA.
{ Focused investment behind priority development projects
with clear commercial pathways.
10
TICKER AIM: TRX www.tissueregenix.com Strategic Objectives
The Group’s strategic objectives are targeted to meet its vision of becoming a Global leader in
regenerative medicine, addressing critical and growing clinical needs, transforming patient care and
providing favourable health economic outcomes, in order to build a business capable of generating
attractive long term results for investors.
FOR MORE INFORMATION ON
OUR RISKS SEE PAGE 19
Objective
Measurement
Risk
Mitigation
EU launch of
OrthoPure™ XT
{ Launch scheduled for H2 2018
{ Agent/Distributor agreements
signed
{ Training completed.
{ Delay in Regulatory
approval timeline
{ Potential for change
in the clinical data
required for approval.
{ Extension to application
for revision/small ligaments
submitted.
Human Tissue
Authority Licence
Gaining of HTA licence
allowing for the
importation of CRT
portfolio into UK
{ Approval of licence anticipated to be
{ Delay in approval
{ Submission has been made to
in H1 2018
timeline
Authority
{ Conduct trial run to ensure smooth
importation, transportation and
storage
{ Commence commercial importation
for distribution to partners.
{ Sourcing of tissue.
{ Internal audit completed to
ensure compliance and necessary
infrastructure is in place.
CellRight Integration
into the Tissue
Regenix Group
{ Implementation of shared services
and back office functions
{ Delay in IT systems/
financial reporting.
{ Standardized operational reporting.
{ Migration onto one financial
system allows greater financial
visibility and control
{ Physical integration of companies’
offices provides operational
efficiencies.
DermaPure®
Manufacture in
CellRight facility
Global portfolio
review
Driving investment to
maximise financial ROI
and resources
{ Build inventory levels to ensure
{ Sourcing of Tissue
{ Completion of validation batches
demand is met
{ Begin processing of larger sizes to
address additional clinical areas.
{ Financial and commercial review of
existing portfolio ongoing
{ Implementation of new ‘stage &
gate’ onboarding review.
{ Capacity of CRT
facility.
{ Additional donor sourcing
identified
{ Additional shift patterns identified.
{ Regular review of assumptions
allowing for course correction
{ Monitoring of market landscape to
ensure development meets market
demands and opportunities
identified.
Build collaborative
partnerships with
strategic multinational
organisations
{ Announcement of strategic
distribution agreements
{ Potential partnerships identified
within each key market area
{ Inability to supply
increased demand
{ Reliance on single
partner.
{ Early identification of capacity and
inventory planning
{ Multiple alternative partners
identified in each specialty.
Investor Relations
programme and
communication
{ Ongoing analysis and identification
of Tissue Regenix value drivers for a
partner portfolio.
{ Frequent, scheduled updates
provided to all Stakeholders
{ Timely and relevant analyst notes
issued .
I
L
A
C
R
E
M
M
O
C
I
N
O
T
A
R
G
E
T
N
I
T
N
E
M
P
O
L
E
V
E
D
E
T
A
R
O
P
R
O
C
OPERATIONS REPORT SECTION
The Group is organised into three divisions for internal management, reporting and decision-making –
TRX Biosurgery, Orthopaedics & Dental, and Cardiac. CellRight is included within Orthopaedics & Dental.
GBM-V, the 50% controlled joint venture with GTM-V, operates non-core activities to offset the costs of facilities
which were established to process dCELL® products in Germany. Its results are consolidated, as the Group has
a controlling interest. The following sections report an overview of each division in more detail.
11
TISSUE REGENIX GROUP PLC ANNUAL REPORT AND ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2017STRATEGIC REPORT
DIVISIONAL OVERVIEW
TRX BioSurgery
(formerly Tissue Regenix Wound Care, Inc.)
DERMAPURE® SALES INCREASED BY 30%,
WITH AN EXPANSION OF CLINICAL USES AND
ADDITIONAL PRODUCT SIZES. PROGRESSING FROM
TRADITIONAL WOUND CARE CLINICAL SETTINGS
TO SURGICAL APPLICATIONS IS A NATURAL
EVOLUTION FOR DERMAPURE®.
JOEL PICKERING, PRESIDENT, TRX BIOSURGERY
Business Review
2017 was another successful year for
DermaPure® as we continue to establish
momentum and sales traction. The GPO
agreements with Premier and Vizient
have now been in place for a full year
and allowed us to access a new quota of
hospitals. During 2017, over 30 DermaPure®
evaluations were undertaken, and over
another 25 initiated due to complete
during 2018. Our clinical affairs team
continue to identify and monitor relevant
case studies with 13 in-patient cases
followed highlighting DermaPure®’s positive
clinical outcome for replacing tissue and in
providing structural support.
Throughout the year, the uses of
DermaPure® expanded into new clinical
areas with particular focus on urological and
gynaecological applications. This was in part
led by the need for innovation in this area,
with the increasing scrutiny and reluctance
to use mesh based products to treat cases
of pelvic organ prolapse. DermaPure® has
proven to be an optimal treatment solution
in these cases.
Our sales teams continue to convert large
integrated delivery networks (IDN) and larger
hospital accounts, with significant approvals
from the Memorial Hermann and Cleveland
Clinic Health System. Moving forward,
with the acceptance of DermaPure® in
surgical and trauma cases, we will focus
on targeting large volume accounts driving
advocacy for DermaPure®’s use in a broader
range of clinical settings.
To expand the opportunity, we signed an
exclusive distributor agreement with ARMS
Medical, a specialist urogynaecology
distributor. The agreement provides rights
to distribute DermaPure® to hospitals
and surgeons throughout the United
States for use in urology and gynaecology
procedures from February 2018. Our
partnership with ARMS Medical allows us
to leverage their strong relationships with
Key Opinion Leaders in the urogynaecology
space, allowing us to further penetrate
this market segment without losing any of
our commercial traction and focus in other
target market segments.
Financial Performance
TRX BioSurgery reported revenues of
£1,932K for the 12-month period (11 month
period to December 2016: £1,322K), an
increase of 46%.
Gross margin for the 12 month period was
53%, in line with prior year (11 month period
to December 2016: 50%), and reflects
the continued programme of providing
evaluation units and improving market
penetration. Gross margins are stated after
deducting cost of external commissions
(previously expensed as administration
expenses) in order to provide a clearer view
of costs directly associated with generating
revenue. External commissions paid in the
year were £588K (11 months to December
2016: £376K).
Clinical uses of the product expanded
throughout the year, with the move to
a more in-patient focus, addressing
the surgical, wound reconstruction and
orthopaedic trauma application areas. In
order to address these new clinical uses,
sales and marketing costs of £64K were
incurred in the period (11 month period to
December 2016: £79K), which are expected
to yield revenue benefits in FY18.
12
TICKER AIM: TRX
www.tissueregenix.com
STRATEGIC REPORT
Outlook and Business
Developments
We view 2018 as a significant year for
TRX BioSurgery.
In February 2018, Tissue Regenix Wound
care, Inc. began trading under the name TRX
BioSurgery, addressing the progression of
the division from a pure wound care focus.
We continue to pursue our hybrid sales
model, utilising both direct reps and
distributors thereby allowing us to maintain
our focus in the original wound care settings,
while also driving awareness and education
in new clinical areas of Orthopaedic Trauma,
Plastics and General Surgery.
DermaPure® continues to offer a cost-
effective solution to healthcare providers
and with the insourcing of manufacturing
at the CellRight facility, we intend to launch
additional line extensions to address these
new surgical application areas.
We have also expanded our clinical affairs
teams to augment our sales reps and
strengthen our clinical argument and
engagement. With the growing importance
of real world clinical data, we will commence
a prospective observational study at four
centres situated around the US to enhance
our health economic argument.
The US national account team and the
field sales force continue to leverage our
‘Innovative Technology’ awards with the
Premier and Vizient Group Purchasing
Organisations, provide coverage for
approximately 75% of patient beds in
the US, and focus on driving usage
with ongoing contract negotiations and
evaluations. Securing these partnerships
will have a positive influence on contracting
decisions as well as driving awareness.
SurgiPure™ XD, a decellularized porcine
dermis for use in hernia repair, has
entered at the Tissue Regenix facility
in the UK. Approved under the 510(k)
market clearance route, we will continue
to seek out relevant partnerships for the
commercialization of this product.
With growing clinical advocacy throughout
the hospital groups, we expect positive
uptake of our products to continue, and
with a bolstered product portfolio and
partnership opportunities, we expect
to report many positive inflection points
throughout 2018.
US Wound Biologics Market
Forecast 2015-2020E
CAGR 9.8%
1.52bn
1.41bn
1.29bn
1.19bn
1.09bn
0.9bn
5
1
0
2
E
6
1
0
2
E
7
1
0
2
E
8
1
0
2
E
9
1
0
2
E
0
2
0
2
Collagen/Active Dressings
S/D Amniotic Tissue/Allografts
S/D Dermal Allografts
S/D Xenographs & Other
S/D Cell-based Bioengineering
Topical Delivery/Drug
TISSUE REGENIX GROUP PLC
ANNUAL REPORT AND ACCOUNTS
FOR THE YEAR ENDED 31 DECEMBER 2017
13
DIVISIONAL OVERVIEW
Orthopaedics and Dental
DURING 2017 WE MADE SIGNIFICANT PROGRESS
WITH BOTH REGULATORY AND OUR ‘GO TO MARKET’
PLANNING FOR OUR DCELL® ORTHOPAEDIC
APPLICATIONS. THE ADDITION OF THE MANY CELLRIGHT
TECHNOLOGY PRODUCTS OFFERS BROAD EXPANSION
INTO NEW MARKET AREAS WITHIN THE ORTHOPAEDIC,
SPINE AND SPORTS MEDICINE MARKETS.
DREW DISTIN, PRESIDENT, TRX ORTHOPAEDICS
Financial Overview
Investment continued in the period with
development costs of £894K (11 months
to December 2016: £1,221K). Marketing
costs have also been incurred in advance
of the OrthoPure™ XT EU launch currently,
expected to be launched during 2018
subject to CE mark approval. With ongoing
business development in the US, initial costs
around a FDA approved pre-clinical trial for
OrthoPure™ XT have been incurred. We
expect to see the first revenues from our
orthopaedic dCELL® products during FY18.
Business Review
OrthoPure™ XT, to address primary and
revision ACL reconstruction, continues
to progress through the regulatory body
for CE mark approval. With positive
clinical data being reported at 1 year we
have developed additional indications
to also encompass extra-articular knee
reconstruction procedures. Pre-launch
marketing activities continue and we expect
that we will receive approval and begin
commercialization during 2018. Initially we
will target 4 key European countries where
we have developed distributor relationships
and where we believe market demand and
clinical uptake will be achieved.
This data has also been used to validate the
application made to the FDA to commence
a pilot trial in the US. With the support of our
clinical advisory board, we have appointed
approved centres to take part in this study
and our aim is to commence and enrol all
patients by the end of 2018.
The pilot trial is the initial step needed
to apply for a pivotal study which in turn
would facilitate a Pre-Market Approval
application for US market clearance. We are
currently investigating potential go to market
strategies for this opportunity to allow the
buildout of a long-term strategy around our
presence in the US Orthopaedic market.
14
In tandem with this, the technology transfer
to produce OrthoPure™ HT, a decellularized
human tendon at the CellRight facility
has commenced. This will allow us to
build clinical advocacy around dCELL®
applications whilst the clinical trial for
OrthoPure™ XT is undertaken.
Throughout the year we also worked closely
with our BioSurgery division to introduce
DermaPure® into the orthopaedic soft tissue
market where it could be used as a suitable
option for tendon reinforcement, rotator cuff
repair, and other surgical procedures.
Outlook and
Business Developments
We took significant steps in the
commercialization of our dCELL® portfolio
throughout 2017.
We are poised to commercialize
OrthoPure™ XT in the EU market, subject
to regulatory approval, and commence the
processing of OrthoPure™ HT for the North
American market.
Combining dCELL® (soft tissue) and
BioRinse (Bone) technologies, our new
portfolio allows us to be of greater interest
to clinicians and potential strategic partners.
During this year, we will attend a number
of prestigious conferences as an enlarged
company, including the American Academy
of Orthopaedic Surgeons, the European
Society of Sports Traumatology, knee
surgery and Arthroscopy, and the North
American Spine Society.
Our aim throughout 2018 is to drive
clinical advocacy of the dCELL® and
BioRinse applications and, working with
our CellRight and BioSurgery colleagues,
increase awareness of the versatility of our
augmented product portfolio in various
orthopaedic procedures.
TICKER AIM: TRX
www.tissueregenix.com
STRATEGIC REPORT
DIVISIONAL OVERVIEW
CellRight Technologies
SINCE JOINING THE TISSUE REGENIX GROUP IN
AUGUST 2017, WE HAVE MADE SIGNIFICANT PROGRESS
AGAINST OUR COMMERCIAL MILESTONES, AND
DELIVERED AGAINST OUR REVENUE EXPECTATION
FOR THE PERIOD. THE INTEGRATION PROCESS HAS
PROCEEDED WITH THE TRANSFER OF TECHNOLOGY
COMMENCING AHEAD OF SCHEDULE, AND AN
EXPANDED INFRASTRUCTURE IMPLEMENTED.
JESUS HERNANDEZ, CEO, CELLRIGHT TECHNOLOGIES
Financial Overview
In the period since acquisition, CellRight
has contributed £2.2m to Group revenues
and £277K profit to the overall Group
operating loss.
Business Review
We initiated the integration with Tissue
Regenix in August 2017 and looked at
ways to quickly maximise our combined
experience and facilities. The Tissue
Regenix US office-based workforce
moved into the CellRight facility to allow
collaborative working and culture. The
initial steps for the technology transfer of
DermaPure® commenced, which will allow
the Group to have an important second
source supplier as demand increases,
and we began to review the processing
needs for the production of OrthoPure™ HT.
Important business infrastructures were
implemented to ensure compliance and
standardisation across all functions including
finance, human resources and marketing
approval processes.
Historically, we have commercialised our
products through a network of distributors
and white label (OEM) agreements. This
continued during 2017 as we signed
our first distribution agreement for our
Amnion product, targeting applications
in orthopaedics and ophthalmology.
However, we can now also directly access
the physicians’ offices under the Tissue
Regenix direct sales reps, providing them an
augmented product offering, expanding our
distribution through independent and direct
to customer channels. Alongside this, we
signed agreements to be an OEM provider
for 2 additional orthopaedic partners and
added 2 dental partners.
Throughout the year we bolstered our
product portfolio with the addition of
DentalFix, a portfolio of regenerative
products for specific use in periodontal
procedures, larger sizes of Matrix IQ,
our human dermis for reconstructive
procedures, and AmnioWorks, an amniotic
membrane with indications in orthopaedics
and opthalmology.
In order to provide clinical advocacy and
thought leadership we appointed a Board
of Scientific Advisers who will provide
relevant case studies offering real world
clinical data and advising on future product
developments. With the addition of Jeffrey
Wood, MD as an adviser for spinal surgery,
and Amir Hosseini, DDS as an adviser for
dental surgery, we have the advantage
of a well-rounded, experienced group
of surgeons who will work closely with
ourselves and the dCELL® Orthopaedic
Clinical Advisory Board.
Outlook and Business
Developments
In March 2018 we announced a distribution
agreement with Arthrex, Inc. a premier
innovator of orthopaedic surgical solutions.
This multi-year agreement will provide
physician access to the BioRinse portfolio
through the expanded Arthrex network.
This is a pivotal agreement for CellRight and
the wider Tissue Regenix Group, signifying
the first major strategic partnership for the
Company. In order to facilitate this contract,
work was undertaken to ensure inventory
would be available and other revenue
streams not under served.
The advantages of the synergies and
opportunities provided by the acquisition
are still being recognised. With the dCELL®
Technology transfer tracking ahead of
schedule we expect that we will be in a
position to complete the validation worked
needed for DermaPure® processing in
H1 2018.
The application for a Human Tissue
Authority licence for the UK facility based
in Leeds would greatly expand the ability
for the distribution of our BioRinse portfolio
throughout the UK and the wider EU. We
continue to establish the potential for cross-
selling products and leveraging commercial
partnerships, maximising the value of the
combined product portfolios, and expect
that we will develop further opportunities
for collaborative development and market
access throughout the year.
TISSUE REGENIX GROUP PLC
ANNUAL REPORT AND ACCOUNTS
FOR THE YEAR ENDED 31 DECEMBER 2017
15
DIVISIONAL OVERVIEW
Cardiac
Financial Performance
Income relates to the licensing fees of
£89.3K derived from the grant of the
initial CardioPure™ licence in the EU.
We are preparing for the market launch
of CardioPure™. Subject to regulatory
approval, we expect sales for this division to
commence during FY19.
Business Review
Throughout the period we continued to
globally promote the compelling clinical
argument for CardioPure™, validated by
ongoing accumulation of positive clinical
results. As such, our clinical colleague Dr
Fransisco da Costa presented his findings
at prestigious conferences including the
Heart Valve Society Meeting, the 25th
Annual Meeting of the Asian Society for
Cardiovascular and Thoracic Surgery and
the 31st Annual Meeting of the European
Association of Cardiothoracic Surgery, as
well as publishing articles in two major peer
reviewed cardiac journals. His impressive
clinical results also play a significant role
in the EU regulatory application process
currently ongoing.
WE CONTINUE TO GATHER CLINICAL DATA WHICH
CLEARLY DEMONSTRATES THE EFFICACY AND
PERFORMANCE OF CARDIOPURE™ HEART VALVES.
WORKING CLOSELY WITH OUR RESEARCH PARTNERS
IN BRAZIL, AND THE REGULATORY AND PROCESSING
EXPERIENCE OF THE CONTROLLED JOINT VENTURE
GBM-V, WE REMAIN CONFIDENT THAT WE WILL RECEIVE
A MANUFACTURING LICENCE APPROVAL DURING 2018.
ANDREA RAUSCH, COMMERCIAL DIRECTOR, TISSUE REGENIX CARDIAC LIMITED
Outlook and Future
Business Developments
We expect that the German regulatory
submission for CardioPure™ pulmonary
and aortic valves will complete allowing for
commercial activity to commence during
2019. We will also continue to strengthen
our clinical evidence by expanding into a
multicentre paediatric follow-up study in
Brazil and expect further publication of
CardioPure™ pulmonary follow-up data and
subanalysis in major peer reviewed US and
EU journals.
With the search for an ideal pericardial
valve ongoing, there is huge interest from
particularly paediatric cardiac surgeons in
this potential business development. This
patch could also be used as a springboard
for developing biological surgical,
transcatheter and sutureless heart valves.
16
TICKER AIM: TRX
www.tissueregenix.com
DIVISIONAL OVERVIEW
GBM-V
STRATEGIC REPORT
CONTROLLED JOINT VENTURE GBM-V CONTINUES
TO MAKE SIGNIFICANT PROGRESS BOTH IN TERMS
OF ITS COMMERCIAL FOOTPRINT AND R&D ACTIVITY.
WORKING CLOSELY WITH OUR NEW TEAM AT
CELLRIGHT TECHNOLOGIES, AND OUR RESEARCH
PARTNERS AROUND THE WORLD, WE ARE UNIQUELY
POSITIONED TO BRING TO MARKET A PORTFOLIO OF
HUMAN TISSUE DERIVED CRYO-PRESERVED AND
DECELLULARIZED APPLICATIONS.
Financial Summary
Reported sales of £1,135K derived from the
commercialisation of processed corneas.
Continued Group investment of £247K in
FY2017 relates to the EU commercialisation
of DermaPure® and CardioPure™; we
expect this to commence during FY19.
Business Review
During the year the focus was to gain traction
with the processed corneas, establish solid
and expanding partnerships with donor
institutions and progress the regulatory
application for CardioPure™ in the EU.
In our first full year of sales we grew to a
12%1 market penetration of the German
cornea market. Throughout the year we
expanded our network of donor institutions
and quickly established the sales traction
we were expecting.
We have been working closely with our
colleagues at CellRight Technologies
establishing ways to collaborate and the
potential for technology transfers between
the sites to access new markets. Our
relationship with Dr Francisco da Costa
and his research associates in Brazil also
remains fundamental as we progress
with the EU regulatory application for the
CardioPure™ decellularized heart valves.
An application for a production licence for
cryo-preserved valves and vessels was also
submitted at the end of 2017 and we expect
this to be granted during 2018.
We continue to work closely with our higher
education research partners. A grant was
won in partnership with the University of
Rostock and GBM-V enabling the set-up of
a laminar airflow system which will enhance
the pre-treatment of the dCELL® products
as well as allowing us to raise the first
validation data.
1 TRG estimate.
Outlook and Business
Developments
Receiving market approval for cryo-
preserved heart valves will allow us to take
a first step into the EU Cardiac market and
begin to pave the way for the introduction of
the decellularized CardioPure™ heart valves
expected in 2019.
The transfer of the DermaPure® technology
will allow us to commence processing
and distribute to the EU wound care and
surgical markets, validated by the clinical
data collected from DermaPure® use in the
US. With the approval of the Human Tissue
Authority Licence to import and distribute
the portfolio CellRight’s portfolio of BioRinse
products, we continue to evaluate the
opportunity to become a second source
processor for the European market.
TISSUE REGENIX GROUP PLC
ANNUAL REPORT AND ACCOUNTS
FOR THE YEAR ENDED 31 DECEMBER 2017
17
Financial Overview
NOTE: 2016 COMPARATIVES ARE FOR THE 11 MONTHS ENDED 31 DECEMBER 2016.
Sales
In the year ended 31 December 2017
revenue increased by 263% to £5,233K
(2016: £1,443K). Revenue from existing
businesses increased by 113% to £3,067K
(2016: £1,443K). Revenue from CellRight
was £2,166K (2016: £nil) since its
acquisition on 09 August 2017.
Cost of Sales and
Gross Profit
Cost of sales includes cost of product of
£2,039K (2016: £354K) and third party
commissions of £588K (2016: £376K).
Gross profit increased by 265% to £2,606K
(2016: £713K).
Trading Results
Administrative expenses increased by
£1,649K from £11,773K to £13,422K.
These included £1,098K of exceptional
costs. Other costs increased by £551K.
Overheads included staff costs (55%),
sales and marketing (1%), research and
development (11%), establishment and
administration costs (33%). Operating loss
was £10,816K (2016: £11,060K).
CellRight was acquired on 9 August 2017
and the operating profit of £277K for the
period to 31 December 2017 is included
within the consolidated result.
Exceptional Items
Non-recurring costs include the costs of
acquisition of CellRight of £996K and £102K
of legal costs in relation to the LifeNet
litigation (see note 22) which were written
off in arriving at the operating loss. A further
£2,318K was set off against the share
premium account arising on the issue of
new shares.
Finance Income
Finance income of £47K (2016: £114K)
represents interest earned on cash deposits.
Balance Sheet
Cash absorbed by operations was £9,786K
(2016: £10,811K)
Taxation
Net taxation was a credit of £1,348K
(2016: credit £1,034K). The Group submits
enhanced research and development tax
claims and elects to exchange tax losses for
a cash refund. The refund expected for the
year ended 31 December 2017 is £799K.
(2016: £875K); 2016 R&D tax credits were
received in January 2018. Tax payable of
£31K (2016: £Nil) represents corporation tax
payable in the US on the profits of CellRight
since acquisition.
Gross tax losses carried forward in the UK
were £35,819K (2016: £32,037K). The
Group does not currently pay tax in the
UK. A deferred tax asset has not been
recognised as the timing and recoverable
value of the tax losses is uncertain.
Loss for the Year
Loss for the year was £9,421K
(2016: £9,912K). The number of shares in
issue during the year was 1,170,990,924
(2016: 760,124,264) resulting in a basic loss
per share of (1.00p) (2016: (1.29p)).
The Company issued shares by way
of a placing and subscription of shares
which were admitted to AIM on 9 August
2017. This raised proceeds of £40,000K
which, after expenses of £2,318K, netted
£37,682K.
On 9 August 2017 the Group acquired
CellRight for a maximum consideration of
£23,078K, of which £19,945K was paid
to the vendors on the acquisition date
and £3,133K is payable contingent upon
achieving performance criteria. The fair value
of the contingent consideration is assessed
at £2,718K. The fair value of the assets
acquired was assessed at £7,359K. This
includes £4,374K attributed to intangible
assets not previously recognised in the
financial statements of CellRight. Goodwill
on acquisition was £15,304K.
At 31 December 2017 the Group had net
assets of £39,522K (2016: £11,536K) of
which cash in hand totalled £16,423K
(2016: £8,173K).
Going Concern
The Group’s forecasts indicate it has
sufficient resources until more than one year
from the date of this report.
Current Trading
and Prospects
There has been a strong start in sales of
both CellRight and BioSurgery product,
including shipments under two significant
distributor agreements. The integration of
CellRight is progressing well. 2018 promises
to be a further year of revenue generation
and product launch. Trading for 2018
remains in line with expectations.
18
TICKER AIM: TRX www.tissueregenix.com Risks
THE BOARD CAREFULLY CONSIDERS THE RISKS FACING THE GROUP AND
ENDEAVOURS TO MINIMISE THEIR IMPACT THROUGH THE NECESSARY
MITIGATING ACTIONS. THE PROMINENT RISKS FACING THE GROUP AT THIS
TIME ARE LISTED BELOW.
RISK AND IMPACT
MITIGATING FACTOR
TREND
Sourcing of Tissue
This risk increased with the acquisition of CellRight whose
product portfolio is entirely based upon the sourcing of high
quality human allograft products.
The dCELL® Technology portfolio continues to pursue a dual
tissue strategy applying to both allograft and xenograft.
Intellectual Property
The commercial success of the Group hinges on our ability
to exploit our intellectual property across the identified
market opportunities. We hold a number of process patents;
however, these can be difficult to defend. Infringement of
our IP could be financially costly, both in terms of litigation
and profits.
We have agreements in place with a number of
registered donor recovery organisations. This
ensures that we do not rely on a single source
provider and can ensure to meet the increasing
demand for suitable donated tissue.
We have a robust, global, IP portfolio protected
through a number of patents which we monitor and
contest accordingly. A number of processes are
kept as “know-how” which offers further protection
from infringement.
Management of Cash
The Company is currently consuming cash to fund working
capital. While the Funds raised during 2017 are anticipated
to provide funding for the foreseeable future there is no
guarantee that the Company will not require additional
funding in the future.
We have in place a top of the range accounting
system to monitor all cash expenditure and measure
this against the commercial budget and forecast.
Our R&D and product pipeline is closely mapped
to ensure that we pursue opportunities within our
budget and have a clear strategy to provide a ROI.
Clinical Trials and Regulatory Pathways
We have a number of ongoing clinical trials for our porcine
dCELL® Technology products. There is the potential for
these applications to be lengthy due to the implementation
of new directives. However, failure to comply with the
necessary clinical and ethical work required by each territory
would present a barrier to entry and could hold significant
financial implications.
Transfer of Technology to Partners
As our dCELL® human tissue products are processed
by a third party partner, there is the potential for a leak of
Intellectual Property.
We plan our clinical trials to allow for the broadest use
of the clinical data, and the fastest route to market in
line with the country-specific clinical regulations.
Any transfer of Intellectual Property or “know-how” is
done so under strict legal agreements and the Group
looks to only undertake such arrangements with
partners, and in territories where there is appropriate
legal protection. With the acquisition of CellRight we
also now have a manufacturing facility in which we
can process human tissue products reducing the
need for IP to transfer out of the Company.
UP
DOWN
CONTINUOUS
19
TISSUE REGENIX GROUP PLC ANNUAL REPORT AND ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2017STRATEGIC REPORT Risks CONTINUED
RISK AND IMPACT
MITIGATING FACTOR
TREND
Retention of Staff
Our success is built on our ability to retain the most
appropriate staff. We have a number of roles which require
specialised knowledge of our Technology and the Company.
In order to to undertake these roles the employee may be
privy to sensitive IP information.
The Group ensures to incentivise staff through a
range of benefits and share schemes. Employee
development and training is one of the core
fundamental beliefs of the Company and we
encourage professional development and internal
progression. We also continue to monitor the
talent pool for relevant future recruitment. Staff
who are privy to sensitive information are tied onto
non-disclosure agreements and all clinical data for
dCELL® Technology is owned and specific to the
Tissue Regenix Group.
Damage to Manufacturing Facility
There is the potential for a damaging incident, e.g. fire, to
occur at our manufacturing facilities. This would have an
impact on our ability to produce our products and therefore
potential sales.
We have a comprehensive risk analysis procedure
in place and a disaster management plan. Our
facility is spit over separate buildings meaning that
an incident can be contained within one area and
should not affect all business activities.
Product Quality
The Group operates in highly regulated environments with
strict quality requirements. Failure ot meet these standards
could results on the loss of reputation, loss of revenues, loss
of customers, recall costs as well as sanctions from
the regulator.
The Group operates a strictly controlled quality
management system, and has in-house experts to
ensure compliance with all regulatory requirements.
We test the quality of our products in-house
and verify these results externally. Every lot of
CellRight products is independently verified for
osteoinductivity.
Competition
As the focus on regenerative medicine increases there may
be products or companies that could be in direct competition
with our product portfolio or decellularization technology
which could potentially have a detrimental effect on the
commercial success of the Company. This now includes to a
much larger extend breakthroughs in modern technology.
We continually monitor the competitive landscape in
order to adopt the best positioning for our products.
As demonstrated by the acquisition of CellRight we
also look to undertake relevant M&A opportunities
and enter strategic partnerships to further bolster
our commercial positioning.
Brexit
It is currently unclear how the decision to leave the EU could
affect the Company. For example, there may be changes
implemented to the regulatory system under which our
products are approved, import / export regulations could be
affected and economic volatility and uncertainty may
be possible.
The Group continues to monitor developments
relating to Brexit and receives relevant updates
from advisers to ensure any potential risks are
understood and mitigating actions implemented if
needed. With the establishment of a controlled joint
venture in Germany, the Company holds a corporate
position within the EU and would therefore maintain
a presence in both the UK and EU following the
final decision.
UP
DOWN
CONTINUOUS
20
TICKER AIM: TRX www.tissueregenix.com
Corporate Social Responsibility
TISSUE REGENIX’S VISION TO BECOME A LEADER IN REGENERATIVE MEDICINE
IS UNDERPINNED BY ITS CORE VALUES TO MAINTAIN A SUSTAINABLE,
ETHICAL AND RESPONSIBLE COMPANY. FUNDAMENTAL TO THIS IS OUR
APPROACH TO SOCIAL, ENVIRONMENTAL AND POLITICAL ISSUES WHICH
COULD AFFECT OUR ABILITY TO DELIVER OUR NOVEL PRODUCTS AND
IMPROVE PATIENT CARE AND CLINICAL OUTCOMES.
Corporate
Tissue Regenix recognises that it holds a
corporate responsibility to its employees,
customers, partners, suppliers and
shareholders. To this end, the Group
ensures to set and maintain the highest
working, ethical and management
standards.
The Group employs a strict corporate
governance code and relies on its
experienced management team to ensure
that all regulatory requirements across all
business functions are met.
Ethical
Operating in an industry based upon the
processing of human and animal derived
tissues demands the highest ethical
standards. The Group aspires to maintain
the highest ethical standards across all
business functions and relations. The Group
undertakes regular audit checks to ensure
that partners, suppliers and employees
comply with the ethical standards and
operate to meet our expectations.
Health and Safety
The Group recognises that health and
safety of its employees, partners and at
its manufacturing facilities is of paramount
importance to ensure the smooth and
continuing functionality of the business.
The Group aims to identify and control
any risks through continual monitoring of
the working environment and ensure
continuing improvement to our health and
safety policies.
Employees
The Group employees almost 100 people
based in three geographical locations. We
employ a strict policy of equal opportunities
and do not discriminate against age, gender,
gender identity, colour, disability, ethnic or
national origin, sexual orientation, marital
status, religious or political views.
The Group supports the development
and further training of all employees and
will, where possible, encourage internal
promotion. The Group values the retention
of staff and offers a comprehensive incentive
and benefits package to encourage
employee loyalty. We also recognise the
importance of employee engagement and
offer a range of employee communication
opportunities to ensure that feedback is
collated and actioned, maintaining an open
and respectful company culture.
21
TISSUE REGENIX GROUP PLC ANNUAL REPORT AND ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2017STRATEGIC REPORT Profile of the current Directors
John Samuel
CHAIRMAN
John Samuel joined Tissue Regenix Limited as Chairman in March 2008. John qualified as a
Chartered Accountant with Price Waterhouse and has held a number of senior finance positions
in industry. 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. Currently he is also Chairman of Xeros Group Plc, and VernaCare
Group Ltd.
Steven Couldwell
CHIEF EXECUTIVE OFFICER
Steve Couldwell has a proven international track record in driving revenues and profit growth
in both the Medical Device and Pharma industries for over 20 years. Steve was formerly Vice
President and Head of Global Biosurgery at Sanofi in Boston, MA. Previous roles include Vice
President and General Manager of Covance Laboratories Europe, and almost 20 years for Smith
& Nephew in a number of senior positions: President Orthopaedics (Europe), Senior VP Sales and
Marketing for Smith & Nephew’s Advanced Wound Management business and VP Innovation and
Business Development. Steve was appointed CEO of Tissue Regenix in November 2017 having
served as a Non-Executive Director for four years.
Jonathan Glenn
NON-EXECUTIVE DIRECTOR
Jonathan was Group Finance Director of Consort Medical plc from September 2006 to December
2007 until he took up the position of Chief Executive Officer in December 2007. Prior to joining
Consort Medical plc, Jonathan was global Head of Finance at Celltech Group plc and later Chief
Financial Officer of Akubio Ltd, a Cambridge-based developer of instrumentation for the Life
Sciences industry. Mr Glenn is a member of the Institute of Chartered Accountants in England
and Wales.
Committees: Audit Committee, Remuneration Committee
22
TICKER AIM: TRX www.tissueregenix.com Alan Miller
NON-EXECUTIVE DIRECTOR
Alan Miller is the Chief Investment Officer and a Founding Partner of SCM Direct, an online wealth
management company. He was formerly the Chief Investment Officer and founding shareholder of
New Star Asset Management from early 2001 until early 2007. Prior to that, Alan was a Director at
Jupiter Asset Management in charge of their specialist high performance division between 1994
and 2000. He is also a qualified accountant and alumnus of the London Business School.
Committees: Audit Committee (Chair), Remuneration Committee
Randeep Singh Grewal
NON-EXECUTIVE DIRECTOR
Randeep Grewal is a fund manager at Trium Capital LLP. He has 17 years of experience in
institutional investing, having worked at F&C Asset Management, ICAP Equities and Tudor Capital,
where he spent ten years covering and investing in healthcare companies. He is also a non-
executive director of BB Healthcare Investment Trust, listed on the London Stock Exchange, since
December 2016. Randeep has been involved in a number of start-up and early stage companies
both personally and as an investor. He read medicine at the University of Cambridge and trained in
the NHS as a vascular surgeon for eight years.
Committees: Remuneration Committee (Chair), Audit Committee
Shervanthi Homer-Vanniasinkam
NON-EXECUTIVE DIRECTOR
Shervanthi Homer-Vanniasinkam graduated with an MBBS from Mysore University in India in 1981.
She became a Fellow of the Royal College of Surgeons of Edinburgh in 1989, and a Fellow of the
Royal College of Surgeons of England in 1998. She was appointed Consultant Vascular Surgeon
at Leeds General Infirmary in 1995, a post she continues to hold. Shervanthi also holds a number
of appointments with national academic institutions and health trusts; she is Clinical Sub-Dean of
the University of Leeds Medical School, Professor of Surgery (Founding), University of Warwick
Medical School & University Hospitals Coventry and Warwickshire NHS Trust, and Professor of
Engineering and Surgery, University College London. In 2017, Shervanthi was appointed a Visiting
Scholar at Harvard University.
23
GOVERNANCETISSUE REGENIX GROUP PLC ANNUAL REPORT AND ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2017 Governance Framework
BOARD OF
DIRECTORS &
COMMITTEES
RISK &
PERFORMANCE
MANAGEMENT
LEGAL &
REGULATORY
COMMUNICATION
CODE OF
CONDUCT &
ETHICS
THE COMPANY EMPLOYS SEVERAL LEVELS OF CORPORATE GOVERNANCE
MANAGEMENT IN ORDER TO MINIMISE RISK, AND ENSURE COMPLIANCE AND
STRATEGIC ALIGNMENT THROUGHOUT ALL MEMBERS OF THE GROUP AND
ITS SUBSIDIARY COMPANIES.
The Board of Directors & Committees
Monitor the internal control system, reviewing accounting information, potential business risks, employee policies and market
communications. The Board also operates two subcommittees, namely Audit and Remuneration Committees, to ensure compliance with
market regulations:
Audit Committee:
Remuneration Committee:
ALAN MILLER
CHAIR
RANDEEP GREWAL
CHAIR
RANDEEP
GREWAL
JONATHAN
GLENN
ALAN
MILLER
JONATHAN
GLENN
24
TICKER AIM: TRX www.tissueregenix.com BOARD OF
DIRECTORS &
COMMITTEES
RISK &
PERFORMANCE
MANAGEMENT
LEGAL &
REGULATORY
COMMUNICATION
CODE OF
CONDUCT &
ETHICS
Legal & Regulatory
We employ a number of legal and regulatory advisers, for both
our stock exchange listing and also validation of our products and
clinical trial pathways.
Business Practices & Ethics
As a company that operates in a highly regulated and sensitive
environment, we ensure that we operate with a vigorous code of
conduct and ethics. We also monitor any existing and potential
partners to ensure that they align with our Company values.
Risk & Performance Management
As a company we are well aware of, and continually monitor,
the primary risks to our business, and any external developments
that occur that could have a detrimental effect on the performance
of the Company and look to take the necessary actions to mitigate
any impact that these could have on our performance. Internally,
we report our monthly performance against a number of objectives
and COGs allowing us to track performance management,
and identify any potential improvements to our structure and
operational efficiencies.
Communications
We communicate any relevant Company news to external
stakeholders in the most timely manner possible through the
necessary news flow outlets. The Board reviews all relevant
information to ensure that the correct information is adequately
explained to offer transparency and a true reflection of the Company.
Internal and cross company communications are equally as valued
and we have a number of staff engagement initiatives in order to
keep knowledge and alignment with the Corporate positioning,
values and progress high.
Corporate Governance
The Directors recognise the importance of sound corporate
governance and have observed the principles of the UK Corporate
Governance Code, to the extent that they consider them
appropriate for the Group’s size, throughout the accounting year.
The Board
The Board currently comprises one Executive Director, a Non-
Executive Chairman, and four 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 Company’s Auditor relating to the
accounting and internal controls and to make recommendations
relating to the appointment of the external Auditor.
The Audit Committee comprises Alan Miller, who acts as chairman
of the committee, Jonathan Glenn and Randeep Grewal.
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. The
Board confirms that it has established the procedures necessary to
implement the guidance “Internal Control Guidance for Directors on
the Combined Code” (The Turnbull Report). 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; iv. There is a clearly defined
organisational structure; and v. There are well-established financial
reporting and control systems.
Going Concern
At 31 December 2017, the Group had £16.4m of cash and cash
equivalents available to it, with an updated balance of £16.0m at
28 February 2018.
The Directors have considered their obligation, in relation to the
assessment of the going concern of the Group and each statutory
entity within it. They have reviewed the current cash position, budget
cash forecasts and assumptions as well as the main risk factors
facing the Group as set out on page 19.
The Directors consider that the Group has sufficient funds to continue
its activities for note less than 12 months from the date of the
approval of these financial statements. These financial statements
have therefore been prepared on the going concern basis.
25
GOVERNANCETISSUE REGENIX GROUP PLC ANNUAL REPORT AND ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2017 Directors’ Remuneration Report
Remuneration Policy
The Group’s policy is to provide Executive Directors with a
competitive market-based package in order to reward individual and
Group performance and deliver outstanding shareholder returns.
The Remuneration Committee is committed to ensuring that the
Company’s key executive team is incentivized to drive sustainable
earnings growth and returns to shareholders, thereby creating a
genuinely strong alignment of interests between management and
investors.
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 comprised Steven Couldwell, who
was chairman of the committee, Randeep Grewal, and Alan Miller
until the appointment of Steve Couldwell as CEO on 2 November
2017. Subsequently Randeep Grewal assumed the chair of the
committee and the other members comprised Alan Miller and
Jonathan Glenn. 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
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.
On 24 April 2014 the Remuneration Committee approved the
implementation of a deferred annual bonus plan to commence from
the financial year ended 31 January 2014 (the “Deferred Annual
Bonus Plan”). Under the terms of the Deferred Annual Bonus Plan,
Directors and senior managers may waive up to 50% of their annual
cash bonus and in return receive a share option over ordinary shares
in the Company (the “Deferred Allocation”). The number of ordinary
shares comprising the Deferred Allocation (i.e. subject to the option)
will be calculated by dividing the amount of the cash bonus waived
by the closing market value of the ordinary shares of the Company
on the dealing day immediately prior to the date of deferral of the
bonus. The Deferred Allocation option is not capable of exercise until
the vesting date has been reached which is three years from the
date of grant of the award. By participating in the Deferred Annual
Bonus Plan Directors and senior managers will be entitled to receive
a matching award at no additional cost (the “Matching Allocation”).
The Matching Award will be an option over ordinary shares in the
Company. The number of ordinary shares comprising the Matching
Allocation will be equivalent to three times the number of ordinary
shares received in the Deferred Allocation. Participants will not be
entitled to receive the Matching Allocation until the vesting date is
reached which is three years from the date of grant of the award.
Additionally participants will not be entitled to receive the Matching
Award unless shares price growth performance targets have been
achieved and those price targets sustained for 30 consecutive days.
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 0.5 pence and 22.5 pence 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.
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.
26
TICKER AIM: TRX www.tissueregenix.com Directors’ Remuneration
The remuneration of the main Board Directors of Tissue Regenix who served in the year to 31 December 2017 was:
Antony Odell * (resigned 1 November 2017)
John Samuel (Note 1)
Paul Devlin (resigned 30 November 2017)
Ian Jefferson
Randeep Grewal
Steven Couldwell
Jonathan Glenn
Alan Miller
Shervanthi Homer-Vanniasinkam
Total
Salary
& fees
£000
Bonus
£000
323
110
177
–
28
62
30
33
30
793
–
–
–
–
–
–
–
–
–
–
Total up to
December
2017
£000
Total up to
December
2016
£000
343
110
185
–
28
63
30
33
30
293
99
–
252
18
23
21
23
15
Benefits
£000
20
–
8
–
–
1
–
–
–
29
822
744
Note 1. In addition, a certain Director holds employee share scheme interests in the Company.
* Included within this salary is £50,000 for exiting the business, and £85,500 payment in lieu of notice.
Directors’ Shareholdings
Directors’ interests in the shares of the Company, including family interests at 31 December 2017 were:
John Samuel (note 2)
Alan Miller
Paul Devlin
Steven Couldwell
Jonathan Glenn
Shervanthi Homer-Vanniasinkam
Note 2. Includes shares held jointly by the Director and EBT as set out overleaf.
31
December
2017
Number
26,276,928
22,886,988
300,000
300,000
600,000
250,000
Ordinary shares of 0.5p each
31
December
2016
Number
31
December
2017
%
2.22%
24,276,928
1.97%
21,886,988
31
December
2016
%
3.19%
2.88%
0.03%
0.03%
0.06%
0.02%
–
–
–
–
–
–
–
–
27
GOVERNANCETISSUE REGENIX GROUP PLC ANNUAL REPORT AND ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2017 Directors’ Remuneration Report CONTINUED
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 Benefit Trust (EBT) and in share options
to acquire ordinary shares of 0.5 pence each in the Company at 31 December 2017 were:
At
1 January
2017
Exercised
during
year
Lapsed
during
year
Granted
during
year
At
31 December
2017
Exercise price
Approved EMI scheme options
Antony Odell (Note 1)
Antony Odell (Note 2)
Antony Odell (Note 3)
Ian Jefferson (Note 4)
Ian Jefferson (Note 3)
John Samuel (Note 5)
John Samuel (Note 3)
Paul Devlin (Note 13)
Unapproved scheme options
Antony Odell (Note 6)
Antony Odell (Note 8)
Antony Odell (Note 10)
Antony Odell (Note 12)
Ian Jefferson (Note 6)
Ian Jefferson (Note 7)
Ian Jefferson (Note 9)
Ian Jefferson (Note 11)
John Samuel (Note 6)
EBT scheme shares (note 14)
Antony Odell
Ian Jefferson
John Samuel
8,307,608
8,307,608
1,187,200
577,777
872,727
577,777
2,400,000
577,777
–
422,223
519,480
1,021,936
122,779
86,734
126,794
209,677
88,890
5,372,800
–
–
872,727
–
–
–
–
–
–
–
86,734
126,794
209,677
–
–
827,586
827,586
10,740,000
–
–
–
577,777
–
577,777
–
–
422,223
389,610
766,452
–
–
–
–
–
–
–
–
0.73 pence
1,187,200
5.00 pence
–
–
–
22.50 pence
13.75 pence
22.50 pence
2,400,000
5.00 pence
577,777
22.50 pence
2,272,727
2,272,727
11.00 pence
–
–
818,181
1,090,908
122,779
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
22.50 pence
129,870
255,484
272,727
–
–
–
–
0.05 pence
0.05 pence
0.05 pence
22.50 pence
0.05 pence
0.05 pence
0.05 pence
88,890
22.50 pence
5,372,800
5.00 pence
–
14.50 pence
10,740,000
5.00 pence
Note 1. There were no performance conditions 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.
Note 2. There were employment period and performance conditions in relation
to the 1,187,200 options granted on 29 June 2010 which allowed 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. As at 31 December 2017 all the performance conditions had
been met and the options were eligible for exercise.
Note 3. There were employment period and performance conditions in relation
to the 577,777 options granted on 4 February 2014 which allowed 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 30 pence
per share, 40 pence per share and 50 pence per share by the respective three
vesting dates. As at 31 December 2017 none of the performance conditions
had been met and no options were eligible for exercise.
Note 4. There were employment period and performance conditions in relation
to the 872,727 options granted on 6 July 2011 which allowed 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 15 pence
per share, 20 pence per share and 25 pence per share by the respective three
vesting dates. As at 31 December 2017 all the performance conditions had
been met and the options were eligible for exercise.
28
TICKER AIM: TRX www.tissueregenix.com
Note 5. There were employment period and performance conditions in relation
to the 2,400,000 options granted on 29 June 2010 which allowed 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. As at 31 December 2017 all the performance conditions had
been met and the options were eligible for exercise.
Note 6. There were employment period and performance conditions in
relation to the 422,223, 122,779 and 88,890 options granted on 4 February
2014 which allowed 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 30 pence per share, 40 pence per share and
50 pence per share by the respective three vesting dates. As at 31 January
2016 none of the performance conditions had been met and no options were
eligible for exercise.
Note 7. There were employment period and performance conditions in
relation to the 346,936 options granted on 20 May 2014 under the Company
Deferred Annual Bonus plan. 86,734 options vest after three years and
correspond to the amount of bonus deferred by the participant. The remaining
260,202 options which relate to the matching award vest in three equal
proportions three years after the date of grant, subject to the Company’s
share price reaching 30 pence per share, 40 pence per share and 50 pence
per share by the vesting dates. As at 31 December 2016 the matching award
had lapsed due to resignation.
Note 8. There were employment period and performance conditions in relation
to the 519,480 options granted on 12 May 2015 under the Company Deferred
Annual Bonus plan. 129,870 options vest after three years and correspond
to the amount of bonus deferred by the participant. The remaining 389,610
options which relate to the matching award vest in three equal proportions three
years after the date of grant, subject to the Company’s share price reaching 25
pence per share, 30 pence per share and 35 pence per share by the vesting
dates. As at 31 December 2017 none of the performance conditions had been
met and no options were eligible for exercise.
Note 9. There were employment period and performance conditions in
relation to the 505,976 options granted on 12 May 2015 under the Company
Deferred Annual Bonus plan. 126,494 options vest after three years and
correspond to the amount of bonus deferred by the participant. The remaining
379,482 options which relate to the matching award vest in three equal
proportions three years after the date of grant, subject to the Company’s
share price reaching 25 pence per share, 30 pence per share and 35 pence
per share by the vesting dates. As at 31 December 2017 the matching award
had lapsed due to resignation.
Note 10. There were employment period and performance conditions in
relation to the 1,021,936 options granted on 29 June 2016 under the Company
Deferred Annual Bonus plan. 255,484 options vest after three years and
correspond to the amount of bonus deferred by the participant. The remaining
766,452 options which relate to the matching award vest in three equal
proportions three years after the date of grant, subject to the Company’s share
price reaching 20 pence per share, 25 pence per share and 30 pence per
share by the vesting dates. As at 31 December 2017 none of the performance
conditions had been met and no options were eligible for exercise
Note 11. There were employment period and performance conditions in
relation to the 838,708 options granted on 29 June 2016 under the Company
Deferred Annual Bonus plan. 209,677 options vest after three years and
correspond to the amount of bonus deferred by the participant. The remaining
629,031 options which relate to the matching award vest in three equal
proportions three years after the date of grant, subject to the Company’s
share price reaching 20 pence per share, 25 pence per share and 30 pence
per share by the vesting dates. As at 31 December 2017 the matching award
had lapsed due to resignation
Note 12. There were employment period and performance conditions
in relation to the 1,090,908 options granted on 21 July 2017 under the
Company Deferred Annual Bonus plan. 272,727 options vest after three
years and correspond to the amount of bonus deferred by the participant.
The remaining 818,181 options which relate to the matching award vest in
three equal proportions three years after the date of grant, subject to the
Company’s share price reaching 15 pence per share, 20 pence per share
and 30 pence per share by the vesting dates. As at 31 December 2017 the
matching award had lapsed due to resignation
Note 13. There were employment period and performance conditions in relation
to the 2,272,727 options granted on 21 July 2017 which allowed 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 15 pence
per share, 20 pence per share and 30 pence per share by the respective three
vesting dates. As at 31 December 2017 none of the performance conditions
had been met and no options were eligible for exercise
Note 14. The Tissue Regenix Group Employee Benefit 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. Antony Odell and
John Samuel 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 5 pence per share. Ian Jefferson has an interest in ordinary shares in the
Company which were acquired jointly with the Trustee in the market on 25
July 2012 at a price of 14.25 pence. The shares were all acquired pursuant to
certain conditions set out in Joint Owned Equity agreements (“JOEs”). Subject
to meeting the performance criteria conditions set out in the JOEs, 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 December 2017 was 9.25 pence per share, the highest and lowest prices
during the year were 20.25 pence and 5.63 pence respectively. Further details
of all share options and jointly owned shares held by the Trustee are set out in
note 16 to the financial statements.
On behalf of the Board
RANDEEP GREWAL
CHAIRMAN OF THE REMUNERATION COMMITTEE
26 March 2018
29
GOVERNANCETISSUE REGENIX GROUP PLC ANNUAL REPORT AND ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2017 Directors’ Report
The Directors present their report and consolidated financial
statements for the year ended 31 December 2017.
Principal Activity
The principal activity of the Group is the exploitation of innovative
platform technologies in the field of tissue engineering and
regenerative medicine. The Company is incorporated and domiciled
in the UK.
Business Model
A description of the Company’s activities and how it seeks to
add value are included in the Chairman’s Statement and Chief
Executive’s Operational Review report on pages 02 and 07 to 09.
Business Review and Results
A review of the Group’s performance and future prospects is
included in the Chairman’s Statement and Chief Executive’s Report
on pages 02 and 07 to 09. The loss for the 12 months attributable
to equity holders was (£9,221K) (11 months to December 2016:
£9,786K). The Directors do not recommend the payment of a
dividend (2016: nil).
Share Capital and Funding
Full details of the Group and Company’s share capital movements
during the year are given in note 17 to the financial statements.
Directors and Their Interests
The following Directors held office in the year.
John Samuel
Antony Odell (resigned 1 November 2017)
Paul Devlin (resigned 30 November 2017)
Steve Couldwell
Jonathan Glenn
Shervanthi Homer-Vanniasinkam
Alan Miller
Randeep Singh Grewal
Directors’ interests in the shares of the Company, including
family interests, are included in the Remuneration Report on pages
26 to 29.
Directors’ Indemnity Insurance
The Group has maintained insurance throughout the year for its
Directors and officers against the consequences of actions brought
against them in relation to their duties for the Group.
30
Substantial Shareholders
As at 31 December 2017, shareholders holding more than 3% of the
share capital of Tissue Regenix Group plc were:
Number of
shares
% of
voting rights
336,709,939
28.98
Name of shareholder
Invesco Limited
Woodford Investment Management
Ltd
Techtran Group Ltd
Baillie Gifford & Co Ltd
Jupiter Asset Management
IP2ipo Limited
300,427,872
103,042,837
70,764,595
68,885,745
50,000,000
Director and Related Holdings(s)
50,313,916*
25.86
8.87
6.09
5.93
4.30
4.33
* Includes 10,740,000 shares held jointly by the Director and the Tissue
Regenix Employee Share Trust.
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 has confirmed that they have taken
all the steps that they ought to have taken as Directors in order to
make themselves aware of any relevant audit information and to
establish that it has been communicated to the Auditor.
Auditor
In accordance with section 489 of the Companies Act 2006,
a resolution to appoint KPMG LLP as Auditor will be made to
members at the Annual General Meeting.
On behalf of the Board
STEVE COULDWELL
CHIEF EXECUTIVE OFFICER
26 MARCH 2018
TICKER AIM: TRX www.tissueregenix.com Statement of Directors’ Responsibilities
IN RESPECT OF THE ANNUAL REPORT AND THE FINANCIAL STATEMENTS
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the parent Company’s
transactions and disclose with reasonable accuracy at any time the
financial position of the parent Company and enable them to ensure
that its financial statements comply with the Companies Act 2006.
They are responsible for such internal control as they determine is
necessary to enable the preparation of financial statements that are
free from material misstatement, whether due to fraud or error, and
have general responsibility for taking such steps as are reasonably
open to them to safeguard the assets of the Group and to prevent
and detect fraud and other irregularities.
Under applicable law and regulations, the Directors are also
responsible for preparing a Strategic Report and a Directors’ Report
that comply with that law and those regulations.
The Directors are responsible for the maintenance and integrity of
the corporate and financial information included on the company’s
website. Legislation in the UK governing the preparation and
dissemination of financial statements may differ from legislation in
other jurisdictions.
The Directors are responsible for preparing the Annual Report and
the Group and parent Company financial statements in accordance
with applicable law and regulations.
Company law requires the directors to prepare Group and parent
Company financial statements for each financial year. As required
by the AIM Rules of the London Stock Exchange, they are required
to prepare the Group financial statements in accordance with
International Financial Reporting Standards as adopted by the EU
(IFRSs as adopted by the EU) and applicable law and have elected to
prepare the parent Company financial statements on the same basis.
Under company law the Directors must not approve the financial
statements unless they are satisfied that they give a true and fair
view of the state of affairs of the Group and parent Company and of
their profit or loss for that period. In preparing each of the Group and
parent Company financial statements, the Directors are required to:
{ select suitable accounting policies and then apply them
consistently;
{ make judgements and estimates that are reasonable, relevant
and reliable;
{ state whether they have been prepared in accordance with IFRSs
as adopted by the EU;
{ assess the Group and parent Company’s ability to continue as a
going concern, disclosing, as applicable, matters related to going
concern; and
{ use the going concern basis of accounting unless they either
intend to liquidate the Group or the parent Company or to cease
operations, or have no realistic alternative but to do so.
31
GOVERNANCETISSUE REGENIX GROUP PLC ANNUAL REPORT AND ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2017 Independent Auditor’s Report
TO THE MEMBERS OF TISSUE REGENIX GROUP PLC
1. Our opinion is unmodified
We have audited the financial statements of Tissue Regenix Group
plc (“the Company”) for the year ended 31 December 2017 which
comprise the group statement of comprehensive income, group
and parent company statement of changes in equity, the group
and parent company statement of financial position, the group and
company statement of cash flows, and the related notes, including
the accounting policies in note 1.
Basis for opinion
We conducted our audit in accordance with International Standards
on Auditing (UK) (“ISAs (UK)”) and applicable law. Our responsibilities
are described below. We have fulfilled our ethical responsibilities
under, and are independent of the Group in accordance with, UK
ethical requirements including the FRC Ethical Standard as applied
to listed entities. We believe that the audit evidence we have
obtained is a sufficient and appropriate basis for our opinion.
In our opinion:
Overview
{ the financial statements give a true and fair view of the state
of the Group’s and of the parent Company’s affairs as at
31 December 2017 and of the Group’s loss for the year
then ended;
{ the group financial statements have been properly prepared in
Materiality:
group financial
statements as a whole
£250k (2016: £160k)
2.3% of loss before tax (2016: 1.2% of
gross assets)
Coverage
96% of group loss before tax (2016: 98%
of group gross assets)
accordance with International Financial Reporting Standards as
adopted by the European Union (IFRSs as adopted by the EU);
Risks of material
misstatement
{ the parent Company financial statements have been properly
Event driven
prepared in accordance with IFRSs as adopted by the EU and as
applied in accordance with the provisions of the Companies Act
2006; and
{ the financial statements have been prepared in accordance with
Recurring risks
the requirements of the Companies Act 2006.
vs 2016
Business combinations
accounting including valuation of
acquired goodwill and acquired
intangibles assets
Carrying value of investments and
recoverability of intercompany
debt (parent company risk)
Recurring risks
Completeness of capitalised
development costs
2. Key audit matters: our assessment of risks of material misstatement
Key audit matters are those matters that, in our professional judgement, were of most significance in the audit of the financial statements
and include the most significant assessed risks of material misstatement (whether or not due to fraud) identified by us, including those which
had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing the efforts of the engagement
team. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon,
and we do not provide a separate opinion on these matters. In arriving at our audit opinion above, the key audit matters, in decreasing order
of audit significance, were as follows: (2016: going concern and recoverability of trade debtors).
Business combinations accounting
including valuation of acquired
goodwill and acquired intangible
assets
Acquired goodwill £15.3 million; Acquired
intangible assets £4.4 million
Refer to page 40 (accounting policy) and
page 55 (financial disclosures).
THE RISK
OUR RESPONSE
Subjective valuation
Our procedures included:
The Group acquired CellRight
Technologies LLC in the year.
The exercise to identify and recognise
tangible and intangible assets acquired
involves a significant degree of judgement
on the inputs used to value the assets
including future cash flows, discount rates
and useful economic life and is a material
estimate.
{ Accounting analysis: We assessed the judgements
taken around fair value adjustments having regard to
relevant accounting standards. Considering the separately
identified intangible assets acquired through gaining an
understanding of the business acquired and applying our
professional experience and judgement;
{ Assessing valuer’s credentials: We evaluated the
competence and independence of the valuer through
verification of experts credentials and qualifications;
{ Benchmarking assumptions: challenging the basis for
the key assumptions used in the valuation such as discount
rate, growth rates and customer churn rates applied in the
valuation of acquired intangibles having regard to internal
and external data; and
{ Assessing transparency: considering the adequacy of
the Groups disclosures in respect of business combinations
accounting
32
TICKER AIM: TRX www.tissueregenix.com Recoverability of parent company’s
investment in subsidiaries and loan
due from group entities
(Investments £12.9 million; 2016: £12.9
million, Intercompany loans balance £64.4
million; 2016 £36.5 million)
Refer to page 64 (financial disclosures).
Completeness of capitalised
development costs
Development cost assets £0.6million
(2016: £0.6million)
Development costs expensed: £2.7 million
(2016: £3.1million)
Refer to page 42 (accounting policy) and
page 51 (financial disclosures).
THE RISK
OUR RESPONSE
Forecast-based valuation
Our procedures included:
The carrying amount of the parent
company’s investments in subsidiaries
and group loan balance are significant
and atrisk of not being recoverable, due
to the continued losses made in some
subsidiaries. The estimated recoverable
amount of these balances is subjective
due to the inherent uncertainty in
forecasting trading conditions and cash
flows used in thebudgets.
{ Benchmarking assumptions: Challenging the
assumptions used in the cash flows included in the
budgets including growth rates and discount rates to
externally derived data;
{ Sensitivity analysis: Performing breakeven analysis on
the assumptions noted above;
{ Comparing valuations: Comparing the sum of the of the
discounted cash flow’s to the Group’s market capitalisation
to assess reasonableness of those cash flows; and
{ Assessing transparency: Assessing the adequacy of the
parent company’s disclosures in respect of the investment
in subsidiaries and group loan balance.
Accounting treatment
Our procedures included:
{ Accounting analysis: Assessing the nature of the items
expensed and assessing the appropriateness of their
classification as expenses, having regard to the relevant
accounting standard;
{ Test of detail: Agreeing a sample of costs to supporting
documentation; and
{ Assessing transparency: Assessing the adequacy of the
Groups disclosures in respect of the judgements made.
Project development costs should be
capitalised if they meet the relevant
accounting standard.
This requires, among other things, an
assessment of the technical stage of the
project and the future commercial outturn
of the project. The costs are otherwise
expensed as incurred.
Due to the above, assessing whether the
capitalisation criteria are met is inherently
judgemental and there is a risk that the
appropriate point in time for capitalisation
is not identified appropriately and
therefore costs continue to be expensed
when they should be capitalised.
We continue to perform procedures over going concern. However, following the equity placement in in the year we have not assessed this
as one of the most significant risks in our current year audit and, therefore, it is not separately identified in our report this year. We continue
to perform procedures over trade debtors. However, following reduced aged debt in the year we have not assessed this as one of the most
significant risks in our current year audit and, therefore, it is not separately identified in our report this year.
33
FINANCIALSTISSUE REGENIX GROUP PLC ANNUAL REPORT AND ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2017 Independent Auditor’s Report CONTINUED
TO THE MEMBERS OF TISSUE REGENIX GROUP PLC
3. Our application of materiality and an
overview of the scope of our audit
Materiality for the group financial statements as a whole was set at
£250k (2016: £160k), determined with reference to a benchmark of
loss before tax (of which it represents 2.3% (2016: 1.2%) of gross
assets.) The change in benchmark is as a result of the acquisition in
the year leading to increased income statement focus by the users
of the accounts.
Materiality for the parent company financial statements as a whole
was set at £200k (2016: £24k), determined with reference to a
benchmark of company total assets, of which it represents 0.2%
(2016: 1.5% of loss before tax). The change in benchmark is as a
result of the acquisition in the year.
We agreed to report to the Audit Committee any corrected or
uncorrected identified misstatements exceeding £12.5k, in addition
to other identified misstatements that warranted reporting on
qualitative grounds
Of the group’s 12 (2016: 9) reporting components, we subjected
8 (2016: 7) to full scope audits for group purposes and 1 (2016:
0) to specified risk-focused audit procedures over revenue. The
component for which we performed work other than audits for
group reporting purposes was not individually significant but were
included in the scope of our group reporting work in order to provide
further coverage over the group’s results.
Loss before tax
£10.8m (2016: 10.9m)
Group Materiality
£250k (2016: £160k)
£250k
Whole financial
statements materiality
(2016: £160k)
£200k
Range of materiality at
9 components (£200k - £25k)
(2016: £150k to £8k)
Loss before tax
Group materiality
£12.5k
Misstatements reported to the
audit committee (2016: £8k)
Group revenue
Group loss before tax
Group total assets
22
8
100%
(2016 92%)
92
78
4
2
96%
(2016 98%)
98
96
1
2
99%
(2016 98%)
98
99
Full scope for group audit purposes 2017
Specified risk-focused audit procedures 2017
Full scope for group audit purposes 2016
Residual components
34
TICKER AIM: TRX www.tissueregenix.com 4. We have nothing to report on
going concern
We are required to report to you if we have concluded that the use
of the going concern basis of accounting is inappropriate or there is
an undisclosed material uncertainty that may cast significant doubt
over the use of that basis for a period of at least twelve months from
the date of approval of the financial statements. We have nothing to
report in these respects.
5. We have nothing to report on the other
information in the Annual Report
The Directors are responsible for the other information presented in
the Annual Report together with the financial statements. Our opinion
on the financial statements does not cover the other information and,
accordingly, we do not express an audit opinion or, except as explicitly
stated below, any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so,
consider whether, based on our financial statements audit work,
the information therein is materially misstated or inconsistent with
the financial statements or our audit knowledge. Based solely on
that work we have not identified material misstatements in the
other information.
Strategic report and Directors’ report
Based solely on our work on the other information:
{ we have not identified material misstatements in the strategic
report and the Directors’ report;
{ in our opinion the information given in those reports for the
financial year is consistent with the financial statements; and
{ in our opinion those reports have been prepared in accordance
with the Companies Act 2006.
6. We have nothing to report on the other
matters on which we are required to
report by exception
Under the Companies Act 2006, we are required to report to you if,
in our opinion:
{ adequate accounting records have not been kept by the parent
Company, or returns adequate for our audit have not been
received from branches not visited by us; or
{ the parent Company financial statements 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 ouraudit.
We have nothing to report in these respects.
7. Respective responsibilities
Directors’ responsibilities
As explained more fully in their statement set out on page 31,
the Directors are responsible for: the preparation of the financial
statements including being satisfied that they give a true and fair
view; such internal control as they determine is necessary to enable
the preparation of financial statements that are free from material
misstatement, whether due to fraud or error; assessing the Group
and parent Company’s ability to continue as a going concern,
disclosing, as applicable, matters related to going concern; and
using the going concern basis of accounting unless they either
intend to liquidate the Group or the parent Company or to cease
operations, or have no realistic alternative but to do so.
Auditor’s responsibilities
Our objectives are to obtain reasonable assurance about whether
the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue our
opinion in an auditor’s report. Reasonable assurance is a high level
of assurance, but does not guarantee that an audit conducted
in accordance with ISAs (UK) will always detect a material
misstatement when it exists. Misstatements can arise from fraud or
error and are considered material if, individually or in aggregate, they
could reasonably be expected to influence the economic decisions
of users taken on the basis of the financial statements.
A fuller description of our responsibilities is provided on the FRC’s
website at www.frc.org.uk/auditorsresponsibilities.
8. The purpose of our audit work and to
whom we owe our responsibilities
This report is made solely to the Company’s members, as a body, in
accordance with Chapter 3 of Part 16 of the Companies Act 2006.
Our audit work has been undertaken so that we might state to the
Company’s members those matters we are required to state to
them in an auditor’s report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume responsibility
to anyone other than the Company and the Company’s members,
as a body, for our audit work, for this report, or for the opinions we
have formed.
IAN BEAUMONT
(SENIOR STATUTORY AUDITOR)
for and on behalf of KPMG LLP, Statutory Auditor
Chartered Accountants
1 Sovereign Square
Sovereign Street
Leeds
LS1 4DA
26 March 2018
35
FINANCIALSTISSUE REGENIX GROUP PLC ANNUAL REPORT AND ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2017 Consolidated Statement of Comprehensive Income
FOR THE YEAR ENDED 31 DECEMBER 2017
REVENUE
Cost of sales
GROSS PROFIT
Administrative expenses before exceptional items
Exceptional items
Total administrative expenses
OPERATING LOSS
Finance income
LOSS BEFORE TAXATION
Taxation
LOSS FOR YEAR
ATTRIBUTABLE TO:
Equity holders of the parent
Non-controlling interests
OTHER COMPREHENSIVE INCOME:
Foreign currency translation differences – foreign operations
TOTAL COMPREHENSIVE EXPENSE FOR THE YEAR
ATTRIBUTABLE TO:
Equity holders of the parent
Non-controlling interests
LOSS PER SHARE
Basic and diluted on loss attributable to equity holders of parent
The loss for the year arises from the Group’s continuing operations.
The accompanying notes form an integral part of the financial statements.
Year to
31 December
2017
£000
11 Months to
31 December
2016
£000
Notes
3
3
4
4
6
7
8
8
5,233
(2,627)
2,606
(12,324)
(1,098)
(13,422)
(10,816)
47
1,443
(730)
713
(11,773)
–
(11,773)
(11,060)
114
(10,769)
(10,946)
1,348
(9,421)
1,034
(9,912)
(9,221)
(200)
(9,421)
(9,786)
(126)
(9,912)
(614)
(1)
(10,035)
(9,913)
(9,835)
(200)
(10,035)
(9,787)
(126)
(9,913)
(1.00)p
(1.29)p
36
TICKER AIM: TRX www.tissueregenix.com
Consolidated Statement of Changes in Equity
FOR THE YEAR ENDED 31 DECEMBER 2017
Attributable to equity holders of the parent
Share
capital
£000
Share
premium
£000
Merger
reserve
£000
Reverse
acquisition
reserve
£000
Reserve
for own
shares
£000
Share
based
payment
reserve
£000
Retained
earnings
deficit
£000
Non-
controlling
interests
£000
Total
equity
£000
Total
£000
At 31 January 2016
3,801
50,461
10,884
(7,148)
(831)
946
(36,791) 21,322
(83) 21,239
Loss for the period
Other comprehensive
expense
Loss and total
comprehensive
expense for the period
Share based payment
expense
At 31 December
2016
Loss for the period
Other comprehensive
expense
Loss and total
comprehensive
expense for the period
Cost of issue of new
equity
Exercise of share
options
Share based payment
expense
At 31 December
2017
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(9,786)
(9,786)
(126)
(9,912)
(1)
(1)
–
(1)
(9,787)
(9,787)
(126)
(9,913)
210
–
210
–
210
3,801
50,461
10,884
(7,148)
(831)
1,156
(46,578) 11,745
(209) 11,536
–
–
–
–
–
–
–
(2,318)
54
–
255
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
30
(9,221)
(9,221)
(200)
(9,421)
(614)
(614)
–
(614)
(9,835)
(9,835)
(200) (10,035)
–
–
–
–
40,000
– 40,000
(2,318)
309
30
–
–
–
(2,318)
309
30
Issue of shares
2,000
38,000
5,855
86,398
10,884
(7,148)
(831)
1,186
(56,413) 39,931
(409) 39,522
37
FINANCIALSTISSUE REGENIX GROUP PLC ANNUAL REPORT AND ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2017 Consolidated Statement of Financial Position
AS AT 31 DECEMBER 2017
31 December
2017
£000
31 December
2016
£000
Notes
9
10
11
12
13
14
14
15
17
17
17
17
18
20
18
2,994
19,305
22,299
2,872
4,168
16,423
23,463
45,762
(635)
(635)
(4,781)
(4,781)
(824)
(824)
(6,240)
39,522
5,855
86,398
10,884
(7,148)
(831)
1,186
(56,913)
39,931
(409)
39,522
1,087
550
1,637
661
3,130
8,173
11,964
13,601
–
–
(2,065)
(2,065)
–
–
(2,065)
11,536
3,801
50,461
10,884
(7,148)
(831)
1,156
(46,578)
11,745
(209)
11,536
ASSETS
Non-current assets
Property, plant and equipment
Intangible assets
TOTAL NON-CURRENT ASSETS
Current assets
Inventory
Trade and other receivables
Cash and cash equivalents
TOTAL CURRENT ASSETS
TOTAL ASSETS
LIABILITIES
Non-current liabilities
Other payables
TOTAL NON-CURRENT LIABILITIES
Current liabilities
Trade and other payables
TOTAL CURRENT LIABILITIES
Provisions
Deferred Tax
TOTAL PROVISION
TOTAL LIABILITIES
NET ASSETS
EQUITY
Share capital
Share premium
Merger reserve
Reverse acquisition reserve
Reserve for own shares
Share based payment reserve
Retained earnings deficit
EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF PARENT
Non-controlling interests
TOTAL EQUITY
Approved by the Board of Directors and authorised for issue on 26 March 2018.
STEVEN COULDWELL
CHIEF EXECUTIVE OFFICER
Company number: 5969271
38
TICKER AIM: TRX www.tissueregenix.com
Consolidated Statement of Cash Flows
FOR THE YEAR ENDED 31 DECEMBER 2017
OPERATING ACTIVITIES
Operating loss
Adjustment for:
Depreciation of property, plant and equipment
Amortisation of intangible assets
Share based payments
Research tax credit received
Operating cash outflow
(Increase) in inventory
(Increase) in trade and other receivables
Increase in trade and other payables
Net cash outflow from operations
INVESTING ACTIVITIES
Interest received
Purchases of property, plant and equipment
Capitalised development expenditure
Acquisition of subsidiary
Net cash (outflow) from investing activities
FINANCING ACTIVITIES
Proceeds from issue of share capital
Proceeds from exercised share options
Net cash inflow from financing activities
Increase/(decrease) in cash and cash equivalents
Foreign exchange translation movement
Cash and cash equivalents at start of period
CASH AND CASH EQUIVALENTS AT END OF PERIOD
Year to
31 December
2017
£000
11 Months to
31 December
2016
£000
Notes
(10,816)
(11,060)
9
19
20
11
6
9
10
16
17
482
225
30
1,541
(8,538)
(503)
(783)
38
301
–
210
319
(10,230)
(597)
(90)
106
(9,786)
(10,811)
47
(130)
(93)
(19,945)
(20,121)
37,682
309
37,991
8,084
166
8,173
16,423
114
(487)
(550)
–
(923)
–
–
–
(11,734)
–
19,907
8,173
39
FINANCIALSTISSUE REGENIX GROUP PLC ANNUAL REPORT AND ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2017
Notes to the Financial Statements
FOR THE YEAR ENDED 31 DECEMBER 2017
1) BASIS OF PREPARATION
The financial statements of Tissue Regenix Group plc are audited consolidated financial statements for the year ended 31 December 2017.
These include audited comparatives for the 11 month period ended 31 December 2016.
The Group financial statements consolidate the financial statements of Tissue Regenix Group plc and the entities it controls, being its
subsidiaries and its joint venture interest.
Going concern
As at 31 December 2017, the Group had £16.4m 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 19-20.
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. As is the nature of the business,
the Directors acknowledge there will be further funding requirements before revenues have grown to the point of self sufficiency
Change in accounting presentation
Cost of sales in the Group’s financial statements comprises cost of goods sold and external commissions payable. This is a change from
previous years where external commissions were expensed as administration expenses. The change is because the Directors believe this
presentation gives the users of the accounts a clearer view of the costs directly associated with generating revenue.
This change has increased Cost of sales by £376,000 from what was previously presented in the 11 months to December 2016 with a
corresponding reduction in the administration expenses. The impact on the 2017 figure is an increase of £588,000 with a corresponding
reduction in administration expenses. The loss before tax and earnings per share in both the current year and prior period are unaffected by
this change.
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.
The principal accounting policies applied are set out below.
Basis of consolidation
Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has rights to, variable returns from
its involvement with the entity and has the ability to affect those returns through its power over the entity. In assessing control, the Group
takes into consideration potential voting rights. The acquisition date is the date on which control is transferred to the acquirer. The financial
statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that
control ceases. Losses applicable to the non-controlling interests in a subsidiary are allocated to the non-controlling interests even if doing
so causes the non-controlling interests to have a deficit balance.
Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions, are eliminated.
Unrealised gains arising from transactions with equity-accounted investees are eliminated against the investment to the extent of the Group’s
interest in the investee. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence
of impairment.
Business combinations
All business combinations are accounted for by applying the acquisition method. Business combinations are accounted for using the
acquisition method as at the acquisition date, which is the date on which control is transferred to the Group.
The Group measures goodwill at the acquisition date as:
{ the fair value of the consideration transferred; plus
{ the recognised amount of any non-controlling interests in the acquiree; plus
{ the fair value of the existing equity interest in the acquiree; less
{ the net recognised amount (generally fair value) of the identifiable assets acquired and liabilities assumed.
When the excess is negative, a bargain purchase gain is recognised immediately in profit or loss.
Costs related to the acquisition, other than those associated with the issue of debt or equity securities, are expensed as incurred.
40
TICKER AIM: TRX www.tissueregenix.com Any contingent consideration payable is recognised at fair value at the acquisition date. If the contingent consideration is classified as
equity, it is not remeasured and settlement is accounted for within equity. Otherwise, subsequent changes to the fair value of the contingent
consideration are recognised in profit or loss.
Goodwill
Goodwill arising on the acquisition of a subsidiary undertaking is the difference between the fair value of the consideration payable and the
fair value of the identifiable assets, liabilities and contingent liabilities acquired.
Impairment of non-financial assets
An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised in prior periods are
assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there
has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the
asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no
impairment loss had been recognised.
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
The individual financial statements of each Group entity are presented in the currency of the primary economic environment in which the
entity operates (its functional currency). For the purposes of the consolidated financial statements, the results and the financial position of
each Group entity are expressed in Pounds Sterling, which is the functional currency of the Company and the presentational currency for the
consolidated financial statements.
In preparing the financial statements of the individual entities, transactions in currencies other than the entity’s functional currency (foreign
currencies) are recorded at the rates of exchange prevailing at the dates of the transactions. At each balance sheet date, monetary items
denominated in foreign currencies are retranslated at the rates prevailing at the balance sheet date. Non-monetary items carried at fair value
that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined.
Non-monetary items that are measured in terms of historical cost in foreign currency are not retranslated.
The assets and liabilities of foreign operations are translated using exchange rates at the balance sheet date. The components of
shareholders’ equity are stated at historical value. An average exchange rate for the period is used to translate the results and cash flows of
foreign operations.
Exchange differences arising on translating the results and net assets of foreign operation are taken to the translation reserve in equity until
the disposal of the investment. The gain or loss in the income statement on the disposal of foreign operations includes the release of the
translation reserve relating to the operation that is being sold.
41
FINANCIALSTISSUE REGENIX GROUP PLC ANNUAL REPORT AND ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2017 2) SIGNIFICANT ACCOUNTING POLICIES continued
Research and development
Research costs are charged to profit and 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:
{ it is technically feasible to complete the product and the management 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. Other development costs are charged against
profit or loss as incurred since the criteria for capitalisation 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.
Exceptional items
Items which are significant by virtue of their size or nature and/or which are considered non-recurring are classified as an exceptional
operating items. Such items, which include for example costs relating to acquisitions, litigation charges etc, are included within the
appropriate consolidated income statement category but are highlighted separately. Exceptional operating items are excluded from the profit
measures used by the Directors to monitor underlying performance.
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:
Buildings over 39 years
Laboratory equipment over 5 years
Computer equipment over 3 years
Fixtures and fittings over 5 years
Land is not depreciated.
Intangible assets
Intangible assets are stated at fair value. Amortisation is provided on all intangibles over its expected useful life.
Trademarks over 5 years
Customer relationships over 10 years
Process & IT technology over 5 years
Supplier agreements over 5 years
Impairment of property, plant and equipment and intangible assets
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.
42
Notes to the Financial Statements CONTINUEDFOR THE YEAR ENDED 31 DECEMBER 2017TICKER AIM: TRX www.tissueregenix.com 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
a binomial valuation model.
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 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 behavioural 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 12 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.
Taxation
Tax on the profit or loss for the year comprises current and deferred tax. Tax is recognised in the profit and loss account except to the extent
that it relates to items recognised directly in equity or other comprehensive income, in which case it is recognised directly in equity or other
comprehensive income.
Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively
enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years.
Deferred tax is provided on temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes
and the amounts used for taxation purposes. The following temporary differences are not provided for: the initial recognition of goodwill; the
initial recognition of assets or liabilities that affect neither accounting nor taxable profit other than in a business combination; and differences
relating to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future. The amount of deferred
tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates
enacted or substantively enacted at the balance sheet date.
43
FINANCIALSTISSUE REGENIX GROUP PLC ANNUAL REPORT AND ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2017 2) SIGNIFICANT ACCOUNTING POLICIES continued
Controlled joint venture
Tissue Regenix Group entered a joint venture in January 2016 establishing GBM-V GmbH, a company in Germany. The results for this entity
are consolidated within these accounts because the Group controls the majority of the voting rights.
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:
Estimates
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 period was £30,000 (2016: £210,000).
Business Combinations
Determining a value for assets acquired
Determining the fair value of acquired intangible assets and goodwill acquired in business combinations requires the use of estimates. The
values are determined using discounted cash flows and based upon latest approved budgets which include estimates on future cash flows,
attrition rates and discount rate.
Performing impairment tests
Subsequent impairment reviews also require the use of estimates to value the cash generating units to which goodwill and other intangible
assets have been allocated. The value in use calculations, which are made on an annual basis for goodwill, or when there is an indicator of
impairment for tangible and other intangible fixed assets, determine whether there is any impairment to the carrying value of assets arising
from business combinations. More details of these estimates can be found in note 15.
Judgements
Deferred tax
The actual tax on the Company’s profits is determined according to complex laws and regulations. Where the effect of these laws and
regulations is unclear, estimates are used in determining the liability for the tax to be paid on profits which are recognised in the financial
statements. The Company considers the estimates, assumptions and judgements to be reasonable, but this can involve complex issues
which may take a number of years to resolve. The final determination of tax liabilities could be different from the estimates reflected in the
financial statements. Deferred tax assets and liabilities require management judgement in determining the amounts to be recognised. In
particular, judgement is used when assessing the extent to which deferred tax assets should be recognised with consideration given to the
timing and level of future taxable income.
Capitalisation of development costs
The point at which development costs meet the criteria for capitalisation is a key judgement. During the year we capitalised development
costs of £93,000 in respect of a product/products which we received US regulatory clearance to sell the product (510K approval). We deem
this to be the point at which it becomes probable that future economic benefits will be received from the product and hence the criteria for
capitalisation are met. If we had capitalised other product development costs, then there would have been a reduction of £2,687,000 to the
loss reported in the income statement
44
Notes to the Financial Statements CONTINUEDFOR THE YEAR ENDED 31 DECEMBER 2017TICKER AIM: TRX www.tissueregenix.com 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:
IFRS 9
IFRS 15
IFRS 16
Financial Instruments
Revenue from contracts from customers
Leases
Amendments to IAS12 Recognition of Deferred Tax Assets for Unrealised Losses
IFRIC 22
Foreign Currency Transactions and Advanced Consideration
Amendments to IAS 28 Long-term Interests in Associates and Joint Ventures
Amendments to IFRS 2 Classification and Measurement of Share based Payment Transactions
Annual Improvements to IFRS Standards 2014–2016 cycle
Effective date
1 January 2018
1 January 2018
1 January 2019
1 January 2017
TBC
TBC
TBC
TBC
The following accounting standards that are due to be adopted in the next year will or may have an impact on the Group’s future financial
statements:
IFRS 15 – Revenue from contracts with customers
The Group is required to adopt IFRS 15 from 1 January 2018. IFRS 15 establishes a comprehensive framework for determining whether,
how much and when revenue is recognised. It replaces existing revenue recognition guidance, including IAS 18 Revenue, IAS 11
Construction Contracts and IFRIC 13 Customer Loyalty Programmes. Currently only IAS 18 Revenue applies to the Groups accounts.
In order to assess the impact of the implementation of the new revenue standard on the Group’s consolidated financial statements,
IFRS learning sessions will be organised incorporating representatives from finance, legal and commercial teams. Following from this a
quantitative impact analysis will be developed and discussed in the first half of 2018. This has been delayed from 2017 due to the acquisition
of CellRight in H2 2017 which makes up a significant element of the Group’s revenue (42% of total Group revenue in FY17; if CellRight was
acquired at the start of the year revenue would represent 61% of the total Group revenue in 2017).
While the impact still needs to be calculated, given the nature of invoicing revenue the Group does not believe the impact will be material.
IFRS 9 – Financial instruments
The Group has assessed the impact of IFRS 9 which uses a single approach to determine whether a financial asset is measured at
amortised cost or fair value, replacing many different rules in IFRS 39. The approach in IFRS 9 is based on how an entity manages its
financial instruments and the contractual cash flow characteristics of the financial asset.
The Group has considered the implications of IFRS 9 to have an immaterial impact.
No Standards or Interpretations adopted in the year had any material impact on the financial statements of the Group.
3) SEGMENTAL REPORTING
The following table provides disclosure of the Group’s revenue by geographical market based on location of the customer:
USA
Rest of world
Year to
31 December
2017
£000
11 Months to
31 December
2016
£000
4,098
1,135
5,233
1,322
121
1,443
45
FINANCIALSTISSUE REGENIX GROUP PLC ANNUAL REPORT AND ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2017
3) SEGMENTAL REPORTING continued
Analysis of revenue by customer
During the year ended 31 December 2017 the Group had two customers who individually exceeded 10% of revenue. These customers
generated 13% and 11% of revenue respectively (2016:12% and 10%).
Operating segments
The Group is organised into BioSurgery, Orthopaedics & Dental, Cardiac and Other divisions for internal management, reporting and
decision-making, based on the nature of the products of the Group’s businesses. Managers have been appointed within these divisions,
who report to the Chief Executive Officer. These are the reportable operating segments in accordance with IFRS 8 “Operating Segments”.
The Directors recognise that the operations of the Group are dynamic and therefore this position will be monitored as the Group develops.
In accordance with IFRS 8, the Group has derived the information for its operating segments using the information used by the Chief
Operating Decision Maker. The Group has identified the Chief Executive Officer as the Chief Operating Decision Maker as he is responsible
for the allocation of resources to the operating segments and assessing their performance.
Central overheads, which primarily relate to operations of the Group function, are not allocated to the business unit.
BioSurgery
Orthopaedics &
Dental
Cardiac
Other
Central
Total
11
Months
to
31 Dec
2016
£000
Year to
31 Dec
2017
£000
11
Months
to
31 Dec
2016
£000
11
Months
to
31 Dec
2016
£000
Year to
31 Dec
2017
£000
Year to
31 Dec
2017
£000
1,932
1,322
2,166
(916)
(664)
(829)
1,016
658
1,337
–
–
–
–
–
–
–
–
–
11
Months
to
31 Dec
2016
£000
121
(66)
55
Year to
31 Dec
2017
£000
1,135
(882)
253
Year to
31 Dec
2017
£000
–
–
–
11
Months
to
31 Dec
2016
£000
11
Months
to
31 Dec
2016
£000
Year to
31 Dec
2017
£000
–
–
–
5,233
1,443
(2,627)
(730)
2,606
713
Revenue
Cost of sales
Gross Profit
Administrative costs
(4,737)
(5,124)
(3,297)
(2,738)
(481)
(462)
(484)
(308)
(3,325)
(3,141)
(12,324)
(11,773)
Exceptional costs
–
–
–
–
–
–
–
–
(1,098)
–
(1,098)
–
Operating loss
(3,721)
(4,466)
(1,960)
(2,738)
(481)
(462)
(231)
(253)
(4,423)
(3,141)
(10,816)
(11,060)
Finance income
–
–
3
–
–
Loss before taxation
(3,721)
(4,466)
(1,957)
(2,738)
(481)
Taxation
372
323
722
600
254
Loss for the year
(3,349)
(4,143)
(1,235)
(2,138)
(227)
–
(462)
111
(351)
–
–
44
114
47
114
(231)
(253)
(4,379)
(3,027)
(10,769)
(10,946)
–
–
–
–
1,348
1,034
(231)
(253)
(4,379)
(3,027)
(9,421)
(9,912)
46
Notes to the Financial Statements CONTINUEDFOR THE YEAR ENDED 31 DECEMBER 2017TICKER AIM: TRX www.tissueregenix.com
Administrative costs are broken down as follows:
BioSurgery
Orthopaedics &
Dental
11
Months
to
31 Dec
2016
£000
Year to
31 Dec
2017
£000
11
Months
to
31 Dec
2016
£000
Year to
31 Dec
2017
£000
Cardiac
Other
Central
Total
11
Months
to
31 Dec
2016
£000
11
Months
to
31 Dec
2016
£000
Year to
31 Dec
2017
£000
11
Months
to
31 Dec
2016
£000
Year to
31 Dec
2017
£000
11
Months
to
31 Dec
2016
£000
Year to
31 Dec
2017
£000
Year to
31 Dec
2017
£000
Staff costs
(3,343)
(3,162)
(1,837)
(1,327)
(281)
(293)
(181)
(157)
(1,135)
(2,087)
(6,777)
(7,026)
Sales and marketing
costs
Research and
development
Establishment and
administration costs
Administrative
costs
(64)
(79)
(17)
(12)
(4)
(3)
(21)
(277)
(388)
(894)
(1,221)
(147)
(70)
(32)
(4)
–
–
–
–
–
(106)
(98)
(1,350)
(1,679)
(1,053)
(1,495)
(549)
(178)
(49)
(96)
(250)
(147)
(2,190)
(1,054)
(4,091)
(2,970)
(4,737)
(5,124)
(3,297)
(2,738)
(481)
(462)
(484)
(308)
(3,325)
(3,141)
(12,324)
(11,773)
4) LOSS FROM OPERATIONS
Loss from operations is stated after charging:
Depreciation of plant and equipment (see note 9)
Amortisation
Operating lease rentals – land and buildings
Staff costs (see note 5)
Foreign exchange (gains)/ losses
Research and development (inclusive of research and development staff costs)
Sales and marketing costs (inclusive of sales and marketing staff costs and commissions)
Exceptional items:
Costs of acquisition of subsidiary
Litigation costs
Auditor remuneration:
– fees payable to Company’s Auditor for the audit of the parent Company and consolidated
financial statements
– auditing the accounts of subsidiaries pursuant to legislation
Other services:
– fees in relation to corporation tax
– fees in relation to other services
Total Auditors’ remuneration
Year to
31 December
2017
£000
11 Months to
31 December
2016
£000
482
225
85
6,777
264
2,687
5,787
996
102
20
60
32
161
273
301
–
64
7,026
(115)
3,127
4,872
–
–
11
20
41
28
100
47
FINANCIALSTISSUE REGENIX GROUP PLC ANNUAL REPORT AND ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2017
5) STAFF COSTS
The average monthly number of persons (including Directors) employed by the Group during the period was:
Directors
Laboratory and administration staff
The aggregate remuneration, including Directors, comprised:
Wages and salaries
Share based expense (see note 16)
Social security, pension & healthcare costs
Directors’ remuneration included above comprised:
Emoluments for qualifying services
Year to
31 December
2017
Number
11 Months to
31 December
2016
Number
7
72
79
7
73
80
£000
£000
6,035
30
712
6,777
6,036
210
780
7,026
822
744
Directors’ emoluments disclosed above include £413,000 paid to the highest paid Director (2016: £293,000) as well as share based
payments benefit of nil (2016: £35,000).
6) FINANCE INCOME
Bank interest receivable
7) TAXATION
Tax on loss on ordinary activities
Current tax:
UK corporation tax credit on losses of period
Deferred tax:
Origination and reversal of temporary timing differences
Tax credit on loss on ordinary activities
48
Year to
31 December
2017
£000
11 Months to
31 December
2016
£000
47
114
Year to
31 December
2017
£000
11 Months to
31 December
2016
£000
(1,348)
(1,348)
(1,034)
(1,034)
–
–
(1,348)
(1,034)
Notes to the Financial Statements CONTINUEDFOR THE YEAR ENDED 31 DECEMBER 2017TICKER AIM: TRX www.tissueregenix.com
The charge for the year 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 year varies from the main 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 19.25% (FY16: 20%)
Effects of:
Expenses not deductible for tax purposes
Research and development tax credits received
Surrender of research and development relief for repayable tax credit
Research and development enhancement
Prior period adjustment
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*
* The Group has not recognised a deferred tax asset relating to these losses as their recoverability is uncertain.
Year to
31 December
2017
£000
11 Months to
31 December
2016
£000
(10,776)
(2,074)
(10,946)
(2,189)
–
(799)
1,098
(621)
(549)
1,597
(1,348)
–
(875)
1,249
(706)
(158)
1,645
(1,034)
Year to
31 December
2017
£000
11 Months to
31 December
2016
£000
35,819
6,089
32,037
5,767
49
FINANCIALSTISSUE REGENIX GROUP PLC ANNUAL REPORT AND ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2017
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 year to assume
conversion of all dilutive potential ordinary shares.
Total loss attributable to the equity holders of the parent
Weighted average number of ordinary shares in issue during the year
Loss per share
Basic and diluted on loss for the year
Year to
31 December
2017
£000
11 Months to
31 December
2016
£000
(9,221)
(9,786)
No.
No.
920,506,514
760,124,264
(1.00)p
(1.29)p
The Company has issued employee options over 243,105,607 ordinary shares and there are 16,112,800 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.
9) PROPERTY, PLANT AND EQUIPMENT
Building &
Land
£000
Laboratory
Equipment
£000
Fixtures &
Fittings
£000
Computer
Equipment
£000
–
–
–
-
849
849
–
–
–
5
5
844
–
–
940
158
1,098
88
1,361
2,547
506
132
638
241
879
1,668
460
434
410
124
534
20
49
603
102
84
186
110
296
307
348
308
289
205
494
22
–
516
130
85
215
126
341
175
279
159
Total
£000
1,639
487
2,126
130
2,259
4,515
738
301
1,039
482
1,521
2,994
1,087
901
Cost
At 31 January 2016
Additions
At 31 December 2016
Additions
Additions form Acquisition
At 31 December 2017
Depreciation
At 31 January 2016
Charge for the period
At 31 December 2016
Charge for the period
At 31 December 2017
Net book value
At 31 December 2017
At 31 December 2016
At 31 January 2016
50
Notes to the Financial Statements CONTINUEDFOR THE YEAR ENDED 31 DECEMBER 2017TICKER AIM: TRX www.tissueregenix.com
10) INTANGIBLE ASSETS
Development
costs
£000
Goodwill
£000
Customer
relationships
£000
Trademarks
£000
Process
Tech
£000
Supplier
agreements
£000
Cost
At 31 January 2016
Additions
At 31 December 2016
Additions
At 31 December 2017
Amortisation
At 31 January 2016
And 31 December 2016
Charge for the period
At 31 December 2017
Net book value
At 31 December 2017
At 31 December 2016
At 31 January 2016
11) INVENTORY
550
550
93
643
–
–
–
643
550
–
–
–
–
14,504
14,504
2,234
2,234
–
–
–
14,504
–
–
92
92
2,142
–
–
–
–
592
592
–
49
49
543
–
–
Raw materials and consumables
Work in progress
Finished goods including goods for resale
Total
The replacement cost of stocks approximates to the value at which they are stated in the accounts.
12) TRADE AND OTHER RECEIVABLES
Trade debtors
Other receivables
Prepayments and accrued income
Total
£000
–
550
550
18,980
19,530
–
225
225
–
–
1,112
1,112
–
46
46
–
–
445
445
–
38
38
1,066
407
19,305
–
–
–
–
2017
£000
1,130
941
801
2,872
550
–
2016
£000
126
74
461
661
At
31 December
2017
£000
At
31 December
2016
£000
1,466
2,194
508
4,168
427
2,231
472
3,130
The Directors consider that the carrying amounts of trade and other receivables approximate to their fair values.
Trade debtors are shown net of provisions of £24,000 (2016: £90,000).
51
FINANCIALSTISSUE REGENIX GROUP PLC ANNUAL REPORT AND ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2017
12) TRADE AND OTHER RECEIVABLES continued
Trade receivables, are analysed by the currencies of settlement below:
US Dollars
Euros
Trade payables
At
31 December
2017
£000
At
31 December
2016
£000
1,112
354
1,466
339
88
427
13) RISK MANAGEMENT OF FINANCIAL ASSETS AND LIABILITIES
The Group’s activities expose it to a variety of financial risks: market risk, specifically interest rate risk, credit risk and liquidity risk. The
Group’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse
effects on the Group’s financial performance.
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
Interest rate risk
As the Group 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
short-term accounts, which have variable interest rates attributable to them, to ensure that sufficient funds are available to cover the working
capital requirements of the Group.
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:
Cash and cash equivalents
Cash and cash equivalents
Fixed rate
£000
December 2017
Floating rate
£000
15,007
1,416
Fixed rate
£000
7,654
December 2016
Floating rate
£000
519
Total
£000
16,423
Total
£000
8,173
Due to the high proportion of funds held on a fixed deposit, the impact of a 5% increase/decrease in interest rates would have an immaterial
impact on the loss in each period.
Management of credit risk
The Group is exposed to credit risk from its operating activities; it principally arises from short-term bank deposits. The Group seeks to
minimise this risk by only depositing funds with banks with a high credit rating.
The maximum exposure to credit risk on the Group’s financial assets is represented by their carrying amounts as outlined in the
categorisation of financial instruments table below.
The Group does not consider that any changes in fair value of financial assets or liabilities in the year are attributable to credit risk.
52
Notes to the Financial Statements CONTINUEDFOR THE YEAR ENDED 31 DECEMBER 2017TICKER AIM: TRX www.tissueregenix.com
Management of liquidity risk
The Group 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.
The Group had cash and cash equivalents at each reporting date is set out below.
Cash and cash equivalents
AA-
A+
A
BBB+
Year to
31 December
2017
£000
11 Months to
31 December
2016
£000
–
5,092
10,248
1,083
16,423
16
–
7,654
503
8,173
The above has been split by the Fitch rating system and gives an analysis of the credit rating of the financial institutions where cash balances
are held.
Capital risk management
The Group manages its capital to ensure that the Group will be able to continue as a going concern while maximising the return to
stakeholders. The Group’s overall strategy is to minimise costs and liquidity risk.
The capital structure of the Group consists of equity attributable to the owners of the Group, comprising issued capital, reserves and
retained earnings as disclosed in note 17 and 18 and in the Statement of Changes in Equity.
Categorisation of financial instrument
Financial assets/(liabilities)
At 31 December 2017
Trade and other receivables
Cash and cash equivalents
Trade and other payables
Loans and
receivables
£000
Financial
liabilities at
amortised
cost
£000
Financial
liabilities
held at fair
value
£000
3,660
16,423
–
20,083
–
–
(1,672)
(1,672)
–
–
(2,637)
(2,637)
Total
£000
3,660
16,423
(4,309)
15,774
53
FINANCIALSTISSUE REGENIX GROUP PLC ANNUAL REPORT AND ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2017
13) RISK MANAGEMENT OF FINANCIAL ASSETS AND LIABILITIES continued
Financial assets/(liabilities)
At 31 December 2016
Trade and other receivables
Cash and cash equivalents
Trade and other payables
14) TRADE AND OTHER PAYABLES
Trade payables
Taxes and social security
Accruals
Contingent consideration (of which £635,000 is due after 1 year)
Loans and
receivables
£000
Financial
liabilities at
amortised
cost
£000
Financial
liabilities
held at fair
value
£000
2,658
8,173
–
10,831
–
–
(765)
(765)
–
–
–
–
Total
£000
2,658
8,173
(765)
10,066
At
31 December
2017
£000
At
31 December
2016
£000
1,519
152
1,108
2,637
5,416
618
147
1,300
–
2,065
The Directors consider that the carrying amount of trade and other payables approximates to their fair value.
Trade payables are analysed by the currencies of settlement below:
At
31 December
2017
£000
At
31 December
2016
£000
262
963
294
1,519
150
332
136
618
Sterling
US Dollars
Euros
Trade payables
54
Notes to the Financial Statements CONTINUEDFOR THE YEAR ENDED 31 DECEMBER 2017TICKER AIM: TRX www.tissueregenix.com
15) PROVISION
Deferred tax liability
At
31 December
2017
£000
At
31 December
2016
£000
824
824
–
–
16) BUSINESS COMBINATION
Acquisition of CellRight Technologies
On 09 August 2017, the Group acquired 100% of the voting equity instruments of CellRight Technologies LLC. This acquisition was made
as the first part of the expansion plan for the US group to process in-house human tissue products in the US. The Group anticipated the
close relationship between CellRight and Tissue Regenix businesses will be mutually beneficial including shared resources in manufacturing,
sales, marketing and accounting.
Details of the fair value of the identifiable assets and liabilities acquired, purchase consideration and goodwill are as follows:
Net assets
Intangible assets
Inventory
Property and land
Plant and equipment
Trade and other receivables
Trade and other payables
Deferred tax liability
Total fair value
Consideration
Goodwill
Book value
£’000
Adjustments
£’000
Fair value
£’000
–
2,298
643
1,574
448
(551)
–
4,412
23,078
4,374
(598)
237
(113)
–
–
(953)
2,947
(415)
4,374
1,700
880
1,461
448
(551)
(953)
7,359
22,663
15,304
£000
19,945
2,718
22,663
Deferred tax has been calculated on the value of the asset acquired at a US corporation tax rate of 21%.
Fair value of consideration
Cash
Contingent consideration
Total consideration
Contingent consideration
The Group has agreed to pay the contingent consideration if Gross Revenue during the first year after acquisition equals or exceeds seven
million dollars ($7,000,000), in an amount equal to $2,036,201.46.
The Group has agreed to a milestone advance payment of an amount equal to one million dollars ($1,000,000) in addition to the milestone
payment earned, if Gross Revenue during the first milestone period equals or exceeds ten million dollars ($10,000,000),
The Group has agreed to pay a second milestone if Gross Revenue during the second annual period equals or exceeds twelve million five
hundred thousand dollars ($12,500,000) an amount equal to $2,036,201.46 less the amount of the milestone advance payment, if any.
55
FINANCIALSTISSUE REGENIX GROUP PLC ANNUAL REPORT AND ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2017
16) BUSINESS COMBINATION continued
Acquisition-related costs
Acquisition costs relating to this transaction amounted to £996,000 and have been disclosed within the exceptional costs in the statement
of comprehensive income.
Since the acquisition date, CellRight has contributed £2,166,000 to Group revenues and a profit of £277,000 to Group income. If the
acquisition had occurred on 1 January 2017, Group Revenue would have increased by £2,930,000 and Group income for the period would
have increased by £702,000.
Measurements of fair values
The valuation techniques used for measuring the fair value of material assets acquired were as follows.
Assets acquired
Valuation technique
Property, plant and equipment
Intangible assets
Market comparison technique and cost technique: The valuation model considers market prices for
similar items when they are available, and depreciated replacement cost when appropriate. Depreciated
replacement cost reflects adjustments for physical deterioration as well as functional and economic
obsolescence.
Relief-from-royalty method and multi-period excess earnings method: The relief-from-royalty method
considers the discounted estimated royalty payments that are expected to be avoided as a result of the
patents or trademarks being owned. The multi-period excess earnings method considers the present
value of net cash flows expected to be generated by the customer relationships, by excluding any cash
flows related to contributory assets.
Inventories
Net realisable value: The fair value is determined based on the actual cost of the inventory items.
The trade receivables comprise gross contractual amounts due of £713k, which was acquired with a provision of £265k which was
expected to be uncollectible at the date of acquisition to give a net value of £448k.
17) SHARE CAPITAL
Total Ordinary shares of 0.5 p each
as at 31 January 2016
Issue of shares
Share options exercised
Total Ordinary shares of 0.5p each
as at 31 December 2016
Issue of shares
Share options exercised
Total Ordinary shares of 0.5p each
as at 31 December 2017
Number
Share
capital
£000
Share
premium
£000
Merger
reserve
£000
Reverse
acquisition
reserve
£000
Total
£000
760,124,264
3,801
50,461
10,884
(7,148)
57,998
–
–
–
–
–
–
760,124,264
400,000,000
10,866,660
3,801
2,000
54
50,461
35,682
235
10,884
(7,148)
–
–
–
–
57,998
37,682
309
1,170,990,924
5,855
86,398
10,884
(7,148)
95,989
As permitted by the provisions of the Companies Act 2006, the Company does not have an upper limit to its authorised share capital.
56
Notes to the Financial Statements CONTINUEDFOR THE YEAR ENDED 31 DECEMBER 2017TICKER AIM: TRX www.tissueregenix.com
18) MOVEMENT IN RETAINED EARNINGS AND RESERVE FOR OWN SHARES
At 31 December 2016
Loss for the period
Foreign translation movement
Minority Interest
At 31 December 2017
Retained
earnings
deficit
£000
(46,578)
(9,421)
(614)
200
Reserve
for own
shares
£000
(831)
–
–
–
(56,413)
(831)
19) 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 between 1 – 5 years
Total
As at
31 December
2017
£000
As at
31 December
2016
£000
85
61
146
64
–
64
20) 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 22.5p and a vesting period between 1 and 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.
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 (“JOEs”). Subject to meeting the performance criteria conditions set out in the JOEs, 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.
57
FINANCIALSTISSUE REGENIX GROUP PLC ANNUAL REPORT AND ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2017
20) SHARE BASED PAYMENTS continued
The number and weighted average exercise prices of share options and EBT shares are as follows:
At 31 January 2016
Exercised in the period
Lapsed during period
Issued in the period
At 31 December 2016
Exercised in the period
Lapsed during year
Issued in the year
Number of share interests
EMI
options
Unapproved
options
EBT
shares
SAYE
options
Total
Weighted
average
exercise
price per
share (£)
17,087,380
7,456,473
16,940,386
41,484,239
0.0657
–
–
(160,008)
(1,431,905)
–
5,094,124
–
–
–
–
(1,591,913)
1,510,557
6,604,681
16,927,372
11,118,692
16,940,386
1,510,557
46,497,007
–
0.0368
0.0507
0.0650
(9,180,335)
(1,809,494)
(827,586)
–
(11,817,415)
0.0473
(1,408,719)
(3,113,324)
4,863,634
4,868,608
–
–
(1,419,331)
(5,941,374)
1,838,855
11,571,097
0.0913
0.0965
0.0842
At 31 December 2017
11,201,952
11,064,482
16,112,800
1,930,081
40,309,315
There were 7,499,918 share options outstanding at 31 December 2017 eligible to be exercised. The remaining 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 December 2017.
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 certain hurdle values by the respective vesting dates.
There were 16,112,800 of the jointly held EBT shares which were eligible to vest as at 31 December 2017. The remaining shares were not
eligible to vest because the related employment period conditions and some of the performance conditions under the JOEs had not been met.
The fair value benefit received on share options granted is measured using the Binomial model 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 benefits received on
EBT shares are measured using the Binomial model, taking into account the terms and conditions upon which the jointly owned shares were
purchased. The following table lists the inputs to the models used:
Dividend yield
Expected volatility
Risk free interest rate (%)
Expected vesting life of EBT shares and options (years)
Weighted average share price (£)
Options
Granted year to
31 December
2017
EBT shares
Granted year to
31 December
2017
Options
Granted year to
31 December
2016
–
46%
1
4
0.0823
–
–
–
–
–
–
45%
0.9
4
0.0507
Share options issues under the DAB scheme which are not exercised within 4 years from the date of grant will expire. Any other share
options and employee interests in jointly owned EBT shares which are not exercised within 10 years from the date of grant will expire.
58
Notes to the Financial Statements CONTINUEDFOR THE YEAR ENDED 31 DECEMBER 2017TICKER AIM: TRX www.tissueregenix.com
A charge has been recognised in the statement of comprehensive income for each year as follows:
At 31 January 2016
Charge in the period
At 31 December 2016
Charge in the period
At 31 December 2017
21) RELATED PARTY TRANSACTIONS
Transactions with key management personnel
The Company’s key management personnel comprise only the Directors of the Group.
During the year the Group entered into the following transactions in which the Directors had an interest:
Directors’ remuneration:
Remuneration received by the Directors from the Group is set out below:
Short-term employment benefits
Share based
payment
£000
946
210
1,156
30
1,186
Year to
31 December
2017
£000
11 Months to
31 December
2016
£000
822
744
During the year ended 31 December 2017, the Company entered into numerous transactions with its subsidiary company which net off on
consolidation – these have not been shown above.
22) CONTINGENT LIABILITIES
The Group has been served notification of IP infringement from LifeNet; this is currently going through the discovery stages and the duration,
timing and outcome of this litigation is currently unknown. Should the Company be found liable for the IP infringement (which has not been
indicated) it is possible it would have to make a settlement payment, the size and timing of which are unknown due to the early stages of the
discovery process.
23) ULTIMATE CONTROLLING PARTY
The Directors believe that there is no ultimate controlling party.
59
FINANCIALSTISSUE REGENIX GROUP PLC ANNUAL REPORT AND ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2017
Company Statement of Changes in Equity
FOR THE YEAR ENDED 31 DECEMBER 2017
Attributable to the equity holders of the Company
Share
capital
£000
3,801
Share
premium
£000
50,461
Merger
reserve
£000
10,884
Share based
payment
reserve
£000
Retained
earnings
reserve
£000
873
(7,527)
Total
£000
58,492
(1,701)
210
57,001
(1,793)
40,000
(2,318)
309
30
–
210
1,083
–
–
–
30
1,113
(1,701)
–
(9,228)
(1,793)
–
–
–
(11,021)
93,229
At 31 January 2016
Total expense and other comprehensive
loss for the period
Share based payment expense
–
–
–
–
–
–
At 31 December 2016
3,801
50,461
10,884
Total expense and other comprehensive
loss for the period
Issue of shares
Cost of issue of new equity
Share options exercised
Share based payment expense
–
2,000
–
54
–
–
40,000
(2,318)
255
–
–
–
–
–
At 31 December 2017
5,855
86,398
10,884
60
TICKER AIM: TRX www.tissueregenix.com
Company Statement of Financial Position
AS AT 31 DECEMBER 2017
ASSETS
Non-current assets
Investments
Total non-current assets
Current assets
Trade and other receivables
Intercompany loan balance
Cash and cash equivalents
TOTAL ASSETS
LIABILITIES
Current liabilities
Trade and other payables
TOTAL LIABILITIES
NET ASSETS
EQUITY
Share capital
Share premium
Merger reserve
Share based payment reserve
Retained earnings deficit
TOTAL EQUITY
Approved by the Board of Directors and authorised for issue on 26 March 2018.
STEVEN COULDWELL
CHIEF EXECUTIVE OFFICER
Company number: 5969271
At
31 December
2017
£000
At
31 December
2016
£000
Notes
C3
C4
C5
C6
17
17
17
20
12,922
12,922
250
64,390
15,949
80,589
93,511
12,922
12,922
63
36,531
7,819
44,413
57,335
(384)
(384)
(334)
(334)
93,127
57,001
5,855
86,398
10,884
1,113
(11,123)
93,127
3,801
50,461
10,884
1,083
(9,228)
57,001
61
FINANCIALSTISSUE REGENIX GROUP PLC ANNUAL REPORT AND ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2017
Company Statement of Cash Flows
FOR THE YEAR ENDED 31 DECEMBER 2017
Operating activities
Loss before interest and tax
Adjustment for non-cash items:
Share based payments
Operating cash outflow
(Increase) in trade and other receivables
(Decrease)/Increase in trade and other payables
Net cash absorbed by operations
INVESTING ACTIVITIES
Interest received
Loan to subsidiary undertaking
Net cash used in investing activities
FINANCING ACTIVITIES
Proceeds from issue of share capital
Proceeds from exercise of share options
Net cash generated from financing activities
INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS
Cash and cash equivalents at start of period
CASH AND CASH EQUIVALENTS AT END OF PERIOD
Year to
31 December
2017
£000
11 Months to
31 December
2016
£000
Notes
20
C5
17
17
(1,837)
(1,815)
30
(1,807)
(187)
(52)
210
(1,605)
(3)
16
(2,046)
(1,592)
44
(27,859)
(29,861)
37,682
309
37,991
8,130
7,819
15,949
114
(10,301)
(10,187)
–
–
–
(11,779)
19,598
7,819
62
TICKER AIM: TRX www.tissueregenix.com
Notes to the Company Information
FOR THE YEAR ENDED 31 DECEMBER 2017
C1. Principal accounting policies
The separate financial statements of the Company are presented as required by the Companies Act 2006 and in accordance with
International Financial Reporting Standards as adopted by the EU.
The principal accounting policies adopted are the same as for those set out in the Group’s financial statements.
C2. Company results
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 December 2017 was a loss of £1,793,000
(2016: £1,701,000).
The audit fee for the Company is set out in note 4 to the Group’s financial statements.
C3. Investment in subsidiary companies
At 31 December 2017, the Company held the following investments in subsidiaries:
Undertaking
Sector
Tissue Regenix Limited
Regenerative medicine
TRx Wound Care Limited
Regenerative medicine
TRx Orthopedics Limited
Regenerative medicine
TRx Cardiac Limited
TRx Vascular Limited
Regenerative medicine
Regenerative medicine
Tissue Regenix Wound Care Inc*
Regenerative medicine
Tissue Regenix Orthopedics Inc†
Regenerative medicine
Tissue Regenix Holdings Limited
Holding company
Tissue Regenix Holdings Inc
Holding company
CellRight Technologies LLC
GBM-V GmbH
Regenerative medicine
* Held through TRX Wound Care Limited.
† Held through TRX Orthopaedics Limited.
Share of issued capital
and voting rights
2017
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
50%
2016
100%
100%
100%
100%
100%
100%
100%
–
–
100%
50%
Registered Addresses:
Tissue Regenix Limited, TRX Wound Care Limited, TRX Orthopaedics Limited, TRX Cardiac Limited, TRX Vascular Limited:
Unit 1&2, Astley Way, Astley Lane Industrial Estate, Swillington, Leeds, LS26 8XT.
Tissue Regenix Wound Care Inc, TRX Orthopedics Inc, CellRight Technologies LLC:
1808 Universal City Boulevard, Universal City Texas, 78148.
GBM-V Gmbh:
Wilhelm-Kulz-Platz 3. 18055 Rostock.
63
FINANCIALSTISSUE REGENIX GROUP PLC ANNUAL REPORT AND ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2017 Notes to the Company Information
FOR THE YEAR ENDED 31 DECEMBER 2017
C3. Investment in subsidiary companies continued
Cost
Impairment
Carrying value at 31 December 2017
C4. Trade and other receivables
Prepayments & accrued income
Other debtors
C5. Current assets
Intercompany loans
31 December
2017
£000
31 December
2016
£000
14,707
(1,785)
12,922
14,707
(1,785)
12,922
At
31 December
2017
£000
At
31 December
2016
£000
42
208
250
39
24
63
As at
31 December
2017
£000
As at
31 December
2016
£000
64,383
36,531
A loan of £64,383 was advanced to other subsidiary companies in the period. No interest was payable on the loan and the loan is repayable
on demand.
C6. Trade and other payables
Trade creditors
Taxes & social security
Accruals
At
31 December
2017
£000
At
31 December
2016
£000
91
108
185
384
58
88
188
334
C7. Critical accounting estimates
Estimates are continually evaluated and based on historical experience and other factors, including expectations of future events that
we believe to be reasonable under the circumstances. Actual results may differ from these estimates. The estimates that have the most
significant effects on the carrying amounts of the assets and liabilities in the parent company financial statements are described below:
Investment in subsidiaries and intercompany loans
Investments in subsidiaries and intercompany loans receivable include some that, as is the nature of the business, relate to investments that
have not yet reached profitability. Accordingly, where material, recoverability has been tested against value in use by reference to business
projections. The assumptions used comprise Board-approved five year business plans, together with terminal growth of 3%, discounted at a
weighted average cost of capital estimated at 11%.
64
TICKER AIM: TRX www.tissueregenix.com
Notice of Annual General Meeting
Notice is given that the 2018 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 24 May 2018 at 10.00 a.m. for the following purposes:
To consider and, if thought fit, to pass the following resolutions as ordinary resolutions:
To receive the Company’s annual accounts, strategic report and Directors’ and Auditor’s reports for the year ended 31 December 2017.
1.
2.
3.
4.
5.
6.
To reappoint Shervanthi Homer-Vanniasinkam who retires by rotation, as a Director of the Company.
To reappoint Jonathan Glenn, who retires by rotation, as a Director of the Company.
To reappoint KPMG LLP as Auditor of the Company.
To authorise the Directors to determine the remuneration of the Auditor.
That, pursuant to section 551 of the Companies Act 2006 (“Act”), the Directors be generally and unconditionally authorised to allot
Relevant Securities:
6.1
up to an aggregate nominal amount of £1,951,652; and
6.2
comprising equity securities (as defined in section 560(1) of the Act) up to a further aggregate nominal amount of £1,951,652 in
connection with an offer by way of a rights issue:
6.2.1
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
6.2.2
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, provided that these authorities shall expire at the conclusion of the next Annual General
Meeting of the Company after the passing of this resolution or on 24 August 2019 (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 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).
65
FINANCIALSTISSUE REGENIX GROUP PLC ANNUAL REPORT AND ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2017 Notice of Annual General Meeting CONTINUED
To consider and, if thought fit, to pass the following resolutions as special resolutions:
That, subject to the passing of resolution 6 and pursuant to section 570 of the Act, the Directors be and are generally empowered
7.
to allot equity securities (within the meaning of section 560 of the Act) for cash pursuant to the authority granted by resolution 6 as
if section 561(1) of the Act did not apply to any such allotment, provided that this power shall be limited to the allotment of equity
securities:
7.1
in connection with an offer of equity securities (whether by way of a rights issue, open offer or otherwise):
7.1.1
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
7.1.2
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
7.2
otherwise than pursuant to paragraph 7.1 of this resolution up to an aggregate nominal amount of £585,495,
and this power shall expire at the conclusion of the next Annual General Meeting of the Company after the passing of this resolution or
on 24 August 2019 (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).
8.
That, pursuant to section 701 of the 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:
8.1
the maximum aggregate number of Shares which may be purchased is 117,099,024;
8.2
the minimum price (excluding expenses) which may be paid for a Share is 0.5p;
8.3
the maximum price (excluding expenses) which may be paid for a Share is an amount equal to 105% 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 24 August 2019
(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
PAUL BELOW
SECRETARY
2018
Registered office
Units 1 & 2, Astley Way
Astley Way Industrial Estate
Swillington
Leeds
LS26 8XT
Registered in England and Wales No. 05969271
66
TICKER AIM: TRX
www.tissueregenix.com
FINANCIALS
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 6:00 p.m. on 22 May 2018 (or, if the meeting is adjourned, 6:00 p.m. 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.
3.
4.
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 and 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.
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 12p per minute plus
your phone company’s access charge. Calls outside the United Kingdom will be charged at the applicable international rate. The
Company’s registrar is open between 9:00 a.m. - 17:30 p.m. Monday to Friday excluding public holidays in England and Wales) 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, Link Asset Services PXS 1, 34 Beckenham Road, Beckenham BR3 4TU, no later than 10:00 a.m. on 22 May 2018 (or, if the
meeting is adjourned, no later than 48 hours before the time of any adjourned meeting).
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 Link Asset Services (ID RA10) no later than 10:00 a.m. on 22 May 2018
(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 message by the CREST Applications Host) from which
Link Asset Services 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.
TISSUE REGENIX GROUP PLC
ANNUAL REPORT AND ACCOUNTS
FOR THE 12 MONTHS UP TO 31 DECEMBER 2017
67
Notice of Annual General Meeting CONTINUED
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 22 and
22 of the enclosed annual report and accounts.
68
TICKER AIM: TRX
www.tissueregenix.com
FINANCIALS
Directors and Officers
DIRECTORS
John Samuel
Steven Couldwell
Jonathan Glenn
Alan Miller
Randeep Singh Grewal
Shervanthi Homer-Vanniasinkam
(Chairman)
(Chief Executive Officer)
(Non-Executive Director)
(Non-Executive Director)
(Non-Executive Director)
(Non-Executive Director)
COMPANY SECRETARY
Paul Below
COMPANY WEBSITE
www.tissueregenix.com
COMPANY NUMBER
05969271 (England & Wales)
REGISTERED OFFICE
Unit 1 & 2
Astley Way
Astley Lane Industrial Estate
Leeds
West Yorkshire
LS26 8XT
REGISTRAR
Link Asset Services
The Registry
34 Beckenham Road
Beckenham
Kent
BR3 4TU
AUDITOR
KPMG LLP
1 Sovereign Square
Sovereign Street
Leeds
LS1 4DA
LEGAL ADVISER
DLA Piper UK LLP
Princes Exchange
Princes Square
Leeds
LS1 4BY
NOMINATED ADVISER AND BROKER
Jefferies International Ltd
Vintners Place
68 Upper Thames Street
London
EC4V 3BJ
TISSUE REGENIX GROUP PLC
ANNUAL REPORT AND ACCOUNTS
FOR THE YEAR ENDED 31 DECEMBER 2017
IBC
T
I
S
S
U
E
R
E
G
E
N
I
X
G
R
O
U
P
P
L
C
A
N
N
U
A
L
R
E
P
O
R
T
A
N
D
A
C
C
O
U
N
T
S
F
O
R
T
H
E
Y
E
A
R
E
N
D
E
D
3
1
D
E
C
E
M
B
E
R
2
0
1
7
TISSUE REGENIX GROUP PLC
UNIT 1 AND 2
ASTLEY WAY
ASTLEY LANE INDUSTRIAL ESTATE
SWILLINGTON
LEEDS
LS26 8XT
www.tissueregenix.com