Annual Report and Financials
for year ended 31 December 2022
Contents
Business Overview
Strategic Report
Chair & Chief Executive Officer’s Statement
Financial Review
Market Overview
Section 172 Statement
Governance
Management Team
Board of Directors
Corporate Governance Statement
Directors’ Remuneration Report
Directors’ Report
Directors’ Responsibilities Statement
Financial Statements
Independent Auditor’s Report
Consolidated Statement of Income
Consolidated Statement of Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Consolidated Financial Statements
Company Statement of Financial Position
Company Statement of Changes in Equity
Notes to The Company Financial Statements
Other
Notice of Annual General Meeting
Company and Adviser Information
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Annual Report and Accounts 2022 1
Business Overview
Tissue Regenix Group plc (AIM: TRX) is an international, pioneering medical technology company focussed on
commercialising our two platform technologies, dCELL®, addressing soft tissue needs, and BioRinse®, providing
sterile bone and soft tissue allografts.
We are currently helping to transform the treatment of patients in key surgical applications: Orthopaedics (sports
medicine/spine), Dental, General, Foot & Ankle, Plastic Surgery, Urology/Gynaecology, and Ophthalmology.
More details on our operating segments and operations are contained below:
dCELL®
Our patented decellularisation (‘dCELL’) technology platform removes DNA and other cellular material from animal
and human soft tissue leaving an acellular tissue scaffold which is not rejected by the patient’s body and can
then be used to repair diseased or damaged body parts. Current applications address many critical clinical needs,
such as foot and ankle surgery, sports medicine, urological-gynaecological and wound care. This business
segment operates primarily under the TRX BioSurgery brand.
BioRinse®
Our proprietary BioRinse technology platform is primarily utilised to provide sterile tissue prepared in a manner
to minimise the negative effects of processing. One application of the technology provides a natural bone filler
solution, tested for osteoinductivity which can stimulate and regenerate native bone growth. This product has
the potential to provide superior clinical outcomes as it contains 100% allograft bone, tested to demonstrate the
presence of the key natural bone growth factors, and available in various physical forms. Current applications
address many critical clinical needs, such as spine surgery, sports medicine, dental, ophthalmology and wound
care. This business segment operates primarily under the CellRight Technologies brand.
GBM-V
Our controlled joint venture company, GBM-V, is a regional tissue bank based in Rostock Germany. It currently
produces tissue preparations for ophthalmology, primarily cornea, using conventional, classical methods.
Operations
The Group’s main facility is in San Antonio, Texas, and is used for processing dCELL and BioRinse products. As
part of the Phase 1 expansion, completed in 2021, we relocated facilities designated for distribution and frozen
tissue storage as well as adding two clean rooms at the existing San Antonio facility, bringing the total number of
clean rooms to seven. We also have facilities in Leeds, United Kingdom (‘UK’), for processing dCELL porcine tissue
including OrthoPure® XT, as well as our controlled joint venture GBM-V in Rostock Germany for human tissue in
the EU. The Group had an average of 79 employees and 6 Directors in 2022.
2 Tissue Regenix Group plc
Chair & Chief Executive Officer’s Statement
“During what has been a year of immense progress with some notable milestones achieved, we have continued
to demonstrate and realise operational and commercial growth. This has been the result of our continued focus
on our 4S strategy - Supply, Sales Revenue, Sustainability and Scale. We have experienced over 20% revenue
growth across the Group, resulting in a positive adjusted EBITDA for the fourth quarter of 2022. Execution of this
strategy will continue to provide us with the opportunity to build shareholder value as we broaden our opportunities
in regenerative medicine, addressing many critical unmet clinical needs around the globe.”
Jonathan Glenn, Chair
2022 performance
2022 has been a solid year of growth, marked by achieving several new milestones for the Group. As we had
forecast, our top-line revenues exceeded the prior year and continued a positive growth trajectory. Our three main
business units all demonstrated growth building on the strong and sustainable market position we have built for
our company. As a result, the Group has demonstrated sales growth greater than its peers over the past three
years and succeeded in meeting market expectations. This is despite the significant headwinds faced by
commercial healthcare organisations in 2022. We are pleased that the Group continued to execute on its plans
to deliver further operational and commercial growth. We have continued to expand our distribution network with
new products and increased the number of strategic partners and distributors we work with to broaden the
adoption of our innovative products. All of this could not have happened without the talented and dedicated
employees of the Group, which we would like to thank for their hard work.
Strategy
Our focus remains on the 4S strategy which continues to be the foundation for how we operate, execute and drive
our growth:
l Supply – highlighted by the fundamental ability to source donor tissue and having the capacity to produce
various graft products
l Sales Revenue – to distribute the finished grafts to the clinicians and institutions that need these products
to treat patients
l Sustainability – to manage sales revenue along with expenses to be a profitable entity that does not need
additional external capital to operate
l Scale – to utilise the first three S's to continue to invest in and grow the business, license or acquire new
products, technologies and companies
We believe any significant issues with tissue supply are now behind us and have stabilised, given that capacity
has been increased to service our needs through to 2025. Our sales growth continues across all divisions,
highlighted by achieving an important milestone for the Group of an adjusted EBITDA profitable fourth quarter of
2022. Sustainability remains a key focus and by delivering this we will create new opportunities for the Group
with respect to scale, internally and externally.
BioRinse
Through a primary focus on the United States (‘US’) orthopaedics and dental markets, our BioRinse portfolio
reported a strong performance in 2022 with sales of USD16,049k (2021:USD12,711k). The 26% growth was led by
confidence in our ConCelltrate® demineralised bone matrix, and AmnioWorks™ birth tissue product families. Our
strategic partners continue to have confidence in the superior performance of our products and our ability to deliver
products in the required quantities and timeframes due to our elevated processing capacity. Since the completion
of the Phase 1 expansion, we have been able to supply products and adjust to unanticipated customer needs in
half the amount of time. Achieving these service levels with our partners and distributors across all the surgical
specialties we serve (orthopaedics, sports medicine, spine, dental, trauma, others), has earned us a solid and much
improved reputation in the industry. Our growth rate is above the market rate for the period (see Market Overview
for more details on underlying market growth rates), with our top five product families demonstrating a greater
Annual Report and Accounts 2022 3
Chair & Chief Executive Officer’s Statement
continued
than 18% year-on-year revenue growth. We believe we are taking market share, with the opportunity to deliver
further significant and sustainable growth in the years ahead.
Our additional capacity provides for further opportunities both in the US and the rest of the world. In the period,
we began our discussions and efforts to distribute allograft tissue outside the US, identifying target markets and
distribution partners. We also engaged a third-party logistics partner and began the required regulatory approvals
to expand into Europe. We expect to initiate commercial distribution in select markets in 2023 and are excited
about the opportunities that we can see.
dCELL
In 2022, the dCELL commercial business was restructured to bring our commercial leadership closer to our
customers, distributors and clinicians. One objective was to increase our distribution footprint in areas where we
had established business by adding a further 32 distributors. We exceeded that goal by adding 41 distributors by
the end of the calendar year, and as a result sales revenue for this division was USD5,301k (2021:USD4,246k) an
increase of 25%. The demand for dCELL products with our urological/gynecological partner increased during
2022 driven by continued market penetration of Dermapure, non-oriented DermaPure and increased utilisation
of the pre-shaped VNEW product. We launched VNEW™ Fascia Lata in late 2022 and anticipate this product will
develop significant traction in 2023.
During the period, the market for elective surgeries in the EU rebounded, so our efforts to set up distribution of
OrthoPure XT started to gain momentum. OrthoPure XT is the only non-human biologic tissue graft available to
the market for certain anterior cruciate ligament reconstruction procedures. This product was introduced into
Italy and Germany in 2022 and we expect more significant revenue contributions in 2023.
Advancing the clinical science of a new and novel product such as OrthoPure XT provides benefits to growth in
the product’s life cycle. In April 2022, the four-year clinical experience with OrthoPure XT was presented at the
20th European Society of Sports Traumatology, Knee Surgery & Arthroscopy Congress in Paris. The continued
positive long term safety and performance of OrthoPure XT has important implications in this high demand
application. A manuscript on the five-year clinical experience is in preparation and planned for submission to a
major European publication.
GBM-V
The GBM-V joint venture operates in a Good Manufacturing Practices facility which has been producing
commercial corneal products since 2016. In 2022, the combination of increased supply and yield improvements
resulted in the achievement of a record year of distributed corneal grafts, with revenues up 12% (up 24% at
constant currency) to USD3,126k (2021: USD2,789k).
New strategic partners and distributors
We continued to meet operational milestones, support the growth of our commercial partners and secure
additional strategic partnerships or distributorships in 2022.
For BioRinse, our top customers change annually due to market dynamics but we continued to bring on additional
strategic partners and distributors, signing 10 agreements in 2022, for specialties such as spine and dental. Across
the BioRinse portfolio we experienced a 5% increase in the number of orders we processed.
For dCELL, we increased the number of distributors, substantially ahead of our internal targets. Overall revenue
was up 25% versus prior year and neared the levels seen pre-pandemic. Orders for dCELL products increased by
20% versus the prior year which translated into 29% more units shipped. The addition of new distributors also
enabled us to penetrate existing accounts more deeply, with revenue up 80% in some existing hospital systems.
In 2022, we introduced VNEW Fascia Lata produced for our Urological/gynaecological partner ARMS Medical.
The fascia lata tissue is underutilised so this product enabled us to use tissue which would otherwise be discarded
and meets with our mission of maximising the gift of human tissue donation whilst also helping us to improve
our gross margin. This type of tissue is used as a sling in stress urinary incontinence procedures, which affects
4 Tissue Regenix Group plc
Chair & Chief Executive Officer’s Statement
continued
about 10% of the female population. We currently await the introduction of two other new products through our
strategic partners.
The pandemic impacted the launch of OrthoPure XT into the UK and selected European markets, however the
market for elective surgeries in the EU has rebounded since, and our efforts to setup distribution of the product
has started to gain momentum. In March 2022, we signed an agreement with Geistlich Biomaterials Italia, a
subsidiary company of Geistlich Pharma AG, which included a commitment to advance the clinical science for
OrthoPure XT. Sales and clinical use of OrthoPure XT have begun in Italy and initial feedback has been positive. In
November 2022, we signed an agreement with 2Med GmbH to be our exclusive distributor in Germany and we
filled an initial stocking order. To aid us in bringing on distribution partners as part of our European growth strategy,
we have engaged a seasoned sports medicine commercial consultant to identify these partners for OrthoPure XT.
Post year end, we signed an agreement with Kingsung Medical Group (‘Kingsung’) for the exclusive distribution
of OrthoPure XT into China and Hong Kong. As part of the agreement, Kingsung will share the cost to obtain
regulatory approval in China. It is estimated that the current market for ligament reconstruction procedures in
China and Hong Kong is approximately 200k - 250k procedures and growing. This opportunity compares
favourably to the size of the United States market, with ligament reconstruction procedures there estimated to
be in the range of 250k-400k.
Further product line extensions or product improvements are anticipated during 2023 which will continue to drive
our organic growth, efficiently utilising our facility and tissues and supporting the commercial efforts of our
organisation and strategic partners.
Operations
2022 was a successful year for the Group following the completion of the Phase 1 capacity expansion programme
in San Antonio in 2021, which provided additional space for donor storage, processing and production, and
distribution and laid the foundation for future growth.
To meet the need of our commercial partners and our focus on supply, in 2022 we sourced 124% more donors
overall. Though we processed fewer Musculoskeletal donors in 2022, our capacity shifted to the fluctuating
demands for Dermis and Amnion where processing increased by 135% and 130%, respectively.
The additional capacity for storage has alleviated our concerns for tissue supply for use in producing products.
In 2022 we implemented a programme to help us manage the inventory of released donor tissue by making some
of it available to other processing companies, subsequently establishing a number of ongoing relationships with
other tissue processors. This programme aligns with our responsibility to honour the gift of tissue donation
through utilisation in a timely manner for products that can help patients.
Following the addition of two sterile packaging rooms at our San Antonio facility, we have realised some
unanticipated gains to our overall capacity for processing and production. This additional capacity is estimated
to add c.USD10 million of revenue generation potential. This has effectively delayed our need for the 10 additional
clean rooms in the Phase 2 expansion from 2024 until 2025. The expansion has also provided more flexibility in
terms of how we can schedule processing and production. As a result, we have been able to respond to orders or
unanticipated changes in almost half the amount of time required prior to the Phase 1 expansion.
All of the Group’s tissue operations in the US are regulated by the Food and Drug Administration (‘FDA’) and need
to comply with American Association of Tissue Banks (‘AATB’) certification requirements. Following reinspection
by the AATB, we received recertification in December 2022 till March 2025.
Our UK Operations in Garforth received ISO 13485 recertification in January 2022 and also completed a
surveillance audit by our notified body. As a result of a change in medical device regulation in the European Union
from the Medical Device Directive to the Medical Device Regulation (‘MDR’) our UK team submitted our MDR
update in mid-2022 and have been informed that review will not begin till mid 2023 due to the backlog created by
the MDR requirement. The team has processed and shipped the OrthoPure XT device to meet the commercial
demands of our European partners.
Annual Report and Accounts 2022 5
Chair & Chief Executive Officer’s Statement
continued
The impact of the pandemic
The prolonged effects of the pandemic are evident and we still see issues with staff shortages at healthcare
institutions impacting elective procedures and we are still seeing component and material supply chain issues
affecting our operations or those of our material or equipment providers due to global supply issues. These supply
chain issues have indirect effects as they have also lengthened the timelines of our third party vendors and services.
Wage inflation and the tight labour market have made it competitive for all to retain or recruit talented personnel.
Our resilience and resourcefulness will continue to minimise the impact of any lasting pandemic related issues.
Organisational changes
In January 2022 Kirsten Lund was appointed into the Europe, Middle East and Africa (‘EMEA’) Business Director
role and remains as our Corporate Secretary. Capitalising on her experiences within the organisation, Kirsten will
coordinate and drive our efforts to establish commercial distribution focused in the EMEA region.
We will continue to invest in resources which will grow our organisation across all divisions. Additions to our
commercial team in BioRinse and dCELL will bring further opportunities to our organisations and spread our
footprint in the US and the rest of the world.
Outlook
We will continue to build on our 4S Strategy to provide a solid foundation for the future, with sales revenue and
sustainability becoming the priorities in 2023. The Group is well prepared for additional market fluctuations as
markets continue to normalise post-pandemic.
The BioRinse products will remain the dominant revenue contributor in 2023 whilst growth will come from existing
and new partners as well as new products. We anticipate growth from our dCELL as we continue to invest and
expand into markets which historically have been underrepresented, while our GBM-V joint venture consistently
identifies opportunities to increase its tissue supply or other opportunities to maintain growth.
Our geographic outreach with our human tissue dCELL and BioRinse portfolios will expand as we sign agreements
with additional distributors. Alongside this, OrthoPure XT will be introduced into additional EU and other markets
in 2023.
Thus in 2023, we aim to pursue the commercialisation of those products which utilise our core technology
platforms, provide product line extensions that are fast to market, and address a specific clinical or commercial
need. Whilst we will continue to assess when we need to invest in further capacity expansion, we will develop
further efficiencies and be creative in our business practices, whilst looking at all opportunities to scale the
business for additional longer term growth.
A combination of the team that we have in place; the products we currently have and the pipeline of new products
we are developing; the commercial relationships we have and the distribution base that we have established all
give the Board optimism about the future, both short and long term, for the Company. We believe that we are
extremely well positioned to take advantage of the opportunities in front of us and to create a profitable,
sustainable, generative company for shareholders.
We are all excited by the significant opportunities.
Jonathan Glenn
Chair
Daniel Lee
Chief Executive Officer
20 March 2023
6 Tissue Regenix Group plc
Financial Review
Revenue
During the year ended 31 December 2022, revenue increased by 24% to USD24,476k (2021: USD19,746k).
The Group experienced growth across all three key business segments for the year as more fully described below:
l The BioRinse segment increased top line sales by 26% to USD16,049k (2021: USD12,711k) driven by growth
across the allograft segments led by the ConCelltrate and AmnioWorks product families.
l Revenue from the dCELL division increased 25% to USD5,301k (2021: USD4,246k) as the commercial
reorganisation implemented in 2022 gained traction.
l The Group’s joint venture, GBM-V, based in Rostock, Germany, increased sales by 12% (up by 24% at constant
currency) to USD3,126k (2021: USD2,789k) as a result of increased tissue supply.
Cost of sales and gross profit
Gross profit for the year was USD11,258k (2021: USD8,476k). Gross margin percentage increased to 46% (2021:
43%). In early 2022, a price increase was put in place in the BioRinse division to address the cost pressures
associated with the inflationary environment. The benefits of this increase were offset slightly due to a margin
reduction in the dCELL segment caused by a one-off provision (c. USD447k) related to a supply contract
termination.
Included in costs of sales is cost of product USD10,053k (2021: USD10,348k) and third-party commissions
USD1,205k (2021: USD922k).
Administrative expenses
During 2022, administrative expenses before exceptional items increased by USD769k, or 6%, to USD13,268k
(2021: USD12,499k) driven primarily by additional staffing costs.
Exceptional items
There were no exceptional items recorded during the year ended 31 December 2022 (2021: USD355k).
Finance income/charges
Finance income of USD8k (2021: USD3k) represented interest earned on cash deposits. Finance charges for the
year were reported at USD826k (2021: USD767k) and related primarily to interest charges and associated costs
in respect of the MidCap Financial Trust (‘MidCap’) loan arrangement.
Loss for the year
The loss for the year was USD2,596k (2021 loss: USD4,985k) resulting in a basic loss per share of 0.04 cents
(2021 loss per share: 0.07 cents). The reduction in the loss for the year was driven by the increases in sales
revenue and gross margin percentage.
Taxation
The Group continues to invest in developing its product offering, and as such is eligible to submit enhanced
research and development tax claims, enabling it to exchange tax losses for a cash refund. In the year to December
2022, a refund of USD401k was receivable (2021: USD534k). The year-on-year reduction was a result of the
business continuing to move its resources away from research and development to more commercial activities.
Corporation tax payable in the US amounted to USD nil (2021: USD nil). A corporation tax credit of USD232k (2021:
USD157k) was recognised in the period. Gross tax losses carried forward in the UK were USD58,900k (2021:
USD60,779k). The Group does not currently pay tax in the UK. A deferred tax asset has not been recognised as
the timing and recoverability of the tax losses remain uncertain.
Annual Report and Accounts 2022 7
Financial Review
continued
Statement of Financial Position
At December 2022, the Group had net assets of USD30,401k (2021: USD33,392k) of which cash in hand totalled
USD5,949k (2021: USD7,709k).
Inventory levels increased 12% against the 24% sales revenue increase at USD10,882k (2021: USD9,719k) as the
BioRinse and dCELL segments managed stock levels closely to increase inventory turnover while also keeping
adequate stock levels to meet customer demand.
Intangible assets decreased slightly to USD15,061k (2021: USD15,064k) in the year. A further USD709k of
development costs were capitalised in the year. The balance of movements in this account relate to amortisation.
The Directors carried out the annual impairment review, as required by IAS 36, to determine whether there was
any requirement for an impairment provision in respect of its non-current assets at 31 December 2022.
The results of the test indicated that the recoverable amount of the Group’s non-current assets was at least equal
to the carrying amount of those assets and, therefore, no provision for impairment was required at 31 December
2022 (2021: USD nil). See notes 4 and 14.
Working capital decreased slightly in the year to USD9,365k (2021: USD9,992k), driven by an increase in inventory
from continued growth in manufacturing activities and an increase in trade receivables due to sales growth, offset
by an increase in trade and other payables and an increase in the current portion of loans and borrowings. (See
subsequent development paragraph below for more information on the Group’s credit facilities.) The Statement
of Financial Position included corporation tax receivable of USD401k (2021: USD534k) in respect of UK research
and development tax credits.
Borrowings and lease liability
Borrowings include the USD6,258k debt facility through MidCap and the USD3,350k lease liability related to the
Group’s leasehold in San Antonio, TX (2021: USD4,465k and USD3,482k respectively). The MidCap debt facility
includes USD2,000k in respect of the term loan and USD4,387k in respect of the revolving credit facility, net of
USD129k of capitalised debt issue costs. More information on these obligations is provided on page 60.
Dividend
No dividend has been proposed for the year to 31 December 2022 (2021: Nil).
Accounting policies
The Group’s consolidated financial information has been prepared in accordance with UK adopted International
Accounting Standards (‘UK adopted IAS’). The Group’s significant accounting policies, which have been applied
consistently throughout the year, are set out on page 42.
Going concern
The Group financial statements have been prepared on a going concern basis based on cash flow projections
approved by the Board for the Group for the period to 31 December 2024 (the ‘Cash Flow Projections’). Funding
requirements are reviewed on a regular basis by the Group’s Chief Executive Officer and Chief Financial Officer
and are reported to the Board at each Board meeting, as well as on an ad hoc basis, if requested. The Cash Flow
Projections show that the Group will continue to consume cash over the forecast period. Until sufficient cash is
generated from its operations, the Group remains reliant on cash reserves of USD5.9 million at 31 December 2022
and the ongoing support of MidCap (borrowings of USD6.3 million at 31 December 2022) to meet its working
capital requirements, capital investment programme and other financial commitments. As of December 31, 2022,
repayment on the MidCap borrowings is scheduled to begin in July 2023 (See subsequent development paragraph
below for more information on the MidCap borrowings).
8 Tissue Regenix Group plc
Financial Review
continued
In compiling the Cash Flow Projections, the Board has considered a downside scenario regarding the effect of
reduced and delayed revenues due to slower market uptake of the Group’s product offering. The Cash Flow
Projections prepared by the Board, including the downside scenario, indicate that the Group will still have cash
reserves at the end of the forecast period. The Group’s Cash Flow Projections assume that the MidCap revolving
credit facility is available throughout the forecast period and the term loan repayment begins in 2024 (see
subsequent development paragraph below for more information on the MidCap borrowings). The availability of
these facilities is dependent upon compliance with a rolling twelve-month revenue covenant which is measured
on a monthly basis. The Cash Flow Projections, including the downside scenario, indicate compliance with this
covenant throughout the forecast period. In summary, the Directors have considered their obligations in relation
to the assessment of the going concern basis for preparation of the financial statements of the Group and have
reviewed the Cash Flow Projections, including the downside scenario. On the basis of their assessment, they have
concluded that the going concern basis remains appropriate for use in these financial statements.
Subsequent developments
In January 2023, the Group elected to increase its current revolving credit facility from USD5 million to
USD10 million and extend the maturity until 2028. Repayment of the term loan will be made in equal instalments
commencing in 2024. Although this financing is not dictated by the current business plan, which is fully funded
by the Group’s year end cash position, the additional liquidity is a prudent measure.
The Board believes that a consolidation of the Company’s Ordinary Share Capital will result in a more appropriate
number of shares in issue for the Company. Accordingly, the Board has proposed a capital reorganisation in early
2023, which will result in shareholders holding one new Ordinary Share for every 100 existing Ordinary Shares
(‘the Consolidation’).
Principal risks and uncertainties
The principal risks and uncertainties facing the Group are set out on page 10.
Cautionary statement
The strategic report, containing the strategic and financial reports of the Group contains forward-looking
statements that are subject to risk factors associated with, amongst other things, economic and business
circumstances occurring from time to time within the markets in which the Group operates. The expectations
expressed within these statements are believed to be reasonable but could be affected by a wide variety of
variables beyond the Group’s control. These variables could cause the results to differ materially from current
expectations. The forward-looking statements reflect the knowledge and information available at the time of
preparation.
David Cocke
Chief Financial Officer
20 March 2023
Annual Report and Accounts 2022 9
Market Overview
The Group addresses two main segments of the healthcare market, both of which are billion-dollar opportunities
and forecast to grow rapidly over the next five years: the Bone Graft Substitute market and the Soft Tissue market.
Bone Graft Substitutes market
The BioRinse division primarily competes in the global Bone Graft Substitutes market.
According to Fortune Business Insights, the global Bone Graft Substitutes market, comprising allograft,
Demineralised Bone Matrix (‘DBM’), synthetic (e.g., polymer, ceramic) and xenograft, is projected to grow from
c. USD3.8 billion in 2022 (+13% compared with 2021, which benefited from higher elective surgery rates
post-pandemic) to c. USD5.7 billion by 2029, at a compound annual growth rate (‘CAGR’) of 6.1%. The US market
accounted for c.45% of this (USD1.53 billion) and is forecast to grow to USD2.7 billion in 2029 (CAGR of 7.5%).
The market is being driven by:
l Rising prevalence of disorders in which a bone graft is necessary, including spinal fusion, complex fractures,
trauma surgeries and dental implants, with spinal fusion expected to drive the market.
l Rising incidence of bone diseases such as bone infections and bone tumours.
The Group currently addresses two segments of this market, namely allograft and DBM products, with the latter
estimated to have been worth USD0.8 billion in 2021 and growing at c.4.3%, with allograft accounting for 11.1%
of the market in 2021 (i.e. USD0.39 billion) and anticipated to grow at a higher rate.
Soft Tissue market
The dCELL division primarily competes in the Soft Tissue market with focus areas being wound management,
sports related injuries (Achilles tendon repair and rotator cuff repair) and uro-gynaecology surgery through its
partnership with ARMS Medical.
According to Grand View Research, the US wound care market in 2021 was c. USD11.3 billion in a global advanced
wound care market worth c. USD20.6 billion, comprising surgical wound care (USD9.1 billion), rotator cuff and
Achilles tendon repair (USD1 billion - 250,000 and 40,000 annual procedures, respectively) and outpatient use of
skin substitutes for advanced wound management (c. USD2 billion). The US market is forecast to grow to
c. USD15.5 billion by 2027 (5% CAGR over the period) with the outpatient wound care segment forecast to grow
at 10% annually to c. USD2.1 billion.
Principal risk and uncertainties
The Directors continually identify, monitor, and manage the risks and uncertainties of the Group. The Group
maintains a comprehensive risk register that is regularly reviewed by the Board as part of these risk management
responsibilities. Risk is inherent in all businesses and the Group acts to manage these risks. Set out below are
certain risk factors which could have an impact on the Group’s long-term performance and mitigating factors
adopted to alleviate these risks. This list does not purport to be an exhaustive summary of the risks affecting the
Group.
Commercial
Competition risk
Should there be a competitive product that outperforms one of the Group products we could lose customers and
distribution opportunities. Should a competitor bring a product to market before us they could potentially have
an advantage in gaining market share. We continually monitor the commercial and competitive landscape and
look to stay ahead of the trend with innovative product development and line extensions. The Group works with
partners to identify potential market opportunities. The Group also collects post-marketing clinical data to ensure
that the product offering remains differentiated.
10 Tissue Regenix Group plc
Market Overview
continued
Customer concentration
The Group has a number of key customers, however, should the Group be overdependent on a single customer
and not maintain a diversified customer base, it could become exposed if that customer reduced their ordering
pattern or move their business elsewhere. In this case, the Group could be subject to material sales revenue losses
and also experience an excess of inventory that had been processed in line with expectations. The Group
continues to augment its product portfolio with line extensions and new product launches providing diversified
clinical applications. During 2022, the Group announced three new products for the dCELL and BioRinse segment.
The Group can reduce this risk with distribution of its products into multiple disciplines and in some cases with
multiple customers in the same discipline and with a hybrid network of strategic partners, distributors as well as
direct sales.
Operational
Human resources
The Group has a high level of reliance on the skills and knowledge of its management and employees, many
of whom have considerable sector experience or other specialist expertise, making them attractive to
competitors and not always easy to replace. As the business continues to scale and to expand its market
presence, our requirements for high-calibre people continue to increase. The loss of key staff could potentially
weaken the Group’s operational/management capabilities, potentially impeding its ability to grow or maintain
efficient operations. To mitigate this risk, the Group maintains competitive incentive and reward structures
which are benchmarked against industry standards. The compensation levels are designed to be attractive
to existing employees and enable us to continue to attract high quality applicants for new roles. As a regulated
business, we have clearly defined roles and responsibilities, supported by documented systems and
procedures, to provide a level of continuity in the event an employee leaves the Group. Finally, suitable legal
agreements are in place with management and employees to include necessary confidentiality and
non-compete clauses.
Tissue supply
As our products are based around human and animal tissues, failure to source good quality, ethically handled
tissues could result in the inability to produce products in line with specifications and therefore incur lost sales
revenue, reputational damage, customer dissatisfaction and potential regulatory breaches. To address this risk,
we have an experienced donor services department in the US who has expanded the number of donor agencies
that we work with in the US. All suppliers are comprehensively qualified to meet the Group’s internal standards
and those imposed by third party moderators.
Manufacturing capacity
Our commercial strategy is built around the establishment of successful strategic and distribution partnerships,
which increase the demand on our production and manufacturing capabilities. If we are unable to expand in line
with this demand this could result in a loss of business through customer dissatisfaction and reputational
damage. To address this potential constraint, the Group completed a capacity expansion in 2021 which provides
processing capacity of c. USD40 million.
Finance and IT
Finance
We require investment into our working capital and infrastructure to bring our product portfolio to market and
service the increasing demand from our current and future customers. Without this, the Group will be unable to
deliver the anticipated future revenue growth. The equity fundraise in June 2020 provided both investment and
working capital, which is expected to fund the Group to profitability, however, the lingering effect of COVID-19 on
elective surgeries has, and may continue to, alter the timeline to profitability. The Group has elected to increase
its revolving credit facility from USD5 million to USD10 million, and extend the maturity to 2028, which can provide
non-dilutive financing. To the extent that additional funds are required, there are no assurances that these funds
could be raised, and if they could, if those terms would be non-dilutive to current shareholders. To address these
risks, the Board has oversight of all significant cash spends and a well-established control environment, which
includes internal forecasting, monthly reporting and approval limits on all purchase orders. To maintain the cash
Annual Report and Accounts 2022 11
Market Overview
continued
position, The Company reviews business priorities and demands to ensure that funds are invested in the most
appropriate manner to deliver a return on investment and grow the business.
Information technology
The Group is reliant upon information systems in all aspects of its operations. Any failure of systems could impact
the Group’s ability to process and distribute products, lead to a data security breach, loss of financial information
and have potential financial implications. The Group was subject to a cyber security incident in January 2020. No
ongoing material impact to the business was experienced, however, processing and production was temporarily
halted at the San Antonio facility while the restoration and testing of systems was completed. The Group has
since upgraded its IT service providers and implemented additional security procedures. These procedures are
continually reviewed and updated as required. The Group has an established disaster recovery plan and ensures
that secure backups are held off-site in case of a breach. Finally, a global cybersecurity insurance policy has been
put in place to help offset the financial impact of a future breach.
Clinical/Regulatory
Product liability risk
Should a product fail upon implantation or incur an adverse reaction due to the product properties, the Group
would be at risk of legal action, potential loss of sales revenue through product retraction from the market and
reputational damage. To address these risks, before commercialisation, a series of quality assurance, clinical and
safety checks are run dependent on the nature of the product and comprehensive training is provided. In addition,
the Group maintains quality management systems which are compliant with the local markets in which we
operate. Product liability insurance is in place in case of adverse events.
Licensure/Accreditation
As the Group operates in a highly regulated environment, the loss of a license to manufacture or sell products
within a territory would result in reputational and financial damage to the Company. The Group employs regulatory
experts and consultants for each territory in which manufacturing takes place, or where the Group looks to
navigate a regulatory clearance for a product. The Group maintains quality management systems and has a track
record of positive feedback following external audits and operates in established controlled environments to
minimise potential process variations.
Impact of regulatory changes
In line with licensure and accreditation, the Group operates in a highly regulated environment. Biologics is an
area of high growth and additional regulatory standards and requirements are subject to change in any market
in which we participate. Internally and with the help of regulatory experts, we seek to understand and review
our compliance with any pending regulatory changes. As an example, May 2021 marked the end of the
discretionary compliance and enforcement Policy for Certain Human Cells, Tissues, or Cellular or Tissue-based
Products (HCT/Ps) by the US FDA. This did not require any changes for our Group at this time.
Political and economic risk
Group performance could be adversely impacted by factors beyond our control such as the economic conditions
in key markets and political uncertainty. The macroeconomic climate and continued uncertainty surrounding the
impact of Brexit on the UK economy, the US political and economic landscape, and the continued disruptions
caused by the Ukraine conflict could negatively affect the Group’s ability to commercialise its products. An
economic downturn, fiscal or monetary policy changes, continued inflationary pressures, or unexpected
developments linked to worsening economic conditions may have a negative impact on sales revenue and profit.
The Group monitors macroeconomic developments to ensure that it responds swiftly as they materialise.
12 Tissue Regenix Group plc
Market Overview
continued
COVID-19
The global economy continues to face uncertainty due to the lingering effects of the COVID-19 pandemic, which
has, and may continue to have, a significant impact on global healthcare procedures, supply chains, capital
markets and commodity prices as well as effects at the Group level with respect to staffing shortages and
component and material supply chain shortages. During 2022, the Group remained flexible and proactive in
responding to and addressing its needs by expanding its supply chain while still growing the sales line.
Financial risk management
The Group has instigated certain risk management policies covering financial assets and liabilities which are set
out in note 26 to the financial statements.
Key performance indicators (‘KPIs’)
The Group’s KPIs include a range of financial and non-financial measures. The Board considers the main financial
KPIs for the Group to be sales revenue growth and cash resources (see the Chair and Chief Executive Officer’s
statement on pages 3 to 6). The Board also considers non-financial KPIs such as new distribution agreements
signed, measuring clinical data collection, new account wins, improving the product development portfolio, and
increasing manufacturing capacity and supply.
Annual Report and Accounts 2022 13
Section 172 Statement
The Directors acknowledge their duty under S.172 of the Companies Act 2006 and consider that they have, both
individually and together, acted in the way that, in good faith, would be most likely to promote the success of the
Company for the benefit of its members as a whole. In doing so, they have had regard (amongst other matters) to:
the likely consequences of any decision in the long term. The Group's long-term strategy is outlined on page 19
of this report. The principal risks and uncertainties are discussed on page 10 of this report. Throughout the year,
management and Directors look to meet with, and update, institutional and retail investors through a variety of
platforms, whether it be by face-to-face meeting, telephone conversation, the annual general meeting, retail investor
forum, website, social media, or news announcements. Key topics of engagement for investors throughout the year
were around: the increase capacity as a result of the completion of the Phase 1 expansion in the BioRinse segment,
planned new product introductions, the commercial reorganisation of the dCELL division, the response and
implications of the lingering effects of the COVID-19 pandemic, and full year and interim financial results and reports.
the interests of the Group’s employees. The long-term success of the Group is built around our highly skilled
and experienced workforce. Our technicians are highly specialised, and we have world class processing and
development expertise at all facilities. We look to create an environment where all employees can excel and value
both practical experience as well as academic qualifications. We believe in investing in our workforce to maintain
a low turnover rate and build an agile and adaptive workforce who can successfully navigate the ever-evolving
industry landscape to maintain our competitive positioning. We support employees with further education and
qualifications and provide a remuneration and benefits framework that supports a healthy work/life balance and
is competitive with industry standards. Key topics of engagement for employees throughout the year were around:
the response to the lingering effects of the COVID-19 pandemic and the reorganisation of the dCELL division.
the need to foster the Group's business relationships with suppliers, customers and others. Suppliers are
fundamental to the Group’s ability to source high-quality raw materials and ethically sourced and handled tissues.
We look to partner with suppliers who can augment our internal capabilities and build long-term relationships.
Key topics of engagement for suppliers throughout the year were around: the implications of the lingering effects
of the COVID-19 pandemic, availability of supplies, and any variances to payment practices. In addition,
relationships with donor sources were expanded to include tissue types not commercially distributed by the Group,
thereby maximising the gift of tissue donation. With respect to customers, they include prestigious key opinion
leaders whose expertise assists with driving the clinical discussion around the differentiating properties of our
product portfolio. This type of engagement and clinical advocacy is crucial as we work to grow our clinical data
portfolio, improve product and brand recognition and increase the number of patients who can benefit from our
portfolio. The needs of customers of the dCELL division were considered in its reorganisation strategy, as the
new approach puts commercial management closer and therefore more responsive to customer needs. Key topics
of engagement for customers and opinion leaders throughout the year were around: changing practices and
expectations regarding performance of our clinical solutions and new product development opportunities.
the impact of the Group's operations on the community and the environment. The Board is mindful of the potential
social and environmental impacts of the Group’s activities. The Board is committed to minimising the environmental
effect of the Group’s activities wherever possible and seeks rigorous compliance with relevant legislation. More
discussion on the Group’s environmental initiatives is contained in the Corporate Governance Statement on page 19.
The Group also looks to engage with the local communities and support relevant charities wherever possible.
the desirability of the Group maintaining a reputation for high standards of business conduct. Our intention is
to behave in a responsible manner, operating within the high standard of business conduct and good corporate
governance, as highlighted in the Corporate Governance Statement on page 19.
the need to act fairly as between members of the Group. The Group’s intention is to behave responsibly towards
all its shareholders and treat them fairly and equally, so that they too may benefit from the successful delivery of
the Group’s strategic objectives. The Group’s website https://www.tissueregenix.com. has a section dedicated to
investor matters that details, amongst other things, all financial reports, press releases and other regulatory filings.
The Strategic Report on pages 3 to 14 was approved by the Board on 20 March 2023.
On behalf of the Board
Daniel Lee
Chief Executive Officer
20 March 2023
14 Tissue Regenix Group plc
Governance
Management Team
We have a senior management team with extensive experience in the healthcare industry. They are challenged
and supported by an experienced and well-balanced Board of Non-Executive Directors (‘NEDs’), together with the
teams of employees that they lead.
Daniel Lee
Chief Executive Officer (‘CEO’)
Daniel Lee has over 30 years’ experience in the medical device and biologics industry, ranging from product
innovation to commercialisation to corporate management. Daniel was appointed CEO in November 2020 after
initially joining the Group as President of US Operations in January 2019. Prior to this, Danny was the CEO for
Scaffold Biologics and Aperion Biologics. His previous management roles include global marketing for Smith &
Nephew Endoscopy (post-acquisition of Osteobiologics in 1996) and marketing activities for Regeneration
Technologies (now RTI Surgical), a leading allograft tissue processor.
Danny spent the first 10 years of his career in R&D with the United States Surgical Corporation (now Medtronic).
Danny received his B.E.S. degree in Materials Science and Engineering from the Johns Hopkins University, and
his M.S. in Biomedical Engineering from the University of Alabama at Birmingham. He has 13 patents on implants
and instruments used in orthopaedic and general surgery.
Danny is also a Certified Tissue Bank Specialist from the AATB.
David Cocke
Chief Financial Officer ‘(CFO’)
David Cocke has over 30 years’ experience in the medical device industry holding senior finance and operations
positions. In 1997, David was a founding partner of NuPak Medical, Ltd., an ISO-certified contract manufacturer
of sterile disposable medical devices. NuPak Medical, Ltd. Was acquired by Katena Products, Inc. in 2017 and
David remained with the business post-acquisition until joining the Group in January 2021. David was also CFO
at Aperion Biologics from 2008-2017. Prior to this, David was Senior Director for Finance and Operations at Kinetic
Concepts from 1993-1996.
David began his career in the corporate finance sector, working at GE Capital in its Corporate Finance Group and
at Salomon Brothers Inc in its Investment Banking Group.
David received his B.B.A in Business Honours (magna cum laude) from the University of Texas at Austin and his
M.B.A from the University of Virginia’s Darden Graduate School of Business Administration. He has two patents
covering medical devices.
Gerald Sharpe
Vice President – Strategic Partnerships
Gerald Sharpe has over 12 years’ experience in the orthobiologics industry, working for two differentiated allograft
tissue processors. His focus is commercialisation and business development. He joined CellRight Technologies
as Regional Sales Manager in September 2014, before being appointed as Vice President – Strategic Partnerships
in January 2019. Gerald is proficient in the spine, sports medicine, foot and ankle, dental, and ocular markets of
the business.
Prior to joining CellRight, Gerald was Regional Sales Manager and Director of Client Services for TissueNet. His
previous sales roles include Vice President of Business Development for SolomonFX.
Gerald received his Bachelor of Science degree in Marketing from the University of Central Florida.
Annual Report and Accounts 2022 15
Governance
continued
Christine Rowley
Technical and Operations Director, UK
Christine Rowley has over 18 years’ experience in the medical device biologics industry, joining Tissue Regenix in
2010. She has worked in all areas of product development and commercialisation and has led the development
of the OrthoPure XT device from product feasibility through to market approval and launch. Christine’s experience
covers a wide range of activities, including new product development, process optimisation and design transfer,
design verification and validation, clinical trial design and execution, regulatory submissions, and quality control,
almost exclusively working with class III xenograft implants.
Christine has held leadership roles within the product development, regulatory, clinical and quality sectors, and
has achieved market clearance of xenograft medical devices in multiple countries worldwide. Christine has several
patents associated with the decellularisation and manipulation of collagenous tissues for potential health care
benefits. Christine has a Bachelor of Science degree in Biological Sciences from the University of Exeter (UK).
Tina Trimble
Vice President, Donor Services, US
Tina Trimble has over 30 years of tissue banking industry experience and joined CellRight Technologies as VP,
Donor Services in March 2019. Tina has worked with other tissue banks in leadership roles such as Community
Tissue Services, Regeneration Technologies, Tutogen Medical, University of Miami Tissue Bank, and most recently,
Bone Bank Allografts.
Tina is a Certified Tissue Bank Specialist, and currently serves on the AATB Exam Committee, American Board of
Accredited Tissue Banks, Birth Tissue Council and most recently on the AATB Board of Governors from 2018-2020
and Chair of the Processing and Distribution Council. Prior to that, Tina served on the AATB Accreditation
Committee, VC Processing and Distribution Council, Education and Program committees and is currently a
member of AORN and ASQ.
Lance Johnson
Vice President, Quality and Regulatory, US
Lance Johnson has over 30 years’ experience in FDA Requirements and Quality Systems. His experience includes
over 10 years at the executive level for primarily class III medical device implant companies. Prior to joining
CellRight Technologies as VP, QA/RA, Lance was the Vice President of Quality for EndoStim Inc, an active implant
device manufacturer located in Austin, TX. Lance also worked in the xenograft device industry as VP of Quality
for Aperion Biologics, and in the orthopaedic spine industry as Quality Manager for Zimmer Spine and Abbott
Spine.
In addition to his industry experience, he spent 16 years as an active investigator with the FDA. Lance specialised
in medical device compliance and worked in both the San Francisco and Dallas districts.
He spent 12 years as the resident in charge of the Austin, Texas field office and as contributor to the FDA
international cadre. Lance received his Bachelor of Science degree in Biotechnology from Oklahoma State
University.
16 Tissue Regenix Group plc
Governance
continued
Kirsten Lund
EMEA Business Director and Company Secretary
Kirsten Lund has over a decade of finance experience with the Company and was promoted to the position of
Group Finance Director in November 2019 after three years as Group Financial Controller. Kirsten has supported
the CFO, led the finance teams in both the UK and US, and advised the Board on all financial matters relating to
the Group. Starting January 2022 Kirsten has transitioned into the position of EMEA Director and works closely
with the management team to help drive forward the strategy of the business into new markets. Utilising the
knowledge acquired over the years in the healthcare sector, Kirsten provides invaluable experience and
understanding around the Company structure and routes to market.
Kirsten received her Bachelor of Science degree from the University of Derby and successfully completed the
ACCA qualification after joining Tissue Regenix in 2010, qualifying in 2015.
Patti Gary
Vice President, Clinical Affairs
Patti Gary has over 30 years of experience in the medical device and tissue industry. Her experience provides a
unique combination of clinical and sales roles with increasing leadership responsibility. She joined Tissue Regenix
as Senior Director of Clinical Affairs in July 2013, before being appointed to VP of Clinical Affairs in March 2015.
In Patti’s early years she was an RN in ICU before transitioning to industry. Her journey in industry began at
Hill-Rom as an Account Manager. Patti was the owner of Positive Outcomes, Inc. where she developed clinical
and financial tools (HealQuest, HealPROtocols and Healware) to drive standardised processes for wound
management. HealPROtocols was acquired by Acelity (3M). Patti joined Acelity as Post-Acute District Sales
Manager and was promoted to Post-Acute National Accounts Director. After leaving Acelity, Patti held various
positions at Systagenix (3M). She was the Professional Education Manager, Corporate Healthcare Director, and
Director of Clinical Services.
Patti is a Registered Nurse, and a Certified Wound Care Nurse. She graduated from Louisiana State University
Health Sciences Center School of Nursing.
Annual Report and Accounts 2022 17
Board of Directors
Jonathan Glenn
Chair
Jonathan was most recently CEO of Consort Medical from December 2007 until its acquisition for £505m by
Recipharm AB in early 2020. Jonathan originally joined Consort Medical as Group Finance Director from
September 2006 to December 2007, and prior to this, Jonathan was global Head of Finance at Celltech Group
plc, and later CFO of Akubio Ltd, a Cambridge-based developer of instrumentation for the life sciences industry.
Jonathan is a member of the Institute of Chartered Accountants in England and Wales. Jonathan joined the Group
in January 2016. He serves on the Audit Committee.
Daniel Lee
Chief Executive Officer
(see details in Management Team above)
David Cocke
Chief Financial Officer
(see details in Management Team above)
Shervanthi Homer-Vanniasinkam
Non-Executive Director
Professor Shervanthi Homer-Vanniasinkam BSc, MBBS, MD, FRCSEd, FRCS is an internationally renowned
clinician-scientist, who is currently a Consultant Vascular Surgeon at Leeds Teaching Hospitals, the Founding
Professor of Surgery at the University of Warwick, and Professor of Engineering & Surgery at University College
London. Shervanthi joined the Board in June 2016 and serves on the Remuneration Committee.
Shervanthi has 170 publications, attracted significant research grants and has an outstanding track record of
national (Universities of Leeds, London, Warwick) and international (Harvard, Singapore, India) collaborative
research. She is a Visiting Scholar at Harvard University, the Yeoh Ghim Seng Visiting Professor of Surgery at
National University of Singapore and the Brahm Prakash Visiting Professor at the Indian Institute of Science.
Trevor Phillips
Non-Executive Director
Trevor Phillips is the current Chairman of the Board at NEPeSMO and has extensive experience in the UK and US
in corporate development, M&A and operations in the pharmaceutical and life science industries, including
previously held positions as Executive Chairman of hVIVO (2017-2020), Chief Operating Officer for Vectura Group
plc (2011-2017) and former CEO and COO of Critical Therapeutics, Inc. (2002-2008). Trevor holds a BSc,
Microbiology from the University of Reading, a PhD, Microbial Biochemistry from Swansea University and an MBA
from Henley Business School. Trevor joined the Group in January 2021. He is Chair of the Remuneration
Committee and also serves on the Audit Committee.
Brian Phillips
Non-Executive Director
Brian Phillips is an entrepreneurial investment professional with over 25 years’ experience. Brian is the current
Principal of Ethos partners which he co-founded in 2018 to assist individuals in establishing a portfolio of assets
under private equity investments. Prior to this, Brian was Chief Investment Officer at Greenhill Capital Partners
Europe LLP where he was responsible for setting up their UK business (2006-2010) and Managing Director of
LGV Capital (2000-2006). Brian holds a B.Acc from Glasgow University and qualified as a Chartered Accountant
with KMPG. Brian joined the Group in January 2021. He is Chair of the Audit committee and also serves on the
Remuneration Committee.
18 Tissue Regenix Group plc
Corporate Governance Statement
The Board believes in the importance of good corporate governance and is aware of its responsibility for overall
corporate governance, and for supervising the general affairs and business of the Company and its subsidiaries.
The Group is listed on the Alternative Investment Market (‘AIM’) of the London Stock Exchange and is subject to
the continuing requirements of the AIM Rules. AIM-listed companies are required to apply a recognised corporate
governance code. The Group applies the Quoted Companies Alliance Corporate Governance Code (the ‘QCA
Code’). The Board considers that it has complied with the QCA Code throughout the year. This section provides
general information on the Group’s adoption of the QCA Code.
Our strategy and business model and approach to risk
Through our platform technologies, we commercialise regenerative medicine products, helping to transform the
treatment of patients in key surgical applications. We aim to implement a business model that ensures our product
portfolios have the market reach to deliver novel tissue engineering solutions to patients.
In 2022, we continued to employ our 4S strategy as the foundation of how we operate and drive our growth:
l Supply – highlighted by the fundamental ability to source donor tissue and having the capacity to produce
various graft products
l Sales Revenue – to distribute the finished grafts to the clinicians and institutions that need these products
to treat patients
l Sustainability – to manage sales revenue along with expenses to be a profitable entity that does not need
additional external capital to operate
l Scale – to utilise the first three S’s to continue to invest in and grow the business, license or acquire new
products, technologies and companies
Our focus on the 4S’s across all divisions and departments provides a 360-degree approach and strategic
direction for our future success. We believe this focus will allow the Group to achieve above-market growth rates.
The Board carefully considers the strengths, weaknesses, opportunities and risks facing the Group, and
endeavours to minimise the impact of weaknesses and risks by employing the necessary mitigating actions. We
process tissues at our facilities in the UK, Europe and North America. The Group has an experienced and dedicated
management and scientific team, and the prominent risks facing the Group are kept under review and updated
as necessary; the Board ensures to review a detailed risk matrix on a rolling basis as part of the formal Board
meetings. Details of risks identified are set out on pages 10 to 13 of this report.
The Group maintains a central finance team. The Group seeks to operate consistent accounting policies and
engages annual external audits from professional auditors of its financial results and reports, findings from which
are presented to the Board. The Board review monthly financial reports including key performance indicators
provided by the CFO in respect of the management of cash within the business and review against budgets and
forecasts. The Group also has a number of operational controls that all employees are expected to adhere to
including management structure, Board reserved matters, financial monitoring, internal policies, codes of conduct
and training, health and safety monitoring and IT controls. The regulatory and quality teams at each facility
maintain a comprehensive quality management system with each employee having a personal training record.
As noted above, the Group regularly audits its suppliers to ensure that the highest ethical standards are
maintained. In respect of its intellectual property rights, the Group engages a professional patent and trademark
attorney to monitor its intellectual property portfolio.
Board of Directors
The Board is responsible for leading and controlling the activities of the Group, with overall authority for the
management and conduct of the Group’s businesses, together with its strategy and development. Annual strategy
meetings are held wherein management and the Board interact to review performance and set strategic and
operational plans for the coming year. For more information on our Board of Directors, see page 18.
Annual Report and Accounts 2022 19
Corporate Governance Statement
continued
Composition of the Board
The Board is comprised of three independent Non-Executive Directors ('NEDs'), the Non-Executive Chair, and two
Executive Directors, the CEO and the CFO; reflecting a blend of different experiences and backgrounds. The
function of the Chair is to supervise and manage the Board and to ensure its effective control of the business.
The Board believes that the composition of the Board brings a desirable range of skills and experience in light of
the Group’s challenges and opportunities as a public company, while at the same time ensuring that no individual
(or a small group of individuals) can dominate the Board’s decision-making. There is a clear division of
responsibility between the Chair and CEO position, with the Chair advising and leading the Board, as well as making
himself available to meet with shareholders. The CEO is responsible for implementing the strategy of the Group
and managing day-to-day business activities of the Group. Training is made available to each (‘NED’) to ensure
that they are completely aware of their regulatory responsibilities and requirements. A formal Board appraisal is
conducted annually to ensure that the Board continues to function effectively.
The Board aims to meet formally at least 8 times a year, with provision being made to join via telephone or video
conference if a member of the Board is unable to attend in person. A monthly Board report is produced, and
meeting agendas and Board papers are circulated in advance of each meeting so that the Board can properly
consider the matters to be discussed. Outside of the scheduled meetings, the Board will meet to discuss ad hoc
business events where necessary, and the CEO keeps the Board fully informed of any business developments
that could positively or negatively impact the performance or value of the Company; any business decisions that
require formal Board approval, or any event that could impact the Board or individual member carrying out their
duties and regulatory responsibilities. The Company maintains minutes of formal and ad hoc Board meetings.
The composition of the Board did not change in 2022.
In 2022, there were 11 Board meetings. All Directors were present for all meetings, with the exception of one
meeting where a single Director was absent. In addition, there were 3 Audit Committee meetings, with no
absences, and 2 Remuneration Committee meetings, again with no absences.
The NEDs are appointed through formal non-executive appointment letters, which contain a three-month notice
period. The non-executive appointment letters contain an indicative time commitment of 20 days per annum;
however, these indicate that this is an estimate and that all Directors are expected to commit sufficient time to
fully discharge their responsibilities. The Company has not had any issues with regular non-attendance at
meetings. Executive Directors have formal service contracts, which require them to work full-time in the business
and have no other significant outside business commitments. These service agreements have a maximum of
six-months’ notice to terminate.
The Company follows the provisions in its Articles of Association in respect of the retirement and reappointment
of Directors at its Annual General Meeting each year.
The Board is satisfied that it has a suitable balance between independence and knowledge of the business to
allow it to discharge its duties and responsibilities effectively and that effective controls have been put in place.
The Board also operates two sub-committees, the Audit and Remuneration Committees, to ensure compliance
with market regulations.
The Audit Committee’s primary responsibilities are to monitor the integrity of the financial affairs and statements
of the Group, to ensure that the financial performance of the Group and any subsidiary is properly measured and
reported, and to review reports from the Group’s external auditor relating to the accounting and internal controls.
The Audit Committee also recommends to the Board the appointment and reappointment of the external auditor.
The Audit Committee considers the scope and results of the external audit and its cost effectiveness. It also
reviews the fees, independence, and objectivity of the external auditor by discussing with the auditor their annual
assessment regarding their independence, policies and procedures, and analysing the audit and non-audit work.
The Audit Committee also plays a key role in supporting the Board with the ongoing risk assessment and
management framework for the Group.
The Group’s external auditor has unrestricted access to the Audit Committee and attends the Audit Committee
meetings throughout the year. The Executive Directors attend the Audit Committee meeting by invitation only.
20 Tissue Regenix Group plc
Corporate Governance Statement
continued
The Audit Committee comprises of Brian Phillips, Trevor Phillips and Jonathan Glenn. The Audit Committee meets
at least twice per year and is chaired by Brian Phillips who is a Chartered Accountant and has relevant financial
experience.
No separate Audit committee report has been included as the Corporate Governance Statement adequately covers
the content we would include in the audit committee report.
The Remuneration Committee comprises of Trevor Phillips, Brian Phillips and Shervanthi Homer-Vanniasinkam.
The Remuneration Committee meets no fewer than twice per year and is chaired by Trevor Phillips who has many
years of relevant operational and commercial industry experience.
Risk management and internal control
The Board is responsible for maintaining a sound system of internal controls. These measures are designed to
minimise any potential risks identified and provide reasonable, but not absolute assurance against material
misstatement or loss. The Board confirms that it has established a sound system of internal controls. Some key
features of the internal control system are:
l well established financial reporting and control systems
l the Board actively identifies, evaluates and monitors the risks inherent in the business and ensure that
appropriate controls and procedures are in place to manage these risks
l there is a clearly designed organisation and reporting structure
l the Group has operational, accounting and employment policies in place
In addition, the Board regularly assess the internal control environment under which the business operates and
where appropriate implements additional measures to ensure that adequate controls are maintained.
Employees
The Group places value on the involvement of its employees and the Board is regularly briefed on the Group’s
activities. The Group closely monitors staff attrition rates which it seeks to maintain at low levels and aims to
structure staff compensation levels at competitive rates to attract and retain high calibre personnel.
Equal opportunities
The Group is committed to ensuring that equal opportunities are provided to all employees and potential
employees, and do not discriminate on the basis of age, gender, ethnicity, religion, disability, sexual orientation, or
marital status. All employees are expected to conduct themselves in an appropriate manner adhering to our
non-discrimination policy. In all aspects of our business the Group looks to act in ways that are compliant with
the applicable laws and regulations, providing our employees with a work environment that is professional, ethical
and fair.
Environment
As with all businesses the emphasis on environmental sustainability is important and subject to increasing
scrutiny and regulation. All employees are involved in the initiatives implemented to decrease the Group’s carbon
footprint, energy consumption and environmental sustainability efforts. During 2022, the Group implemented
environmental sustainability initiatives as noted below:
l Implemented a cardboard recycling program at the CellRight location in San Antonio, TX.
l Contracted with an external recycling company to remove surplus electronics for sustainable disposal.
Annual Report and Accounts 2022 21
Corporate Governance Statement
continued
Social, community, and human rights
The Board recognises that the Group has a duty to be a good corporate citizen and to respect the laws in the
markets in which it operates. It contributes as far as is practicable to the local communities in which it operates
and takes a responsible and positive approach to employment practices.
The Group, led by the CEO, maintains open and transparent channels of communication with all employees in
order to promote values and behaviours which consistently reflect the Group’s ethos, and to ensure that
employees are aware of company developments and successes. Operating in an industry based upon the
processing of human and animal derived tissues demands the highest ethical standards, and the Group aspires
to maintain these across all business functions and relations. The Company undertakes regular audit checks to
ensure that partners, suppliers, and employees comply with the ethical standards and operate to meet our
expectations.
The Group employs a vigorous code of conduct and ethics to ensure it operates with a level of social responsibility
across the business every day. Through the gift of tissue donation, the Group has the ability to positively impact
hundreds of patients’ lives, therefore, we must treat each gift with the utmost respect and provide the next of kin
with information around how many patients the donation has helped, if requested; something that can often help
in the grieving process.
Relations with shareholders
The Board believes that maintaining regular and transparent dialogue with shareholders is important to ensure
that there is a clear understanding of strategic objectives, financial and operational performance and governance
of the Group.
The Group actively engages with its shareholders throughout the year both through direct meetings, website and
social media communications and stock exchange announcements. Commissioned analyst research notes are
made available on the Company’s website as well as clinical case studies and published papers. Senior
management, typically the CEO and CFO, aim to meet with, or speak with, significant shareholders at least twice
in a year usually after the interim and preliminary results announcements, to provide an update on strategy and
progress of the Group as a whole, and to receive shareholder feedback. The Group also undertakes several publicly
available updates to all shareholders, through forums such as interviews, trading updates and PR announcements.
In 2022, the Group undertook two ‘Investor Meet Company’ retail investor presentations as part of the full year
and interim results investor roadshows, with 60 individuals attending the preliminary results presentation in March
2022 and 74 individuals attending the interim results presentation in September 2022.
In accordance with AIM Rule 26, there is an Investors section on the Group’s website, which is kept up to date.
Information is provided regarding our business, results and financial performance, investor news and copies of
our Annual Reports and Accounts.
The Group holds an Annual General Meeting (AGM) each year at which all shareholders are welcome to attend
and speak with management. At the AGM, separate resolutions will be proposed for each substantially different
issue. The outcome of the voting on AGM resolutions is disclosed by means of an announcement on the London
Stock Exchange.
22 Tissue Regenix Group plc
Directors’ Remuneration Report
Remuneration policy
The Group’s remuneration policy is designed 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 Group’s key management team is incentivised to
drive sustainable earnings growth and returns to shareholders, thereby creating a genuinely strong alignment of
interests between management and investors.
It is the Group’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 Executive Directors’ contracts provide for
compensation up to a maximum of basic salary for the notice period.
NEDs are employed on letters of appointment which may be terminated on no 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
Group.
Further details on risk in the remuneration policy are available below.
Remuneration Committee
The Remuneration Committee’s primary responsibilities are to review the performance of the Executive Directors
of the Group 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 or shares to
such persons under any share scheme adopted by the Group).
The 2022 Remuneration Committee comprises Trevor Phillips as Chair of the Committee, Brian Phillips and
Shervanthi Homer-Vanniasinkam. The Committee meets no fewer 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 taking into account several factors, including the current position and development of
the Group, individual contribution and market salaries for comparable organisations.
The Committee also approves the level of the pool for salary reviews for all staff.
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, against Corporate and individual goals set at the
beginning of the year, in accordance with the Group’s strategy along with financial results.
Long term incentive plan
In 2021 the Group replaced the prior deferred annual bonus (‘DAB’) plan with a new Long-Term Incentive Plan
'LTIP’) for Executive Directors and senior management.
The LTIP awards are made annually, with the initial awards made in 2021, to the Executive Directors and those
senior management members recommended to participate by the Executive Directors and approved by the Board.
Awards are based upon a predetermined percentage of an individual’s annual salary and will vest over a period
of three years.
Annual Report and Accounts 2022 23
Directors’ Remuneration Report
continued
The final vesting of the awards is determined by performance against vesting criteria, set by the Remuneration
Committee at the time of grant, and adjudged by the Remuneration Committee in the period prior to the nominated
vesting date.
The goals are set against key aspects of group performance, defined to be Total Shareholder Return (‘TSR’),
Revenue Growth, Profitability and individual performance against personal performance goals. Weighting is set
at 80% of the vesting directed at group performance over the period against the three corporate goals and 20%
against personal performance goals. As part of the LTIP rules the Executive Directors are required to use vested
LTIPs to build a shareholding in the Group to a level of 100% of base salary over a period of six years.
Remuneration policy for Non-Executive Directors
Remuneration for NEDs is set by the Chair and the Executive member of the Board. Non-Executives do not
participate in bonus schemes.
Directors’ remuneration
The remuneration of the main Board Directors of Tissue Regenix who served in the year to 31 December 2022
was:
Salary and
fees Bonus
USD'000 USD'000
Total December Total December
Benefits 2022 2021
USD'000 USD'000 USD'000
Jonathan Glenn 87 –
Shervanthi Homer- Vanniasinkam 37 –
Daniel Lee 290 276
David Cocke 225 107
Brian Phillips 43 –
Trevor Phillips 43 –
– 87 100
– 37 41
15 581 503
12 344 318
– 43 48
– 43 48
725 383
27 1,135 1,058
Within 2021 the total bonus payments were USD298k and benefits were USD27k.
No options were exercised by Directors in 2022 or 2021. No pension scheme is offered for Directors, and there
are no Directors accruing retirement benefits in respect of money purchase schemes and defined benefit
schemes.
Directors’ shareholdings
Directors’ interests in the shares of the Company, including family interests at 31 December 2022 were:
31 December 31 December 31 December 31 December
2022 2021 2021
2022
% Number %
Number
Jonathan Glenn 40,600,000
Shervanthi Homer-Vanniasinkam 1,628,222
Trevor Phillips 5,535,771
Brian Phillips 15,322,756
Daniel Lee 7,262,200
David Cocke 5,692,000
0.58 40,600,000 0.58
0.02 1,628,222 0.02
0.08 2,777,770 0.04
0.22 15,322,756 0.22
0.10 3,477,200 0.05
0.08 3,907,000 0.06
24 Tissue Regenix Group plc
Directors’ Remuneration Report
continued
Directors’ Interest in LTIPS
At 1 January Exercised Lapsed
2022 during year during year
Number Number Number
LTIP scheme options
Daniel Lee* 28,321,603 – –
David Cocke* 14,649,105 – –
Granted 31 December Exercise
during year 2022 price
Number Number Pence
27,560,776 55,882,379 0.01
21,383,361 36,032,466 0.01
* There were employment period and performance conditions in relation to the options granted on 28 April 2021
and 14 March 2022 which are subject to continued service over a period of three years and satisfaction of
customary performance conditions relating to growth in total shareholder return, annual revenue targets, annual
profitability targets and personal performance targets.
On behalf of the Board
Trevor Phillips
Chair of the Remuneration Committee
20 March 2023
Annual Report and Accounts 2022 25
Directors’ Report
The Directors present their report and consolidated financial statements for Tissue Regenix Group plc, and its
subsidiary undertakings for the year ended 31 December 2022.
Principal activity
The principal activity of the Group is the exploitation of innovative platform technologies in the field of bone graft
substitutes and soft tissue. The Company is principally a holding company incorporated and domiciled in the UK
and is listed on the London Stock Exchange’s Alternative Investment Market. The subsidiary undertakings of the
Group are listed in note C4 of the Company’s financial statements.
Business model
A description of the Group’s business model is included on page 2. Explanations of activities and how it seeks to
add value are included in the Chair and Chief Executive Officer’s statement on pages 3 to 6.
Business review and results
A review of the Group’s performance and future prospects is included in the Chair and Chief Executive Officer’s
statement on pages 3 to 6. A review of the Group’s financial performance is included within the Financial Review
on pages 7 to 9. The loss for the year attributable to owners of the parent company was (USD2,695k) (2021:
USD4,792k). The Directors do not recommend the payment of a dividend (2021: nil).
Subsequent Development
In January 2023, the Group extended the maturity and increased the size of its revolving credit facility. Further
details are included in the Financial Review on page 7.
Share capital and funding
Full details of the Group and the Company’s share capital movements during the year are given in note 22 to the
consolidated financial statements.
Directors and their interests
The following Directors held office in the year:
Jonathan Glenn
Shervanthi Homer-Vanniasinkam
Daniel Lee
Trevor Phillips
Brian Phillips
David Cocke
Directors’ interests in the shares of the Company, including family interests, are included in the Directors’
Remuneration Report on pages 23 to 25.
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.
26 Tissue Regenix Group plc
Directors’ Report
continued
Corporate governance
The corporate governance report is provided on page 19.
Substantial shareholders
At 31 December 2022, shareholders holding more than 3% of the share capital of Tissue Regenix Group plc were:
Name of shareholder
Harwood Capital (London)
Mr Richard Griffiths (UK)
Inthallo Ltd. (Scotland)
Lombard Odier
IP Group (London)
Number
of shares
% of
voting rights
1,051,000,000
775,369,000
704,500,000
654,299,634
653,042,837
14.94
11.02
10.00
9.30
9.28
Employment policies
The Group is committed to keeping employees as fully informed as possible regarding 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, 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.
Financial instruments
Further details of financial risk management objectives and policies are set out in note 26 of the consolidated
financial statements.
Auditor
RSM UK Audit LLP have indicated willingness to continue in office, in accordance with the recommendation of
the Audit Committee and section 489 of the Companies Act 2006. A resolution to reappoint RSM as the Company’s
Auditor will be proposed at the forthcoming Annual General Meeting.
Strategic report
The Group has chosen in accordance with Companies Act 206 s414C (11) to set out in the Group’s strategic
report information required by Large and Medium-sized Companies and Groups (Accounts and Reports)
Regulations 2008, Sch 7 to be contained in the Directors’ report in relation to research and development, and
future developments.
The Directors' Report was approved by the Board on 20 March 2023.
On behalf of the Board
Daniel Lee
Chief Executive Officer
Annual Report and Accounts 2022 27
Directors’ Responsibilities Statement In Respect Of The
Strategic Report, The Directors’ Report And The Financial
Statements
The Directors are responsible for preparing the Strategic Report, the Directors’ Report, and the financial statements
in accordance with applicable law and regulations.
Company law requires the Directors to prepare group and company financial statements for each financial year.
The Directors have elected under company law and are required by the AIM Rules of the London Stock Exchange
to prepare group financial statements in accordance with UK-adopted International Accounting Standards and
have elected under company law to prepare the Company financial statements in accordance with UK Generally
Accepted Accounting Practice (UK Accounting Standards and applicable law).
The Group financial statements are required by law and UK-adopted International Accounting Standards to
present fairly the financial position and performance of the Group. The Companies Act 2006 provides in relation
to such financial statements that references in the relevant part of that Act to financial statements giving a true
and fair view are references to their achieving a fair presentation.
Under company law the Directors must not approve the financial statements unless they are satisfied that they
give a true and fair view of the state of affairs of the Group and the Company and of the profit or loss of the Group
for that period.
In preparing each of the Group and company financial statements, the Directors are required to:
a.
select suitable accounting policies and then apply them consistently;
b. make judgements and accounting estimates that are reasonable and prudent;
c.
d.
e.
for the Group financial statements, state whether they have been prepared in accordance with UK-adopted
International Accounting Standards;
for the Company financial statements state whether applicable UK accounting standards have been
followed, subject to any material departures disclosed and explained in the Company financial statements;
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the
Group and the Company will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain
the Group’s and the Company’s transactions and disclose with reasonable accuracy at any time the financial
position of the Group and the Company and enable them to ensure that the financial statements comply with the
requirements of the Companies Act 2006. They are also responsible for safeguarding the assets of the Group
and the Company and hence for taking reasonable steps for the prevention and detection of fraud and other
irregularities.
The Directors are responsible for the maintenance and integrity of the corporate and financial information included
on the Tissue Regenix Group plc website.
Legislation in the UK governing the preparation and dissemination of financial statements may differ from
legislation in other jurisdictions.
28 Tissue Regenix Group plc
Independent Auditor’s Report
Opinion
We have audited the financial statements of Tissue Regenix plc (the ‘parent Company’) and its subsidiaries
(the ‘Group’) for the year ended 31 December 2022 which comprise the Consolidated Statement of Income, the
Consolidated Statement of Comprehensive Income, the Consolidated and Company Statements of Financial
Position, the Consolidated and Company Statements of Changes in Equity, the Consolidated Statement of Cash
Flows and notes to the financial statements, including significant accounting policies. The financial reporting
framework that has been applied in the preparation of the Group financial statements is applicable law and
UK-adopted International Accounting Standards. The financial reporting framework that has been applied in the
preparation of the Parent Company financial statements is applicable law and UK Accounting Standards, including
Financial Reporting Standard 101 ‘Reduced Disclosure Framework’ (UK Generally Accepted Accounting Practice).
In our opinion:
l
l
l
l
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 2022 and of the Group’s loss for the year then ended;
the Group financial statements have been properly prepared in accordance with UK-adopted International
Accounting Standards;
the Parent Company financial statements have been properly prepared in accordance with UK Generally
Accepted Accounting Practice; and
the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable
law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit
of the financial statements section of our report. We are independent of the Group and the Parent Company in
accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK,
including the FRC’s Ethical Standard as applied to listed entities and we have fulfilled our other ethical
responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our opinion.
Summary of our audit approach
Key audit matters
Group
l Goodwill impairment
Parent Company
l Impairment of intercompany receivables
Materiality
Group
l Overall materiality: USD428,000 (2021: USD345,000)
l Performance materiality: USD278,000 (2021: USD258,000)
Parent Company
l Overall materiality: £265,000 (2021: £222,000)
l Performance materiality: £172,000 (2021: £166,000)
Scope
Our audit procedures covered 100% of revenue, 98% of total assets and 96% of
the loss before tax.
Annual Report and Accounts 2022 29
Independent Auditor’s Report
continued
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of
the Group and parent company financial statements of the current period and include the most significant
assessed risks of material misstatement (whether or not due to fraud) we identified, 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 Group and parent
company financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate
opinion on these matters.
Goodwill impairment
Key audit matter description
The non-current assets of the CellRight Technologies LLC (‘CellRight’) cash
generating unit (‘CGU’) includes goodwill of USD11.6 million (after a cumulative
impairment charge of USD7.9 million) and this CGU is subject to annual
impairment testing. The CellRight CGU is a legal entity in its own right and forms
part of the BioRinse operating segment. Management have disclosed details
relating to their impairment test in notes 4 and 14.
Impairment testing requires management to compare the carrying amount of
the CGU’s attributable assets and liabilities with the higher of fair value less costs
of disposal and value in use (the ‘Recoverable Amount’). Where the carrying
amount is higher than Recoverable Amount then an impairment charge arises.
Impairment testing involves a significant degree of judgement because
management’s determination of value in use is based on a number of
assumptions, including an assessment of future performance in a high growth
sector and the selection of an appropriate discount rate.
Significant impairment charges have arisen in previous periods and the Group
overall continues to be loss making. Any recorded impairment charge would
most likely have a material impact on the financial statements.
Due to the level of estimation uncertainty, we determined this to be a key audit
matter.
How the matter was addressed
in the audit
Management provided us with an impairment model for the CellRight CGU. We
performed audit work on this model, which included:
l Checking the calculations contained within the model, including reperforming
the comparison of the Recoverable Amount with the carrying amount and
agreeing the carrying amount to the accounting records.
l Challenging management to support key assumptions within the model,
particularly forecast revenue growth and the discount rate applied.
l Using a specialist to check the appropriateness of the method and the
mathematical calculation of value in use within the model and to obtain an
independent estimate of an appropriate discount rate.
l Reviewing the disclosures made in the financial statements to ensure that
they were in accordance with the applicable financial reporting framework.
30 Tissue Regenix Group plc
Independent Auditor’s Report
continued
Impairment of intercompany receivables
Key audit matter description
At 31 December 2022, the carrying value of amounts due from group
undertakings amounted to £32.9 million after recording an ECL provision of
£49.3 million (see notes C2 and C5). A reversal of £14.6 million of the provision
in place at the start of the period arose in the year.
The Parent Company has loans due from subsidiary undertakings that are
currently loss making. The loans are repayable on demand and the subsidiary
undertakings do not have sufficient liquid assets to make repayment should the
Parent Company call in the loans.
One of the most significant matters in the current year audit of the Parent
Company is that management are required to calculate an expected credit loss
(‘ECL’) provision in accordance with IFRS9 Financial Instruments.
The calculation of ECLs involves a significant degree of judgement and
estimation as management have to make assumptions about future cash
generation and consider multiple scenarios through which the balances may be
recovered.
Given the magnitude of the loan balances and the level of estimation uncertainty,
we determined this to be a key audit matter.
How the matter was addressed
in the audit
We obtained management’s calculation of the ECL and the underlying
calculations prepared to support the carrying value of the balance and performed
work as follows:
l Assessed the reasonableness of the scenarios considered by management
and the probabilities assigned to each.
l Ensured that the cash flow forecasts used were consistent with the latest
Board approved forecasts.
l Recalculated the computation of the ECL
l Challenged management on a number of the assumptions in the cash flow
forecasts and re-ran the model to assess the impact on management’s
conclusions.
Our application of materiality
When establishing our overall audit strategy, we set certain thresholds which help us to determine the nature,
timing and extent of our audit procedures. When evaluating whether the effects of misstatements, both individually
and on the financial statements as a whole, could reasonably influence the economic decisions of the users we
take into account the qualitative nature and the size of the misstatements. Based on our professional judgement,
we determined materiality as follows:
Overall materiality
USD428,000 (2021: USD345,000)
£265,000 (2021: £222,000)
Group
Parent Company
Basis for determining overall
materiality
1.75% of total revenue
0.5% of net assets. The percentage
applied to the benchmark has been
the purpose of
restricted
calculating
appropriate
an
component materiality.
for
Annual Report and Accounts 2022 31
Independent Auditor’s Report
continued
Rationale
applied
for benchmark
Group
Parent company
Revenue selected given shareholder
focus on revenue growth. The Group
is still in relatively early phase of
development and revenue growth is
critical to reducing operating losses.
Net assets selected as the Parent
Company
is purely a holding
company and no income statement
is presented.
Performance materiality
USD278,000 (2021: USD258,000)
£172,000 (2021: £166,000)
Basis for determining
performance materiality
Reporting of misstatements
to the Audit Committee
65% of overall materiality
65% of overall materiality
in excess of
Misstatements
USD21,000 and misstatements
below that threshold that, in our
view, warranted
reporting on
qualitative grounds.
Misstatements in excess of £13,000
and misstatements below
that
threshold that, in our view, warranted
reporting on qualitative grounds.
Materiality levels in respect of the disclosure requirements for the Group and parent company in relation to
Directors’ emoluments including share-based payment transactions were set at a reduced level of USD151,000.
This reduced level has been set on the basis these transactions and balances have specific disclosure
requirements under UK Company Law and would be of specific interest to shareholders.
An overview of the scope of our audit
The Group consists of 11 components, located in the UK, US and Germany.
The coverage achieved by our audit procedures was:
Number of
components
Full scope audit 4
Specific audit procedures 6
Revenue Total assets Loss before tax
87% 93% 65%
13% 5% 31%
Total 10
100% 98% 96%
Analytical procedures at group level were performed for the remaining 1 component.
Of the above, specific audit procedures for 1 component were undertaken by component auditors.
For 1 component, specific audit procedures were undertaken in respect of revenue cut-off, which was an area we
identified as being susceptible to material misstatement due to fraud. For the other five components where
specific audit procedures were completed, these were undertaken to extend the coverage of our procedures.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the Directors’ use of the going concern basis of
accounting in the preparation of the financial statements is appropriate. Our evaluation of the Directors’ assessment
of the Group’s and parent company’s ability to continue to adopt the going concern basis of accounting included
reviewing and evaluating management’s latest forecasts and plans, considering the appropriateness and sensitivity
of the key assumptions, and reviewing the key terms of debt facilities. These forecasts are prepared in respect of
the period to 31 December 2024. The Group has significant cash reserves at 31 December 2022 of USD5.9m
following the fundraising in June 2020 and continued growth in the level of activity in the Group. Even in downside
scenarios which take account of slower than forecast sales growth, management’s forecasts indicate significant
cash at the end of the forecast period.
32 Tissue Regenix Group plc
Independent Auditor’s Report
continued
Based on the work we have performed, we have not identified any material uncertainties relating to events or
conditions that, individually or collectively, may cast significant doubt on the Group’s or the Parent Company’s
ability to continue as a going concern for a period of at least twelve months from when the financial statements
are authorised for issue.
Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the
relevant sections of this report.
Other information
The other information comprises the information included in the annual report, other than the financial statements
and our auditor’s report thereon. The Directors are responsible for the other information contained within the
annual report. Our opinion on the financial statements does not cover the other information and, except to the
extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether the other information is
materially inconsistent with the financial statements or our knowledge obtained in the course of the audit or
otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material
misstatements, we are required to determine whether this gives rise to a material misstatement in the financial
statements themselves. If, based on the work we have performed, we conclude that there is a material
misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
l
l
the information given in the Strategic Report and the Directors’ Report for the financial year for which the
financial statements are prepared is consistent with the financial statements; and
the Strategic Report and the Directors’ Report have been prepared in accordance with applicable legal
requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the Group and the Parent Company and their environment
obtained in the course of the audit, we have not identified material misstatements in the Strategic Report or the
Directors’ Report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires
us to report to you if, in our opinion:
l
l
l
l
adequate accounting records have not been kept by the Parent Company, or returns adequate for our audit
have not been received from branches not visited by us; or
the Parent Company financial statements are not in agreement with the accounting records and returns; or
certain disclosures of Directors’ remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
Responsibilities of Directors
As explained more fully in the Directors’ responsibilities statement set out on page 28, the Directors are responsible
for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for
such internal control as the Directors determine is necessary to enable the preparation of financial statements
that are free from material misstatement, whether due to fraud or error.
Annual Report and Accounts 2022 33
Independent Auditor’s Report
continued
In preparing the financial statements, the Directors are responsible for assessing the Group’s and the Parent
Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and
using the going concern basis of accounting unless the Directors either intend to liquidate the Group or the Parent
Company or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our
opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise
from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of these financial statements.
The extent to which the audit was considered capable of detecting irregularities, including fraud
Irregularities are instances of non-compliance with laws and regulations. The objectives of our audit are to obtain
sufficient appropriate audit evidence regarding compliance with laws and regulations that have a direct effect on
the determination of material amounts and disclosures in the financial statements, to perform audit procedures
to help identify instances of non-compliance with other laws and regulations that may have a material effect on
the financial statements, and to respond appropriately to identified or suspected non-compliance with laws and
regulations identified during the audit.
In relation to fraud, the objectives of our audit are to identify and assess the risk of material misstatement of the
financial statements due to fraud, to obtain sufficient appropriate audit evidence regarding the assessed risks of
material misstatement due to fraud through designing and implementing appropriate responses and to respond
appropriately to fraud or suspected fraud identified during the audit.
However, it is the primary responsibility of management, with the oversight of those charged with governance, to
ensure that the entity's operations are conducted in accordance with the provisions of laws and regulations and
for the prevention and detection of fraud.
In identifying and assessing risks of material misstatement in respect of irregularities, including fraud, the Group
audit engagement team:
l
l
l
obtained an understanding of the nature of the industry and sector, including the legal and regulatory
frameworks that the Group and parent company operate in and how the Group and parent company are
complying with the legal and regulatory frameworks;
inquired of management, and those charged with governance, about their own identification and assessment
of the risks of irregularities, including any known actual, suspected or alleged instances of fraud;
discussed matters about non-compliance with laws and regulations and how fraud might occur including
assessment of how and where the financial statements may be susceptible to fraud.
The most significant laws and regulations were determined as follows:
Legislation / Regulation
Additional audit procedures performed by the Group audit engagement team
included:
UK-adopted IAS, FRS101
and Companies Act 2006
Review of the financial statement disclosures and testing to supporting
documentation;
Completion of disclosure checklists to identify areas of non-compliance
Tax compliance regulations
Inspection of advice received from external tax advisors
FDA Medical Device
Regulations in the US
Inquiry of management and those charged with governance as to whether the
Group is in compliance with these laws and regulations and whether any
correspondence existed with the Regulatory Authorities.
34 Tissue Regenix Group plc
Independent Auditor’s Report
continued
The areas that we identified as being susceptible to material misstatement due to fraud were:
Risk
Audit procedures performed by the audit engagement team:
Revenue recognition
Management override of
controls
Testing a sample of revenue transactions either side of the balance sheet date
to determine whether the transaction has been appropriately recognised in the
correct financial reporting period;
Testing a sample of revenue transactions and tracing through to appropriate
inventory movements and cash receipt to ensure that the revenue transaction
exists;
Testing of a sample of transactions completed under the Group’s Bill and Hold
arrangements with its customers to ensure that they have been recognised in
accordance with the Group’s accounting policy, substantiating the transactions
to underlying inventory movements and cash receipts and ensuring that they
have been recorded in the appropriate financial period.
Testing the appropriateness of journal entries and other adjustments;
Assessing whether the judgements made in making accounting estimates are
indicative of a potential bias; and
Evaluating the business rationale of any significant transactions that are
unusual or outside the normal course of business.
A further description of our responsibilities for the audit of the financial statements is located on the Financial
Reporting Council’s website at: http://www.frc.org.uk/auditorsresponsibilities. This description forms part of our
auditor’s report.
Use of our report
This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the
Companies Act 2006. Our audit work has been undertaken so that we might state to the Company’s members
those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone other than the Company and the
Company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
ANDREW ALLCHIN FCA (Senior Statutory Auditor)
For and on behalf of RSM UK Audit LLP, Statutory Auditor
Chartered Accountants
Central Square Fifth Floor
29 Wellington Street
Leeds
LS1 4DL
20 March 2023
Annual Report and Accounts 2022 35
Consolidated Statement of Income
For the year ended 31 December 2022
Revenue
Cost of sales
Gross profit
Administrative expenses
Exceptional items
Operating loss
Finance income
Finance charges
Loss on ordinary activities before taxation
Taxation
Loss for the year
Loss for the year attributable to:
Owners of the parent company
Non-controlling interest
Loss per Ordinary Share
Basic and diluted, cents per share
The loss for the year arises from the Group’s continuing operations.
The notes on pages 41 to 68 form part of the financial statements.
Notes
5
8
6
7
8
10
24
11
2022
USD
'000
24,476
(13,218)
11,258
(13,268)
–
(2,010)
8
(826)
(2,828)
232
(2,596)
(2,695)
99
(2,596)
2021
USD
'000
19,746
(11,270)
8,476
(12,499)
(355)
(4,378)
3
(767)
(5,142)
157
(4,985)
(4,792)
(193)
(4,985)
(0.04)
(0.07)
36 Tissue Regenix Group plc
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2022
Loss for the year
Other comprehensive income
Items that may be subsequently reclassified to profit or loss:
Foreign currency translation differences
Total comprehensive loss for the year
Total comprehensive loss for the year attributable to:
Owners of the parent company
Non-controlling interest
The notes on pages 41 to 68 form part of the financial statements.
2022
USD
'000
2021
USD
'000
(2,596)
(4,985)
(653)
(3,249)
(3,348)
99
(3,249)
(4)
(4,989)
(4,796)
(193)
(4,989)
Annual Report and Accounts 2022 37
Consolidated Statement of Financial Position
As at 31 December 2022
Assets
Non-current assets
Property, plant and equipment
Right-of-use assets
Intangible assets
Current assets
Inventory
Trade and other receivables
Corporation tax receivable
Cash and cash equivalents
Total assets
Liabilities
Non-current liabilities
Loans and borrowings
Deferred tax
Lease liability
Current liabilities
Trade and other payables
Loans and borrowings
Lease liability
Total liabilities
Net assets
Equity
Share capital
Share premium
Merger reserve
Reverse acquisition reserve
Reserve for own shares
Share-based payment reserve
Cumulative translation reserve
Retained deficit
Equity attributable to owners of the parent company
Non-controlling interest
Total equity
Notes
12
13
14
15
16
17
19
20
21
18
19
21
22
23
23
23
23
23
23
23
24
2022
USD
'000
5,740
3,203
15,061
24,004
10,882
4,803
401
5,949
22,035
46,039
(5,258)
(520)
(3,216)
(8,994)
(5,510)
(1,000)
(134)
(6,644)
(15,638)
30,401
15,950
134,179
16,441
(10,798)
(1,257)
824
(1,958)
(122,129)
31,252
(851)
30,401
2021
USD
'000
5,708
3,388
15,064
24,160
9,719
4,101
534
7,709
22,063
46,223
(4,465)
(640)
(3,364)
(8,469)
(4,244)
–
(118)
(4,362)
(12,831)
33,392
15,947
134,173
16,441
(10,798)
(1,257)
1,573
(1,305)
(120,432)
34,342
(950)
33,392
The consolidated financial statements were approved by the Board of Directors and authorised for issue on
20 March 2023 and are signed on its behalf by:
Daniel Lee
Chief Executive Officer
Company number: 05969271
The notes on pages 41 to 68 form part of the financial statements.
38 Tissue Regenix Group plc
Consolidated Statement of Changes in Equity
For the year ended 31 December 2022
e
v
r
e
s
e
r
n
o
i
t
i
s
i
u
q
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a
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0
0
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s
e
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a
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s
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s
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0
0
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r
e
t
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i
g
n
i
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l
o
r
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o
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n
o
N
’
0
0
0
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t
i
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l
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0
0
0
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t
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e
d
d
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n
a
t
e
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i
’
0
0
0
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0
0
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S
U
l
a
t
o
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l
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t
i
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e
r
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h
S
’
0
0
0
D
S
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i
m
u
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e
r
p
e
r
a
h
S
’
0
0
0
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s
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r
r
e
g
r
e
M
’
0
0
0
D
S
U
At 31 December 2020 15,947 134,173 16,441 (10,798) (1,257) 1,463 (1,301) (115,640) 39,028 (757) 38,271
Transactions with owners
in their capacity as owners:
Share-based payments – – – – – 110 – – 110 – 110
Total transactions with
owners in their capacity
as owners – – – – – 110 – – 110 – 110
Loss for the year – – – – – – – (4,792) (4,792) (193) (4,985)
Other comprehensive income:
Currency translation differences – – – – – – (4) – (4) – (4)
Total other comprehensive
income for the year – – – – – – (4) – (4) – (4)
Total comprehensive income
for the year – – – – – – (4) (4,792) (4,796) (193) (4,989)
At 31 December 2021 15,947 134,173 16,441 (10,798) (1,257) 1,573 (1,305) (120,432) 34,342 (950) 33,392
Transactions with owners
in their capacity as owners:
Exercise of share options 3 6 – – – – – – 9 – 9
Transfer tor retained deficit in
respect of lapsed, expired
and exercised options – – – – – (998) – 998 – – –
Share-based payments – – – – – 249 – – 249 – 249
Total transactions with
owners in their capacity
as owners 3 6 – – – (749) – 998 258 – 258
Loss for the year – – – – – – – (2,695) (2,695) 99 (2,596)
Other comprehensive income:
Currency translation differences – – – – – – (653) – (653) – (653)
Total other comprehensive
income for the year – – – – – – (653) – (653) – (653)
Total comprehensive
income for the year – – – – – – (653) (2,695) (3,348) 99 (3,249)
At 31 December 2022 15,950 134,179 16,441 (10,798) (1,257) 824 (1,958) (122,129) 31,252 (851) 30,401
The notes on pages 41 to 68 form part of the financial statements.
Annual Report and Accounts 2022 39
Consolidated Statement of Cash Flows
For the year ended 31 December 2022
Operating activities
Loss on ordinary activities before taxation
Adjustments for:
Finance income
Finance charges
Depreciation of property, plant and equipment
Depreciation of right-of-use assets
Amortisation of intangible assets
Share-based payments
Unrealised foreign exchange (gain)/loss
Operating cash outflow before movements in working capital
Increase in inventory
Increase in trade and other receivables
Increase in trade and other payables
Net cash used in operations
Research and development tax credits received
Net cash used in operating activities
Investing activities
Interest received
Purchase of property, plant and equipment
Capitalised development expenditure
Net cash used in investing activities
Financing activities
Proceeds from exercise of share options
Proceeds from loans and borrowings
Interest paid on loans and borrowings
Lease liability payments
Lease interest payments
Net cash generated from/used in financing activities
Net decrease in cash and cash equivalents
Cash and cash equivalents at beginning of year
Effect of movements in exchange rates on cash held
Cash and cash equivalents at end of year
The notes on pages 41 to 68 form part of the financial statements.
2022
USD
'000
2021
USD
'000
(2,828)
(5,142)
(8)
826
353
164
618
249
(239)
(865)
(1,163)
(702)
1,249
(1,481)
187
(1,294)
8
(381)
(709)
(1,082)
9
1,708
(450)
(66)
(291)
910
(1,466)
7,709
(294)
5,949
(3)
767
258
103
730
110
55
(3,122)
(115)
(512)
159
(3,590)
615
(2,975)
3
(1,550)
(497)
(2,044)
–
602
(391)
(102)
(301)
(192)
(5,211)
12,968
(48)
7,709
40 Tissue Regenix Group plc
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022
1. Corporate information
Tissue Regenix Group plc (the ‘Company’ and, together with its subsidiaries, the ‘Group’) is a public company
limited by shares, domiciled and incorporated in England under the Companies Act 2006. Its registered number
is 05969271.
The address of the registered office is Unit 3, Phoenix Court, Lotherton Way, Garforth LS25 2GY.
The nature of the Group’s operations and its principal activity is that of an international, pioneering medical
technology company focused on commercialising two platform technologies, dCELL, addressing soft tissue
needs, and BioRinse, providing sterile bone and soft tissue allografts.
2. Adoption of new and revised standards
Standards adopted during the year
The Group has adopted all of the new or amended Accounting Standards and interpretations issued by the
International Accounting Standards Board (‘IASB’) that are mandatory and relevant to the Group’s activities for
the current reporting period.
The following new and revised Standards have been adopted but have not had any material impact on the
amounts reported in these financial statements:
l
l
l
l
Amendments to IAS 16 - Property, plant and equipment – proceeds before intended use
Annual improvements to IFRS standards 2018-2020
Amendments to IFRS 3 - Reference to the conceptual framework
Amendments to IAS 37 - Onerous contracts – cost of fulfilling a contract
Standards issued but not yet effective
Any new or amended Accounting Standards or interpretations that are not yet mandatory (and in some cases,
had not yet been endorsed by the UK Endorsement Board) have not been early adopted by the Group for the year
ended 31 December 2022. They are as follows:
l
l
l
l
l
l
l
l
Amendments to IAS 1 - Classification of liabilities as current or non-current
Amendments to IFRS 17 - Insurance contracts
Amendments to IFRS 17 - Initial application of IFRS 17 and IFRS 9 - comparative information
Amendments to IAS 12 - Deferred tax related assets and liabilities arising from a single transaction
Amendments to IAS 1 and IFRS practice statement 2 - Disclosure of accounting policies
Amendments to IAS 8 - Definition of accounting estimates
Amendments to IFRS 16 - Lease liability in a sale and leaseback
Amendments to IAS 1 - Non-current liabilities with covenants
The Directors do not expect that the adoption of these Standards or Interpretations in future periods will have a
material impact on the financial statements of the Company or the Group.
Annual Report and Accounts 2022 41
Notes to the Consolidated Financial Statements
continued
3. Significant accounting policies
Basis of preparation
The financial statements have been prepared in accordance with UK-adopted International Accounting Standards
and with the requirements of the Companies Act 2006 as applicable to companies reporting under those
standards.
The financial statements have been prepared on the historical cost basis, other than certain financial assets and
liabilities, which are stated at fair value. Historical cost is generally based on the fair value of the consideration
given in exchange for assets.
The financial statements are presented in United States dollars (‘USD’). All amounts have been rounded to the
nearest thousand, unless otherwise indicated.
As described below, the Directors continue to adopt the going concern basis in preparing the consolidated and
the Company financial statements.
The accounting policies set out below have, unless otherwise stated, been applied consistently to all periods
presented in these financial statements.
The preparation of the financial statements in compliance with UK-adopted International Accounting Standards
requires management to make estimates and the Directors to exercise judgement in applying the Group’s
accounting policies. The significant judgements made by the Directors in the application of these accounting
policies that have a significant impact on the financial statements and the key sources of estimation uncertainty
are disclosed in note 4.
Going concern
The Group financial statements have been prepared on a going concern basis based on cash flow projections,
approved by the Board for the Group, for the period to 31 December 2024 (the ‘Cash Flow Projections’). Funding
requirements are reviewed on a regular basis by the Group’s Chief Executive Officer and Chief Financial Officer
and are reported to the Board at each Board meeting, as well as on an ad hoc basis if requested. The Cash Flow
Projections show that the Group will continue to consume cash over the forecast period. Until sufficient cash is
generated from its operations, the Group remains reliant on cash reserves of USD5.9 million at 31 December 2022
and the ongoing support of MidCap (borrowings of USD6.3 million at 31 December 2022) to meet its working
capital requirements, capital investment programme and other financial commitments.
In compiling the Cash Flow Projections, the Board has considered a downside scenario regarding the effect of
reduced and delayed revenues due to slower market uptake of the Group’s product offerings. The Cash Flow
Projections prepared by the Board, including the downside scenario, indicate that the Group will still have cash
reserves at the end of the forecast period. The Group’s Cash Flow Projections assume that the MidCap revolving
credit facility is available throughout the forecast period and the term loan repayment will begin in 2024 in
accordance with the revised terms agreed in January 2023. The availability of these facilities is dependent upon
compliance with a rolling 12-month revenue covenant which is measured on a monthly basis. The Cash Flow
Projections indicate compliance with this covenant throughout the forecast.
In summary, the Directors have considered their obligations in relation to the assessment of the going concern
basis for the preparation of the financial statements of the Group and have reviewed the Cash Flow Projections.
On the basis of their assessment, they have concluded that the going concern basis remains appropriate for use
in these financial statements.
Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and its subsidiary
undertakings (together ‘the Group’) made up to 31 December each year.
Subsidiary undertakings are those entities controlled directly or indirectly by the Company. Control is achieved
when the Company 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.
42 Tissue Regenix Group plc
Notes to the Consolidated Financial Statements
continued
The financial results 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.
Non-controlling interest
Non-controlling interests are measured at their proportionate share of the acquiree’s identifiable net assets at
the date of acquisition. Changes in the Group’s interest in a subsidiary that do not result in a loss of control are
accounted for as equity transactions. Losses applicable to the non-controlling interests are allocated to the
non-controlling interests even if doing so causes the non-controlling interests to have a deficit balance.
Controlled Joint Venture
In January 2016, the Group entered a joint venture establishing GBM-V GmbH, a company incorporated in
Germany. The Group controls the majority of the voting rights and, consequently, the results for this entity are
consolidated in full within these financial statements with the recognition of a non-controlling interest within
equity.
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.
Goodwill is tested annually for impairment as described below.
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 into the Company, which usually coincides with the
despatch of goods.
Bill-and-hold sales
The Group has bill-and-hold arrangements with customers, and this revenue is recognised when the Company
considers that performance obligations have been met and they meet the following criteria:
l
l
l
l
The reason for the bill-and-hold arrangement must be substantive (usually, the arrangement has been
requested by the customer to facilitate their shipping arrangements)
The product must be identified separately as belonging to the customer (that is, it cannot be used to satisfy
other orders)
The product must be ready for physical transfer to the customer
The Group cannot have the ability to use the product or direct it to another customer
Foreign Currencies
The individual financial statements of each component entity are presented in the currency of the primary
economic environment in which the entity operates (the ‘functional currency’). For the purposes of the
consolidated financial statements, the results and the financial position of each Group entity are expressed in
USD, which is the presentation currency for the consolidated financial statements.
In preparing the financial statements of the individual companies, transactions in currencies other than the
functional currency of each group company (‘foreign currencies’) are translated into the functional currency at
the rates of exchange prevailing on the dates of the transactions. At each reporting date, monetary assets and
Annual Report and Accounts 2022 43
Notes to the Consolidated Financial Statements
continued
liabilities that are denominated in foreign currencies are retranslated into the functional currency at the rates
prevailing on the reporting date. Non-monetary assets and liabilities carried at fair value that are denominated in
foreign currencies are translated 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 a foreign currency are not retranslated.
Foreign exchange differences are recognised in the profit or loss in the period in which they arise, except for
foreign exchange differences on monetary items receivable from or payable to a foreign operation for which
settlement is neither planned nor likely to occur and which, therefore, form part of the net investment in the foreign
operation. Foreign exchange differences arising on the translation of the Group’s net investment in foreign
operations are recognised within the cumulative translation reserve via the statement of other comprehensive
income. On disposal of foreign operations and foreign entities, the cumulative translation differences are
recognised in the income statement as part of the gain or loss on disposal.
For the purpose of presenting company and consolidated financial statements, the assets and liabilities of the
Company, and the Group’s operations which have a functional currency other than USD, are translated using
exchange rates prevailing at the end of each reporting period. Income and expense items are translated at the
average exchange rates for the period, unless exchange rates fluctuate significantly during that period, in which
case the exchange rates at the date of transactions are used. Foreign exchange differences arising, if any, are
recognised in other comprehensive income and accumulated in equity. Equity items are translated at the exchange
rates at the date of transactions, and foreign exchange differences arising, if any, are accumulated directly in
equity.
On the disposal of a foreign operation (e.g. a disposal of the Group’s entire interest in a foreign operation, a disposal
involving loss of control over a subsidiary that includes a foreign operation or loss of joint control over a jointly
controlled entity that includes a foreign operation), all of the accumulated exchange differences in respect of that
operation attributable to the Group are reclassified to profit or loss. Where there is no change in the proportionate
percentage interest in an entity, then there has been no disposal or partial disposal and accumulated exchange
differences attributable to the Group are not reclassified to profit or loss.
Fair value adjustments arising on the acquisition of a foreign operation are treated as assets and liabilities of the
foreign operation and translated at the rate of exchange prevailing at the end of each reporting period. Exchange
differences arising are recognised in equity.
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:
l
It is technically feasible to complete the product, and management is satisfied that appropriate regulatory
hurdles have been or will be achieved
l Management intends to complete the product and use or sell it
l
l
l
l
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 or use or sell
the product
Expenditure attributable to the product can be reliably measured
44 Tissue Regenix Group plc
Notes to the Consolidated Financial Statements
continued
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 costs. The costs of internally generated developments are recognised as
intangible assets and are subsequently measured in the same way as externally acquired intangible assets. The
assets are reviewed for indicators of impairment but they are not amortised until completion of the
development project.
Exceptional Items
Items which are significant by virtue of their size or nature and/or which are considered non-recurring are
classified as exceptional operating items. Such items 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.
Inventories
Inventories are recognised at the lower of cost and net realisable value. Cost is determined using the first in, first
out method and represents the purchase cost, including transport, for raw materials, together with a proportion
of manufacturing overheads based on normal levels of activity for work in progress and finished goods.
Appropriate provisions for estimated irrecoverable amounts are recognised in the income statement when there
is objective evidence that the assets are impaired.
Property, Plant and Equipment and Right-of-use assets
Property, plant and equipment assets are stated at their historical cost of acquisition less any provision for
depreciation or impairment.
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 5–7 years
Computer equipment
over 3 years
Fixtures and fittings
over 5 years
Land is not depreciated.
A right-of-use asset is recognised at commencement of the lease and initially measured at the amount of the
lease liability, plus any incremental costs of obtaining the lease and any lease payments made at or before the
leased asset is available for use by the Group. The right-of-use asset is subsequently measured at cost less
accumulated depreciation and any accumulated impairment losses. Right-of-use assets are depreciated on a
straight-line basis over the lease term.
Annual Report and Accounts 2022 45
Notes to the Consolidated Financial Statements
continued
Intangible Assets
Intangible assets are stated at fair value at acquisition. They are subsequently held at cost less any provision for
impairment or amortisation. Intangible assets are amortised through administrative expenses within the income
statement over their expected useful life as follows:
Trademarks
over 5 years
Customer relationships
over 10 years
Process & IT technology
over 10 years
Supplier agreements
over 5 years
Impairment of Property, Plant and Equipment, Right-of-use and intangible assets
At each reporting date, the Group reviews the carrying amounts of its property, plant and equipment and
right-of-use 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).
In respect of Goodwill and intangible assets with an indefinite life, the Group performs an annual impairment
review as required by IAS 36.
For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately
identifiable cash flows (cash-generating units (‘CGUs’)).
Discounted cash flow valuation techniques are generally applied for assessing recoverable amounts using
Board-approved forward-looking cash flow projections and terminal value estimates, together with discount rates
appropriate to the risk of the related CGUs.
If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of
the asset is reduced to its recoverable amount. An impairment loss is recognised as an expense immediately.
Share-based Payments
Share options
Equity settled share-based payment transactions are measured with reference to the fair value at the date of
grant, recognised on a straight-line basis over the vesting period, based on management’s estimate of shares
that will eventually vest. The fair value of options is measured using a binomial model where the performance
conditions of grants are market-based, the Monte Carlo model where there are multiple performance conditions
and the Black-Scholes model where there are non-market related performance conditions. See note 25 for more
information on performance conditions.
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 consolidated statement of comprehensive income, with a
corresponding entry in equity.
The grant by the Company of options and share-based compensation plans over its equity instruments to the
employees of subsidiary undertakings in the Group is treated as a capital contribution. The fair value of employee
services received, measured by reference to the grant date fair value, is recognised over the vesting period as an
increase to investment in subsidiary undertakings, with a corresponding credit to equity in the parent entity accounts.
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 of the option at the purchase date is recognised on a straight-line basis over the vesting
period. The fair value benefit is measured using a binomial valuation model, considering the terms and conditions
upon which the jointly owned shares were purchased.
46 Tissue Regenix Group plc
Notes to the Consolidated Financial Statements
continued
Financial Assets and Liabilities
Recognition of financial assets and financial liabilities
Financial assets and financial liabilities are recognised on the Group’s Statement of Financial Position when the
Group becomes a party to the contractual provisions of the instrument, and are initially measured at fair value.
Transaction costs are included as part of the initial measurement, except for financial assets measured at fair
value through profit or loss.
Financial assets are subsequently measured at either amortised cost or fair value depending on their classification.
Classification is determined based on both the business model within which such assets are held and the
contractual cash flow characteristics of the financial asset unless an accounting mismatch is being avoided.
Financial liabilities are subsequently measured at either amortised cost or fair value.
Derecognition of financial assets and financial liabilities
The Group derecognises a financial asset only when the contractual rights to cash flows from the asset expire,
or it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another
entity. If the Group neither transfers nor retains substantially all the risks and rewards of ownership and continues
to control the transferred asset, the Group recognises its retained interest in the asset and an associated liability
for the amount it may have to pay. If the Group retains substantially all the risks and rewards of ownership of a
transferred financial asset, the Group continues to recognise the financial asset and also recognises a
collateralised borrowing for the proceeds received.
On derecognition of a financial asset or financial liability a gain or loss is recognised in profit or loss.
Impairment of financial assets
The Group recognises a loss allowance for expected credit losses on financial assets which are measured at
amortised cost. The measurement of the loss allowance depends upon management’s assessment at the end
of each reporting period as to whether the financial instrument’s credit risk has increased significantly since initial
recognition, based on reasonable and supportable information that is available without undue cost or effort to
obtain.
Where there has not been a significant increase in exposure to credit risk since initial recognition, a 12-month
expected credit loss allowance is estimated. This represents a portion of the asset’s lifetime expected credit
losses that is attributable to a default event that is possible within the next 12 months. Where a financial asset
has become credit impaired or where it is determined that credit risk has increased significantly, the loss allowance
is based on the asset’s lifetime expected credit losses. The amount of expected credit loss recognised is measured
on the basis of the probability-weighted present value of anticipated cash shortfalls over the life of the instrument
discounted at the original effective interest rate.
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.
An expected credit loss (‘ECL’) model, as introduced under IFRS 9, broadens the information that an entity is
required to consider when determining its expectations of impairment. Under this model, expectations of future
events must be taken into account, and this will result in the earlier recognition of larger impairments against
trade and other receivables.
In applying the ECL model management considers the probability of a default occurring over the contractual life
of its trade receivables balances on initial recognition of those assets.
Annual Report and Accounts 2022 47
Notes to the Consolidated Financial Statements
continued
Impairment provisions are recognised for the Group as follows, representing the expected credit losses over the
contracted life of these balances:
Not overdue
0% of aged receivables
0 to 3 months overdue
0% of aged receivables
to 4 months overdue
25% of aged receivables
to 5 months overdue
50% of aged receivables
Over 5 months
100% of aged receivables
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.
Borrowings
Borrowings are interest-bearing and are initially recognised at fair value less the directly attributable costs of
issue. 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 three months. The
Group places its funds with financial institutions with an A rating or higher.
Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting
all of its liabilities. Equity instruments issued by the Group are recognised at the proceeds received, net of direct
issue costs.
The costs of an equity transaction are accounted for as a deduction from equity to the extent they are incremental
costs directly attributable to the equity transaction that would otherwise have been avoided.
Leases
On commencement of a contract which gives the Group the right to use assets for a period of time in exchange
for consideration, the Group recognises a right-of-use asset and a lease liability unless the lease qualifies as a
‘short-term’ lease (term is 12 months or less with no option to purchase the leased asset) or a ‘low-value’ lease
(where the underlying asset is USD5,000 or less when new).
The lease liability is initially measured at the present value of the lease payments during the lease term discounted
using the interest rate implicit in the lease, or the incremental borrowing rate if the interest rate implicit in the
lease cannot be readily determined. The lease term is the non-cancellable period of the lease plus extension
periods that the Group is reasonably certain to exercise and termination periods that the Group is reasonably
certain not to exercise. Lease payments include fixed payments less any lease incentives receivable, variable
lease payments dependent on an index or a rate and any residual value guarantees.
The lease liability is subsequently increased for a constant periodic rate of interest on the remaining balance of
the lease liability and reduced for lease payments. Interest on the lease liability is recognised in profit or loss.
Variable lease payments not included in the measurement of the lease liability, as they are not dependent on an
index or rate, are recognised in profit or loss in the period in which the event or condition that triggers those
payments occurs.
48 Tissue Regenix Group plc
Notes to the Consolidated Financial Statements
continued
Taxation
Tax on the profit or loss for the year comprises current and deferred tax. Tax is recognised in the Statement of
Income 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 statement of financial position 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 statement of financial position date.
Segmental reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating
decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing
the performance of the operating segments and making strategic decisions, has been identified as the Board of
Directors.
4. Critical accounting judgements and key sources of estimation uncertainty
In the application of the Group’s accounting policies, which are described in note 3, the Directors are required to
make judgements, estimates and assumptions about the carrying amounts of the assets and liabilities that are
not readily apparent from other sources. The estimates and associated assumptions are based on historical
experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates
are recognised in the period in which the estimate is revised if the revision affects only that period or in the period
of the revision and future periods if the revision affects both the current and future periods.
The following are the critical judgements and estimations that the Directors have made in the process of applying
the Group’s accounting policies and that have the most significant effect on the amounts recognised in the
financial statements:
Judgements and estimations
Recoverability of non-current assets
The Directors carried out the annual impairment review, as required by IAS 36, to determine whether there was any
requirement for an impairment provision in respect of its non-current assets at 31 December 2022.
The carrying amount of non-current assets at 31 December 2022 was USD24.0 million (2021: USD24.2 million).
The Group’s non-current assets include intangible assets and goodwill arising on the acquisition of CellRight
Technologies LLC, which are considered to be a single cash generating unit (‘CGU’). Only the assets included in the
CGU are subject to impairment review.
The aggregate carrying value of the CGU was assessed for impairment based on value in use which requires the
Directors to estimate the future cash flows expected to arise from the CGU using a suitable discount rate in order
to calculate present value. The future cash flows expected to arise were calculated using a discount rate of 18.3%
(2021: 14.6%) based on the weighted average cost of capital. The impairment test indicated that the recoverable
amount was at least equal to the carrying amount of the assets and, therefore, no provision for impairment was
required at 31 December 2022 (2021: USD nil). See note 14.
Annual Report and Accounts 2022 49
Notes to the Consolidated Financial Statements
continued
It is possible that any, or all of these key assumptions may change, which may then impact the estimated values of
the Group’s non-current assets, and this may then require a material adjustment to the carrying value of the assets
in future periods.
Fair value of share-based payments
Equity settled share-based payment transactions are measured by reference to the fair value at the date of grant,
recognised on a straight-line basis over the vesting period, based on the Group’s estimate of shares that will
eventually vest.
The Group is required to make a number of judgements and estimations when measuring the fair value of options
granted during the year, including use of the appropriate fair value model, inputs to that model and estimations in
relation to the anticipated vesting period.
The Directors consider that the appropriate model for calculating the fair value of options is the binomial model,
where the performance conditions of grants are market-based, the Monte Carlo model where there are multiple
performance conditions and the Black-Scholes model where there are non-market related performance conditions.
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 consolidated statement of comprehensive income, with a
corresponding entry in equity.
It is possible that these estimates may vary at each reporting date resulting in an adjustment to the allocation of the
fair value over the remaining vesting period.
5. Segmental information
The following table provides disclosure of the Group’s revenue by geographical market based on the location of
the customer:
US
Rest of World
2022
USD
‘000
20,711
3,765
24,476
2021
USD
‘000
16,883
2,863
19,746
Analysis of revenue by customer
During the year ended 31 December 2022, the Group had one customer who individually exceeded 10% of revenue.
This customer generated 13% of revenue (2021: one customer who generated 14% of revenue).
Operating segments
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, who has been identified as the Board of Directors.
The Board of Directors has determined that the Group has three operating segments for internal management,
reporting and decision-making purposes, namely dCELL, BioRinse, and GBM-V.
Central overheads, which primarily relate to operations of the Group function, are not allocated to an operating
segment.
Revenue from all operating segments derives from the sale of biological medical devices.
Refer to the Business Overview on page 2 for more details on the Group’s operating segments and operations.
50 Tissue Regenix Group plc
Notes to the Consolidated Financial Statements
continued
Segmental information is presented below.
Income Statement
Revenue
Gross profit
Depreciation
Amortisation
Operating (loss)/ profit
Net finance charges
(Loss)/profit before taxation
Taxation
(Loss)/profit for the year
Income Statement
Revenue
Gross profit
Exceptional items
Depreciation
Amortisation
Operating loss
Net finance charges
Loss before taxation
Taxation
Loss for the year
Statement of Financial Position
Non-current assets
Current assets
Total assets
Non-current liabilities
Current liabilities
Total liabilities
Net assets
Capital expenditure
Additions to intangible assets
dCELL
2022
USD
‘000
5,301
1,829
(10)
–
(994)
–
(994)
112
(882)
dCELL
2021
USD
‘000
4,246
1,720
(183)
(18)
–
(1,236)
1
(1,235)
37
(1,198)
dCELL
2022
USD
‘000
1,376
3,571
4,947
–
(736)
(736)
4,211
124
549
BioRinse
2022
USD
‘000
16,049
8,258
(394)
(618)
678
(818)
(140)
120
(20)
BioRinse
2021
USD
‘000
12,711
5,852
(120)
(305)
(730)
(1,043)
(757)
(1,800)
120
(1,680)
BioRinse
2022
USD
‘000
22,382
14,998
37,380
(8,921)
(5,171)
(14,092)
23,288
230
160
GBM-V
2022
USD
‘000
3,126
1,171
–
–
409
–
409
–
409
GBM-V
2021
USD
‘000
2,789
904
–
(3)
–
(154)
–
(154)
–
(154)
GBM-V
2022
USD
‘000
13
806
819
–
(255)
(255)
564
9
–
Central
2022
USD
‘000
–
–
(113)
–
(2,103)
–
(2,103)
–
(2,103)
Central
2021
USD
‘000
–
–
(52)
(35)
–
(1,945)
(8)
(1,953)
–
(1,953)
Central
2022
USD
‘000
233
2,660
2,893
(73)
(482)
(555)
2,338
Total
2022
USD
‘000
24,476
11,258
(517)
(618)
(2,010)
(818)
(2,828)
232
(2,596)
Total
2021
USD
‘000
19,746
8,476
(355)
(361)
(730)
(4,378)
(764)
(5,142)
157
(4,985)
Total
2022
USD
‘000
24,004
22,035
46,039
(8,994)
(6,644)
(15,638)
30,401
36
–
399
709
Annual Report and Accounts 2022 51
Notes to the Consolidated Financial Statements
continued
dCELL
2021
USD
‘000
808
3,326
4,134
–
(428)
(428)
3,706
2
–
BioRinse
2021
USD
‘000
23,005
11,310
34,315
(8,348)
(3,129)
(11,477)
22,838
1,594
497
GBM-V
2021
USD
‘000
5
706
711
–
(249)
(249)
462
3
–
Central
2021
USD
‘000
342
6,721
7,063
(121)
(556)
(677)
6,386
Total
2021
USD
‘000
24,160
22,063
46,223
(8,469)
(4,362)
(12,831)
33,392
105
–
1,704
497
Statement of Financial Position
Non-current assets
Current assets
Total assets
Non-current liabilities
Current liabilities
Total liabilities
Net assets
Capital expenditure
Additions to intangible assets
6. Finance income
Bank interest receivable
7. Finance charges
Interest on bank loans
Interest on lease liabilities
Amortisation of debt cost
8. Loss on ordinary activities before taxation
The loss before taxation for the year has been arrived at after charging/(crediting):
Depreciation of property, plant and equipment
Depreciation of right-of-use assets
Amortisation of intangible assets
Rentals subject to ‘short lease’ exemption
Expensed inventory
Staff costs including share-based payments
Foreign exchange losses/(gains)
Exceptional items
Auditor’s remuneration:
Fees payable for the audit of the parent company and consolidated
financial statements
Fees payable for the audit of subsidiary entity financial statements pursuant
to legislation
52 Tissue Regenix Group plc
2022
USD
‘000
8
2022
USD
‘000
450
291
85
826
2022
USD
‘000
353
164
618
136
11,831
9,068
24
–
31
103
134
2021
USD
‘000
3
2021
USD
‘000
391
301
75
767
2021
USD
‘000
258
103
730
208
7,804
8,550
(4)
355
27
103
130
Notes to the Consolidated Financial Statements
continued
During the year ended 31 December 2021, the Group incurred exceptional costs which included restructuring
costs of USD0.05 million related to a redundancy in the central segment and USD0.2 million was charged to the
DCell division as a result of a restructuring of that division. A winter storm event in Texas resulted in a charge of
USD0.1 million to the BioRinse division relating to non-productive time and spoilage. No such expenditure has
been incurred in the year ended 31 December 2022.
9. Staff costs
The average monthly number of employees (including Directors) was:
Directors
Laboratory and administration staff
Their aggregate remuneration comprised:
Wages and salaries
Social security costs
Other pension costs
Share-based payments
2022
Number
2021
Number
6
79
85
2022
USD
‘000
8,176
608
35
249
9,068
6
73
79
2021
USD
‘000
7,774
625
41
110
8,550
Prior year figures were exclusive of the staff costs absorbed into cost of goods, and therefore are restated to
include these amounts. Wages and Salaries are inclusive of benefits-in-kind such as healthcare, which was
previously presented in summary with social security and pension.
Refer to the Directors’ Remuneration Report for details regarding the remuneration of the highest paid Director
and the total amounts for Directors’ remuneration in accordance with Schedule 5 to the Accounting Regulations.
10. Taxation
Current tax:
UK R&D tax credit
Deferred tax:
Origination and reversal of temporary timing differences
Tax credit on loss for the year
2022
USD
‘000
(112)
(120)
(232)
2021
USD
‘000
(37)
(120)
(157)
Annual Report and Accounts 2022 53
Notes to the Consolidated Financial Statements
continued
The credit for the year can be reconciled to the loss per the income statement as follows:
Loss on ordinary activities before tax
Loss multiplied by the standard rate of corporation tax for UK companies of
19% (2021: 19%)
Effects of:
Research and development tax credits received
Surrender of research and development relief for repayable tax credit including
enhancement
Adjustments in respect of prior period current and deferred tax
Movement in deferred tax not recognised
Income/expenses not subject to tax/deductible for tax purposes and other
permanent differences
Origination and reversal of timing differences
Unrelieved tax losses carried forward
Tax credit on loss for the year
2022
USD
‘000
2021
USD
‘000
(2,828)
(5,142)
(537)
(80)
45
(154)
(366)
980
(120)
–
(232)
(977)
(124)
74
–
–
–
–
870
(157)
There has been no impact due to changes in UK taxation rates during the years reported. The enacted
UK corporation tax rate of 25% forms the basis for the UK element of the deferred tax calculation, following the
UK budget in 2021, when the chancellor announced an increase to the main rate of corporation tax in the UK to
25% from April 2023.
Unrelieved tax losses carried forward, as detailed below, have not been recognised as a deferred tax asset as
there is currently insufficient evidence that the asset will be recoverable in the foreseeable future. The losses must
be utilised in relation to the same operations.
Tax losses
Losses available to carry forward
Unrecognised deferred tax asset at 25% (2021: 25%)
2022
USD
‘000
58,900
14,725
2021
USD
‘000
60,779
15,195
The comparative tax losses and unrecognised deferred tax asset have been re-stated to include the impact of
R&D tax credits which had previously been omitted.
11. Loss per Ordinary Share
Basic loss per Ordinary Share is calculated by dividing the net loss for the year attributable to owners of the parent
company, by the weighted average number of Ordinary Shares in issue during the year, excluding own shares
held jointly by the Tissue Regenix Employee Share Trust and certain employees.
Diluted loss per Ordinary Share is calculated by dividing the net loss for the year attributable to owners of the
parent company, by the weighted average number of Ordinary Shares in issue during the year adjusted for the
dilutive effect of potential Ordinary Shares arising from the Company’s share options and jointly owned shares.
54 Tissue Regenix Group plc
Notes to the Consolidated Financial Statements
continued
The calculation of the basic and diluted loss per Ordinary Share is based on the following data:
Losses
Losses for the purpose of basic and diluted loss per Ordinary Share being net
loss for the year attributable to owners of the parent company
2022
USD
‘000
2021
USD
‘000
(2,695)
(4,792)
Number
Number
Number of shares
Weighted average number of Ordinary Shares for the purpose of basic and
diluted loss per Ordinary Share
Basic and diluted, cents per share
7,034,521,811
7,033,077,499
(0.04)
(0.07)
The Company has options issued over 200,929,300 (2021: 106,832,872) Ordinary Shares, warrants issued over
3,096,798 (2021: 3,096,798) Ordinary Shares and there are 16,112,800 (2021: 16,112,800) jointly owned Shares
which are potentially dilutive. See note 25.
Due to the losses incurred from continuing operations in the years reported, there is no dilutive effect from the
existing share options and jointly owned shares.
12. Property, plant and equipment
Land and
buildings
USD
‘000
Laboratory
equipment
USD
‘000
Fixtures and
fittings
USD
‘000
Computer
equipment
USD
‘000
Cost
At 31 December 2020
Additions
Exchange adjustment
At 31 December 2021
Additions
Exchange adjustment
At 31 December 2022
Depreciation
At 31 December 2020
Charge for the period
Exchange adjustment
At 31 December 2021
Charge for the period
Exchange adjustment
At 31 December 2022
Carrying amount
At 31 December 2022
At 31 December 2021
At 31 December 2020
4,017
1,085
(84)
5,018
75
–
5,093
227
65
(46)
246
132
–
378
4,715
4,772
3,790
2,789
308
(30)
3,067
136
(167)
3,036
2,247
152
(84)
2,315
161
(161)
2,315
721
752
542
1,025
39
(10)
1,054
6
(90)
970
1,001
17
(29)
989
18
(90)
917
53
65
24
840
118
(19)
939
182
(76)
1,045
779
24
17
820
42
(68)
794
251
119
61
Total
USD
‘000
8,671
1,550
(143)
10,078
399
(333)
10,144
4,254
258
(142)
4,370
353
(319)
4,404
5,740
5,708
4,417
Freehold land and buildings with a carrying amount of USD4.7 million (2021: USD4.8 million) have been pledged
to secure borrowings of the Group. The Group is not permitted to pledge these assets as security for other
borrowings or to sell them to another entity.
Annual Report and Accounts 2022 55
Notes to the Consolidated Financial Statements
continued
13. Right-of-use assets
Cost
At 31 December 2020
Additions
At 31 December 2021
Exchange adjustment
At 31 December 2022
Depreciation
At 31 December 2020
Charge for the period
At 31 December 2021
Charge for the period
Exchange adjustment
At 31 December 2022
Carrying amount
At 31 December 2022
At 31 December 2021
At 31 December 2020
Land and buildings
USD
‘000
3,415
154
3,569
(24)
3,545
78
103
181
164
(3)
342
3,203
3,388
3,337
14. Intangible assets
Development
costs
USD ‘000
Goodwill
USD ‘000
Customer
relationships
USD ‘000
Trademarks
USD ‘000
Process
tech
USD ‘000
Supplier
agreements
Total
USD ‘000 USD ‘000
Cost
At 31 December 2020
Additions
Exchange adjustment
1,613
19,458
3,000
799
1,500
600
26,970
497
(11)
–
–
–
–
–
–
–
–
–
–
497
(11)
At 31 December 2021
2,099
19,458
3,000
799
1,500
600
27,456
Additions
Exchange adjustment
709
(229)
–
–
–
–
–
–
–
–
–
–
709
(229)
At 31 December 2022
2,579
19,458
3,000
799
1,500
600
27,936
Amortisation
At 31 December 2020
Charge for the period
Exchange adjustment
At 31 December 2021
Charge for the period
Exchange adjustment
At 31 December 2022
Carrying amount
At 31 December 2022
At 31 December 2021
At 31 December 2020
56 Tissue Regenix Group plc
1,320
–
(9)
1,311
–
(135)
1,176
1,403
788
293
7,871
–
–
7,871
–
–
7,871
11,587
11,587
11,587
1,019
300
–
1,319
300
–
1,619
1,381
1,681
1,981
543
160
–
703
96
–
799
–
96
256
510
150
–
660
150
–
810
690
840
990
408
120
–
528
72
–
600
11,671
730
(9)
12,392
618
(135)
12,875
–
72
15,061
15,064
192
15,299
Notes to the Consolidated Financial Statements
continued
Goodwill, customer relationships, trademarks, process technology and supplier agreements relate to the
acquisition of CellRight Technologies LLC in 2017 and are subject to annual impairment testing as described
below. Trademarks and supplier agreements have now been amortised in full, and the remaining amortisation
period for customer relationships and process tech is 4.6 years.
Impairment of intangible assets
The Group considers the assets arising on the acquisition of CellRight Technologies LLC to be a single CGU and
tests for impairment on an annual basis, or more frequently where there are any indicators of impairment. The
aggregate carrying value is compared against the expected recoverable amount of the unit, by reference to the
present value of the future net cash flow expected to be derived from the asset, its value in use.
Value in use is estimated based on future cash flow discounted to present value using a pre-tax discount rate of
18.3% (2021: 14.6%) which reflects recent increases in the risk-free interest rate inherent in the calculation of the
weighted average cost of capital. An impairment charge arises where the carrying value exceeds the value in use.
The inputs into cash flow forecasts are based on the most recent budgets/forecasts approved and reviewed by
the Directors for the following year, extended forward for the next four years based on expected growth within
the CGU over that period. At the end of year five, a terminal value is calculated using a long-term growth
assumption of 2% (2021: 2%).
The key inputs to the cash flow forecasts are:
l
l
l
revenues (based on estimates of revenue growth with both new and existing customers based on an
understanding of the needs of those customers and having regard to independent market assessments of
market growth);
gross margin and overheads (based on existing gross margins and adapted for appropriate increases based
on the anticipated growth of the business);
future anticipated capital expenditure (adjusted based on expected future growth); and
l movements in working capital.
The key assumption within the cash flow forecasts relates to sales growth which is inherently difficult to forecast
in a rapidly growing market. Across the five-year forecast period, the CAGR is 20.3% (2021: 24.7%).
At 31 December 2022, the impairment test prepared by the Directors indicates a recoverable amount based on
value in use of USD47 million (2021: USD62 million) compared with a CGU carrying amount of USD33 million
(2021: USD31 million). The Directors, therefore, do not consider that an impairment charge is appropriate for the
year ended 31 December 2022 (2021: USD nil). However, in drawing this conclusion the Directors note the
importance of achieving the anticipated CAGR and have calculated that an impairment arises in the event that
the CAGR falls to 15% (2021: 14%) across the five-year period.
Annual Report and Accounts 2022 57
Notes to the Consolidated Financial Statements
continued
15. Inventory
Raw materials and consumables
Work in progress
Finished goods including goods for resale
2022
USD
‘000
4,128
5,873
881
10,882
2021
USD
‘000
2,681
5,628
1,410
9,719
Inventory of finished goods including goods for resale is presented net of a provision of USD0.3 million
(2021: USD0.3 million).
During the year, the sum of USD0.9 million was written off and there was a reversal of USD0.2 million in
the provision.
16. Trade and other receivables
Trade debtors
VAT recoverable
Other receivables
Prepayments and accrued income
2022
USD
‘000
4,195
24
19
565
4,803
2021
USD
‘000
2,946
80
38
1,037
4,101
The Directors consider that the carrying amount of trade and other receivables approximates to their fair values.
Trade receivables
Less: allowance for expected credit losses
2022
USD
‘000
4,279
(84)
4,195
2021
USD
‘000
3,024
(78)
2,946
Allowance for expected credit losses
The ageing of the receivables and allowance for expected credit losses provided for above are as follows:
Expected
credit loss
Rate
0%
0%
25%
50%
100%
Carrying
amount
2022
USD
‘000
Allowance for
expected credit
losses 2022
USD
‘000
Allowance for
Carrying
amount expected credit
losses 2021
USD
‘000
2021
USD
‘000
3,764
229
35
77
174
4,279
–
–
9
6
69
84
2,745
127
69
45
38
3,024
–
–
17
23
38
78
Not overdue
0-3 months overdue
3-4 months overdue
4-5 months overdue
Over 5 months overdue
58 Tissue Regenix Group plc
Notes to the Consolidated Financial Statements
continued
The average credit terms with customers is 40 days (2021: 40 days).
Movements in the impairment allowance for trade receivables are as follows:
At 1 January
Increase during the year
Receivables written off during the year as uncollectable
Unused amounts reversed
At 31 December
2022
USD
‘000
78
161
(21)
(134)
84
2021
USD
‘000
43
135
3
(103)
78
17. Cash and cash equivalents
Cash and cash equivalents held by the Group at 31 December 2022 were USD5.9 million (2021: USD7.7 million).
The Directors consider that the carrying amount of these assets approximate to their fair value and do not believe
that the Group is exposed to any significant credit risk on its cash.
18. Trade and other payables
Trade payables
Taxes and social security
Accruals
2022
USD
‘000
3,438
39
2,033
5,510
2021
USD
‘000
2,574
51
1,619
4,244
The Directors consider that the carrying amount of trade and other payables approximates to their fair value.
Trade payables and accruals principally comprise amounts outstanding for trade purchases and ongoing costs.
The Group has financial risk management policies to ensure that all payables are paid within the credit time frame
and no interest is generally charged on balances outstanding.
Annual Report and Accounts 2022 59
Notes to the Consolidated Financial Statements
continued
19. Loans and borrowings
Term loan
Revolving credit
Gross borrowings
Capitalised debt issue costs
Current loans and borrowings
Non-current loans and borrowings
Maturity analysis
6 months to 1 year
1 year to 2 years
2 years to 5 years
2022
USD
‘000
2,000
4,387
6,387
(129)
6,258
1,000
5,258
6,258
1,000
5,258
–
6,258
2021
USD
‘000
2,000
2,649
4,649
(184)
4,465
–
4,465
4,465
–
1,000
3,465
4,465
In June 2019, the Group signed a US bank facility with MidCap.
The facility includes a term loan and a revolving credit facility, incurring interest at LIBOR rate plus 6.75% and
LIBOR rate plus 4.5% respectively, subject to a floor LIBOR rate of 2.25%.
Repayment of the term loan is due to commence in July 2023 with the payment of 12 monthly instalments, with
a final maturity date of June 2024.
The revolving credit facility is repayable in full by June 2024 and, at 31 December 2022, had a maximum drawdown
facility of USD5 million, extended from USD3 million since the prior year.
Additional debt issue costs of USD29,177 have been capitalised against the loan during the year ended
31 December 2022 and are being amortised over the life of the facilities.
In respect of the term loan, MidCap holds security over the Group’s freehold property in San Antonio and certain
Intellectual Property (‘IP’). The carrying amount of these assets at 31 December 2022 is USD4.7 million (2021:
USD4.8 million) and USD nil (2021: USD nil), respectively.
The revolving credit is subject to a rolling 12-month revenue covenant which is measured on a monthly basis.
The movement in total loans and borrowings during the year was:
2022
USD
‘000
4,465
1,708
85
6,258
2021
USD
‘000
3,788
602
75
4,465
At 1 January
Cash flows - financing activities
Non-cash movements
At 31 December
60 Tissue Regenix Group plc
Notes to the Consolidated Financial Statements
continued
In January 2023, the Group agreed new terms in respect of the MidCap facility, as follows:
l
l
l
l
The replacement of LIBOR by SOFR (Secured Overnight Financing Rate) due to the discontinuation of LIBOR.
The floor SOFR rate is 3%.
The extension of the maturity date of both the term loan and the revolving credit facility to 1 January 2028.
The term loan will be repaid over 48 months commencing January 2024.
The early payment of the exit fee of USD0.25 million (versus at maturity) related to the USD5.5 million term
loan that was repaid in 2019. This fee will be charged against the revolving credit facility. An exit fee of 4.5%
on the remaining balance of the term loan (USD0.09 million) will be due on maturity or earlier settlement if
applicable.
An increase in the funds available under the terms of the revolving credit facility up to USD10 million with a
fee payable in respect of each facility expansion of 0.5%.
20. Deferred tax liabilities
At 1 January
Release to the income statement
At 31 December
2022
USD
‘000
640
(120)
520
2021
USD
‘000
760
(120)
640
The deferred tax liability relates to intangible assets recognised on the acquisition of CellRight Technologies LLC.
See note 14.
21. Lease liabilities
Current lease liabilities
Non-current lease liabilities
At 31 December
2022
USD
‘000
134
3,216
3,350
2021
USD
‘000
118
3,364
3,482
Maturity analysis of leases
The maturity of the gross contractual undiscounted cashflows due on the Group’s lease liabilities is set out below
based on the period between 31 December 2022 and the contractual maturity date.
Land and buildings
Less than 6 months
6 months to 1 year
1 year to 2 years
2 years to 5 years
2022
USD
‘000
203
203
412
3,107
3,925
2021
USD
‘000
202
208
420
3,518
4,348
Disclosure of additions to and carrying amounts of right-of-use assets by class has been provided in note 13.
Annual Report and Accounts 2022 61
Notes to the Consolidated Financial Statements
continued
The movement in lease liabilities during the year was:
At 1 January
Cash flows – financing activities
Non-cash movements - additions
Non-cash movements – foreign exchange movement
At 31 December
Effect of leases on financial performance
Depreciation of right-of-use assets
Interest expense
2022
USD
‘000
3,482
(357)
291
(66)
3,350
2022
USD
‘000
164
291
455
2021
USD
‘000
3,407
(403)
456
22
3,482
2021
USD
‘000
103
301
404
The Group leases properties used for its operations in the UK and US.
UK property: Five-year fixed lease which includes a break clause in 2023.
US property: Five-year fixed lease which includes an option to purchase up to November 2024.
The Group’s average effective borrowing rate for leases on 31 December 2022 was 9% (2021: 9%).
22. Share capital
Allotted issued and fully paid
Ordinary Shares of 0.1 pence
Deferred Shares of 0.4 pence
2022
USD
‘000
9,167
6,783
15,950
2021
USD
‘000
9,164
6,783
15,947
As permitted by the provisions of the Companies Act 2006, the Company does not have an upper limit to its
authorised share capital.
The Ordinary Shares are fully paid and entitle the holder to full voting rights, to full participation and to distribution
of dividends.
The Deferred Shares are not listed on AIM, do not give the holders any right to receive notice of, or to attend or
vote at, any general meetings, and have no entitlement to receive a dividend or other distribution other than to a
return of capital in the event of a winding up (and only after the holders of the Ordinary Shares have received the
sum of £1 million per share).
Due to the difference in functional and presentation currencies of the parent company, foreign exchange
differences can arise between the allotted, issued and fully paid share capital, which is presented at historical
rates of exchange.
62 Tissue Regenix Group plc
Notes to the Consolidated Financial Statements
continued
Issued Ordinary Share capital
On 21 June 2022, the Company issued 2,717,391 Ordinary Shares of 0.1 pence each at a price of 0.0276 pence
per share, raising gross proceeds of USD9,203 (£7,500), in respect of the exercise of share options.
Movements in share capital during the period were as follows:
At 1 January 2021 and 2022
Allotment of shares
At 31 December 2022
23. Reserves
Reserves of the Group represent the following:
Ordinary Shares
Deferred Shares
Number
7,033,077,499
2,717,391
Number
1,171,971,322
–
7,035,794,890
1,171,971,322
Share premium
Consideration paid in excess of the nominal value of shares allotted, net of the costs of issue.
Merger reserve
Consideration and nominal value of the shares issued during a merger where the fair value of the assets
transferred differ.
Reverse acquisition reserve
Retained earnings of a reverse acquisition.
Reserve for own shares
Shares held on trust for the benefit of employees – Employee Benefit Trust.
Share-based payment reserve
Accumulated charges/(credits) made under IFRS 2 in respect of share-based payments.
Cumulative translation reserve
Foreign exchange differences arising on the translation of foreign operations and any net gain/(loss) on the hedge
of net investment in foreign subsidiaries. The cumulative translation reserve also represents the net effect of the
fact that the functional currency of the parent undertaking is GBP, while its reporting currency is USD, resulting in
exchange differences on translation of the parent undertakings equity.
Retained deficit
All current and prior period retained losses.
24. Non-controlling interest
As at 1 January
Attributable profit/(loss) for the year
As at 31 December
2022
USD
‘000
(950)
99
(851)
2021
USD
‘000
(757)
(193)
(950)
The non-controlling interest has a 50% (2021: 50%) equity holding in GBM-V GmbH.
GBM-V GmbH contributed revenue of USD3.1 million (2021: USD2.8 million) and a loss before tax of
USD0.4 million (2021: USD0.2 million) after elimination of intercompany trading for the year ended 31 December
2022. Further financial information relating to GBM-V GmbH can be found in note 5.
Annual Report and Accounts 2022 63
Notes to the Consolidated Financial Statements
continued
25. 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 the Company’s Ordinary Shares.
The Company also operates a jointly owned EBT share scheme for senior management under which the trustee
of the Company-sponsored EBT has acquired shares in the Company, 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.
On 15 March 2022, the Company issued 97,943,367 share options with an exercise price of 0.1 pence per Ordinary
Share, which vest in three equal tranches and can be exercised up until the tenth anniversary of the grant date.
The awards have been granted in two tranches:
l
40% of the awards vest according to a market -related performance condition which is based on the growth
in the Company’s Total Shareholder Return (‘TSR’) over the performance period. The percentage of the TSR
tranche awards which vest is as follows:
Company’s TSR growth
Less than 50%
At least 50% but less than 75%
At least 75% but less than 100%
100% or more
Percentage of TSR
tranche awards
which vest
Nil
25%
50%
100%
The performance period is the three years from 1 January 2022 to 31 December 2024.
l
60% of the awards vest according to non-market performance conditions as follows:
20% based on annual revenue targets;
20% based on annual profitability targets; and
20% based on personal performance targets.
All options are equity settled. The Company has no legal or constructive obligation to repurchase or settle the
options in cash.
Share options and employee interests in jointly owned EBT shares, which are not exercised within 10 years from
the date of grant will expire.
The latest date for exercise of the options is 15 March 2032 and, unless otherwise agreed, the options are forfeited
if the employee leaves the Group before the options vest, or in respect of those options which have already vested,
are not exercised within an agreed time period.
64 Tissue Regenix Group plc
Notes to the Consolidated Financial Statements
continued
Details of the share options and EBT shares outstanding at the end of the year were as follows:
EMI Unapproved
options
Number
’000
options
Number
’000
EBT
shares
Number
’000
SAYE
options
Number
’000
LTIP
options
Number
’000
1,220,437
–
(464,902)
1,843,474
–
(1,346,603)
47,739,128
16,112,800
–
– (24,275,360)
–
– 82,116,698
–
Weighted
average
Total exercise
Number
’000
price
’000
66,915,839
82,116,698
(26,086,865)
1.80p
0.10p
0.81p
755,535
496,871
16,112,800
23,463,768
82,116,698
122,945,672
0.91p
–
–
(240,000)
–
–
–
–
–
–
–
–
–
– 97,943,367
–
–
(889,548)
(2,717,391)
–
–
97,943,367
(2,717,391)
0.10p
0.28p
(240,000) 12.5p
0.10p
(889,548)
515,535
496,871
16,112,800
20,746,377 179,170,517
217,042,100
0.54p
–
333,381
16,112,800
–
–
16,446,181
5.10p
Outstanding at
1 January 2020
Granted
Lapsed
Outstanding at
31 December 2021
Granted
Exercised
Expired
Lapsed
Outstanding at
31 December 2022
Exercisable at
31 December 2022
Options which were not eligible to be exercised are subject to employment period and market-based vesting
conditions, some of which had not been met at 31 December 2022.
The options outstanding at 31 December 2022 had an estimated weighted average remaining contractual life of
8.1 years (2021: 6.7 years), with an exercise price ranging between 0.1p and 19.75p, as follows:
l
l
l
l
l
l
315,389 with an exercise price of 19.75p
363,636 with an exercise price of 11p
333,381 with an exercise price of 9.88p
16,112,800 with an exercise price of 5p
20,746,377 with an exercise price of 0.276p
179,170,517 with an exercise price of 0.1p
The fair value of the first tranche of options granted during the year has been calculated using the Monte Carlo
model as it is considered to be a more appropriate model for options granted with multiple performance
conditions. The second tranche has been calculated using the Black-Scholes model.
The significant inputs into the models for the IFRS 2 valuation were as follows:
Exercise price (pence)
Expected volatility (%)
Expected life (years)
Risk-free rates (%)
Expected dividends
Grants in year
97,943,367
Options
0.1p
50%
2.5 years
1.36%
–
The expected volatility was calculated using the historic volatility of the Company’s TSR for the period 2013 to
2022, adjusted for general market volatility due to the COVID-19 pandemic.
Annual Report and Accounts 2022 65
Notes to the Consolidated Financial Statements
continued
The fair value of the options granted during the year was USD0.3 million (2021: USD0.4 million). The share price
at the date of grant was 0.39 pence per Ordinary Share.
In the year ended 31 December 2022, the Company recognised a total expense of USD0.25 million (2021:
USD0.1 million) in respect of employment-related securities.
On 21 June 2022, 2,717,391 options were exercised at a price of 0.0276 pence per share, raising gross proceeds
of USD9,203 (£7,500). The share price at the date of exercise was 0.425 pence per Ordinary Share
Other share options
In 2019, warrants were issued to MidCap as part of the Group’s new borrowing facilities. Options over
3,096,798 shares were granted at an exercise price of 5.74p. These options are equity-settled and remain
exercisable. The weighted average remaining contractual life is 6.5 years (2021: 7.5 years).
26. Financial instruments
Financial risk management objectives
Management provides services to the business, coordinates access to domestic and international financial
markets and monitors and manages the financial risks relating to the operations of the Group. These risks include
cash flow interest risk, credit risk, liquidity risk, capital risk and foreign currency risk.
The policies for managing these risks are regularly reviewed and agreed by the Board.
The Group does not enter into or trade financial instruments, including derivative financial instruments, for
speculative purposes.
Capital risk management
The Group manages its capital to ensure that entities in the Group will be able to continue as going concerns
while maximising the return to shareholders through the optimisation of the debt and equity balance. The Group’s
overall strategy is to minimise costs and liquidity risk.
The capital structure of the Group consists of cash and cash equivalents, interest-bearing loans and borrowings,
leases and equity attributable to owners of the parent company, issued share capital, reserves and retained earnings.
The Group plans its capital requirements on a regular basis and, as part of this review, the Directors consider the
cost of capital and the risks associated with each class of capital.
Categories of financial instruments
Financial assets measured at amortised cost
Cash and cash equivalents
Trade receivables
Other receivables
Financial liabilities measured at amortised cost
Trade payables
Accruals
Loans and borrowings
Lease liabilities
66 Tissue Regenix Group plc
2022
USD
‘000
5,949
4,195
19
10,163
2022
USD
‘000
3,438
2,033
6,258
3,350
15,079
2021
USD
‘000
7,709
2,946
38
10,693
2021
USD
‘000
2,574
1,619
4,465
3,482
12,140
Notes to the Consolidated Financial Statements
continued
Fair value of financial instruments
The Directors consider that the carrying amount of its financial instruments approximates to their fair value.
Interest rate risk management
The Group’s policy on interest rate management is agreed at Board level and is reviewed on an ongoing basis.
The risk in the potential movement in interest received on cash surpluses held is limited due to little movement
on deposit interest rates.
The Group’s main interest rate risk arises from long term loans and borrowings which incur interest charges at a
fixed rate above established parameters. See note 19. The Directors have performed a sensitivity analysis for the
impact of changes in the interest rate charged on its loans and borrowing and have determined that a
1% (increase)/decrease in the interest rate would result in an additional (charge)/credit to the income statement
of USD0.07 million.
Credit risk management
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss
to the Group.
The maximum exposure to credit risk at the reporting date to recognised financial assets is the carrying amount,
net of any provisions for impairment of those assets. The Group does not hold any collateral.
Credit risk arising from trade debtors is mitigated by a robust procedure including credit reviews on all customers
and establishing a credit allowance that reflects any known risk.
Generally, financial assets are written off when there is no reasonable expectation of recovery.
The credit risk on liquid funds (cash) is considered to be limited as a result of the Group’s policy that the
counterparties are financial institutions with an A rating or higher, assigned by international credit rating agencies.
Liquidity risk management
Ultimate responsibility for liquidity risk management rests with the Board of Directors, which has built an
appropriate liquidity risk management framework for the management of the Group’s short-medium and
long- term funding and liquidity management requirements. The Group manages liquidity risk by maintaining
adequate cash reserves and by continually monitoring forecast and actual cash flow.
With the exception of loans and borrowings and leases, outlined in notes 19 and 20 respectively, the Group’s
financial liabilities mature within six months.
At 31 December 2022, the Group was compliant with all the terms relating to the MidCap facilities. During the
year the Group increased the funds available to it under the terms of the facility from USD2 million to USD5 million
and since the year end, the Group has been able to further increase the funds available to it to USD10 million.
Foreign currency risk management
The Group undertakes certain transactions denominated in foreign currencies, with the result that exposure to
exchange rate fluctuations arises. However, there is limited currency risk within the Group at the current time as
all its financial assets and the majority of its liabilities are denominated in the functional currency of the relevant
entity. The Group holds small amounts of cash balances in currencies other than the functional currency of the
relevant entity and therefore there is little exposure to fluctuations in exchange rates which would impact the
income statement of the Group.
The carrying amounts of the Group’s foreign currency denominated monetary liabilities at the reporting date are
immaterial and as a result the Group has not undertaken foreign currency sensitivity analysis.
The Group does not normally hedge against the effects of movements in exchange rates.
Annual Report and Accounts 2022 67
Notes to the Consolidated Financial Statements
continued
27. Related party transactions
Amounts due from subsidiaries
The Group has taken advantage of the exemptions contained within IAS 24 Related Party Disclosures from the
requirement to disclose transactions between group companies as these have been eliminated on consolidation.
Remuneration of key management personnel
Key management personnel are regarded as being members of the Company’s Board of Directors. The
remuneration of key management personnel of the Group is set out below in aggregate for each of the categories
specified in IAS 24 Related Party Disclosures.
2022 2021
Short-term employee benefits
Share-based payments
Charges for
the year
USD
‘000
Amounts
owing
USD
‘000
Charges for
the year
USD
‘000
Amounts
owing
USD
‘000
1,190
116
1,306
5
–
5
1,115
79
1,194
–
–
–
The amounts outstanding are unsecured and will be settled in cash. No guarantees have been given or received.
All transactions with related parties have been conducted on an arm’s length basis.
For more information on the salary and fees, bonus and benefits included above, see the Directors’ Remuneration
Report.
28. Events after the reporting date
Loans and borrowings
In January 2023, the Group agreed new terms in respect of the MidCap facility, the details of which are set out in
note 19.
29. Ultimate controlling party
The Directors believe that there is no ultimate controlling party.
68 Tissue Regenix Group plc
Company Statement of Financial Position
As at 31 December 2022
Assets
Non-current assets
Investment in subsidiary companies
Intercompany loans
Current assets
Trade and other receivables
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 deficit
Total equity
Notes
C4
C5
C6
C7
C8
C9
C9
C9
C9
2022
£’000
18,975
32,881
51,856
26
1,832
1,858
53,714
(248)
(248)
53,466
11,723
94,294
10,884
574
(64,009)
53,466
2021
£’000
18,836
15,722
34,558
117
4,679
4,796
39,354
(231)
(231)
39,123
11,720
94,290
10,884
987
(78,758)
39,123
The Company has elected to take the exemption permitted by section 408 of the Companies Act 2006 not to
present the Parent Company's Statement of Income or Statement of Comprehensive Income.
The parent company’s profit for the year ended 31 December 2022 is £14.1 million (2021: £0.2 million).
The Company financial statements were approved by the Board of Directors and authorised for issue on 20 March
2023 and are signed on its behalf by:
Daniel Lee
Chief Executive Officer
Company number: 05969271
Annual Report and Accounts 2022 69
Company Statement of Changes in Equity
For the year ended 31 December 2022
At 31 December 2020
Transactions with owners in
their capacity as owners:
Share-based payments
Total transactions with
owners in their capacity as owner
Loss for the year
At 31 December 2021
Transactions with owners in
their capacity as owners:
Exercise of share options
Transfer to retained reserves in
respect of lapsed/expired/exercised
share options
Share-based payments
Total transactions with owners
in their capacity as owner
Profit for the year
At 31 December 2022
Share-
based
Share
capital
£’000
11,720
Share
Merger
payment
Retained
premium
£’000
94,290
reserve
£’000
10,884
reserve
£’000
907
deficit
£’000
(78,514)
Total
£’000
39,287
–
–
–
–
–
–
–
–
–
80
80
–
–
–
80
80
(244)
(244)
11,720
94,290
10,884
987
(78,758)
39,123
3
–
–
3
–
4
–
–
4
–
–
–
–
–
–
11,723
94,294
10,884
–
–
7
(628)
215
(413)
–
574
628
–
–
215
628
222
14,121
14,121
(64,009)
53,466
70 Tissue Regenix Group plc
Notes to the Company Financial Statements
For the year ended 31 December 2022
C1. Principal accounting policies
Tissue Regenix Group plc (the ‘Company’) is a public company limited by shares, domiciled and incorporated in
England under the Companies Act 2006.
The address of the registered office is Unit 3, Phoenix Court, Lotherton Way, Garforth LS25 2GY. The Company’s
shares are admitted to trading on the Alternative Investment Market (‘AIM’) of the London Stock Exchange.
The presentation currency of these financial statements is pound sterling (‘£’), which is the currency in which the
Company raises funds. The functional currency is pound sterling.
These financial statements were prepared in accordance with Financial Reporting Standard 101: Reduced
Disclosure Framework (‘FRS 101’).
In preparing these financial statements, the Company applies the recognition and measurement requirements of
UK adopted International Accounting Standards, amended where necessary to comply with the Companies Act
2006.
Under section 408 of the Companies Act 2006, the Company is exempt from the requirement to present its own
statement of income.
In these financial statements, the Company has applied the exemptions available under FRS 101 in respect of
the following disclosures:
l
l
l
l
l
Cash flow statement and related notes;
Disclosure in respect of transactions with wholly-owned subsidiaries;
Disclosure in respect of capital management;
The effects of new but not yet effective IFRSs; and
Disclosures in respect of the compensation of key management personnel.
As the consolidated financial statements include the equivalent disclosures, the Company has also taken the
exemptions under FRS 101 available in respect of the following disclosures:
l
l
IFRS 2 Share-based payments in respect of group settled share-based payments; and
Certain disclosures required by IFRS 13 Fair value measurement and the disclosures required by IFRS 7
Financial instrument disclosures.
The principal accounting policies adopted are the same as those set out in the Group’s consolidated financial
statements and have, unless otherwise stated, been applied consistently to all years presented in these financial
statements.
The financial statements have been prepared on the historical cost basis. Historical cost is generally based on
the fair value of the consideration given in exchange for assets.
Judgements made by the Directors in the application of these accounting policies that have a significant effect
on the financial statement and estimates with a significant risk of material adjustment in the next year are
discussed in C2.
Investments
Fixed asset investments, including investments in subsidiaries, are stated at cost and reviewed for impairment if
there are any indications that the carrying value may not be recoverable.
Annual Report and Accounts 2022 71
Notes to the Company Financial Statements
continued
C2. Critical accounting estimates and judgements
In the application of the Company’s accounting policies, the Directors are required to make judgements, estimates
and assumptions about the carrying value of the assets and liabilities that are not readily apparent from other
sources. The estimates and associated assumptions are based on historical experience and other factors that
are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates
are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period
of the revision and future periods if the revision affects both the current and future periods.
The following are the critical judgements and estimations that the Directors have made in the process of applying
the Company’s accounting policies and that have the most significant effect on the amounts recognised in the
financial statements.
Estimates
Recoverability of investments and loans to subsidiary undertakings
The Company has investments and outstanding loans from its subsidiaries. However, there is a risk that the
carrying amount of the Company’s investments and loans will exceed the recoverable amount.
At 31 December 2022, the Company had outstanding loans due from its subsidiaries of £82 million (2021:
£79.6 million).
In accordance with IFRS 9 Financial Instruments, as the subsidiary undertakings cannot repay the loans at the
reporting date, the Company has made an assessment of expected credit losses. Having considered multiple
scenarios on the manner, timing, quantum and probability of recovery on the receivables, a cumulative lifetime
Expected Credit Loss (ECL) of £49.3 million has been recognised at 31 December 2022 (2021: £63.9 million),
resulting in a reversal credit of £14.6 million.
The calculation of the allowance for lifetime ECL requires a significant degree of estimation and judgement, in
particular in determining the probability-weighted likely outcome for each scenario considered. The Directors
assessment of ECL included repayment through future cash flows over time (which are inherently difficult to
forecast for the Company at its current stage of development) and also the amount that could be realised through
an immediate sale of the subsidiary undertakings. The Directors assessment of repayment through future cash
flows included scenarios where the loan was not recovered in full. The Directors allocated a probability weighting
of 90% to scenarios where recovery would be repayment over time, and 10% to the scenario where immediate
sale of the subsidiary undertaking was contemplated.
Given the quantum of the provision recorded at 31 December 2022, the outcome is sensitive to the key
assumptions inherent in the calculation. The carrying value of amounts owned by subsidiary undertakings at
31 December 2022 is disclosed in note C5 to the financial statements.
C3. Staff costs
The average monthly number of employees (including Directors) was:
2022
Number
2021
Number
6
1
7
6
2
8
Directors
Administration staff
72 Tissue Regenix Group plc
Notes to the Company Financial Statements
continued
Their aggregate remuneration comprised:
Wages and salaries
Social security costs
Other pension costs
Share-based payments
C4. Investment in subsidiary companies
At 1 January
Pushdown of share-based payment charges
At 31 December
At 31 December 2022, the Company held the following investments in subsidiaries:
Place of
incorporation
Proportion
(or registration)
of ownership
and operation
interest
Proportion
of voting
power held
Directly held
Tissue Regenix Limited
Indirectly held
TRX Wound Care Limited
TRX Orthopaedics Limited
TRX Cardiac Limited
TRX Vascular Limited
Tissue Regenix Holdings Limited
Tissue Regenix Wound Care Inc
TRX Orthopedics Inc
Tissue Regenix Holdings Inc
CellRight Technologies LLC
GBM-V GmbH
UK 100%
UK 100%
UK 100%
UK 100%
UK 100%
UK 100%
US 100%
US 100%
US 100%
US 100%
Germany 50%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
50%
2022
£’000
453
46
9
76
584
2022
£’000
18,836
139
18,975
2021
£’000
471
51
13
56
591
2021
£’000
18,813
23
18,836
Principal activity
Regenerative medicine
Regenerative medicine
Regenerative medicine
Regenerative medicine
Dormant
Holding company
Regenerative medicine
Regenerative medicine
Holding company
Regenerative medicine
Regenerative medicine
The registered office address for all companies incorporated in the UK is Unit 3, Phoenix Court, Lotherton Way,
Garforth, Leeds LS25 2GY.
The registered office address for all companies incorporated in the US is 1808 Universal City Boulevard, Universal
City, Texas 78148.
The registered office address for GBM-V GmbH is Schillingallee 68, 18057, Rostock, Germany.
C5. Intercompany loans
Intercompany loans
Expected credit losses
Non-current assets
2022
£’000
82,184
(49,303)
32,881
32,881
2021
£’000
79,593
(63,871)
15,722
15,722
Annual Report and Accounts 2022 73
Notes to the Company Financial Statements
continued
The Company has entered into a number of unsecured related party transactions with its subsidiary undertakings.
Intercompany loans include a gross sum of £0.8 million (2021: £0.8 million), before a provision of £0.7 million
(2021: £0.7 million), due from the Group’s EBT.
No interest was receivable on loans to subsidiary undertakings and the loans are repayable on demand, except
for a £13.2 million (2021: £13.2 million) unsecured loan to Tissue Regenix Limited which incurs interest at
4% above the Bank of England base rate and which is repayable in 2024.
Intercompany loans are classified as non-current as the timing or repayment is uncertain and unlikely to be within
one year.
C6. Trade and other receivables
Prepayments and accrued income
VAT recoverable
C7. Trade and other payables
Trade payables
Taxes and social security
Accruals
C8. Share capital
Allotted, issued and fully paid
Ordinary Shares of 0.1 pence
Deferred Shares of 0.4 pence
2022
£’000
17
9
26
2022
£’000
38
13
197
248
2022
£’000
7,036
4,687
11,723
2021
£’000
108
9
117
2021
£’000
20
23
188
231
2021
£’000
7,033
4,687
11,720
As permitted by the provisions of the Companies Act 2006, the Company does not have an upper limit to its
authorised share capital.
The Ordinary Shares are fully paid and entitle the holder to full voting rights, to full participation and to distribution
of dividends.
The Deferred Shares are not listed on AIM, do not give the holders any right to receive notice of, or to attend or
vote at, any general meetings, have no entitlement to receive a dividend or other distribution other than to a return
of capital in the event of a winding up (and only after the holders of the Ordinary Shares have received the sum of
£1 million per share).
Issued Ordinary Share capital
On 21 June 2022, the Company issued 2,717,391 Ordinary Shares of 0.1 pence each at a price of 0.0276 pence
per share, raising gross proceeds of £7,500, in respect of the exercise of share options.
74 Tissue Regenix Group plc
Notes to the Company Financial Statements
continued
Movements in share capital during the period were as follows:
At 1 January 2021 and 2022
Allotment of shares
At 31 December 2022
C9. Reserves
Reserves of the Group represent the following:
Ordinary shares
Deferred shares
Number
7,033,077,499
2,717,391
Number
1,171,971,322
–
7,035,794,890
1,171,971,322
Share premium
Consideration paid in excess of the nominal value of shares allotted, net of the costs of issue.
Merger reserve
Consideration and nominal value of the shares issued during a merger where the fair value of the assets
transferred differ.
Share-based payment reserve
Accumulated charges/(credits) made under IFRS 2 in respect of share-based payments.
Retained deficit
All current and prior period retained losses.
Annual Report and Accounts 2022 75
Other
Notice of Annual General Meeting
Notice is given that the 2023 Annual General Meeting of Tissue Regenix Group plc (‘Company’) will be held at
the offices of DLA Piper UK LLP, 160 Aldersgate St, Barbican, London EC1A 4HT on 27 April 2023 at 11.00 a.m.
for the following purposes:
To consider and, if thought fit, pass the following resolutions as ordinary resolutions:
1.
To receive the Company’s annual accounts, strategic report and Directors’ and Auditors’ reports for the year
ended 31 December 2022.
2.
3.
4.
5.
6.
7.
8.
9.
To reappoint David Cocke, 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 Shervanthi Homer Vanniasinkam, who retires by rotation, as a Director of the Company.
To reappoint Daniel Lee, who retires by rotation, as a Director of the Company.
To reappoint Brian Phillips, who retires by rotation, as a Director of the Company.
To reappoint Trevor Phillips, who retires by rotation, as a Director of the Company.
To reappoint RSM UK Audit LLP as auditors of the Company.
To authorise the Directors to determine the remuneration of the auditors.
10. That, pursuant to section 618(1)(b) of the Companies Act 2006 (‘Act’) and Article 56 of the Company’s
articles of association, every one hundred ordinary shares of £0.001 each in the capital of the Company
which are in issue (each being an ‘Existing Share’) be consolidated (the ‘Consolidation’) into one
consolidated ordinary share of £0.10 in the capital of the Company (each being a ‘Consolidated Share’),
such Consolidation to take effect either: (a) in the event that either resolution 11 or 13 is not passed,
immediately after close of business on the dealing day immediately prior to the admission of the
Consolidated Shares to trading on the AIM market operated by the London Stock Exchange plc (‘AIM’); or
(b) if resolutions 11 and 13 are passed, immediately after close of business on the dealing day immediately
prior to the New Ordinary Shares (as such term is defined in resolution 11) being admitted to trading on AIM
(‘Consolidation Time’), each such Consolidated Share having the same rights and being subject to the same
restrictions (save as to nominal value) as the Existing Ordinary Shares as set out in the Company’s articles
of association for the time being, provided that, where such Consolidation results in any shareholder being
entitled to a fraction of a Consolidated Share, such fraction shall be dealt with by the Directors as they see
fit pursuant to the powers available to them under the Company’s articles of association.
11. That, subject to resolutions 10 and 13 being passed:
11.1 immediately after the Consolidation has occurred, in accordance with section 618(1)(a) of the Act,
each of the Consolidated Shares be sub-divided into:
11.1.1 one ordinary share of 0.1 pence (each being a ‘New Ordinary Share’) and
11.1.2 one redesignated deferred share of 9.9 pence (each being a ‘Class 2 Deferred Share’),
each such New Ordinary Share and each such Class 2 Deferred Share having attached thereto
the rights and restrictions as respectively set out in the Amended Articles (as such term is defined
in resolution 13);
11.2 the sub-division and redesignation of the Consolidated Shares into New Ordinary Shares and Class 2
Deferred Shares shall be deemed to confer upon the Company irrevocable authority at any time thereafter
to retain the certificates for such Class 2 Deferred Shares, pending the Directors appointing a custodian and
arranging for the transfer of the Class 2 Deferred Shares to a custodian in both cases pursuant to Article 9
of the Amended Articles;
11.3 any cancellation of the Class 2 Deferred Shares for no consideration by way of a reduction of capital shall
not involve a variation of the rights attached thereto; and
76 Tissue Regenix Group plc
Other
continued
11.4 the rights attached to the Class 2 Deferred Shares shall not be deemed to be varied or abrogated by the
creation or issue of any new shares ranking in priority or pari passu with or subsequent to such shares or
by any amendment or variation to the rights of any other class of shares in the Company.
12. That, pursuant to section 551 of the Act, the Directors be generally and unconditionally authorised to allot
Relevant Securities:
12.1 up to an aggregate nominal amount equal to either: (a) £23,452.64 in the event that resolutions 11
and 13 are passed; or (b) £2,345,264 in all other circumstances;
12.2 comprising equity securities (as defined in section 560(1) of the Act) up to a further aggregate nominal
amount equal to either: (a) £23,452.64 in the event that resolutions 11 and 13 are passed; or (b)
£2,345,264 in all other circumstances, in connection with an offer by way of a rights issue:
12.2.1 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
12.2.2 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 27 July 2024 (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).
To consider and, if thought fit, pass the following resolutions as special resolutions:
13. That the new articles of association produced to the meeting and, for the purposes of identification, initialled
by a Director (the ‘Amended Articles’), be adopted as the articles of association of the Company in
substitution for, and to the exclusion of, the Company’s existing articles of association.
14. That, subject to the passing of resolution 12 and pursuant to section 570 of the Act, the Directors be and
are generally empowered to allot equity securities (within the meaning of section 560 of the Act) for cash
pursuant to the authority granted by resolution 12 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:
14.1 in connection with an offer of equity securities (whether by way of a rights issue, open offer or
otherwise, but, in the case of an allotment pursuant to the authority granted by paragraph 12.2 of
resolution 12, such power shall be limited to the allotment of equity securities in connection with an
offer by way of a rights issue):
14.1.1 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
14.1.2 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,
Annual Report and Accounts 2022 77
Other
continued
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
14.2 otherwise than pursuant to paragraph 14.1 of this resolution up to an aggregate nominal amount equal
to either: (a) £7,035.79 in the event that resolution 11 is passed as an ordinary resolution; and resolution
13 is passed as a special resolution or (b) £703,579 in all other circumstances,
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 27 July 2024 (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).
15. 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 in the capital
of the Company provided that:
15.1 the maximum aggregate number of ordinary shares in the capital of the Company which may be
purchased shall be either:
15.1.1 7,035,795 Consolidated Shares, in the event that resolution 10 is passed as an ordinary
resolution and either of resolutions 11 or 13 is not passed; or
15.1.2 7,035,795 New Ordinary Shares, in the event that resolutions 11 and 13 are passed; or
15.1.3 703,579,489 Existing Ordinary Shares, in all other circumstances,
(the Existing Ordinary Shares, the Consolidated Shares, and the New Ordinary Shares together
being ‘Shares’);
15.2 the minimum price (excluding expenses) which may be paid for a Share is an amount equal to the
nominal value of such Share;
the maximum price (excluding expenses) which may be paid for a Share is an amount equal to
105 per cent of the average of the middle market quotations for a Share as derived from the Daily
Official List of the London Stock Exchange plc for the five business days immediately preceding the
day on which the purchase is made and (unless previously revoked, varied or renewed) this authority
shall expire at the conclusion of the next annual general meeting of the Company after the passing
of this resolution or on 27 July 2024 (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
Kirsten Lund
Secretary
20 March 2023
Registered office
Unit 3, Phoenix Court
Lotherton Way
Garforth
Leeds
England
LS25 2GY
Registered in England and Wales No. 05969271
78 Tissue Regenix Group plc
Other
continued
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 the close of business on 25 April
2023 (or, if the meeting is adjourned, close of business on the date which is two working days before the
date of the adjourned meeting) shall be entitled to attend and vote at the meeting in respect of the number
of shares registered in their name at that time. Changes to entries in the register of members after that time
shall be disregarded in determining the rights of any person to attend or vote (and the number of votes they
may cast) at the meeting.
Proxies
2.
A shareholder is entitled to appoint another person as his or her proxy to exercise all or any of his or her
rights to attend and to speak and vote at the meeting. A proxy need not be a shareholder of the Company.
A shareholder may appoint more than one proxy in relation to the meeting, provided that each proxy is
appointed to exercise the rights attached to a different share or shares held by that shareholder. Failure to
specify the number of shares each proxy appointment relates to or specifying a number which, when taken
together with the numbers of shares set out in the other proxy appointments, is in excess of the number of
shares held by the shareholder may result in the proxy appointment being invalid.
A proxy may only be appointed in accordance with the procedures set out in notes 3 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.
You can vote either:
•
•
•
•
By logging on to HYPERLINK "http://www.signalshares.com" www.signalshares.com and following
the instructions;
If you are an institutional investor you may also be able to appoint a proxy electronically via the
Proxymity platform, a process which has been agreed by the Company and approved by the Registrar.
For further information regarding Proxymity, please go to HYPERLINK “https://www.proxymity.io.”
www.proxymity.io. Your proxy must be lodged by 11.00 a.m. on 25 April 2023 in order to be considered
valid or, if the meeting is adjourned, by the time which is 48 hours before the time of the adjourned
meeting. Before you can appoint a proxy via this process you will need to have agreed to Proxymity’s
associated terms and conditions. It is important that you read these carefully as you will be bound by
them and they will govern the electronic appointment of your proxy. An electronic proxy appointment
via the Proxymity platform may be revoked completely by sending an authenticated message via the
platform instructing the removal of your proxy vote.
You may request a hard copy form of proxy directly from the registrars, Link Group by emailing at
HYPERLINK “mailto:shareholderenquiries@linkgroup.co.uk” shareholderenquiries@linkgroup.co.uk or
by calling them on 0371 664 0300 if calling from the UK, or +44 (0) 371 664 0300 if calling from outside
of the UK. Calls are charged at the standard geographic rate and will vary by provider. Calls outside
the United Kingdom will be charged at the applicable international rate. Lines are open between 09.00
- 17.30, Monday to Friday excluding public holidays in England and Wales);
in the case of CREST members, by utilising the CREST electronic proxy appointment service in
accordance with the procedures set out below.
In order for a proxy appointment to be valid a form of proxy must be completed. In each case the form of
proxy must be received by PXS 1, Link Group, Central Square, 29 Wellington Street, Leeds, LS1 4DL, no later
than 11.00 a.m. on 25 April (or, if the meeting is adjourned, no later than 48 hours before the time of any
adjourned meeting).
Annual Report and Accounts 2022 79
Other
continued
3.
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.
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 &
International 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 Group (ID RA10) no later than 11.00 a.m. on 25 April 2023 (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 Group 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 & International Limited does not make available special procedures in CREST for any particular
messages. Normal system timings and limitations will therefore apply in relation to the input of CREST Proxy
Instructions. It is the responsibility of the CREST member concerned to take (or, if the CREST member is a
CREST personal member or sponsored member or has appointed a voting service provider(s), to procure
that his or her CREST sponsor or voting service provider(s) take(s)) such action as shall be necessary to
ensure that a message is transmitted by means of the CREST system by any particular time. In this
connection, CREST members and, where applicable, their CREST sponsors or voting service providers are
referred, in particular, to those sections of the CREST Manual concerning practical limitations of the CREST
system and timings.
The Company may treat a CREST Proxy Instruction as invalid in the circumstances set out in
Regulation 35(5)(a) of the Uncertificated Securities Regulations 2001.
Corporate representatives
4.
A shareholder that 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.
5.
Unless otherwise indicated on the Form of Proxy, CREST, Proxymity or any other electronic voting instruction,
the proxy will vote as they think fit or, at their discretion or withhold from voting.
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 page 18 of the enclosed annual report and accounts.
80 Tissue Regenix Group plc
Other
continued
Share capital
8.
As at 20 March (the last practicable business day prior to the date of this notice), the Company’s issued
share capital comprised 7,035,794,890 ordinary shares of 0.1 pence each and 1,171,971,322 deferred shares
of 0.4 pence each. Each ordinary share carries the right to vote at a general meeting of the Company. The
deferred shares carry no voting rights. Therefore, the total number of voting rights as at the date of this
document is 7,035,794,890.
Annual Report and Accounts 2022 81
Company and Adviser Information
DIRECTORS
Jonathan Glenn
Daniel Lee
David Cocke
Shervanthi Homer-Vanniasinkam
Trevor Phillips
Brian Phillips
COMPANY SECRETARY
Kirsten Lund
COMPANY WEBSITE
www.tissueregenix.com
COMPANY NUMBER
05969271 (England & Wales)
REGISTERED OFFICE
Unit 3
Phoenix Court
Lotherton Way
Garforth
LS25 2GY
AUDITOR
RSM UK Audit LLP
Central Square
29 Wellington Street
Leeds
LS1 4DL
Non-Executive Chair
Chief Executive Officer
Chief Financial Officer
Non-Executive Officer
Non-Executive Officer
Non-Executive Officer
REGISTRAR
Link Group
PXS 1
Link Group
Central Square
29 Wellington Street
Leeds
LS1 4DL
LEGAL ADVISERS
DLA Piper UK LLP
Princess Exchange
Princess Square
Leeds
LS1 4BY
NOMINATED ADVISER AND BROKER
FinnCap Group
1 Bartholomew Close
London
EC1A 7BL
Squire Patton Boggs UK LLP
6 Wellington Place
Leeds
LS1 4AP
82 Tissue Regenix Group plc
Tissue Regenix Group plc
Unit 3
Phoenix Court
Lotherton Way
Garforth LS25 2GY
www.tissueregenix.com