Annual Report and Financials
for year ended 31 December 2023
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 to the members of Tissue Regenix Group plc
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 2023 1
Business Overview
Tissue Regenix Group plc (‘Tissue Regenix’ or the ‘Company’ or the ‘Group’) (AIM: TRX) is an international,
pioneering medical technology company focused 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 and 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, urology/gynaecology 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, Gewebebank Mecklenburg-Vorpommern (‘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 European Union (‘EU’). The Group had an average of 76 employees and 6 Directors in 2023.
2 Tissue Regenix Group plc
Chair & Chief Executive Officer’s Statement
“2023 was another year of solid progress for the Group and is a great credit to the management team behind it.
We have seen record revenues, Tissue Regenix’s first full-year positive adjusted EBITDA, improved cash
conversion and many operational highlights including further regulatory approvals, and new and improved
relationships with our many partners. The diligent focus of our highly motivated team is allowing us to broaden
the Group’s capacity, continue to grow the business at an impressive rate and, importantly, build shareholder
value. The Board of Tissue Regenix is confident and excited about the future and looks forward to further
significant progress in 2024.”
Jonathan Glenn, Chair
2023 performance
The Group’s performance continued the positive trajectory set over the past three years, achieving numerous
milestones over the reporting period. We saw record revenues for the Group, with top-line revenue growth of 20%
during FY2023. This faster than market growth was driven by the continued adoption of our products through
our strategic partners as well as our direct distribution activities. The combination of sales growth and a tight
focus on overheads translated into positive adjusted EBITDA* for the year – a first for Tissue Regenix – and
contributed to an increase in our cash balance over the second half of 2023. These results could not have
happened without the hard work and dedication of all the employees of the Group. We are proud of what we have
achieved so far and believe that a bright future lies ahead for Tissue Regenix.
* (Earnings before interest, taxes, depreciation and amortisation and adjusted for share-based payments)
Strategy
Our focus on the 4S strategic elements of Supply, Sales Revenue, Sustainability and Scale continues to provide
the foundation of how we operate, execute and drive growth.
The continued investment that we are making and the focus we are placing on tissue Supply has enabled us to
sustain and grow in line with our business needs as well as manage the inventories more efficiently and provide
tissue to other tissue processors. Processing capacity, another key element in Supply, has kept pace with the
Group’s growth despite resource-related headwinds, as experienced more broadly across numerous industries.
Our focus on Sales Revenue and Sustainability has been realised in revenue growth and a positive adjusted
EBITDA for the year. Our ability to increase our cash balance in the second half of 2023 was a milestone for the
organisation and a further demonstration of Sustainability.
Obtaining the regulatory approvals for our third-party logistics partner provides us the opportunity and flexibility
to Scale our allograft business in markets outside the U.S. (‘OUS’).
The Group’s solid 4S foundation enables us to continue growth plans for Tissue Regenix and deliver shareholder
value.
Growth pillars
The 4S strategy enables us to support defined tactical activities moving forward. In 2023, we implemented clearly
defined growth pillars to provide further direction and help sustain the growth trajectory for the Group.
The four growth pillars are:
1.
Base Business
We will continue to grow our core businesses with our existing and new partners/distributors through the
BioRinse and dCELL product lines. This base business includes existing specialities and geographic markets.
We will support this growth with logical new product enhancements and clinical- or market-related activities.
This growth will also be supported by our current infrastructure and planned capacity enhancements.
Annual Report and Accounts 2023 3
Chair & Chief Executive Officer’s Statement
continued
2.
Tissue Partnerships
Our focus on tissue supply is at the core of our growth as it drives our capacity. We have built supply volumes
that exceed our internal needs, so we have the opportunity to provide donor tissue to other tissue processors
(‘Released Donor Tissue’). We also have the responsibility of meeting the donor’s desire to have their tissue
utilised to help others in a safe and expeditious manner. Our tissue supply operation adds value by
performing the medical reviews and chart releases required for tissue suitable for immediate processing by
other domestic and OUS partners. These activities help us to manage our recovery partner relationships
and provide opportunities for tissue that we currently do not utilise in our processing operations.
3. Market Expansion
We will continue to broaden the markets for our products via a two-pronged approach. The need for tissue-
based products in the surgical marketplace is substantial, and we currently participate in limited segments.
We intend to expand into additional surgical specialities by first generating clinical experience at institutions
where we have an existing base business. This will serve as the stepping stone for expansion with additional
customers and institutions.
We also plan to expand into markets that have a need for allograft tissue-based products but currently have
limited availability. Our establishment and receipt of approval to distribute tissue through a third-party
logistics partner provides the conduit for opportunities into the EU. OrthoPure XT, our xenograft tissue
product, received a CE Mark in 2020, and we continue to identify opportunities to distribute this product in
markets that recognise the CE Mark.
4.
Regulatory Evolution
The bulk of our revenue comes from allograft tissue-based products, which are regulated as Section 361
HCTP (Human, Cell and Tissue Products) in the U.S. The requirements mandated for Section 361 products
place limits on changes to the allograft tissue; if one works beyond these limits then the product will need
to be regulated as a medical device. Our facility in San Antonio has been established to meet the
requirements of producing Section 361 products. We intend to evolve and change this facility to become
one that is capable of meeting medical device requirements. This evolution will give us the opportunity to
innovate with human tissue and broaden opportunities for Tissue Regenix to distribute tissue into certain
international markets that regulate human tissue allografts as medical devices.
BioRinse
The BioRinse portfolio was our top performer over the financial year, reporting sales of USD20,133k (2022:
USD16,049k), driven by the U.S. orthopaedics, wound care and dental markets. The 25% year-on-year growth was
led by confidence in our Concelltrate, AmnioWorks and other demineralised bone matrix (‘DBM’) products in addition
to our Released Donor Tissue relationships. Our ability to supply these products in 2022 translated into 2023
through the conviction of our strategic partners to increase their orders and grow their respective businesses. Our
customers expect a level of service, and we remain flexible and responsive to our customers’ needs.
We continue to grow at above-market rates due to the superior performance of our products, excellent customer
service and adaptability to customer needs. Our growth rate is above market for the period, but there is still opportunity
for additional growth. We saw greater than 20% growth from the prior year within our top five product families.
Our focus on supply ensures an adequate and continuous supply of donated human tissue. As stewards of the
gift of human tissue donation, we use every effort to ensure that the tissue is utilised to produce our high-quality
products. Our management of human tissue donation and the processing of the tissue to meet product demands
can result in excess tissue in our inventories. We have been able to utilise these inventories, complete the medical
review and release process and provide these value-added tissues to other processors for their own needs. This
ultimately meets our obligation to make sure that the donated human tissue is used efficiently.
In 2023, after some unanticipated regulatory delays, we received approval to distribute tissue from our third-party
logistics partner in the Republic of Ireland. This approval has opened up additional markets within the EU. We also
announced our agreement with Spineart España to distribute allograft tissue into Spain. Other markets and
agreements are still in the discussion phase as our plan is to explore opportunities for focused commercial
distribution in the Europe, Middle East and Africa (‘EMEA’) markets.
4 Tissue Regenix Group plc
Chair & Chief Executive Officer’s Statement
continued
dCELL
In 2023, the commercial reorganisation of the dCELL business continued to provide growth opportunities for this
division. dCELL is a direct business with a regional sales management team managing distributors in their
respective territories. This business is highly impacted by Group Purchasing Organization (‘GPO’) approvals for
our products, which we currently have with the top five GPOs. As a result, we have placed management in areas
that align with our approvals and will continue to pursue opportunities to help us achieve coverage over the entire
U.S. market. To increase our coverage footprint, we have targeted areas where we have already established
business. In 2023, our aim was to add 32 new distributors over the year. Pleasingly, we more than doubled that
goal by adding 66 distributors by 31 December 2023, and, as a result, revenue growth for this division increased
17% year on year to USD6,183k (2022: USD5,301k).
The OrthoPure® XT product is the only non-human biologic tissue graft available for certain ligament
reconstruction procedures. In 2022, we introduced this product into two new markets and added the UK in 2023.
Our efforts to expand distribution into Australia were impacted by regulatory approval delays. Additional markets
were temporarily put on hold as we resolved inventory issues in Leeds. Efforts to expand distribution opportunities
will resume this year.
In 2023, clinical use and traction of the OrthoPure XT device continued to gain momentum in Italy, and we expect
the initial positive Italian experiences of the OrthoPure XT in broader clinical use to be presented at the European
Society of Sports Traumatology, Knee Surgery and Arthroscopy (‘ESSKA’) meeting in 2024. The manuscript on the
five-year clinical experience from the initial regulatory approval study is in final preparation and planned for
submission to a major European publication. During 2023, we also conducted a retrospective study reviewing
DermaPure® use in addressing Achilles tendinopathy. A poster has been presented at the 2024 American College of
Foot and Ankle Surgeons meeting, and a manuscript is to be submitted for publication soon after the event.
GBM-V
The GBM-V joint venture operates in a GMP (Good Manufacturing Practice) level facility that has been producing
commercial corneal products since 2016. In 2023, the joint venture faced supply issues in Germany due to
customers requiring the donor tissue to be sourced from donors who not only were COVID free but also had no
history of COVID infection. While this impacted the growth of tissue supply, the joint venture realised USD3,177k
(2022: USD3,126k) of revenue, which was marginally up on the prior year. Demand for corneal tissue continues
to outpace supply, and efforts to minimise COVID concerns, alongside efforts by our tissue recovery partner to
increase supply, will continue in 2024.
New strategic partners and distributors
During 2023, we achieved commercial milestones for the Group as we saw record revenue months across all our
human tissue product families – musculoskeletal, dermis and amnion. These milestones were achieved through
the growth of our commercial partners and securing additional strategic partnerships/distributor relationships.
For BioRinse, our top customers remained consistent from the prior year. We saw a 13% increase in the number
of units shipped but a 2% decrease in the number of orders we processed due to a trend towards larger orders.
In 2023, we signed BioRinse agreements with five new strategic partners and six stocking distributors who target
specialities such as the spine and dental markets.
For dCELL, the number of distributors added by the end of the year was 206% greater than targeted. Overall
revenue was up 17% versus the prior year, which represented record annual revenue for this division. The number
of products invoiced for dCELL products increased by 3% versus the prior year, and the revenue increase was due
in large part to our product mix shifting to those with higher Average Selling Prices (‘ASPs’). Our meshed
DermaPure products helped to drive this revenue increase, and this sales traction is expected to continue into
2024.
We continued to pursue the commercialisation of products that utilise our core technology platforms, provide
product line extensions that are faster to market, address a specific clinical or commercial need and have a
customer in place. In 2023, due to customer requests, we introduced a smaller DermaPure Mesh product.
To address market expectations for our sports medicine tendon grafts, we implemented new processing protocols
and reagents to improve product safety and implemented a low-dose sterilisation process.
Annual Report and Accounts 2023 5
Chair & Chief Executive Officer’s Statement
continued
We added UK distribution of the OrthoPure XT in 2023. Further adoption of this unique product into select
European markets was impacted by mid-year production issues related to a bioburden spike within the processing
line at our Leeds facility. The temporary halt to production affected inventory availability, so we paused market
expansion during this period as we needed existing inventory to service current customers. Despite this brief
setback, we look forward to the resumption of discussions with additional EU distribution partners.
During 2023, we continued to pursue our global commercialisation plans for our tissue-based products. We have
already described how our third-party logistics partner in the Republic of Ireland will be central to our human
allograft tissue opportunities in the EMEA region. We signed an agreement with a Chinese distributor for our
OrthoPure XT product and have initiated the regulatory approval process for China, which required a regulatory
submission, and a human clinical evaluation in China is planned. The resources needed for this involved process
are being shared with our distribution partner. Another notable example of the global market demand for our
OrthoPure XT product was adding a distributor in Australia. The CE mark for this product is recognised in Australia,
although additional regulatory approvals are required there before marketing. The review process in Australia has
been slower than anticipated due to the volume of submissions within the Therapeutic Goods Administration.
Expanding demand for our existing products with new and existing partners as well as product line extensions
and product improvements are anticipated to drive our continued organic growth in 2024 and further utilise our
facility and tissues.
Operations
2023 was another year of growth for the Group as we continued operations throughout the year at all our locations
without significant impacts from any external influences.
For our allograft tissue business, the supply of donor tissue is directly linked to our growth plans. To meet the
need of our commercial partners and our focus on Supply, in 2023, we sourced 31% more musculoskeletal and
dermis donors and released 38% more donors versus the prior year. These shifts reflected the demand for our
processing of musculoskeletal donors and demand from other tissue processors for our Released Donor Tissue.
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. All tissue we receive needs to go through an internal review
and release process to ensure the safety and quality of the tissue before it is processed. We continue to expand
our relationships with other tissue processors located domestically or outside the U.S. who wish to have access
to this tissue. This segment of our business has grown dramatically over the prior year and has become one of
the growth pillars for our organisation. This programme aligns with our responsibility to honour the gift of tissue
donation through utilisation in a timely manner into products that can help patients.
The addition of two sterile packaging rooms in the existing San Antonio facility from our Phase 1 expansion in
2021 brought the total number of clean rooms to seven and provided additional capacity and flexibility. We
continue to identify ways in which we can be more efficient with the flexibility we now have with room utilisation
and processing scheduling. As a result, we have been able to respond to orders or unanticipated changes in
almost half the amount of time prior to the Phase 1 expansion. These rooms effectively provide approximately
USD40m of revenue generation potential and delayed our need for the Phase 2 expansion and its 8–10 additional
clean rooms until 2025, and we do not anticipate the need for additional equity funding for this further expansion.
In late 2023, we implemented Sage X3, an enterprise resource planning (‘ERP’) system, in our U.S. operations.
This ERP product is used to manage financial aspects of the business, and we believe that this investment will
significantly increase efficiencies for the Group. The transition from our legacy system has been smooth, and we
continue to refine the system to meet the needs of all groups within the organisation. The implementation of Sage
X3 was a multi-year effort involving all segments of the business and two consulting groups and is a strong
strategic investment for the Group that will support our growth plans.
We believe that the contribution of increased processing efficiency, increased capacity and state-of-the-art
systems will allow us to enjoy improved gross margins over time.
6 Tissue Regenix Group plc
Chair & Chief Executive Officer’s Statement
continued
The pandemic is behind us
In the U.S., the issues of healthcare institution staff shortages still exist in some geographic areas. We have seen
elective procedure volumes improve. Supply chain issues have been improved, but costs across all aspects of our
operations have increased since the pandemic. We will absorb most of these increases through efficiencies in our
operation. We began the year with issues related to labour shortages, but by year end we saw some normalisation
with respect to candidates applying for open positions at our U.S. business.
Organisational changes
We will continue to invest in resources that will grow our organisation across all divisions. Additions and
adjustments to our commercial team in BioRinse and dCELL will seek to bring additional commercial opportunities
to our organisation and spread Tissue Regenix’s footprint in the U.S. and OUS.
Outlook
Sales Revenue and Sustainability will continue to be the priorities of the 4S’s in 2024. We will continue to build on
this base to provide a more solid foundation for the future. Our four growth pillars are the tactical areas of focus
that will be built on this foundation.
The BioRinse products will continue to be the dominant revenue contributor in 2024. Growth will come from
existing and new partners as well as new products. Our dCELL business is also expected to show further growth
as we expand into new domestic territories where we historically have not had much presence. We will also use
our current footholds to expand into other surgical specialities, such as oncology and colorectal surgery, as
clinicians become familiar with our practise areas. The inventory of Released Donor Tissue will be distributed to
other processors who have a need for tissue that is ready to be processed. Our GBM-V joint venture will continue
to identify opportunities to increase their tissue supply and address any issues that have impacted their growth.
Our geographic outreach with our human tissue dCELL and BioRinse portfolios is only just beginning as we have
our registered logistics partner, which provides the opportunity to move into numerous EU markets. We will also
seek registrations and distribution partners in other OUS markets for our human allograft. Interim supply
challenges are behind us, and OrthoPure XT will be introduced into additional EU and other markets in 2024.
Our evolution into a medical device manufacturer will provide us the flexibility to be more innovative with our
products versus 361 HCTP products. A medical device registration is rare for a tissue processor of our size but
positions us well to consider not only novel products but also entry into markets that regulate allograft tissue as
a medical device.
In 2024, we will begin some of the preliminary planning activities to build our Phase 2 capacity expansion.
In addition to our organic growth plans, we will continue to examine acquisition opportunities that would allow
us to scale the business for additional longer-term growth.
In 2021, the Board of Tissue Regenix set in place our 4S strategy. It has been a highly successful strategy for the
Group and continues to provide structure and clear direction for everything that we do. Three years later, we are
in a strong position, with market-leading products that are distributed globally, production facilities that allow us
to fulfil our current growth ambitions, a balance sheet to support these growth opportunities and a team of people
that are motivated, talented and driven with a very clear idea of where we are taking the business. I am proud to
be a part of the Tissue Regenix Group and excited for its future prospects in 2024 and beyond.
Daniel Lee
Chief Executive Officer
18 March 2024
Annual Report and Accounts 2023 7
Financial Review
Statement of Comprehensive Income
Revenue
During the year ended 31 December 2023, revenue increased by 20% to USD29,493k (2022: USD24,476k).
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 25% to USD20,133k (2022: USD16,049k), driven by growth
in Released Donor Tissue and continued growth across the allograft segments, led by the AmnioWorks and
Concelltrate 100 product families.
l Revenue from the dCELL division increased by 17% to USD6,183k (2022: USD5,301k) as the commercial
reorganisation implemented in 2022 continued to mature.
l The Group’s joint venture, GBM-V, based in Rostock, Germany, grew modestly by 2% to USD3,177k
(2022: USD3,126k).
Cost of sales and gross profit
Gross profit for the year was USD14,040k (2022: USD11,258k). Gross margin percentage increased to
48% (2022: 46%).
Included in costs of sales is cost of product – USD13,750k (2022: USD12,013k) – and third-party commissions
– USD1,703k (2022: USD1,205k).
Administrative expenses
During 2023, administrative expenses increased by USD1,166k, or 9%, to USD14,434k (2022: USD13,268k), driven
primarily by additional staffing costs.
Adjusted EBITDA
During 2023, the Group reported adjusted EBITDA of USD925k (2022 loss: USD626k). This shift into positive
adjusted EBITDA was driven by increased sales revenue and gross margin percentage and aided by management
of administrative expenses to achieve operating leverage. In 2023, EBITDA was USD583k (2022 loss: USD875k)
and is adjusted for share based payments of USD342k (2022: USD249k).
Finance income/charges
Finance income of USD26k (2022: USD8k) primarily represented interest earned on cash deposits. Finance
charges for the year were reported at USD1,301k (2022: USD826k) and related primarily to interest charges and
associated costs in respect of the MidCap Financial Trust (‘MidCap’) loan arrangement. Included in finance
charges for 2023 is USD248k relating to a financing fee associated with the former MidCap loan termination.
Loss for the year
The loss for the year was USD1,657k (2022: loss: USD2,596k), resulting in a basic loss per share of 2.43 cents
(2022: loss per share: 3.83 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
2023, a refund of USD352k was receivable (2022: USD401k). The year-on-year reduction was a result of the
collection of aged research and development credits during 2023.
Income tax payable in the U.S. amounted to USD310k (2022: USD nil). Gross tax losses carried forward in the UK
were USD60,361k (2022: USD58,900k). 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.
8 Tissue Regenix Group plc
Financial Review
continued
Statement of Financial Position
As at December 2023, the Group had net assets of USD29,355k (2022: USD30,401k), of which cash in hand totalled
USD4,650k (2022: USD5,949k).
Inventory levels decreased 5% against the 20% sales revenue increase at USD10,358k (2022: USD10,882k) as the
BioRinse and dCELL segments managed stock levels closely to increase inventory turnover while also keeping
adequate stock levels to meet customer demand. The Released Donor Tissue offering of the BioRinse segment
turns over more rapidly than processed grafts.
Intangible assets increased slightly to USD15,135k (2022: USD15,061k) in the year. A further USD450k of
development costs, relating primarily to clinical research, were capitalised in the year (2022: USD709k). The
balance of movements in this account relate to amortisation and exchange adjustments.
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 goodwill as at 31 December 2023.
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 as at 31 December
2023 (2022: USD nil). See notes 4 and 14.
Working capital increased slightly in the year to USD9,705k (2022: USD9,442k), driven by a decrease in payables
made possible by improved debtor collections and lower inventory investment. As mentioned above, the Released
Donor Tissue offering of the BioRinse segment turns over more rapidly, which speeds up the sales cycle, allowing
for faster cash generation. The Statement of Financial Position includes income tax receivable of USD352k
(2022: USD401k) in respect of UK research and development tax credits.
Loans and borrowings and lease liability
Borrowings include the USD5,985k debt facility through MidCap and the USD3,410k lease liability related to the
Group’s leasehold in San Antonio (2022: USD6,258k and USD3,350k, respectively). The MidCap debt facility
includes USD2,000k in respect of the term loan and USD4,148k in respect of the revolving credit facility, net of
USD163k of capitalised debt issue costs. In January 2023, the Group elected to increase its current revolving
credit facility from USD5,000k to USD10,000k and extend the maturity until 2028. Repayment of the term loan in
equal instalments commenced in February 2024. See Note 19.
Dividend
No dividend has been proposed for the year to 31 December 2023 (2022: 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 pages 43 to 50.
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 2025 (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. Until sufficient
cash is generated from its operations, the Group remains reliant on cash reserves of USD4,650k at 31 December
2023 and the ongoing support of MidCap (borrowings of USD5,985k at 31 December 2023) and other lending
institutions to meet its working capital requirements, capital investment programme and other financial
commitments. Repayment on the MidCap borrowings commenced in February 2024.
Annual Report and Accounts 2023 9
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 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 that the term loan repayment begins in 2024. The
availability of these facilities is dependent upon compliance with a rolling 12-month revenue covenant that 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 the 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.
Principal risks and uncertainties
The principal risks and uncertainties facing the Group are set out on pages 12 to 14.
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
18 March 2024
10 Tissue Regenix Group plc
Market Overview
The Group addresses three main segments of the healthcare market, all of which are billion-dollar opportunities
and forecast to grow rapidly over the next five years: the bone graft substitute market, the skin substitute market
and the soft tissue biologics market.
Bone graft substitutes market
According to GRc Market Insights, (in a bespoke market research report) in 2023, there were 4.3 million bone graft
and bone graft substitute procedures, of which two million were performed in the U.S., and the market experienced
a 3.7% growth rate compared with 2022. Bone grafts and bone graft substitutes are most often used in surgical
cases where there is a breakage in the bone or there is a void in or between the bones due to several factors, such
as age and degenerative diseases. The bone graft/bone graft substitute market comprises allograft (donor tissue)
bone chips/particulates, synthetic bone graft substitutes, bone morphogenetic proteins (‘BMPs’)/growth factors,
DBMs and cell-based matrices. Globally, the market was worth USD3.9b in 2023 and is projected to reach USD6.0b
by 2029 with a CAGR of 6.1%. While, historically, autograft (self-donated) bone was considered the gold-standard
treatment for patients requiring bone grafts, the amount of autograft bone available is often insufficient, and the
graft-harvesting procedure presents a number of comorbidities, including donor site pain and infection. As a result,
a rising demand for alternatives to autograft bone has been observed. Due to the continued increase of bone graft
procedures, a continued shift towards biologically active bone graft substitutes, such as DBM products, are expected.
The Group focusses on the DBM market, which is worth USD660m globally in 2023 and is projected to grow to
over USD800m by 2027. The US DBM market size is over USD330m and is part of the bone substitute market,
which approximates USD1.5b and is growing at a CAGR of 4.1% (2023–2028). The market drivers of growth in
this segment are listed below:
l Increasing procedure volume of spinal fusion, trauma fixation and joint reconstruction and dental surgeries
due to growing aging and obese populations
l Companies’ continued efforts on product innovation and line extension to create a comprehensive
Orthobiologics platform
l Ongoing research for materials that promote the bone healing triad: osteoinductivity, osteoconductivity and
osteogenesis
Key competitors in this segment include Musculoskeletal Transplant Foundation, LifeNet, RTI Surgical, Community
Tissue Services, AlloSource and XTANT.
Skin substitute market
According to the market research firm Biomed GPS, the U.S. wound biologics market primarily services non-healing
chronic wounds, estimated to be 7 million annually. Hard-to-heal diabetic foot ulcers and venous leg ulcers are
projected to grow 2.0% and 2.4%, respectively, over the next five years and will account for nearly half of all
hard-to-heal wounds. Approximately 14.5% of U.S. Medicare beneficiaries have at least one type of wound or
wound-related infection. The U.S. wound biologics market comprises skin substitutes/cell tissue products, topical
delivery/drugs and collagen/active dressings. The largest segment in 2023 was skin substitutes at USD1.8b. Skin
substitutes consist of five segments, including allograft products, both dermal and amniotic, xenografts (animal
tissue), cell-based bioengineered and synthetic products. A crackdown on reimbursement in the physician office
to enforce reimbursement at average selling price +6% versus wholesale acquisition cost negatively impacted
revenue for those companies active in this segment during 2022 and will continue into 2023.
In addition to an aging population and rising prevalence of chronic wounds, the market drivers of growth in this
segment are listed below:
l The use of skin substitutes provides an alternative therapy to heal chronic wounds, showing superior
efficacy.
l Increased awareness of advanced therapies, such as skin substitutes.
l Expansion of wound care clinics, mobile wound care clinics,and wound care specialists treating chronic
wounds.
Annual Report and Accounts 2023 11
Market Overview
continued
Key competitors in this segment include Organogenisis, Integra, MiMedx and ColoPlast.
Soft tissue biologics market
According to GRc Market Insights, in 2023, there were 2.5 million global soft tissue ortho-biologic procedures.
Soft tissue biologics are used in surgical procedures to replace, reinforce or repair tendons or ligaments that have
been torn or damaged in the human body. They are made from substances that are naturally found in the body.
Soft tissue biologics comprise either autografts, allografts, xenografts (animal tissue–based products, including
OrthoPure XT) or synthetic grafts and used in regeneration and repair of the musculoskeletal tissues. A growing
interest in exercise and recreational sports is contributing to an increased number of sports injuries worldwide,
which is driving the number of orthopaedic soft tissue reconstruction procedures. Increased prevalence of
orthopaedic injuries amongst the aging population across the globe and the choice of treatment methods that
restore body function with minimum side effects further contribute to the increased demand of orthopaedic soft
tissue reconstruction procedures. In 2023, from an orthopaedic soft tissue perspective, North America, Europe,
Asia-Pacific and Middle East/Africa represented USD3.0b in total annual demand in 2023, with a 5.1% CAGR
(2023–2028). The market drivers of growth in this segment are:
l Increasing number of sports injuries
l Increasing aging and obese population worldwide
l Increasing prevalence of orthopaedic medical conditions
l Widespread adoption of arthroscopic treatment techniques
l Increasing physician and patient education in emerging markets
Key competitors in this segment include Musculoskeletal Transplant Foundation, LifeNet, RTI Surgical, Community
Tissue Services, AlloSource and Corin Group.
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, which 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 that 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’s 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.
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 moved 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. In 2023,
one customer accounted for 13% of the Group’s revenue (2022: one customer with 13% of the Group’s revenue).
The Group continues to augment its product portfolio with line extensions and new product launches providing
diversified clinical applications. During 2023, the Group announced three new products for the dCELL and BioRinse
12 Tissue Regenix Group plc
Market Overview
continued
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 and
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 Group 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 that 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 tissue, failure to source high-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 U.S., which has expanded the number of donor agencies
that we work with in the U.S. 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 that provides
processing capacity of approximately 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 fundraiser 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 historically altered the timeline to profitability. The Group increased its revolving credit
facility from USD5 million to USD10 million and extended 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 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 and loss of financial
information and have potential financial implications. The Group was subject to a cybersecurity incident in January
Annual Report and Accounts 2023 13
Market Overview
continued
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 that are compliant with the local markets in which we operate.
Product liability insurance is in place in case of adverse events or other negative outcomes.
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 U.S. FDA. This did not require any changes for our Group at this time. In 2023, the
Centers for Medicare & Medicaid Services considered significant changes to the physician office and hospital
outpatient reimbursement for skin substitutes and wound care products, including amnion (birth tissue
products), which could have affected the BioRinse segment. These changes were not implemented but could
be revisited in the future. We have implemented regulatory activities designed to mitigate the risks of future
reimbursement changes.
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 U.S. political and economic landscape and the continued disruptions
caused by the Ukraine and Gaza conflicts 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 or political 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.
Lingering effects of the pandemic
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 2023, the Group remained flexible and proactive in
responding to and addressing its needs by expanding its supply chain while still growing the sales line.
14 Tissue Regenix Group plc
Market Overview
continued
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
The Group’s key performance indicators (‘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, adjusted EBITDA and cash
resources (see the Chair and Chief Executive Officer’s statement on pages 3 to 7). 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, employee retention, employee engagement, internal employee
promotions/skill level increases and increasing manufacturing capacity and supply.
Annual Report and Accounts 2023 15
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 3 of
this report. The principal risks and uncertainties are discussed on pages 12 to 13 of this report. Throughout the year,
management and Directors look to meet with, and update, institutional and retail investors through a variety of
platforms, be it by face-to-face meeting, telephone conversation, the annual general meeting (‘AGM’), or retail investor
forum, website, social media or news announcements. Key topics of engagement for investors throughout the year
were around: the increased capacity as a result of the completion of the Phase 1 expansion in the BioRinse segment,
planned new product introductions, the results of the commercial reorganisation of the dCELL division 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 we
value both practical experience and 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:
lunch and learn sessions that exposed the employees to the workings of other departments to gain a better
understanding of the company’s operations and an updated and improved health and safety programme at the
CellRight Technologies facility in Universal City, Texas.
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. 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 24.
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 pages 21-24.
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 16 was approved by the Board on 18 March 2024.
On behalf of the Board
Daniel Lee
Chief Executive Officer
18 March 2024
16 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 U.S. 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 and has co-authored two book chapters on bone grafts
and regulatory considerations.
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 to 2017. Prior to this, David was Senior Director for Finance and Operations at
Kinetic Concepts from 1993 to 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 13 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 2023 17
Governance
continued
Christine Rowley
Technical and Operations Director, UK
Christine Rowley has over 19 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 healthcare
benefits. Christine has a Bachelor of Science degree in Biological Sciences from the University of Exeter (UK).
Tina Trimble
Senior Vice President, Donor Services, U.S.
Tina Trimble has over 30 years’ 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 to
2020 and Chair of the Processing and Distribution Council. Prior to that, Tina served on the AATB Accreditation
Committee and 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, U.S.
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, Texas. 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 a contributor to the FDA
international cadre.
Lance received his Bachelor of Science degree in Biotechnology from Oklahoma State University.
18 Tissue Regenix Group plc
Governance
continued
Kirsten Lund
EMEA Business Director and Company Secretary
Kirsten Lund brings over a decade of finance experience to 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 the U.S. and advised the Board on all financial matters relating
to the Group. Starting in 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’ experience in the medical device and biologics industry. She joined Tissue Regenix
in 2013 as Senior Director of Clinical Affairs and was appointed VP of Clinical Affairs in 2015. Patti’s experience
provides a unique combination of sales and clinical roles, such as Director of Professional Education, Corporate
Healthcare Director and Clinical Services Director for Systagenix (Acelity); Post-Acute National Accounts Director
and District Sales Manager for Acelity (3M); Home Health Director of Wound Care for Memorial Hermann
Healthcare System; and Account Manager for Hill-Rom. She was also the owner and President of Positive
Outcomes, Inc., where she developed clinical and financial tools (HealQuest, HealPROtocols and Healware) to
drive standardized processes for wound management. HealPROtocols was acquired by Acelity (now 3M).
Patti is a Registered Nurse and Certified Wound Care Nurse. She graduated from the Louisiana State University
Health Sciences Center School of Nursing.
Annual Report and Accounts 2023 19
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 is currently Chair of Surgical Innovations plc, Torbay Pharmaceuticals Ltd,
and a NED at Amber Therapeutics Ltd. Jonathan joined the Group in January 2016. He serves on the Audit
Committee.
Daniel Lee
Chief Executive Officer
(see details on page 17)
David Cocke
Chief Financial Officer
(see details on page 17)
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 has extensive experience in the UK and the U.S. in corporate development, M&A and operations in
the pharmaceutical and life science industries, including previously held positions as Chairman of the Board at
NEPeSMO (2017–2023), 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 in
Microbiology from the University of Reading, a PhD in 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 BAcc 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.
20 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 2023, 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, having the capacity to produce
various graft products, and the ability to efficiently place donor tissue with other processors
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 and 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.
In 2023, we continued to build upon the 4S foundation and added four growth pillars to drive our organic tactical
decision-making within the Group. The growth pillars are:
l Base Business – Growth of our base businesses with existing and new customers
l Tissue Partnerships – Growth of our unique capacity to provide Released Donor Tissue and partially
processed tissue to outside parties
l Market Expansion – Growth into additional surgical specialities and geographic regions globally with our
products and technology platforms
l Regulatory Evolution – Growth expansion into markets requiring medical device approvals or with products
classified as medical devices
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 12 to 13 of this report.
The Group maintains a central finance team, excluding the day-to-day finance activities at our joint venture,
GBM-V. 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 reviews monthly financial reports including KPIs 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,
Annual Report and Accounts 2023 21
Corporate Governance Statement
continued
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 20.
Composition of the Board
The Board comprises three independent 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, 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 eight 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 2023.
In 2023, there were eight Board meetings. All Directors were present for all meetings, with the exception of two
meetings where a single Director was absent. In addition, there were three Audit Committee meetings, with no
absences, and two 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 AGM 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.
22 Tissue Regenix Group plc
Corporate Governance Statement
continued
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.
The Audit Committee comprises 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 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 in both the UK and the US.
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 as follows:
l Well-established financial reporting and control systems.
l The Board actively identifies, evaluates and monitors the risks inherent in the business and ensures 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 assesses 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 to 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.
Annual Report and Accounts 2023 23
Corporate Governance Statement
continued
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 and energy consumption and in the Group’s environmental sustainability efforts. During 2023, the Group
implemented new environmental sustainability initiatives related to plastics recycling to reduce its environmental
footprint.
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 that 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 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 the 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 2023,
the Group undertook two ‘Investor Meet Company’ retail investor presentations as part of the full-year and interim
results investor roadshows, with 69 individuals attending the preliminary results presentation in March 2023 and
70 individuals attending the interim results presentation in September 2023.
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 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.
24 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 that may be terminated on no less than three months’ notice.
Companies with securities listed on the 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 2023 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 2023 25
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 members 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 2023
was as follows:
Salary and
fees Bonus
USD'000 USD'000
Total December Total December
Benefits 2023 2022
USD'000 USD'000 USD'000
Jonathan Glenn 87 –
Shervanthi Homer-Vanniasinkam 37 –
Daniel Lee 305 305
David Cocke 237 118
Brian Phillips 44 –
Trevor Phillips 44 –
– 87 87
– 37 37
11 621 581
12 367 344
– 44 43
– 44 43
754 423
23 1,200 1,135
In 2022, the total bonus payments were USD383k and benefits were USD27k.
No share options were exercised by Directors in either of the years reported. 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.
The Committee has agreed to standardise the bonus potential for Executive Directors in 2024 and, as such, have
agreed to amend the bonus potential for the CFO to 100%, which brings that position in line with the CEO and his
bonus potential.
Directors’ shareholdings
Directors’ interests in the shares of the Company, including family interests at 31 December 2023, were as follows:
31 December 31 December 31 December 31 December
2023 2023 2022 2022
Number % Number %
Jonathan Glenn 406,000 0.58 40,600,000 0.58
Shervanthi Homer-Vanniasinkam 16,282 0.02 1,628,222 0.02
Trevor Phillips 55,357 0.08 5,535,771 0.08
Brian Phillips 160,000 0.23 15,322,756 0.22
Daniel Lee 86,907 0.12 7,262,200 0.10
David Cocke 71,205 0.10 5,692,000 0.08
Note: 2023 numbers are post-consolidation of the Company’s shares at 100:1
26 Tissue Regenix Group plc
Directors’ Remuneration Report
continued
Directors’ interest in LTIP
The table below is adjusted for consolidation of the Company's shares at 100:1 in 2023:
At 1 January Exercised Lapsed
2023 during year during year
Number Number Number
Granted 31 December Exercise
during year 2023 price
Number Number Pence
LTIP Scheme Options
Daniel Lee (note 1) 283,216 – –
Daniel Lee (note 2) 275,607 – –
Daniel Lee (note 3) – – –
– 283,216 10
– 275,607 10
198,074 198,074 10
David Cocke (note 1) 146,491 – –
David Cocke (note 2) 213,833 – –
David Cocke (note 3) – – –
– 146,491 10
– 213,833 10
153,678 153,678 10
Note 1
There were employment period and performance conditions in relation to the options granted on 28 April 2021 that 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.
Note 2
There were employment period and performance conditions in relation to the options granted on 14 March 2022 that 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.
Note 3
There were employment period and performance conditions in relation to the options granted on 21 March 2023 that 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
18 March 2024
Annual Report and Accounts 2023 27
Directors’ Report
The Directors present their report and consolidated financial statements for Tissue Regenix Group plc
(the ‘Company’) and its subsidiary undertakings (the ‘Group’) for the year ended 31 December 2023.
Principal activity
The nature of the Group’s operations and its principal activity is that of an international medical technology
company focused on commercialising two platform technologies, dCELL, addressing soft tissue needs, and
BioRinse, providing sterile bone and soft tissue allografts. The Company is principally a holding company
incorporated and domiciled in England and Wales and is listed on the London Stock Exchange’s AIM. 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 CEO’s Statement on pages 3 to 7.
Business review and results
A review of the Group’s performance and future prospects is included in the Chair and CEO’s Statement on pages 3
to 7. A review of the Group’s financial performance is included within the Financial Review on pages 8 to 10. The
loss for the year attributable to owners of the parent company was USD1,713k (2022: USD2,695k).
Dividends
The Directors do not recommend the payment of a dividend for the year ended 31 December 2023 (2022: nil).
Share capital and funding
Full details of the Company’s share capital movements during the year are given in note 22 to the consolidated
financial statements.
Directors and their interests in shares and share options
The Directors who held office during the year and since the year end are as follows:
Jonathan Glenn
Shervanthi Homer-Vanniasinkam
Daniel Lee
Trevor Phillips
Brian Phillips
David Cocke
Directors’ interests in the Ordinary Shares of the Company, including family interests, are included in the Directors’
Remuneration Report on pages 25 to 27.
Third-party indemnity provision for Directors
The Company currently has in place, and had for the year ended 31 December 2023, Directors & Officers liability
insurance for the benefit of all Directors of the Company.
Corporate governance
Corporate governance matters are set out in the Corporate Governance Statement on pages 21 to 24.
28 Tissue Regenix Group plc
Directors’ Report
continued
Political donations
No political donations were made in the year.
Substantial shareholdings
At 29 February 2024, shareholders holding more than 3% of the share capital of Tissue Regenix Group plc were:
Name of shareholder
Harwood Capital (London)
Inthallo Ltd. (Scotland)
Lombard Odier
Mr Richard Griffiths (UK)
IP Group (London)
Number
of shares
% of
voting rights
10,615,000
9,910,000
7,457,545
6,852,500
6,530,428
15.04
14.04
10.57
9.71
9.25
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 that affect them as employees.
Financial instruments
During the year, the Company and its subsidiary undertakings applied the financial risk management policies as
disclosed in note 26 to the consolidated financial statements.
Disclosure of information to the auditor
The Directors who held office at the date of approval of these financial statements have confirmed that, so far as
they are aware, there is no relevant audit information of which the Company’s auditor is unaware. Each of the
Directors has confirmed that they have taken all the steps that they ought to have taken as a Director in order to
make themselves aware of any relevant audit information and to establish that the Company’s auditor is aware
of that information.
Auditor
RSM UK Audit LLP have expressed their 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 AGM.
Strategic report
The Group has chosen in accordance with Companies Act 2006 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. For more information on research and development and future developments, see the Chair
& Chief Executive Officer’s statement on page 3 to 7.
The Directors' Report was approved by the Board on 18 March 2024.
On behalf of the Board
Daniel Lee
Chief Executive Officer
Annual Report and Accounts 2023 29
Directors’ Responsibilities Statement
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 IAS 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’s financial statements are required by law and UK-adopted IAS 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
IAS;
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.
30 Tissue Regenix Group plc
Independent Auditor’s Report
to the members of Tissue Regenix Group plc
Opinion
We have audited the financial statements of Tissue Regenix Group plc (the ‘parent company’) and its subsidiaries
(the ‘Group’) for the year ended 31 December 2023 which comprise the Consolidated Statement of Income, the
Consolidated Statement of Comprehensive Income, the Consolidated Statement of Financial Position, the
Consolidated Statement of Changes in Equity, the Consolidated Statement of Cash Flows, the Company Statement
of Financial Position, the Company Statement of Changes in Equity 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 United Kingdom Accounting Standards, including Financial Reporting Standard 101 ‘Reduced
Disclosure Framework’ (United Kingdom 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 2023 and of the Group’s loss for the year then ended;
the Group financial statements have been properly prepared in accordance with UK-adopted International
Accounting Standards;
the parent company financial statements have been properly prepared in accordance with United Kingdom
Generally Accepted Accounting Practice; and
the financial statements have been prepared in accordance with the requirements of the Companies Act
2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable
law. Our responsibilities under those standards are further described in the auditor’s responsibilities for the audit
of the financial statements section of our report. We are independent of the Group and the parent company in
accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK,
including the FRC’s Ethical Standard as applied to listed entities and we have fulfilled our other ethical
responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our opinion.
Summary of our audit approach
Key audit matters
Group
l Goodwill impairment
Parent company
l None
Group
Materiality
l Overall materiality: USD516,000 (2022: USD428,000)
l Performance materiality: USD335,000 (2022: USD278,000)
Parent company
l Overall materiality: £405,000 (2022: £265,000)
l Performance materiality: £263,000 (2022: £172,000)
Scope
Our audit procedures covered 100% of revenue, 98% of total assets and 90% of
loss before tax.
Annual Report and Accounts 2023 31
Independent Auditor’s Report
to the members of Tissue Regenix Group plc
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 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 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 obtain an independent estimate of an appropriate
discount rate.
l Reviewing the accuracy of historic forecasts and sensitivity to changes in
the assumptions.
l Reviewing the disclosures made in the financial statements to ensure that
they were in accordance with the applicable financial reporting framework.
32 Tissue Regenix Group plc
Independent Auditor’s Report
to the members of Tissue Regenix Group plc
continued
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
USD516,000 (2022: USD428,000)
£405,000 (2022: £265,000)
Group
Parent company
Basis for determining overall
materiality
1.75% of total revenue
0.7% of net assets. The percentage
applied to the benchmark has been
the purpose of
restricted
calculating
appropriate
an
component materiality.
for
Rationale
applied
for benchmark
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
USD335,000 (2022: USD278,000)
£263,000 (2022: £172,000)
Basis for determining
performance materiality
Reporting of misstatements
to the Audit Committee
65% of overall materiality
65% of overall materiality
Misstatements
in excess of
USD13,000 and misstatements
below that threshold that, in our
view, warranted
reporting on
qualitative grounds.
Misstatements in excess of £20,000
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 USD68,000.
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 6 components, located in the United Kingdom, USA and Germany.
The coverage achieved by our audit procedures was:
Number of
components
Full scope audit 5
Specific audit procedures 1
Revenue Total assets Profit before tax
89% 98% 90%
11% 0% 0%
Total 6
100% 98% 90%
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, existence and accuracy
which were areas we identified as being susceptible to material misstatement due to fraud.
Annual Report and Accounts 2023 33
Independent Auditor’s Report
to the members of Tissue Regenix Group plc
continued
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 2025. The Group has significant cash reserves at 31 December 2023 of USD4.7m as a
result of the continued growth in the level of activity in the Group and agreed an extension to its borrowing facilities
during the year. 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.
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:
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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:
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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
34 Tissue Regenix Group plc
Independent Auditor’s Report
to the members of Tissue Regenix Group plc
continued
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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 30, the Directors are responsible
for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for
such internal control as the Directors determine is necessary to enable the preparation of financial statements
that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are responsible for assessing the Group’s and the parent
company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and
using the going concern basis of accounting unless the Directors either intend to liquidate the Group or the parent
company or to cease operations, or have no realistic alternative but to do so.
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:
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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 framework;
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.
Annual Report and Accounts 2023 35
Independent Auditor’s Report
to the members of Tissue Regenix Group plc
continued
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 USA
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.
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 reporting date to
determine that the Group’s revenue recognition policies have been applied
correctly, and revenue is recorded in the correct accounting period.
Testing transactions identified by the use of a data analytics tool as being
outside of the normal revenue and investigating these.
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
Date 18 March 2024
36 Tissue Regenix Group plc
Consolidated Statement of Income
For the year ended 31 December 2023
Revenue
Cost of sales
Gross profit
Administrative expenses
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
Notes
5
6
7
8
10
24
11
2023
USD
'000
29,493
(15,453)
14,040
(14,434)
(394)
26
(1,301)
(1,669)
12
(1,657)
(1,713)
56
(1,657)
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)
(2.43)
(3.83)*
The loss for the year arises from the Group’s continuing operations.
*Restated to reflect the share consolidation that became effective on 28 April 2023. See note 22.
The notes on pages 42 to 73 form part of the financial statements.
Annual Report and Accounts 2023 37
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2023
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 42 to 73 form part of the financial statements.
2023
USD
'000
2022
USD
'000
(1,657)
(2,596)
195
(1,462)
(1,518)
56
(1,462)
(653)
(3,249)
(3,348)
99
(3,249)
38 Tissue Regenix Group plc
Consolidated Statement of Financial Position
As at 31 December 2023
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
Taxation payable
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
2023
USD
'000
5,748
3,270
15,135
24,153
10,358
3,730
352
4,650
19,090
43,243
(5,527)
(400)
(3,226)
(9,153)
(3,783)
(310)
(458)
(184)
(4,735)
(13,888)
29,355
15,950
134,253
16,441
(10,798)
(1,257)
1,088
(1,763)
(123,764)
30,150
(795)
29,355
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
The consolidated financial statements were approved by the Board of Directors and authorised for issue on
18 March 2024 and are signed on its behalf by:
Daniel Lee
Chief Executive Officer
Company number: 05969271
The notes on pages 42 to 73 form part of the financial statements.
Annual Report and Accounts 2023 39
Consolidated Statement of Changes in Equity
For the year ended 31 December 2023
e
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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 to 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
Transactions with owners in
their capacity as owners:
Exercise of share options – 74 – – – – – – 74 – 74
Transfer to retained deficit in
respect of exercised and
expired options – – – – – (78) – 78 – – –
Share-based payments – – – – – 342 – – 342 – 342
Total transactions with
owners in their capacity
as owners – 74 – – – 264 – 78 416 – 416
Loss for the year – – – – – – – (1,713) (1,713) 56 (1,657)
Other comprehensive income:
Currency translation differences – – – – – – 195 – 195 – 195
Total other comprehensive
income for the year – – – – – – 195 – 195 – 195
Total comprehensive
income for the year – – – – – – 195 (1,713) (1,518) 56 (1,462)
At 31 December 2023 15,950 134,253 16,441 (10,798) (1,257) 1,088 (1,763) (123,764) 30,150 (795) 29,355
The notes on pages 42 to 73 form part of the financial statements.
40 Tissue Regenix Group plc
Consolidated Statement of Cash Flows
For the year ended 31 December 2023
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 loss/(gain)
Operating cash inflow/(outflow) before movements in working capital
Decrease/(increase) in inventory
Decrease/(increase) in trade and other receivables
(Decrease)/increase in trade and other payables
Net cash generated from/(used in) operations
Research and development tax credits received
Net cash generated from/(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
(Repayment of)/proceeds from loans and borrowings
Interest paid on loans and borrowings
Fees paid on loans and borrowings
Lease liability payments
Lease interest payments
Other interest payments
Net cash (used in)/generated from 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 42 to 73 form part of the financial statements.
2023
USD
'000
2022
USD
'000
(1,669)
(2,828)
(26)
1,301
395
132
450
342
84
1,009
524
1,073
(1,836)
770
270
1,040
26
(413)
(450)
(837)
74
(238)
(567)
(355)
(140)
(284)
(2)
(1,512)
(1,309)
5,949
10
4,650
(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
Annual Report and Accounts 2023 41
Notes to the Consolidated Financial Statements
For the year ended 31 December 2023
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 and Wales 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, 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:
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Amendments to IFRS 17 - Insurance contracts
Amendments to IFRS 17 - Initial application of IFRS 17 and IFRS 9 - comparative information
Amendments to IAS 1 and IFRS practice statement 2 - Disclosure of accounting policies
Amendments to IAS 8 - Definition of accounting estimates
Amendments to IAS 12 - Deferred tax related assets and liabilities arising from a single transaction
Amendments to IAS 12 - International tax reform - pillar two model rules
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 2023. They are as follows:
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Amendments to IAS 1 - Classification of liabilities as current or non-current
Amendments to IAS 1 - Non-current liabilities with covenants
Amendments to IFRS 16 - Lease liability in a sale and leaseback
Amendments to IAS 7 and IFRS 7 - Supplier finance arrangements
Amendments to IAS 21 - Lack of exchangeability
Amendments to IFRS 10 and IAS 28 - Sale or contribution of assets between an investor and its associate
or joint venture
IFRS S1 - General requirements for disclosure of sustainability - related financial information
IFRS S2 - Climate-related disclosures
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.
42 Tissue Regenix Group plc
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. 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 2025 (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. Until sufficient
cash is generated from its operations, the Group remains reliant on cash reserves of USD4.7 million at
31 December 2023 and the ongoing support of MidCap (borrowings of USD6.0 million at 31 December 2023) and
other lending institutions to meet its working capital requirements, capital investment programme and other
financial commitments. Repayment of the MidCap borrowings commenced in February 2024.
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 that the term loan repayment begins in 2024. The
availability of these facilities is dependent upon compliance with a rolling 12-month revenue covenant that 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 the 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.
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.
The financial results of subsidiaries are included in the consolidated financial statements from the date that
Annual Report and Accounts 2023 43
Notes to the Consolidated Financial Statements
continued
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 Group, which usually coincides with the
despatch of goods.
In some instances, for a small proportion of the business, goods are held by third parties (e.g. hospitals) and
revenue is recognised upon utilisation within surgical procedures.
Bill-and-hold sales
The Group has bill-and-hold arrangements with customers, and this revenue is recognised when the Group
considers that performance obligations have been met and they meet the following criteria:
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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.
44 Tissue Regenix Group plc
Notes to the Consolidated Financial Statements
continued
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
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 that 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 a 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.
Annual Report and Accounts 2023 45
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.
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 when 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 over
the shorter of the useful life of the asset and the lease term, unless the title to the asset transfers at the end of
the lease term, in which case it is depreciated over the useful life.
46 Tissue Regenix Group plc
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
Customer relationships
over 5 years
over 10 years
Process and information 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.
Annual Report and Accounts 2023 47
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 that 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.
48 Tissue Regenix Group plc
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 - 3 months overdue
0% of aged receivables
3 - 4 months overdue
25% of aged receivables
4 - 5 months overdue
50% of aged receivables
Over 5 months overdue
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 that they are
incremental costs directly attributable to the equity transaction that would otherwise have been avoided.
Leases
On commencement of a contract that 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 (where the 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.
Annual Report and Accounts 2023 49
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.
Recoverability of non-current assets
The Directors are required by IAS 36 Impairment of assets to carry out an annual impairment review in respect of
goodwill to determine whether there was any requirement for an impairment provision in respect of the Group’s
goodwill at 31 December 2023.
The carrying amount of non-current assets at 31 December 2023 was USD24.2 million (2022: USD24.0 million).
Critical judgements
The Group’s non-current assets include intangible assets and goodwill arising on the acquisition of CellRight
Technologies LLC, plus certain property, plant and machinery and right-of-use assets. It is the Directors judgement
that the recoverable amount of these assets cannot be determined individually and that this is the smallest
identifiable group of assets whose output has an active market and which generate largely independent cash flows
from other assets or group of assets. It is, therefore, the Directors judgement that these assets should be considered
to be a single cash generating unit (‘CGU’). Only the assets included in the CGU are subject to impairment review.
50 Tissue Regenix Group plc
Notes to the Consolidated Financial Statements
continued
Estimations
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%
(2022: 18.3%) 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 2023 (2022: nil). See note 14.
The key inputs to the cash flow forecast are revenues, gross margin and overheads, future anticipated capital
expenditure and movements in working capital. The key estimation relates to sales growth, which is inherently
difficult to forecast in a rapidly growing market, and it is possible that any or all of these key assumptions may
change, which may then impact the estimated recoverable amount of the CGU and require a material adjustment
to the carrying value of the assets in future periods.
Leases
Critical judgements
Determining the term of a lease that includes an option to purchase requires the Directors to use their judgement in
determining whether the option is reasonably certain to be exercised. The Directors’ assessment will impact both
the determination of the lease term and the useful economic life of the asset.
In determining the term of a lease, the Directors consider all facts and circumstances that create an economic
incentive to exercise an option to purchase a leased asset. Periods after the date of the option to purchase are not
included in the lease term if the option to purchase is reasonably certain to be exercised.
In making their assessment, the Directors considered the potential cash outflow arising as a result of financing the
option to purchase against the potential cost of ongoing lease payments, the potential market value of the property,
which an independent appraisal indicated would be in excess of the fixed option exercise price, and the commercial
advantages of taking ownership and control of the property.
The Directors concluded that the option to purchase is reasonably certain to be exercised, therefore, the lease term
has been determined on this basis, and the USD3 million cash outflow on exercise of the option has been included
in the lease liability.
Estimations
Right-of-use assets are depreciated over the shorter of the useful life of the asset and the lease term, unless the
title to the asset transfers at the end of the lease term, in which case it is depreciated over the useful life. As a result
of the Directors assessment that the Group will exercise the option to purchase, the assets are being depreciated
over an estimated useful life of 39 years.
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
2023
USD
‘000
25,327
4,166
29,493
2022
USD
‘000
20,711
3,765
24,476
Annual Report and Accounts 2023 51
Notes to the Consolidated Financial Statements
continued
Analysis of revenue by customer
During the year ended 31 December 2023, the Group had one customer who individually exceeded 10% of revenue.
This customer generated 13% of revenue (2022: one customer who generated 13% 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.
Segmental information is presented below.
dCELL
2023
USD
‘000
6,183
2,839
(4)
–
340
4
344
202
546
dCELL
2022
USD
‘000
5,301
1,829
(10)
–
(994)
–
(994)
112
(882)
BioRinse
2023
USD
‘000
20,133
10,141
(423)
(450)
1,838
(1,296)
542
(190)
352
BioRinse
2022
USD
‘000
16,049
8,258
(394)
(618)
678
(818)
(140)
120
(20)
GBM-V
2023
USD
‘000
3,177
1,060
(16)
–
220
–
220
–
220
GBM-V
2022
USD
‘000
3,126
1,171
–
–
409
–
409
–
409
Central
2023
USD
‘000
–
–
(84)
–
(2,792)
17
(2,775)
–
(2,775)
Central
2022
USD
‘000
–
–
(113)
–
(2,103)
–
(2,103)
–
(2,103)
Total
2023
USD
‘000
29,493
14,040
(527)
(450)
(394)
(1,275)
(1,669)
12
(1,657)
Total
2022
USD
‘000
24,476
11,258
(517)
(618)
(2,010)
(818)
(2,828)
232
(2,596)
Statement of Income
Revenue
Gross profit
Depreciation
Amortisation
Operating profit/(loss)
Net finance income/(charges)
Profit/(loss) before taxation
Taxation
Profit/(loss) for the year
Statement of Income
Revenue
Gross profit
Depreciation
Amortisation
Operating (loss)/ profit
Net finance charges
(Loss)/profit before taxation
Taxation
(Loss)/profit for the year
52 Tissue Regenix Group plc
Notes to the Consolidated Financial Statements
continued
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
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
Other interest received
7. Finance charges
Interest on loans and borrowings
Fees on loans and borrowings
Interest on lease liabilities
Amortisation of debt cost
Other interest paid
dCELL
2023
USD
‘000
1,946
5,030
6,976
–
(693)
(693)
6,283
165
334
dCELL
2022
USD
‘000
1,376
3,571
4,947
–
(736)
(736)
4,211
124
549
BioRinse
2023
USD
‘000
21,987
12,649
34,636
(9,123)
(3,345)
(12,468)
22,168
167
116
BioRinse
2022
USD
‘000
22,382
14,998
37,380
(8,921)
(5,171)
(14,092)
23,288
230
160
GBM-V
2023
USD
‘000
Central
2023
USD
‘000
6
807
813
–
(200)
(200)
613
9
–
GBM-V
2022
USD
‘000
13
806
819
–
(255)
(255)
564
9
–
214
604
818
(30)
(497)
(527)
291
54
–
Central
2022
USD
‘000
233
2,660
2,893
(73)
(482)
(555)
2,338
36
–
2023
USD
‘000
24
2
26
2023
USD
‘000
603
248
284
163
3
1,301
Total
2023
USD
‘000
24,153
19,090
43,243
(9,153)
(4,735)
(13,888)
29,355
395
450
Total
2022
USD
‘000
24,004
22,035
46,039
(8,994)
(6,644)
(15,638)
30,401
399
709
2022
USD
‘000
8
–
8
2022
USD
‘000
450
–
291
85
–
826
Annual Report and Accounts 2023 53
Notes to the Consolidated Financial Statements
continued
8. Loss on ordinary activities before taxation
The loss before taxation for the year has been arrived at after charging:
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
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
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
2023
USD
‘000
395
132
450
147
11,658
10,247
15
74
70
144
2022
USD
‘000
353
164
618
136
11,831
9,068
24
70
64
134
2023
Number
2022
Number
6
76
82
2023
USD
‘000
9,174
697
34
342
10,247
6
79
85
2022
USD
‘000
8,176
608
35
249
9,068
Included within wages and salaries are other staff benefits provided to employees. The cost of providing these
benefits is USD0.6 million (2022: USD0.5 million).
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.
54 Tissue Regenix Group plc
Notes to the Consolidated Financial Statements
continued
10. Taxation
Current tax:
UK R&D tax credit
Foreign taxation
Deferred tax:
Origination and reversal of temporary differences
Tax credit for the year
2023
USD
‘000
(202)
310
108
(120)
(12)
The credit for the year can be reconciled to the loss per the Consolidated Statement of Income as follows:
2023
USD
‘000
2022
USD
‘000
(112)
–
(112)
(120)
(232)
2022
USD
‘000
Loss on ordinary activities before tax
Loss multiplied by the standard rate of corporation tax for UK companies
of 23.52% (2022: 19%)
Effects of:
Research and development tax credits received
Surrender of tax losses for R&D tax credit refund
Deduction for R&D expenditure
Remeasurement of deferred tax for changes in tax rates
Adjustments in respect of prior period current and deferred tax
Movement in deferred tax not recognised on unutilised tax losses
Expenses not deductible for tax purposes
Origination and reversal of timing differences
Tax credit on loss for the year
(1,669)
(2,828)
(393)
–
233
(115)
(22)
122
175
108
(120)
(12)
(537)
(80)
104
(59)
–
(154)
(366)
980
(120)
(232)
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 are
related to UK operations and must be utilised in relation to the same operations.
Tax losses
Losses available to carry forward
Unrecognised deferred tax asset at 25% (2022: 25%)
2023
USD
‘000
60,361
15,090
2022
USD
‘000
58,900
14,725
Annual Report and Accounts 2023 55
Notes to the Consolidated Financial Statements
continued
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.
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
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
2023
USD
‘000
2022
USD
‘000
(1,713)
(2,695)
Number
Number
70,426,760
70,345,218
(2.43)
(3.83)
The Company has options issued over 2,585,537 (2022: 2,009,293) Ordinary Shares and warrants issued over
30,968 (2022: 30,968) Ordinary Shares, and there are 161,128 (2022: 161,128) jointly owned shares that 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.
The information shown above has been restated to reflect the share consolidation, that became effective on
28 April 2023, in all periods presented. See note 22.
56 Tissue Regenix Group plc
Notes to the Consolidated Financial Statements
continued
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 2021
Additions
Exchange adjustment
At 31 December 2022
Additions
Disposal
Exchange adjustment
At 31 December 2023
Depreciation
At 31 December 2021
Charge for the period
Exchange adjustment
At 31 December 2022
Charge for the period
Disposal
Exchange adjustment
At 31 December 2023
Carrying amount
At 31 December 2023
At 31 December 2022
At 31 December 2021
5,018
75
–
5,093
18
–
–
5,111
246
132
–
378
132
–
–
510
4,601
4,715
4,772
3,067
136
(167)
3,036
135
(11)
75
3,235
2,315
161
(161)
2,315
193
(11)
73
2,570
665
721
752
1,054
6
(90)
970
10
–
40
1,020
989
18
(90)
917
17
–
39
973
47
53
65
939
182
(76)
1,045
232
(2)
38
1,313
820
42
(68)
794
53
(2)
33
878
435
251
119
Total
USD
‘000
10,078
399
(333)
10,144
395
(13)
153
10,679
4,370
353
(319)
4,404
395
(13)
145
4,931
5,748
5,740
5,708
Property, plant and equipment with a carrying amount of USD5.7 million (2022: USD5.7 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 2023 57
Notes to the Consolidated Financial Statements
continued
13. Right-of-use assets
Land and Laboratory
buildings equipment
USD’000 USD’000
Total
USD’000
3,569
(24)
3,545
–
10
3,555
181
164
(3)
342
128
6
476
3,079
3,203
3,388
–
–
–
195
–
195
–
–
–
–
4
–
4
191
–
–
3,569
(24)
3,545
195
10
3,750
181
164
(3)
342
132
6
480
3,270
3,203
3,388
Cost
At 31 December 2021
Exchange adjustment
At 31 December 2022
Additions
Exchange adjustment
At 31 December 2023
Depreciation
At 31 December 2021
Charge for the period
Exchange adjustment
At 31 December 2022
Charge for the period
Exchange adjustment
At 31 December 2023
Carrying amount
At 31 December 2023
A 31 December 2022
At 31 December 2021
58 Tissue Regenix Group plc
Notes to the Consolidated Financial Statements
continued
14. Intangible assets
Development
costs
USD ‘000
Goodwill
USD ‘000
Customer
relationships
USD ‘000
Process and
information
Trademarks technology
USD ‘000
USD ‘000
Supplier
agreements
Total
USD ‘000 USD ‘000
Cost
At 31 December 2021
Additions
Exchange adjustment
2,099
19,458
3,000
799
1,500
600
27,456
709
(229)
–
–
–
–
–
–
–
–
–
–
709
(229)
At 31 December 2022
2,579
19,458
3,000
799
1,500
600
27,936
Additions
Exchange adjustment
450
136
–
–
–
–
–
–
–
–
–
–
450
136
At 31 December 2023
3,165
19,458
3,000
799
1,500
600
28,522
Amortisation
At 31 December 2021
Charge for the period
Exchange adjustment
At 31 December 2022
Charge for the period
Exchange adjustment
At 31 December 2023
Carrying amount
At 31 December 2023
At 31 December 2022
At 31 December 2021
1,311
–
(135)
1,176
–
62
1,238
1,927
1,403
788
7,871
–
–
7,871
–
–
7,871
11,587
11,587
11,587
1,319
300
–
1,619
300
–
1,919
1,081
1,381
1,681
703
96
–
799
–
–
799
–
–
96
660
150
–
810
150
–
960
540
690
840
528
72
–
600
–
–
600
–
–
72
12,392
618
(135)
12,875
450
62
13,387
15,135
15,061
15,064
Development costs represent expenditure on clinical evaluation studies relating to the Group’s products. The
assets are reviewed for indicators of impairment but are not amortised until completion of the development
project.
Goodwill, customer relationships, trademarks, process and information technology and supplier agreements relate
to the acquisition of CellRight Technologies LLC in 2017.
Goodwill represents the excess of the consideration paid over the fair value of the assets acquired.
Customer relationships represents the fair value attributed to the customer base existing on acquisition. The
carrying value of these assets is USD1.1 million, and the remaining useful life is 3.6 years.
Trademarks relate to registered trademarks acquired in the acquisition, which have now been amortised in full.
Process and information technology represent the fair value attributed to in-house developed technology for each
product group, ‘trade secrets’ and in-house developed information technology. The carrying value of these assets
is USD0.5 million, and the remaining useful life is 3.6 years.
Annual Report and Accounts 2023 59
Notes to the Consolidated Financial Statements
continued
Supplier agreements relate to agreements for the supply of human tissue, which have now been amortised in full.
The assets acquired on the acquisition of CellRight Technologies are subject to annual impairment testing as
described below.
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% (2022: 18.3%), which still reflects 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% (2022: 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 compound annual growth rate (‘CAGR’) is
20.5% (2022: 20.3%).
At 31 December 2023, the impairment test prepared by the Directors indicates a recoverable amount based on
value in use of USD68.2 million (2022: USD47 million) compared with a CGU carrying amount of USD32.6 million
(2022: USD33 million). The Directors, therefore, do not consider that an impairment charge is appropriate for the
year ended 31 December 2023 (2022: 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 12.4% (2022: 15%) across the five-year period.
60 Tissue Regenix Group plc
Notes to the Consolidated Financial Statements
continued
15. Inventory
Raw materials and consumables
Work in progress
Finished goods, including goods for resale
2023
USD
‘000
4,518
5,133
707
2022
USD
‘000
4,128
5,873
881
10,358
10,882
Inventory of finished goods, including goods for resale, is presented net of a provision of USD0.2 million (2022:
USD0.3 million).
16. Trade and other receivables
Trade receivables
VAT recoverable
Other receivables
Prepayments and accrued income
2023
USD
‘000
3,027
49
77
577
3,730
2022
USD
‘000
4,195
24
19
565
4,803
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
2023
USD
‘000
3,087
(60)
3,027
2022
USD
‘000
4,279
(84)
4,195
Allowance for expected credit losses
The ageing of the receivables and allowance for expected credit losses provided for above are as follows:
Not overdue
0-3 months overdue
3-4 months overdue
4-5 months overdue
Over 5 months overdue
Expected
credit loss
Rate
0%
0%
25%
50%
100%
Carrying
amount
2023
USD
‘000
Allowance for
expected credit
losses 2023
USD
‘000
Carrying
Allowance for
amount expected credit
losses 2022
USD
‘000
2022
USD
‘000
2,835
161
5
35
51
3,087
–
–
1
8
51
60
3,764
229
35
77
174
4,279
–
–
9
6
69
84
Annual Report and Accounts 2023 61
Notes to the Consolidated Financial Statements
continued
The average credit term with customers is 40 days (2022: 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
2023
USD
‘000
84
120
(31)
(113)
60
2022
USD
‘000
78
161
(21)
(134)
84
17. Cash and cash equivalents
Cash and cash equivalents held by the Group at 31 December 2023 were USD4.7 million (2022: USD5.9 million).
The Directors consider that the carrying amount of these assets approximates 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
2023
USD
‘000
1,207
35
2,541
3,783
2022
USD
‘000
1,075
39
4,396
5,510
At 31 December 2023, an accrual in respect of goods received not invoiced which was presented as a trade
payable in the prior year has now been presented as an accrual in order to better reflect the nature of the balance.
The comparative figures have, therefore, been reclassified for comparison purposes. The reclassification
amounted to USD2.4 million.
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.
62 Tissue Regenix Group plc
Notes to the Consolidated Financial Statements
continued
19. Loans and borrowings
Term loan
Revolving credit
Gross loans and borrowings
Capitalised debt issue costs
Current loans and borrowings
Non-current loans and borrowings
2023
USD
‘000
2,000
4,148
6,148
(163)
5,985
458
5,527
5,985
2022
USD
‘000
2,000
4,387
6,387
(129)
6,258
1,000
5,258
6,258
Remaining contractual maturity analysis
The following table details the Group’s remaining contractual maturity for its loans and borrowings. The table has
been drawn up based on the undiscounted cash flows based on the earliest date on which the loans and
borrowings are required to be paid. The tables include both principal and interest cash flows.
Maturity analysis
Less than 6 months
6 months to 1 year
1 year to 2 years
2 years to 5 years
2023
USD
‘000
526
558
1,064
6,137
8,285
2022
USD
‘000
291
1,264
5,593
–
7,148
In June 2019, the Group signed a US bank facility with MidCap.
The facility includes a term loan and a revolving credit facility, which originally incurred interest at LIBOR rate plus
6.75% and LIBOR rate plus 4.5% respectively, subject to a floor LIBOR rate of 2.25%.
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 Secured Overnight Financing Rate (‘SOFR’) 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 February 2024.
An early payment of the exit fee of USD0.25 million (initially due on 1 June 2024) relating to the USD5.5 million
term loan which, was repaid in 2019. This fee has been 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
(extended from USD5 million at 31 December 2022), with a fee payable in respect of each facility expansion
of 0.5%.
Additional debt issue costs of USD0.2 million have been capitalised against the loan during the year ended
31 December 2023 and are being amortised over the life of the facilities.
Annual Report and Accounts 2023 63
Notes to the Consolidated Financial Statements
continued
In respect of the term loan, MidCap holds security over the Group’s freehold property in San Antonio and
certain intellectual property. The carrying amount of these assets at 31 December 2023 is USD4.6 million
(2022: USD4.7 million) and USD nil (2022: USD nil), respectively.
The revolving credit is subject to a rolling 12-month revenue covenant, which is measured on a monthly basis.
The Group was in full compliance with the terms of the covenant in the periods reported.
The movement in loans and borrowings during the year was:
At 1 January
Cash flows - financing activities - loan repayments
Non-cash movements - movement in amortised loan costs
At 31 December
20. Deferred tax liabilities
At 1 January
Release to the income statement
At 31 December
2023
USD
‘000
6,258
(238)
(35)
5,985
2023
USD
‘000
520
(120)
400
2022
USD
‘000
4,465
1,708
85
6,258
2022
USD
‘000
640
(120)
520
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
2023
USD
‘000
184
3,226
3,410
2022
USD
‘000
134
3,216
3,350
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 2023 and the contractual maturity date.
Less than 6 months
6 months to 1 year
1 year to 2 years
2 years to 5 years
2023
USD
‘000
236
236
3,147
138
3,757
2022
USD
‘000
203
203
412
3,107
3,925
Disclosure of additions to and carrying amounts of right-of-use assets by class has been provided in note 13.
64 Tissue Regenix Group plc
Notes to the Consolidated Financial Statements
continued
The movement in lease liabilities during the year was:
At 1 January
Cash flows - financing activities - lease repayments
Non-cash movements - additions to right-of-use-assets
Non-cash movements - net effect of foreign exchange
At 31 December
Effect of leases on financial performance
Depreciation of right-of-use assets
Interest expense
2023
USD
‘000
3,350
(140)
195
5
3,410
2023
USD
‘000
132
284
416
2022
USD
‘000
3,482
(66)
–
(66)
3,350
2022
USD
‘000
164
291
455
The Group leases properties used for its operations in the UK and the US.
l
l
l
UK land and buildings: Five-year fixed lease, which included a break clause in 2023 not exercised.
US land and buildings: Ten-year fixed lease, which includes an option to purchase within the first five years,
being up to November 2024.
US property, plant and equipment: Five-year fixed leases.
The Group’s average effective borrowing rate for leases at 31 December 2023 was 9% (2022: 9%).
22. Share capital
Allotted issued and fully paid
Ordinary Shares of 0.1 pence
Deferred Shares of 0.4 pence
Deferred Shares of 9.9 pence
2023
USD
‘000
91
6,783
9,076
15,950
2022
USD
‘000
9,167
6,783
–
15,950
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 the Alternative Investment Market (‘AIM’) of the London Stock Exchange,
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).
On 28 April 2023, the Company consolidated every 100 Ordinary Shares of 0.1 pence each into one ‘Consolidated
Ordinary Share of 10 pence each’. Immediately following the consolidation, each Consolidated Ordinary Share was
subdivided into one New Ordinary Share of 0.1 pence each and one New Deferred Share of 9.9 pence each. The New
Ordinary, and New Deferred Shares have the same rights as the existing Ordinary and Deferred Shares, respectively.
Annual Report and Accounts 2023 65
Notes to the Consolidated Financial Statements
continued
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.
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
(pre-consolidation).
Immediately prior to the share consolidation on 28 April 2023, the Company issued 10 Ordinary Shares of
0.1 pence each at nil consideration to allow for an exact consolidation of 100:1.
On 6 September 2023, the Company issued 216,519 Ordinary Shares of 0.1 pence each at a price of 27.6 pence
per share, raising gross proceeds of USD74,693 (£59,759), in respect of the exercise of share options.
Movements in share capital during the period were as follows:
At 1 January 2022
Allotment of shares
At 31 December 2022
Share issue
Immediately prior to share consolidation
Share consolidation
Post-consolidation subdivision of shares
Allotment of shares
Ordinary
Deferred
Deferred
Shares of 0.1p
Shares of 9.9p
Shares of 0.4p
Number
7,033,077,499
2,717,391
7,035,794,890
10
7,035,794,900
(6,965,436,951)
Number
–
–
–
–
–
–
70,357,949
216,519
70,357,949
–
Number
1,171,971,322
–
1,171,971,322
–
–
–
–
–
At 31 December 2023
70,574,468
70,357,949
1,171,971,322
23. Reserves
Reserves of the Group represent the following:
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.
66 Tissue Regenix Group plc
Notes to the Consolidated Financial Statements
continued
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 undertaking’s equity.
Retained deficit
All current and prior period retained profits and losses.
24. Non-controlling interest
As at 1 January
Attributable profit for the year
As at 31 December
2023
USD
‘000
(851)
56
(795)
2022
USD
‘000
(950)
99
(851)
The non-controlling interest has a 50% (2022: 50%) equity holding in GBM-V GmbH.
GBM-V GmbH contributed revenue of USD3.2 million (2022: USD3.1 million) and a profit before tax of USD0.2
million (2022: USD0.4 million) after elimination of intercompany trading for the year ended 31 December 2023.
Further financial information relating to GBM-V GmbH can be found in note 5.
25. Share-based payments
The Company operates a number of share incentive plans, under which Directors and certain employees have
been granted options to subscribe for the Company’s Ordinary Shares.
Details of the share options and EBT shares outstanding at 31 December 2023 were as follows:
EMI Unapproved
options
Number
options
Number
7,555
–
–
(2,400)
–
5,155
–
–
–
–
4,969
–
–
–
–
4,969
–
–
–
(3,334)
EBT
shares
Number
161,128
–
–
–
–
SAYE
options
Number
234,638
–
(27,174)
–
–
LTIP
options
Number
821,167
979,434
–
–
(8,896)
Weighted
average
Total exercise
Number
price
1,229,457
979,434
(27,174)
91p
10p
27.6p
(2,400) £12.50
10p
(8,896)
161,128
207,464
1,791,705
2,170,421
54p
–
–
–
–
–
(216,519)
9,055
–
787,041
–
–
–
787,041
(216,519)
9,055
(3,334)
10p
27.6p
27.6p
9.88p
5,155
1,635
161,128
–
–
161,128
–
–
2,578,746
2,746,664
42p
–
161,128
£5
Outstanding at
31 December 2021
Granted
Exercised
Expired
Lapsed
Outstanding at
31 December 2022
Granted
Exercised
Expired adjustment
Lapsed
Outstanding at
31 December 2023
Exercisable at
31 December 2023
The information shown above has been restated to reflect the share consolidation, that became effective on
28 April 2023, in all periods presented. See note 22.
Annual Report and Accounts 2023 67
Notes to the Consolidated Financial Statements
continued
The options outstanding at 31 December 2023 had an estimated weighted average remaining contractual life of
7.5 years (2022: 8.1 years) with an exercise price ranging between 10 pence and £19.75, as follows:
l
l
l
l
3,154 with an exercise price of £19.75
3,636 with an exercise price of £11
161,128 with an exercise price of £5
2,578,746 with an exercise price of 10 pence
The latest date for exercise of the options is 21 March 2033, and, unless otherwise agreed, the options are forfeited
if the Director or employee leaves the Group before the options vest, or in respect of those options that have
already vested, are not exercised within an agreed time period.
Unapproved share incentive plan
The Company has granted awards under the unapproved share incentive plan, some of which qualify as Enterprise
Management Incentives (‘EMI’), which have a three-year share price performance condition.
l
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1,519 EMI options have a share price performance condition under which the price of the Company’s
Ordinary Shares must reach £25 in year 1, £30 in year 2 and £35 in year 3 for a minimum of 30 consecutive
days.
3,636 EMI options have a share price performance condition under which the price of the Company’s
Ordinary Shares must reach £15 in year 1, £20 in year 2 and £30 in year 3 for a minimum of 30 consecutive
days.
The unapproved share options have a share price performance condition under which the price of the
Company’s Ordinary Shares must reach £25 in year 1, £30 in year 2 and £35 in year 3 for a minimum of
30 consecutive days.
Share options that are not exercised within 10 years from the date of grant will expire.
Save As You Earn (‘SAYE’) scheme
The Company operates a SAYE share option plan, under which Directors and certain employees have been granted
options to subscribe for the Company’s Ordinary Shares. Employees must pay into the plan for a minimum of
three years before options can be exercised. At the end of the scheme, employees can exercise their options or
elect to have their contributions refunded.
Share options that are not exercised within 10 years from the date of grant will expire.
Long-Term Incentive Plan (‘LTIP’)
The Company operates an LTIP share option plan, under which Directors and certain employees have been granted
options to subscribe for the Company’s Ordinary Shares.
Awards vest based on a three-year performance period and are granted in two tranches:
l
Tranche 1 - 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 that 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
68 Tissue Regenix Group plc
Percentage of TSR
tranche awards
that vest
Nil
25%
50%
100%
Notes to the Consolidated Financial Statements
continued
The Remuneration Committee may use its discretion to adjust the percentage of TSR awards that are deemed to
vest at the end of the vesting period. A likely reason is that the Committee considers that the Group’s strong
operating performance is not reflected in the Company’s share price due to prevailing market conditions outside
the Company’s control.
l
Tranche 2 - 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.
Awards made under all plans are equity-settled. The Company has no legal or constructive obligation to
repurchase or settle the options in cash.
Share options that are not exercised within 10 years from the date of grant will expire.
At 31 December 2023, 1,031,499 awards had been granted with market-related performance conditions
(tranche 1) and 1,547,248 awards had been granted with non-market performance conditions (tranche 2).
Shares held in employee benefit trust (‘EBT’)
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. The portion available is calculated based on
the price of the Company’s Ordinary Shares at the time the employee wishes to take their portion.
Employee interests in jointly owned EBT shares that are not exercised within 10 years from the date of grant will
expire.
Grant of LTIP options
On 21 March 2023, the Company issued 787,041 share options with an exercise price of 10 pence per Ordinary
Share under the LTIP.
l
l
314,816 of the awards were issued with a market related performance condition (Tranche 1).
472,225 of the awards were issued with non-market performance conditions (Tranche 2).
The performance period is the three years from 1 January 2023 to 31 December 2025.
The fair value of the market related performance options 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 fair value
of the options granted with non-market performance conditions 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
787,041
Options
10
50
3
3.43
–
The expected volatility was calculated using the historic volatility of the Company’s TSR for the period 2013
to 2023.
Annual Report and Accounts 2023 69
Notes to the Consolidated Financial Statements
continued
The fair value of the options granted during the year was USD0.3 million. The share price at the date of grant was
60.5 pence per Ordinary Share.
In the year ended 31 December 2023, the Company recognised a total expense of USD0.3 million (2022:
USD0.25 million) in respect of employment-related securities.
On 6 September 2023, the Company issued 216,519 Ordinary Shares of 0.1 pence each at a price of 27.6 pence
per share, raising gross proceeds of USD74,693 (£59,759), in respect of the exercise of share options.
Warrants
In 2019, warrants were issued to MidCap as part of the Group’s new borrowing facilities. Options over 30,968
shares were granted at an exercise price of £5.74. These options are equity-settled and remain exercisable.
The weighted average remaining contractual life is 5.5 years (2022: 6.5 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
capital risk, cash flow interest rate risk, credit risk, liquidity 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
70 Tissue Regenix Group plc
2023
USD
‘000
4,650
3,027
77
7,754
2023
USD
‘000
1,207
2,541
5,985
3,410
2022
USD
‘000
5,949
4,195
19
10,163
2022
USD
‘000
1,075
4,396
6,258
3,350
13,143
15,079
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 that 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 borrowings and have determined that a 1% (increase)/decrease
in the interest rate would result in an additional (charge)/credit to the income statement of USD0.06 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 in respect of 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 receivables 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 21, respectively, the Group’s
financial liabilities mature within six months.
The Group does not face a significant liquidity risk with regard to its lease liabilities, which are monitored by the
Board.
At 31 December 2023, 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 USD5 million 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.
Other than small amounts of cash balances that are held in currencies other than the functional currency of the
relevant entity, the majority of its monetary assets and monetary liabilities are denominated in the functional
currency of the relevant entity. As a result, there is limited exposure to fluctuations in exchange rates that would
impact the income statement of the Group.
Annual Report and Accounts 2023 71
Notes to the Consolidated Financial Statements
continued
The financial statements of certain of the Group’s foreign subsidiaries are denominated in currencies that differ
from the Group’s presentation currency. As a result, the Group is exposed to movements in USD in respect of foreign
exchange differences arising on the translation of recognised assets and liabilities, which may impact equity.
The Group does not normally hedge against the effects of movements in exchange rates.
Foreign currency sensitivity analysis
The carrying amounts of the Group’s monetary assets and liabilities that are denominated in a different currency
to the functional currency of the relevant entity are immaterial, and, as a result, the Group has not undertaken
foreign currency sensitivity analysis in respect of the income statement.
The carrying amounts of the Group’s assets and liabilities, including those that may give rise to net gain/(loss)
on the hedge of net investment in foreign subsidiaries, denominated in currencies that differ from the Group’s
presentation currency, and that, which, may therefore, have an impact on equity, are as follows:
Assets
Liabilities
GBP
USD
‘000
47,050
(70,307)
(23,257)
Euro
USD
‘000
813
(200)
613
Sensitivity analysis has been performed to indicate how equity would have been affected by changes in the
exchange rate between GBP/Euro and USD. The analysis is based on the weakening and strengthening of USD
by 5%. The sensitivity analysis includes assets and liabilities denominated in a currency that differs from the
Group’s presentation currency and adjusts their translation at the period end for a 5% change in foreign currency
rates.
The table below details the Group’s sensitivity to a 5% decrease in USD against GBP/Euro. A negative number
below indicates a decrease in equity where USD weakens 5% against GBP/Euro. For a 5% strengthening of USD,
there would be an equal and opposite impact on equity, and the balance below would be positive.
Equity
27. Related party transactions
USD
‘000
(1,132)
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
governance section of this report includes persons other than Board members who are not considered key
management personnel in terms of decision making, and they are, therefore, not included in the related party
disclosure.
72 Tissue Regenix Group plc
Notes to the Consolidated Financial Statements
continued
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.
2023 2022
Salary and other benefits
Social security costs
Share-based payments
Charges for
the year
USD
‘000
Amounts
owing
USD
‘000
Charges for
the year
USD
‘000
Amounts
owing
USD
‘000
1,196
23
1,219
176
1,395
423
–
423
–
423
1,135
55
1,190
116
1,306
5
–
5
–
5
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 salaries and fees, bonuses and benefits included above, see the Directors’
Remuneration Report.
28. Ultimate controlling party
The Directors believe that there is no ultimate controlling party.
Annual Report and Accounts 2023 73
Company Statement of Financial Position
As at 31 December 2023
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
2023
£’000
19,164
36,988
56,152
16
276
292
56,444
(239)
(239)
56,205
11,723
94,353
10,884
814
(61,569)
56,205
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
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 2023 is £2.4 million (2022: £14.1 million).
The Company financial statements were approved by the Board of Directors and authorised for issue on
18 March 2024 and are signed on its behalf by:
Daniel Lee
Chief Executive Officer
Company number: 05969271
74 Tissue Regenix Group plc
Company Statement of Changes in Equity
For the year ended 31 December 2023
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
Transactions with owners in
their capacity as owners:
Exercise of share options
Transfer to retained reserves in
respect of expired/
exercised share options
Share-based payments
Total transactions with owners
in their capacity as owner
Profit for the year
At 31 December 2023
Share-
based
Share
capital
£’000
11,720
Share
Merger
payment
Retained
premium
£’000
94,290
reserve
£’000
10,884
reserve
£’000
987
deficit
£’000
(78,758)
Total
£’000
39,123
3
–
–
3
–
4
–
–
4
–
–
–
–
–
–
11,723
94,294
10,884
–
–
–
–
–
59
–
–
59
–
–
–
–
–
–
11,723
94,353
10,884
–
–
7
(628)
215
(413)
–
574
628
–
–
215
628
222
14,121
14,121
(64,009)
53,466
–
–
59
(35)
275
240
–
814
35
–
35
–
275
334
2,405
2,405
(61,569)
56,205
Annual Report and Accounts 2023 75
Notes to the Company Financial Statements
For the year ended 31 December 2023
C1. Principal accounting policies
Tissue Regenix Group plc (the ‘Company’) is a public company limited by shares, domiciled and incorporated in
England and Wales 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 AIM.
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:
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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 IFRS; 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:
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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.
76 Tissue Regenix Group plc
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 subsidiary undertakings and there is a risk that
the carrying amount of the Company’s investments and loans will exceed the recoverable amount.
In accordance with IFRS 9 Financial Instruments, as the subsidiary undertakings cannot repay the loans at the
reporting date, the Directors have 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
ECL of £46.8 million has been recognised at 31 December 2023 (2022: £49.3 million), resulting in a reversal credit
of £2.5 million.
The calculation of the allowance for lifetime ECL requires a significant degree of estimation, 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.
It is possible that any or all of these key assumptions may change, which may then impact the estimated future
cash flows expected to arise within the Company and may then require a material adjustment to the carrying
value of the investments and loans in future periods.
The carrying value of amounts owed by subsidiary undertakings at 31 December 2023 is disclosed in note C5 to
the Company financial statements.
C3. Staff costs
The average monthly number of employees (including Directors) was:
Directors
Administration staff
2023
Number
2022
Number
6
1
7
6
1
7
Annual Report and Accounts 2023 77
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
2023
£’000
500
35
10
86
631
2023
£’000
18,975
189
19,164
2022
£’000
453
46
9
76
584
2022
£’000
18,836
139
18,975
The Company had investments in the following subsidiary undertakings at 31 December 2023:
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%
Principal activity
Holding company
Holding company
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
78 Tissue Regenix Group plc
2023
£’000
83,835
(46,847)
36,988
36,988
2022
£’000
82,184
(49,303)
32,881
32,881
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 (2022: £0.8 million) before a provision of £0.7 million
(2022: £0.7 million) due from the Group’s EBT.
The Company has made loans to its subsidiary undertakings which are interest free and recoverable on demand,
other than an unsecured loan of £13.2 million to one of its subsidiary undertakings on which interest is charged
at 4% above the Bank of England base rate. Loan interest is rolled up into the loan, and the loan and accrued
interest are due for repayment in 2024.
The repayment terms of the unsecured loan are currently being renegotiated, and repayment is not expected to
be made within at least 12 months of the year end.
The Company has given an undertaking that it will continue to provide financial support to its subsidiary
undertakings and will not demand repayment of the loans within at least 12 months following 31 December 2023.
As a result, all the loans have been classified as non-current receivables.
The Directors have made an assessment of expected credit losses and have determined that a cumulative lifetime
ECL of £46.8 million should be recognised at 31 December 2023 (2022: £49.3 million). See note C2.
C6. Trade and other receivables
Prepayments and accrued income
VAT recoverable
2023
£’000
11
5
16
2022
£’000
17
9
26
The Directors consider that the carrying amount of trade and other receivables approximates to their fair value.
C7. Trade and other payables
Trade payables
Taxes and social security
Accruals
2023
£’000
20
13
206
239
2022
£’000
38
13
197
248
The Directors consider that the carrying amount of trade and other payables approximates to their fair value.
C8. Share capital
Allotted, issued and fully paid
Ordinary Shares of 0.1 pence
Deferred Shares of 0.4 pence
Deferred Shares of 9.9 pence
2023
£’000
71
4,687
6,965
11,723
2022
£’000
7,036
4,687
–
11,723
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.
Annual Report and Accounts 2023 79
Notes to the Company Financial Statements
continued
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).
On 28 April 2023, the Company consolidated every 100 Ordinary Shares of 0.1 pence each into one ‘Consolidated
Ordinary Share of 10 pence each’. Immediately following the consolidation, each Consolidated Ordinary Share
was subdivided into one New Ordinary Share of 0.1 pence each and one New Deferred Share of 9.9 pence each.
The New Ordinary and New Deferred Shares have the same rights as the existing Ordinary and Deferred Shares,
respectively.
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 (pre-consolidation).
Immediately prior to the share consolidation on 28 April 2023, the Company issued 10 Ordinary Shares of 0.1 pence
each at nil consideration to allow for an exact consolidation of 100:1.
On 6 September 2023, the Company issued 216,519 Ordinary Shares of 0.1 pence each at a price of 27.6 pence
per share, raising gross proceeds of £59,759, in respect of the exercise of share options.
Movements in share capital during the period were as follows:
At 1 January 2022
Allotment of shares
At 31 December 2022
Share issue
Immediately prior to share consolidation
Share consolidation
Post-consolidation subdivision of shares
Allotment of shares
Ordinary
Deferred
Deferred
Shares of 0.1p
Shares of 9.9p
shares of 0.4p
Number
7,033,077,499
2,717,391
7,035,794,890
10
7,035,794,900
(6,965,436,951)
70,357,949
216,519
Number
–
–
–
–
–
–
70,357,949
–
Number
1,171,971,322
–
1,171,971,322
–
–
–
–
–
At 31 December 2023
70,574,468
70,357,949
1,171,971,322
C9. Reserves
Reserves of the Company represent the following:
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 profits and losses.
80 Tissue Regenix Group plc
Other
Notice of Annual General Meeting
Notice is given that the 2024 Annual General Meeting of Tissue Regenix Group plc (“Company”) will be held at
DLA Piper UK LLP, 160 Aldersgate St, Barbican, London EC1A 4HT on 25 April 2024 at 11.00 a.m. for the following
purposes:
To consider and, if thought fit, to pass the following resolutions as ordinary resolutions:
1.
To receive the Company's annual accounts, strategic report and Directors' and auditors' reports for the year
ended 31 December 2023.
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 551 of the Companies Act 2006 (“Act”), the Directors be generally and
unconditionally authorised to allot Relevant Securities:
10.1. up to an aggregate nominal amount of £23,524.822; and
10.2. comprising equity securities (as defined in section 560(1) of the Act) up to a further aggregate nominal
amount of £23,524.822 in connection with an offer by way of a rights issue:
10.2.1. 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
10.2.2. 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 AGM of the Company after the passing of this resolution or
on 25 July 2025 (whichever is the earlier), save that, in each case, the Company may make an offer or agreement
before the authority expires that 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 that may be
allotted pursuant to that right.
These authorities are in substitution for all existing authorities under section 551 of the Act (which, to the extent
unused at the date of this resolution, are revoked with immediate effect).
To consider and, if thought fit, to pass the following resolutions as special resolutions:
11. That, subject to the passing of resolution 10 and pursuant to section 570 of the Act, the Directors be and
are generally empowered to allot equity securities (within the meaning of section 560 of the Act) for cash
pursuant to the authority granted by resolution 10 as if section 561(1) of the Act did not apply to any such
allotment, provided that this power shall be limited to the allotment of equity securities:
Annual Report and Accounts 2023 81
Other
continued
11.1.
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 10.1 of
resolution 10, such power shall be limited to the allotment of equity securities in connection with an
offer by way of a rights issue):
11.1.1. 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
11.1.2. to holders of other equity securities in the capital of the Company, as required by the rights
of those securities or, subject to such rights, as the Directors otherwise consider necessary,
but subject to such exclusions or other arrangements as the Directors may deem necessary or expedient
in relation to treasury shares, fractional entitlements, record dates or any legal or practical problems under
the laws of any territory or the requirements of any regulatory body or stock exchange; and
11.2. otherwise than pursuant to paragraph 11.1 of this resolution up to an aggregate nominal amount of
£7,057.446,
and this power shall expire at the conclusion of the next AGM of the Company after the passing of this
resolution or on 25 July 2025 (whichever is the earlier), save that the Company may make an offer or
agreement before this power expires which would or might require equity securities to be allotted for cash
after this power expires and the Directors may allot equity securities for cash pursuant to any such offer or
agreement as if this power had not expired.
This power is in substitution for all existing powers under section 570 of the Act (which, to the extent unused
at the date of this resolution, are revoked with immediate effect).
12. That, pursuant to section 701 of the Act, the Company be and is generally and unconditionally authorised
to make market purchases (within the meaning of section 693(4) of the Act) of Ordinary Shares of 0.1p each
in the capital of the Company (“Shares”), provided that:
12.1.
the maximum aggregate number of Shares which may be purchased is 7,057,446;
12.2.
the minimum price (excluding expenses) which may be paid for a Share is 0.1p;
12.3.
the maximum price (excluding expenses) which may be paid for a Share is an amount equal to
105 per cent of the average of the middle market quotations for a Share as derived from the Daily
Official List of the London Stock Exchange plc for the five business days immediately preceding the
day on which the purchase is made;
and (unless previously revoked, varied or renewed) this authority shall expire at the conclusion of the next
AGM of the Company after the passing of this resolution or on 25 July 2025 (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
18 March 2024
Registered office
Unit 3, Phoenix Court
Lotherton Way
Garforth
Leeds
England
LS25 2GY
Registered in England and Wales No. 05969271
82 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 23 April
2024 (or, if the meeting is adjourned, close of business on the date that 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:
l
l
l
l
By logging on to 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 that has been agreed by the Company and approved by the Registrar. For further
information regarding Proxymity, please go to www.proxymity.io. Your proxy must be lodged by 11.00 a.m.
on 23 April 2024 in order to be considered valid or, if the meeting is adjourned, by the time that 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.
In the case of CREST members, by utilising the CREST electronic proxy appointment service in
accordance with the procedures set out below.
You may request a hard copy form of proxy directly from the registrars, Link Group, by emailing them
at 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 UK will be charged at the applicable
international rate. Lines are open between 09:00 and 17:30, Monday to Friday (excluding public holidays
in England and Wales).
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 23 April (or, if the meeting is adjourned, no later than 48 hours before the time of any
adjourned meeting).
Annual Report and Accounts 2023 83
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 23 April 2024
(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, 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.
84 Tissue Regenix Group plc
Other
continued
Biographical details of Directors
7.
Biographical details of all those Directors who are offering themselves for reappointment at the meeting are
set out on pages 17 and 20 of the enclosed annual report and accounts.
Share capital
8.
As at 18 March 2024 (the last practicable business day prior to the date of this notice), the Company’s issued
share capital comprised 70,574,468 Ordinary Shares of 0.1 pence each, 1,171,971,322 deferred shares of
0.4 pence each and 70,357,949 class 2 deferred shares of 9.9 pence each. Each ordinary share carries the
right to vote at a general meeting of the Company. The deferred shares and class 2 deferred shares carry
no voting rights. Therefore, the total number of voting rights as at the date of this document is 70,574,468.
Annual Report and Accounts 2023 85
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
REGISTRAR
Link Group
PXS 1
Link Group
Central Square
29 Wellington Street
Leeds
LS1 4DL
Non-Executive Chairman
Chief Executive Officer
Chief Financial Officer
Non-Executive Officer
Non-Executive Officer
Non-Executive Officer
NOMINATED ADVISER AND BROKER
Cavendish
1 Bartholomew Close
London
EC1A 7BL
LEGAL ADVISERS
DLA Piper UK LLP
Princes Exchange
Princes Square
Leeds
LS1 4BY
Squire Patton Boggs UK LLP
6 Wellington Place
Leeds
LS1 4AP
FINANCIAL PR AND INVESTOR RELATIONS
Walbrook PR
75 King William Street
London
EC4N 7BE
86 Tissue Regenix Group plc
Tissue Regenix Group plc
Unit 3
Phoenix Court
Lotherton Way
Garforth LS25 2GY
www.tissueregenix.com