TIDMTRX
RNS Number : 7859W
Tissue Regenix Group PLC
28 April 2021
Tissue Regenix Group plc
("Tissue Regenix" or "the Group")
Final Results for the Year Ended 31 December 2020
and
Notice of AGM
Tissue Regenix (AIM: TRX), the regenerative medical devices
company, announces its final results for the year ended 31 December
2020.
Financial Highlights
-- Maintained Revenue at GBP12.8m (2019: GBP13.0m) despite the challenges posed by COVID-19
o Orthopaedics and Dental revenue of GBP7.4m, +11% (GBP2019:
GBP6.7m)
o Joint venture GBM-v achieved sales of GBP2.1m (2019:
GBP2.1m)
o DermaPure(R) sales decreased by 22% to GBP3.3m (2019:
GBP4.2m)
-- Gross Profit steady at GBP5.9m (2019: GBP6.0m), with a 46% gross profit margin (2019: 46%)
-- Operating Loss of GBP9.8m (2019: GBP7.2m) driven largely by a
non-cash impairment charge of GBP6.1m arising from the annual
impairment test on the CellRight Technologies
o Implemented cost reduction initiatives reducing the overhead
cost base by GBP400,000
-- Cash balance at 31 December 2020 GBP9.6m (2019: GBP2.4m)
following an equity fundraise raising net proceeds of GBP13.8m in
June 2020
Operational Highlights
-- CE Mark approval for OrthoPure(R) XT, June 2020
-- New strategic collaboration with a top 10 global healthcare
company for white label product
-- Additional commercial opportunities secured for growth
product lines such as AmnioWorks(TM), diversifying the sales
portfolio
-- Phase 1 of the capacity expansion programme commenced in San
Antonio, July 2020, providing additional capacity from H1 2021
-- Operational improvement initiatives implemented at San Antonio facility
-- Relocation of UK facility to Garforth, Leeds, October 2020,
expected to deliver annualised savings of GBP0.4m from 2021
-- 19 new DermaPure(R) clinical case studies undertaken for new product applications
-- EU and UK distribution agreements signed for OrthoPure(R) XT
-- Daniel Lee appointed as Chief Executive Officer, November 2020
Post balance sheet events
-- Trevor Phillips and Brian Phillips appointed as Independent Non-Executive Directors
-- David Cocke appointed Chief Financial Officer, January 2021
-- Restructuring of US Operations, estimated to save c.GBP500k
on an annualised basis, January 2021
-- Jonathan Glenn appointed Non-Executive Chairman, February 2021
-- Occupation of initial phase of the facility expansion in San Antonio, Texas, March 2021
Daniel Lee, CEO of Tissue Regenix, commented: " I am honoured to
have been appointed as CEO to lead the Group through its next
stages of development. 2020 was a challenging year, but under the
circumstances, a successful period for the Group and we are pleased
to have maintained consistent revenues and gross profit despite the
many challenges of COVID-19.
"The year was primarily highlighted by our financial performance
relative to other industry participants, and securing the necessary
funding to support the organisation and invest in the required
capacity expansion programme. Alongside this, we secured a number
of additional distribution and white label agreements for organic
growth in the US and extending our geographical outreach through
the receipt of the CE Mark for OrthoPure(R)XT which allowed us to
begin our commercialisation efforts within the EU. As COVID
restrictions subside and with the backdrop of a material global
backlog of elective surgeries, we expect strong growth in product
demand in the second half of 2021 and are well positioned to
capture and service this need with our extensive product lines.
"Having been with the Group for two years as President of US
Operations, I was familiar with much of the business. However,
since moving into this role, I can see expansive opportunities that
lie before us to enable our global growth in regenerative
medicine."
Annual Report and Accounts and Notice of AGM
As part of the Company's move to electronic reporting, the
Annual Report and Accounts, notice of AGM and accompanying form of
proxy, will be available later this morning on the Company's
website, www.tissueregenix.com , in accordance with AIM Rule 20.
For those who opted to receive hard copies of the Annual Report,
these will be posted today.
The AGM will be held at DLA Piper, Princes Exchange, Princes
Square, Leeds LS1 4BY, on 3 June 2021 at 12.00pm. At the time of
writing, it is expected that there will still be limitations on the
ability to host shareholders at the AGM. Shareholders are strongly
recommended not to attend the AGM in person and instead appoint the
Chairman of the meeting to act as their proxy. If any shareholders
do intend to attend the meeting in person, the Company strongly
encourages them to advise the Company at least 48 hours in advance
of the AGM by using the contact details below. Any such
communication shall not provide a guarantee that admittance to the
AGM will be permitted where to do so would be in breach of rules
governing public gatherings and/or the need to protect the health
and safety of those already in the meeting. The Company would
nevertheless like to engage with its shareholders as fully as
possible in the circumstances, and you are invited to ask the Board
questions about the Accounts or the AGM by contacting Walbrook PR
at TissueRegenix@walbrookpr.com .
The results of the votes on the proposed resolutions will be
announced by RNS as soon as practicable after the conclusion of the
AGM.
For more information:
Tissue Regenix Group plc www.tissueregenix.com
Daniel Lee, Chief Executive Officer Via Walbrook PR
David Cocke, Chief Financial Officer
Stifel Nicolaus Europe Limited (Nominated Tel: +44(0)20 7710 7600
Adviser and Broker)
Ben Maddison / Alex Price
Walbrook PR Ltd Tel: +44 (0)20 7933 8780
Alice Woodings / Lianne Cawthorne / Paul TissueRegenix@walbrookpr.com
McManus
About Tissue Regenix ( www.tissueregenix.com )
Tissue Regenix is a leading medical devices company in the field
of regenerative medicine. The company's patented decellularisation
('dCELL(R)') technology 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 worn-out body parts. Current
applications address many critical clinical needs such as sports
medicine, heart valve replacement and wound care.
In August 2017 Tissue Regenix acquired CellRight
Technologies(R), a biotech company that specializes in regenerative
medicine and is dedicated to the development of innovative
osteoinductive and soft tissue scaffolds that enhance healing
opportunities of defects created by trauma and disease. CellRight's
human osteobiologics may be used in spine, trauma, general
orthopaedic, foot & ankle, dental, and sports medicine surgical
procedures.
Chairman's statement
Introduction
With the outbreak of the COVID-19 pandemic, 2020 was always
going to be a challenging year for the Group, however, the
management team dealt with the demands admirably and also achieved
a significant number of milestones. The pandemic had a significant
impact on our ability to grow our top line revenue due to the
postponement of many elective surgical procedures, and a slowdown
of product approvals in new hospital institutions. Despite this, we
were successful in achieving several commercial milestones upon
which the Company can build its future success.
Financial performance
The Group reported top-line revenue of GBP12.8m (2019: GBP13.0m)
which is down 2% as a result of the COVID-19 pandemic. Despite the
decline in surgeries caused by the pandemic, the BioRinse(R)
portfolio returned 11% growth driven mainly by increased
penetration of the AmnioWorks(TM) product line.
The DermaPure(R) portfolio was hit more sharply by the pandemic,
with revenue dropping 22%, as the indications, DermaPure(R) targets
were more affected by the cessation of elective surgeries in the
US.
Our controlled joint venture, GBM-v, maintained its revenues at
2019 levels despite surgical lockdowns in its German cornea
business.
As part of its COVID-19 response, the US subsidiaries applied
and received loans under the US Government's PPP program. These
loans may be converted into grants if used for permitted purposes.
The Group believes it has met these conditions and has accordingly
classified the proceeds of GBP815k as Grant Income, in addition to
GBP40k received through the UK furlough scheme.
Shareholders and Funding
In June 2020, the Group successfully raised GBP13.8m (net)
(GBP14.6m gross) of funding through a placement of equity. This,
together with a restructuring and optimisation of the cost base has
ensured the Group is in a significantly stronger financial position
in 2021 and are able to continue to weather the impact of the
enduring COVID-19 pandemic.
Furthermore, this injection of capital has allowed for the
commencement of the capacity expansion programme in San Antonio,
Texas. Phase 1 of this programme, which commenced in July 2020, is
expected to increase the BioRinse(R) processing capacity by c.50%
once operational, alleviating the capacity constraints which have
historically impinged on the growth of the business.
In order to facilitate this placing, the Group attracted a
number of new institutional and private investors which has
significantly changed the size and shape of our shareholder base. I
would like to thank all of our new and existing shareholders for
their continued support.
Operations and the impact of COVID-19
The COVID-19 pandemic and associated restrictions provided an
unprecedented and complex landscape to navigate, however, we
successfully maintained all operations at the San Antonio facility
allowing us to continue to service customer demand, whilst also
building inventory to meet the projected demand once a normalised
level of procedures has returned. Outside of this, as mentioned
above, the commencement of the first phase of the capacity
expansion project in July 2020 will provide additional capacity
from H1 2021.
Throughout the pandemic, the main priority of the Board has been
the wellbeing and safeguarding of our employees, customers,
suppliers and all other stakeholders. In the UK, operations and
technical staff were furloughed from March in accordance with the
UK Government advice. However, with the launch of OrthoPure(R) XT
scheduled for Q4 2020 all staff were re-engaged in July to ensure
this timeline could be met.
Outside of this, the Group continued to implement several
overhead cost reduction initiatives and the decision was made to
relocate the UK head office and manufacturing facility to Garforth,
Leeds from October 2020 which is expected to deliver annualised
savings of GBP0.4m from 2021.
Our strategy
Our strategy has evolved with the main focus now being the
commercialisation of our product pipeline. A key factor in the
success of this is our ability to attract and maintain significant
strategic partners and key customers. During 2020, we successfully
launched a new product under a white label opportunity with a top
10 global healthcare company, signed additional customers,
particularly focusing on our lesser known product lines, and
expanded into the UK and EU markets with the launch of OrthoPure(R)
XT.
We continue to seek new partnership opportunities and have
identified additional product line extensions and therapeutic areas
which will drive market adoption and penetration, whilst
diversifying the Group's sales portfolio and geographic outreach
which we can pursue once the additional processing capacity is
fully operational.
Management
In November 2020, Gareth Jones, interim CEO resigned from his
position within the Company. After reviewing the strategic
direction of the business and running a formal process with an
external recruitment firm, the Board made the decision to appoint
Daniel (Danny) Lee as CEO of the Group. Danny, who has over 30
years of industry experience, joined as President of US Operations
in January 2019 and has been responsible for leading the capacity
expansion and optimisation programme in San Antonio.
Following the year end, in January 2021, David Cocke was
appointed as CFO for the Group and is based alongside Danny in San
Antonio. David has 30 years' experience in senior finance and
operations roles having previously been CFO at Aperion Biologics,
Inc. and founding NuPak Medical in 1997 which was later acquired by
Katena Products, Inc in 2017.
I would like to take this opportunity to welcome both Danny and
David to the Group and on behalf of the Board, I would like to
thank Gareth for his commitment and leadership throughout what was
a particularly challenging year for business.
The Board
The Board of Directors underwent a number of other changes
during 2020 in order to ensure that its size, composition and skill
set remained relevant to the requirements and strategy of the
Group. After significant tenures on the Board, both Alan Miller and
Randeep Grewal resigned their positions as Non--Executive
Directors, following which Trevor Phillips and Brian Phillips (no
relation) were appointed. Brian and Trevor bring a wealth of
experience particularly regarding operations and corporate
development in the lifescience industry and financial management,
which will be key in driving the Company's future success.
In March 2020, John Samuel, former Executive Chairman, also
resigned from the Board and I stepped up to fill the Chairman's
role on an interim basis and latterly on a permanent basis. With
the appointment of Danny Lee as permanent CEO, David Cocke as CFO
and two new Non-Executive Directors, Tissue Regenix has a strong
new team to lead the Group forward.
Our employees
Our skilled employees are a key stakeholder in the success of
the Group and I would like to thank them for their ongoing hard
work and commitment. 2020 has been an uncertain year, particularly
for the UK employees who were furloughed for a period of time due
to the pandemic, but through their continued commitment and focus
on maintaining a COVID-19 free work environment, the Group has
emerged in a stronger position to execute our strategic growth
drivers, increasing our market penetration and moving closer to
profitability.
Post balance sheet events
As we transitioned into 2021, COVID-19 continued to impact the
return of elective surgeries. The Group continued to service its
customers and partners and positioned the business to be ready for
a resumption of the growth it experienced prior to the COVID-19
outbreak.
The expansion plans for the San Antonio facility continued and
the initial phase was successfully completed and occupied in March
2021. The expansion enabled the company to transfer its
distribution and freezer facilities to the new building which
provides the additional capacity for donor tissue, the foundation
for growth. The new facility provides a more centralised and
efficient arrangement for product distribution needs in the short
and long term. In our existing building, the relocation of the
freezer facility now enables us to expand our clean rooms which
will provide additional processing capacity during H1 2021. The
relocation of distribution to the new building, provides the
departments remaining in our existing facility the ability to
increase their capacity and throughput, as well as the space for
future needs.
Outlook
During 2020, the Group achieved a number of significant
milestones and we remain focused and committed to creating
long-term, sustainable value for our shareholders by increasing our
market penetration through leveraging relationships with strategic
partners, and improving our portfolio offering with product line
extensions for identified, underserved clinical applications.
The capacity expansion programme will alleviate the supply
issues that have previously hindered the growth of the Group and
moving forward will provide a step-change in the trajectory of the
business as we secure additional distribution contracts and have
the ability to increase our geographic outreach.
Having successfully entered the UK and specific EU markets with
OrthoPure(R) XT, and establishing our white label manufacturing
capabilities with a large global partner, the Board has confidence
in the prospects of the Group once the COVID-19 pandemic has
subsided and healthcare procedures return to a normalised
level.
Jonathan Glenn
Chairman
CEO operational review
2020 performance
The Group performed strongly during 2020 despite the COVID-19
backdrop, delivering top-line revenues consistent with 2019 and
achieving significant operational and commercial success. We
improved our performance against key performance indicators in a
year where many companies experienced a downturn in demand as
hospital resources were redirected, and this is a testament to our
products, partners and employees.
Financial Performance
Our Orthopaedics and Dental division is comprised primarily of
our BioRinse(R) portfolio, reported sales of GBP7,446K (2019:
GBP6,724K), an increase of 11% driven largely by strong
performances by our partners, the diversity of our markets, and the
addition of distributors for smaller product lines. The most
significant increase was seen in our amniotic membrane product line
which was achieved primarily through strategic partnerships in
ophthalmology, a growth opportunity for the Company. Over time,
sales from the OrthoPure(R) XT product line will be captured under
this division however, with its launch in November 2020 the
contribution to the 2020 revenue line was not material.
The BioSurgery division maintained its increased focus on soft
tissue orthopaedic and urogynaecology procedures which were
established during 2019, however, these areas were more
significantly impacted by the postponement and cancellation of
elective surgical procedures caused by the COVID-19 pandemic, and
consequently lead to a 22% reduction for revenues under this
division. We continue to work closely with our customers,
distributors and strategic partners and it is expected that once
these procedures recommence, the demand for our DermaPure(R) and
DermaPure(R) non-oriented products will continue to increase.
Alongside this, the Group initiated a number of overhead cost
reduction initiatives, which reduced our overhead cost base by
GBP1.7m, and the full annualised saving of c.GBP400k from the UK
facility move in October 2020 will not be fully realised until
2021. We have continued to focus on our overhead cost base and
following the year end announced restructuring of the US business
which once annualised will realise a further c.$700k saving.
The completion of the GBP14.6m (gross) equity fundraise in June
2020 has provided a strong cash position for the Group, with these
resources allowing for investment into phase 1 of the capacity
expansion programme in San Antonio. It will provide sufficient
working capital to support the Group for the foreseeable
future.
Operations
Operationally, 2020 was a successful year for the Group with the
additional funding allowing for the commencement of the capacity
expansion programme in San Antonio. Previously, the Group was
hindered by a lack of freezer storage and distribution facilities
which restricted the number of donors we could hold on site for
processing; and efficiencies in our ability to ship finished goods
in-line with peak demand. The new distribution facility
consolidates this function into a single location and provides
labour and time savings in processing orders. Phase 1 of the
capacity expansion will move all freezer space into the new
facility increasing our capacity. This in turn will allow for two
additional sterile packaging clean rooms to be installed in the
space formerly occupied by freezers in the original building. These
changes alone should provide additional flexibility and increase
our BioRinse(R) portfolio processing capacity by c.50%, which we
expect will be easily absorbed by the demand we see from existing
partners and customers. This expansion will also improve the
efficiency for processing the DermaPure(R) portfolio of products.
Furthermore, we intend to build up to an additional 10 clean rooms
in the new facility in phase 2, which will allow for the continued
expansion of our customer base, product portfolio and geographic
reach. Due to the impact of COVID-19 on the healthcare markets, the
initiation of this phase has been placed under review to ensure the
efficient deployment of capital and a return to normalised market
conditions. Once Phase 2 is fully operational, it is expected that
this expansion programme will meet our processing requirements for
the next 5-7 years.
The relocation of our UK facility was undertaken in October 2020
once the required inventory for the launch of OrthoPure(R) XT had
been processed. As part of this relocation, many aspects of the
production process have been successfully outsourced reducing our
dependency on in-house manufacturing.
In January 2020, the Group was the victim of a cyber attack,
which temporarily affected our ability to process at the facility
in San Antonio. We quickly implemented an action plan to provide
forensic data, remediate our services and mitigate the potential
consequences. Although there was a short-term impact on our ability
to service customer demand as we were unable to release inventory
for distribution in-line with the necessary quality regulations,
during the weeks that followed the attack, the San Antonio team
worked to catch up with this demand. The Company reported the
attack to all relevant authorities, has reviewed its IT service
providers and implemented additional data security procedures to
reduce the risk of a similar incident occurring in the future.
The impact of COVID-19
The pandemic stunted the surgical marketplace when hospitals,
governments and health care providers halted elective procedures
across all specialties. The postponement of surgical procedures,
which was initially most evident in the urogynaecology and dental
applications, has led to business disruption in terms of
unpredictable inventory and manufacturing forecasts.
By undertaking certain initiatives, which were updated
throughout the year based on guidelines issued by the government
and other credible sources, there was minimal disruption to the
processing undertaken at the facility in San Antonio, which
continued to show strong production throughput. Although COVID-19
did not impact production in San Antonio, it did have an impact on
our supply chain of donors. To address the delays in donor
sourcing, we broadened our donor sourcing agencies by taking into
account factors such as geography and recovery structures. As the
impact of COVID-19 became more evident, we monitored and adapted
our approach through a combination of communication with partners
and altering our processing and production priorities. During Q3,
regional markets started to regain momentum but COVID-19 continued
to have an impact nationally as 2020 came to an end.
Strategy
Whilst in the position as President of US Operations, I was
involved in shaping the strategic direction for the US business and
the required capacity expansion project. Therefore, the strategy as
highlighted by the previous Executive management at the time of the
fundraise is one that I continue to endorse and look to our
strategic growth drivers as the map to our future success. During
2020, we were successful in securing a number of commercial and
operational milestones and improving our performance against key
performance indicators, such as increasing our strategic
partnerships and therefore, US market penetration.
Commercial and R&D
Following the restructuring of the business in late 2019, we
continue to pursue the commercialisation of current product lines
as our top priority and look to augment this with product line
extensions that are faster to market and address a specific
clinical application and need. One of these areas was a focus on
our amnion based products which has increased nearly four-fold year
on year.
During 2020, we launched OrthoPure(R) XT into the UK and select
European markets following the receipt of CE mark certification.
OrthoPure(R) XT is used in the reconstruction of the Anterior
Cruciate Ligament following re-rupture, the reconstruction of other
knee ligaments in multi-ligament procedures following trauma, and
primary ACL procedures where the autograft is unavailable or
inadequate.
The Group has been working to launch this product for a number
of years and successfully undertook a comprehensive clinical trial,
resulting in white papers describing the pre-clinical and two-year
clinical follow-up.
We also strengthened our white label manufacturing which will
supplement our own branded portfolio, increase market opportunities
and provide revenue generating streams for the business. In May, we
announced that we had signed a white label agreement with a top 10
global healthcare company for a new soft tissue orthopaedic
product; this was the culmination of two years work between our
R&D and commercial teams alongside our new partner. Although
there has been a positive response to this product, it is expected
that the full impact of this product line will not be seen until
2021 once the COVID-19 pandemic has subsided. The additional
capacity provided by the expansion programme will allow us to
expand our white label offering and it is this type of activity
which we hope to replicate with additional strategic partners in
the future. During the year we also added several additional
private label agreements for our growth product lines, such as
AmnioWorks(TM), which have the potential to generate revenue and
diversify our spectrum of products and specialties moving
forward.
One of our focus areas during 2020 was the identification of
product line extensions to strengthen both our product portfolio
and market position. We expect that during 2021 a number of these
identified product line extensions or improvement opportunities
from our product portfolio will come to fruition, driving the
organic growth rate, specifically as we look to tailor our soft
tissue offering to clinical applications where we see a lack of
suitable biologic alternatives and meet market expectations.
Culture
The Group is reliant upon our employees to ensure that the value
of our novel technology platforms realises its true potential and
becomes the clinician's product of choice to improve the lives of
as many patients as possible.
Central to this is the corporate culture we create, and I
strongly support the Group's vision, mission, values and behaviours
which we expect every employee to uphold and which guides the
corporate strategy and decision making. 2020 also provided the
challenge of COVID-19, requiring a combination of remote and
on-site working to ensure a safe and healthy workplace. This
culture ensured that the Company is fair, ethical and supportive
towards all employees and stakeholders, making it a place where
people want to work, and excel, as well as being a Company that
customers and industry peers want to partner with.
2021 priorities
The COVID-19 pandemic continues to have a significant impact on
the healthcare industry. However, we remain focused on developing
the aspects of the business within our control, continuing our
efforts to more effectively utilise our resources and position the
Group with a competitive edge once the situation begins to
normalise.
This includes the completion of Phase 1 of the capacity
expansion programme and ensuring that all operational procedures
are implemented to allow for a smooth transition to the increased
processing capacity. With this increased capacity, we can continue
the positive discussions that have commenced with existing and new
strategic partners.
Alongside this, we will be in a position to commence the
processing and launch of product line extensions that have been
identified due to market demand which will augment our product
portfolio.
Our commercial focus to this point has primarily been on the US
market where there is significant demand. However, with the
increased capacity and expansion of distribution networks, during
2021 and beyond we will seek to expand our geographic outreach into
new territories for our dCELL(R) and BioRinse(R) portfolios.
Following the successful launch of OrthoPure(R) XT into the UK and
select EU markets during Q4 2020, we will continue to rollout this
product into additional target markets.
Post balance sheet events
As we moved into 2021, the Company was still impacted by the
COVID-19 pandemic as elective surgical procedures in many
institutions were still on hold and postponed. Commercial
representatives were prevented from entering institutions to meet
with clinicians and administrators. Many patients also delayed
surgeries due to COVID-19 fears, family finances, lost time at
work, lack of insurance or employment, and other considerations.
The arrival of vaccines and the drop in positivity rates brought
hope and optimism. There were indications of the return of normal
market conditions but many expect disruptions to continue to mid
2021. It remains difficult to predict at what pace a return to
pre-pandemic procedure levels will occur. All of our divisions
continued to exercise caution and protect the safety and well-being
of our employees. By continuing the initiatives we began in 2020
and implementing any relevant government policies, no disruptions
in operations and no positions were impacted by the pandemic.
On 5 January, we continued to enhance our organisational
excellence with the confirmation of Brian Phillips and Trevor
Phillips as independent Non-Executive Directors of Tissue Regenix.
Brian Phillips assumed the Chair of the Audit Committee and Trevor
Phillips assumed the Chair of the Remuneration Committee.
On 21 January, we added David Cocke as our Chief Financial
Officer and Executive Board member. David has over 29 years of
experience in the medical device industry holding senior finance
and operations positions. David founded NuPak Medical, an
ISO-certified contract manufacturer of sterile disposable medical
devices, which was acquired by Katena Products, Inc. in 2017. David
remained with the business post-acquisition until early 2021,
leading the expansion to double the clean room capacity and
assembly space on time and on budget. I had the opportunity to work
with David at Aperion Biologics where he was the Chief Financial
Officer and where we successfully supported the Board in raising
$21m from venture capital and private investors. David's experience
in financial systems, management and operations will be invaluable
to the Group as we undertake the next stages of our growth
programme.
In late January further re-structuring of the US business was
undertaken to rationalise resources across the business. It is
expected to reduce the overhead cost base by c.$700k on an
annualised basis.
On 26 February, we announced that the Board had appointed
Jonathan Glenn to the position of Non-Executive Chairman. Jonathan
joined the Group in January 2016 and his leadership had been
invaluable as a Board member and as Interim Chairman. We look
forward to his continued contribution to the Group.
On 18 March, we announced that we have completed the initial
phase of our expansion plans at our San Antonio Texas facility.
This expansion into the 21,000 sq. ft facility adjacent to our
existing facility was the first stage of our plans to address
manufacturing capacity constraints. This initial part of the
expansion project comprised of relocating facilities designated for
distribution and frozen tissue storage, both of which had outgrown
their existing space in the San Antonio facility. The new freezer
facility triples the Company's current storage capacity allowing
Tissue Regenix to hold more donor tissue on site. The new
distribution area enables the Company to integrate distribution and
finished goods into a more efficient operating space.
Work has also started on the construction of two additional
clean rooms at the existing San Antonio facility, bringing the
total number of clean rooms to seven and providing additional
capacity and flexibility. The move of distribution and finished
goods to the new building provides expansion space for supporting
departments in our existing facility. These developments, which
will complete phase 1 of the expansion project, are scheduled for
completion during H1 2021. The decision to do this in phases was
advantageous by enabling us to be efficient with our capital and
plan our expansion in line with the return to pre-pandemic
procedure levels. We anticipate as the markets normalise and demand
returns, we can justify the investment into the additional phase of
the capacity expansion.
Daniel Lee
Chief Executive Officer
Financial overview
Revenue
In the year ended 31 December 2020 revenue decreased by 2% on an
underlying basis or 0% constant currency basis to GBP12,829k (2019:
GBP13,033k).
The financial performance for the year was impacted by the
ongoing COVID-19 pandemic which became evident from Q2 onwards,
together with material cash constraints that the business
experienced in the first half of the period. Notwithstanding this,
the Orthopaedics & Dental segment successfully grew top line
sales by 11%, to GBP7,446k (2019: GBP6,724k) largely driven by a
strong Q1 performance. In addition, it maintained strong
relationships with strategic partners and saw an increase in the
utilisation of a newer, growth product line, AmnioWorks(TM), which
will be utilized in surgical specialties such as ophthalmology.
Revenue from DermaPure(R) , under the BioSurgery division, was
more significantly impacted by the pandemic and associated
restrictions, as US hospitals postponed elective surgical
procedures, such as urogynaecology and soft tissue orthopaedics,
where the DermaPure(R) products would be utilized, resulting in a
22% decrease in revenues to GBP3,308k (2019: GBP4,233k) for this
division. There is beginning to be a slight uptick in the
recommencement of these procedures as the US vaccine roll-out
continues and patient confidence returns, however, it remains
difficult to predict at what pace a return to pre-pandemic
procedural levels will occur.
The Group's joint venture, GBM-V, based in Rostock, has been
impacted by the German lockdown restrictions that were in place for
much of the last year, however, the business unit continued to
service the cornea market where possible and maintained revenues of
GBP2,075k (2019: GBP2,076k) in line with prior year results.
Grant income
During the year, the US subsidiaries of the group were
successful in the application of the US Government PPP loans. The
loans have a two year term and carry a 1% annual interest rate
deferred for six months, however, under the loan agreement, the
total amount of the loan will not require repayment if the funds
are used to support employee payroll, healthcare, utilities and
rent payment within the US during the six months post funding. The
Group believes they have met the conditions and have classified the
proceeds GBP815k (2019: nil) as Grant Income. The UK furlough
scheme also provided support for the Group during COVID-19, which
amounted to GBP40k in Grant Income.
Exceptional items
Restructuring costs for the year totalled GBP353K (2019: GBP21K)
with GBP252k relating to the reduction in staff and consultants in
the Central segment were charged in the year.
Restructuring costs of GBP101k due to the reduction in staff and
consultants were charged to the Cardiac & Other segment in
2020.
Exceptional items includes a GBP6,130k non-cash impairment
charge arising from the annual impairment test on the CellRight
Technologies cash generating unit. The uncertainty created by the
COVID-19 pandemic necessarily resulted in more conservative
forecasting of future cash flows which in turn gave rise to the
reported impairment. Further details on the impairment test can be
found in note 12.
Cost of sales and gross profit
Gross profit for the year is GBP5,896k (2019: GBP6,019k). Gross
margin percentage remained the same at 46% (2019: 46%).
Included in costs of sales is cost of product GBP5,990k (2019:
GBP5,803k) and third party commissions of GBP943k (2019:
GBP1,211k).
Administrative expenses
During 2020, administrative expenses before exceptional items
decreased by GBP3,132k to GBP10,066k (2019: GBP13,198k), largely
due to a reduction of GBP2,600k in spending at the Central overhead
function to GBP1,325k (2019: GBP3,925k). This reduction was driven
by the downsizing in Q4 2019 which resulted in 18 positions being
made redundant in addition to GBP736k reduced depreciation and
amortisation after the impairment recorded in 2019. In addition,
certain expenses related to ongoing clinical trials of OrthoPure(R)
XT (GBP215k) are now capitalised due to the recently received CE
Mark. Historically these expenses were expensed as incurred, but
accounting standards require these to be capitalised once relevant
conditions have been met. Administrative expenses at the BioSurgery
division decreased GBP1,069k to GBP2,660k (2019: GBP3,729k) due
primarily to reduced staffing levels which decreased GBP756k to
GBP2,106k (2019: GBP2,862k).
Finance income/charges
Finance income of GBP2k (2019: GBP17k) represented interest
earned on cash deposits. Finance charges for the year were reported
at GBP445k (2019: GBP477k) and related to interest charges and
associated costs for the MidCap loan arrangement of GBP245k (2019:
GBP384k) in addition to interest arising due to the adoption of
IFRS16 of GBP200k (2019: nil).
Taxation
The Group continues to invest in developing its product
offering, and as such, is eligible to submit enhanced research and
development tax claims in the UK, enabling it to exchange tax
losses for a cash refund. In the year to December 2020, a refund of
GBP440k was receivable (2019: GBP488k). The year-on-year reduction
was a result of the business continuing to move its resources away
from research and development to more commercial activities.
Gross tax losses carried forward in the UK were GBP51,104k
(2019: GBP43,533k). 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. Corporation tax
payable in the US amounted to GBP0k (2019: GBP29k).
Loss for the year
The loss for the year was GBP9,708 k (2019 loss: GBP7,106k)
resulting in a basic loss per share of (0.22p) (2019 loss per
share: 0.60p).
Balance sheet
At December 2020, the Group had net assets of GBP27,847k (2019:
GBP24,595k) of which cash in hand totalled GBP9,550k (2019:
GBP2,380k).
Inventory increased by GBP2,887k to GBP7,072k (2019: GBP4,185k)
as the BioSurgery and Orthopaedics & Dental segments added to
stock levels to support projected business growth.
Property, plant and equipment increased by GBP895k to GBP3,252k
(2019: GBP2,357k) related to the expansion of the US manufacturing
facility.
A Right of Use asset was recorded in 2020 of GBP2,458k in
accordance with IFRS 16, Leasing (2019: nil). The Group took on
property leases in the US and UK, resulting in a Right of Use Asset
and a related Lease liability on the balance sheet.
Intangible assets decreased to GBP10,931k (2019: GBP17,999k)
through amortisation charges in the year and the non-cash charge
against Goodwill of GBP6,130k (2019: nil). A further GBP215k of
development costs were capitalised in the year.
Working capital increased in the year to GBP7,277k (2019:
GBP4,644k) driven by increased inventory (GBP2,887k increase). The
balance sheet included corporation tax receivable of GBP825k (2019:
GBP1,035k) in respect of UK research and development tax
credits.
Borrowings
Non-current liabilities represent the GBP2,790k debt facility.
This includes GBP1,473k of the term loan and GBP1,507k of the
revolving credit facility, net of GBP190k of capitalised debt issue
costs. The debt facilities mature in 2024 with quarterly principal
repayments on the term loan of $500k per quarter starting in July
2023. The Group is in compliance with the financial covenants
related to the debt facilities as of the date of this report.
More information on these obligations is provided on page
91.
Dividend
No dividend has been proposed for the year to 31 December 2020
(2019: Nil).
Accounting policies
Following the departure from the EU, the Group's consolidated
financial information has been prepared in accordance with
International Accounting Standards in conformity with the UK
Companies Act 2006.The Group's significant accounting policies,
which have been applied consistently throughout the year, are set
out on pages 73 to 77.
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 2022 (the "Cash Flow
Projections").
Funding requirements are reviewed on a regular basis by the
Group's Chief Executive Officer and Chief Financial Officer and are
reported to the Board at each Board meeting, as well as on an ad
hoc basis, if requested. The Cash Flow Projections show that the
Group will continue to consume cash over the forecast period. Until
sufficient cash is generated from its operations, the Group remains
reliant on cash reserves of GBP9.6m at 31 December 2020 and the
ongoing support of MidCap Financial Trust ("MidCap") (borrowings of
GBP2.8m at 31 December 2020) to meet its working capital
requirements, capital investment programme and other financial
commitments.
The COVID-19 pandemic has affected most businesses during 2020.
As a result of the reprioritisation of healthcare professionals
during this time, there has been a decline in elective procedures
undertaken across a number of medical specialities that use our
products. Given the uncertainty around the level and duration of
disruption from COVID-19, it is difficult to determine how long the
current situation may last, and the time taken to catch-up any
postponed surgical procedures thereafter.
However, the Board, in compiling the Cash Flow Projections, has
considered a downside scenario regarding the effect of reduced and
delayed revenues due to COVID-19 and, has undertaken market
soundings regarding the likely timeframe for the recommencement of
procedures. It has concluded that there will not be a significant
long-lasting impact on the capability of the business to carry out
its commercial activities. 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 also assume that the MidCap
facilities are available throughout the forecast period as they are
repayable in 2024. The availability of these facilities is
dependent upon compliance with a rolling twelve month revenue
covenant which is measured on a monthly basis. The Cash Flow
Projections indicate compliance with this covenant throughout the
forecast period. The scenario reflecting very low growth indicates
that this covenant may be breached in the second half of 2022. That
scenario also shows that the MidCap facility could be repaid from
cash reserves in the event that repayment was demanded by
MidCap.
In summary, the Directors have considered their obligations in
relation to the assessment of the going concern basis for
preparation of the financial statements of the Group and have
reviewed the Cash Flow Projections. On the basis of their
assessment, they have concluded that the going concern basis
remains appropriate for use in these financial statements.
Post balance sheet events
The Group has remained committed to appropriately sizing its
overhead cost base and expenditure. To this end, further
re-structuring of the US business was undertaken in January 2021 to
rationalise resources across the business which is expected to
reduce the overhead cost base by c. $700k on a normalised,
annualised basis. With respect to the COVID-19 pandemic, there is
beginning to be a slight development in the recommencement of
surgical procedures in the United States as the vaccine roll-out
continues and patient confidence returns, however, it remains
difficult to predict at what pace a return to pre-pandemic
procedural levels will occur.
Principal risks & uncertainties
The principal risks and uncertainties facing the Group are set
out on pages 38 to 43.
Cautionary statement
The strategic report, containing the strategic and financial
reports of the Group contain 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
Consolidated statement of comprehensive income
For the year ended 31 December 2020
2020 2019
Notes GBP000 GBP000
------------------------------------------------------ ----- -------- --------
Revenue 3 12,829 13,033
Cost of sales (6,933) (7,014)
------------------------------------------------------ ----- -------- --------
Gross profit 5,896 6,019
Administrative expenses before exceptional items 3 (10,066) (13,198)
Exceptional items (6,483) (21)
------------------------------------------------------ ----- -------- --------
Total administrative expenses (16,549) (13,219)
------------------------------------------------------ ----- -------- --------
Grant Income 855 -
------------------------------------------------------ ----- -------- --------
Operating loss (9,798) (7,200)
Finance income 2 17
Finance charges (445) (477)
------------------------------------------------------ ----- -------- --------
Loss before taxation (10,241) (7,660)
Tax 4 533 554
------------------------------------------------------ ----- -------- --------
Loss for year (9,708) (7,106)
------------------------------------------------------ ----- -------- --------
Attributable to:
Equity holders of the parent 5 (9,709) (6,973)
Non-controlling interests 1 (133)
------------------------------------------------------ ----- -------- --------
(9,708) (7,106)
------------------------------------------------------ ----- -------- --------
Other comprehensive income:
Foreign currency translation differences - foreign
operations (764) (724)
------------------------------------------------------ ----- -------- --------
Total comprehensive expense for the year (10,472) (7,830)
------------------------------------------------------ ----- -------- --------
Attributable to:
Equity holders of the parent (10,473) (7,697)
Non-controlling interests 1 (133)
------------------------------------------------------ ----- -------- --------
(10,472) (7,830)
------------------------------------------------------ ----- -------- --------
Loss per share
Basic and diluted loss attributable to equity holders
of parent 5 (0.22)p (0.60)p
------------------------------------------------------ ----- -------- --------
The loss for the period arises from the Group's continuing
operations.
Consolidated statement of financial position
At 31 December 2020
2020 2019
Notes GBP000 GBP000
------------------------------------------------ ----- -------- --------
Assets
Non-current assets
Property, plant and equipment 3,252 2,357
Right of use assets 2,458 -
Intangible assets 10,931 17,999
------------------------------------------------ ----- -------- --------
Total non-current assets 16,641 20,356
------------------------------------------------ ----- -------- --------
Current assets
Inventory 7,072 4,185
Trade and other receivables 2,643 2,539
Corporation tax receivable 825 1,035
Cash and cash equivalents 9,550 2,380
------------------------------------------------ ----- -------- --------
Total current assets 20,090 10,139
------------------------------------------------ ----- -------- --------
Total assets 36,731 30,495
------------------------------------------------ ----- -------- --------
Liabilities
Non-current liabilities
Borrowings (2,790) (2,115)
Deferred tax (560) (670)
Lease liability 6 (2,271) -
------------------------------------------------ ----- -------- --------
Total non-current liabilities (5,621) (2,785)
------------------------------------------------ ----- -------- --------
Current liabilities
Trade and other payables (3,007) (2,944)
Borrowings - (171)
Lease liability 6 (256) -
------------------------------------------------ ----- -------- --------
Total current liabilities (3,263) (3,115)
------------------------------------------------ ----- -------- --------
Total liabilities (8,884) (5,900)
------------------------------------------------ ----- -------- --------
Net assets 27,847 24,595
------------------------------------------------ ----- -------- --------
Equity and reserves
Share capital 11,720 5,859
Share premium 94,290 86,399
Merger reserve 10,884 10,884
Reverse acquisition reserve (7,148) (7,148)
Reserve for own shares (831) (831)
Share based payment reserve 955 983
Retained earnings deficit (81,409) (70,936)
------------------------------------------------ ----- -------- --------
Equity attributable to equity holders of parent 28,461 25,210
Non-controlling interests (614) (615)
------------------------------------------------ ----- -------- --------
Total equity 27,847 24,595
------------------------------------------------ ----- -------- --------
The consolidated financial statements were approved by the Board
of Directors on 27 April 2021 and were signed on its behalf by:
Daniel Lee
Chief Executive Officer
Company number: 05969271
Consolidated statement of changes in equity
For the year ended 31 December 2020
Attributable to equity holders of parent
-------------------------------------------------------------------------------
Share
Reverse Reserve based Retained Non-
Share Share Merger acquisition for own payment earnings controlling Total
capital premium reserve reserve shares reserve deficit Total interests equity
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
-------------- ------- ------- -------- ----------- -------- -------- -------- -------- ----------- --------
At 31 December
2018 5,859 86,398 10,884 (7,148) (831) 1,129 (63,239) 33,052 (482) 32,570
-------------- ------- ------- -------- ----------- -------- -------- -------- -------- ----------- --------
Loss for the
period - - - - - - (6,973) (6,973) (133) (7,106)
Other
comprehensive
income - - - - - - (724) (724) - (724)
-------------- ------- ------- -------- ----------- -------- -------- -------- -------- ----------- --------
Loss and total
comprehensive
expense
for the
period - - - - - - (7,697) (7,697) (133) (7,830)
Contributions
by
and
distributions
to owners
Exercise of
share
options - 1 - - - - - 1 - 1
Share based
payments - - - - - (146) - (146) - (146)
-------------- ------- ------- -------- ----------- -------- -------- -------- -------- ----------- --------
At 31 December
2019 5,859 86,399 10,884 (7,148) (831) 983 (70,936) 25,210 (615) 24,595
-------------- ------- ------- -------- ----------- -------- -------- -------- -------- ----------- --------
Loss for the
period - - - - - - (9,709) (9,709) 1 (9,708)
Other
comprehensive
expense - - - - - - (764) (764) - (764)
-------------- ------- ------- -------- ----------- -------- -------- -------- -------- ----------- --------
Loss and total
comprehensive
expense
for the
period - - - - - - (10,473) (10,473) 1 (10,472)
Contributions
by
and
distributions
to owners
Issue of
shares 5,860 8,790 - - - - - 14,650 - 14,650
Cost of issue
of
new Equity - (899) - - - - - (899) - (899)
Exercise of
share
options 1 - - - - - - 1 - 1
Share based
payments - - - - (28) - (28) - (28)
-------------- ------- ------- -------- ----------- -------- -------- -------- -------- ----------- --------
At 31 December
2020 11,720 94,290 10,884 (7,148) (831) 955 (81,409) 28,461 (614) 27,847
-------------- ------- ------- -------- ----------- -------- -------- -------- -------- ----------- --------
Consolidated statement of cash flows
For the year ended 31 December 2020
2020 2019
Notes GBP000 GBP000
-------------------------------------------------------- ----- -------- -------
Operating activities
Loss before taxation (10,241) (7,660)
Adjustment for:
Depreciation of property, plant equipment and right
of use asset 10 192 476
Amortisation of intangible assets 12 570 570
Impairment of intangible assets and property, plant
and equipment 10/12 6,130 1,311
Share based payments 21 (28) (146)
Interest receivable 6 (2) (17)
Interest payable 7 445 477
-------------------------------------------------------- ----- -------- -------
Operating cash outflow before working capital movements (2,934) (4,989)
-------------------------------------------------------- ----- -------- -------
(Increase) in inventory 13 (2,887) (1,855)
(Increase)/decrease in trade and other receivables 14 (11) 1,076
(Decrease) in trade and other payables 16 (46) (1,567)
-------------------------------------------------------- ----- -------- -------
Cash outflows from operations (5,878) (7,335)
-------------------------------------------------------- ----- -------- -------
Research & development tax credit received 649 653
-------------------------------------------------------- ----- -------- -------
Net cash outflow from operations (5,229) (6,682)
-------------------------------------------------------- ----- -------- -------
Investing activities
Interest received 6 2 17
Purchases of property, plant and equipment 10 (1,158) (438)
Capitalised development expenditure 12 (215) (213)
-------------------------------------------------------- ----- -------- -------
Net cash outflow from investing activities (1,371) (634)
-------------------------------------------------------- ----- -------- -------
Financing activities
Interest paid 7 (245) (384)
Proceeds from exercise of share options 2 1
Gross proceeds from issue of shares 14,650 -
Cost of issue of equity (899) -
Proceeds from new loans 504 6,479
Repayment of loans - (4,193)
Lease liability payments 19 (41) -
Lease interest payments (200) -
-------------------------------------------------------- ----- -------- -------
Net cash inflow from financing activities 13,771 1,903
-------------------------------------------------------- ----- -------- -------
Increase/(decrease) in cash and cash equivalents 7,171 (5,413)
Foreign exchange translation movement (1) (23)
Cash and cash equivalents at start of period 2,380 7,816
-------------------------------------------------------- ----- -------- -------
Cash and cash equivalents at end of period 9,550 2,380
-------------------------------------------------------- ----- -------- -------
Notes to the financial statements
For the year ended 31 December 2020
1) Basis of preparation
The financial statements of Tissue Regenix Group plc are audited
consolidated financial statements for the year ended 31 December
2020. These include audited comparatives for the year ended 31
December 2019.
The consolidated financial statements are prepared in accordance
with international accounting standards in conformity with the
Companies Act 2006 ('IFRS').
The Company is incorporated and domiciled in the United Kingdom
and its registered number is 05969271. The address of the
registered office is Unit 3 Phoenix Court, Lotherton Way, Garforth
LS25 2GY. The Company was incorporated on 17 October 2006. The
principal activity of Tissue Regenix Group is to develop,
manufacture and commercialise biological medical devices.
The Group financial statements consolidate the financial
statements of Tissue Regenix Group plc and the entities it
controls, being its subsidiaries and its joint venture
interest.
The figures for the years ended 31 December 2020 and 2019 do not
constitute statutory accounts within the meaning of Section 434 of
the Companies Act 2006. The information contained within this
announcement has been extracted from the audited financial
statements which have been prepared in accordance with
International Accounting standards in conformity with the
requirements of the Companies Act 2006 ('IAS'). They have been
prepared using the historical cost convention except where the
measurement of balances at fair value is required. The information
in this preliminary statement has been extracted from the audited
financial statements for the year ended 31 December 2018 and as
such, does not contain all the information required to be disclosed
in the financial statements prepared in accordance with IAS.
The auditors have issued an unqualified opinion on the full
financial statements for the year ended 31 December 2020 which will
be made available for shareholders and delivered to the Registrar
of Companies in due course. The financial information for 2020 and
2019 does not comprise statutory financial statements within the
meaning of Section 434 of the Companies Act 2006. Statutory
financial statements for the year ended 31 December 2019, on which
the auditors gave an unqualified opinion, have been delivered to
the Registrar of Companies. No statement has been made by the
auditor under Section 498(2) or (3) of the Companies Act 2006 in
respect of either of these sets of accounts. Further copies of
these results, and the full financial statements when published,
will be available on the Company's website at www.tissueregenix.com
and at the Company's registered office: Unit 3 Phoenix Court,
Lotherton Way, Garforth LS25 2GY
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 2022 (the "Cash Flow
Projections").
Funding requirements are reviewed on a regular basis by the
Group's Chief Executive Officer and Chief Financial Officer and are
reported to the Board at each Board meeting, as well as on an ad
hoc basis, if requested. The Cash Flow Projections show that the
group will continue to consume cash over the forecast period. Until
sufficient cash is generated from its operations, the Group remains
reliant on cash reserves of GBP9.6m at 31 December 2020 and the
ongoing support of MidCap Financial Trust ("MidCap")(borrowings of
GBP2.8m at 31 December 2020) to meet its working capital
requirements, capital investment programme and other financial
commitments.
The COVID-19 pandemic has affected most businesses during 2020.
As a result of the reprioritisation of healthcare professionals
during this time, there has been a decline in elective procedures
undertaken across a number of medical specialities that use our
products. Given the uncertainty around the level and duration of
disruption from COVID-19, it is difficult to determine how long the
current situation may last, and the time taken to catch-up any
postponed surgical procedures thereafter.
However, the Board, in compiling the Cash Flow Projections, has
considered a downside scenario regarding the effect of reduced and
delayed revenues due to COVID-19 and, has undertaken market
soundings regarding the likely timeframe for the recommencement of
procedures. It has concluded that there will not be a significant
long-lasting impact on the capability of the business to carry out
its commercial activities. 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 also assume that the MidCap
facilities are available throughout the forecast period as they are
repayable in 2024. The availability of these facilities is
dependent upon compliance with a rolling twelve month revenue
covenant which is measured on a monthly basis. The Cash Flow
Projections indicate compliance with this covenant throughout the
forecast period. The scenario reflecting very low growth indicates
that this covenant may be breached in the second half of 2022. That
scenario also shows that the MidCap facility could be repaid from
cash reserves in the event that repayment was demanded by
MidCap.
In summary, the Directors have considered their obligations in
relation to the assessment of the going concern basis for
preparation of the financial statements of the Group and have
reviewed the Cash Flow Projections. On the basis of their
assessment, they have concluded that the going concern basis
remains appropriate for use in these financial statements.
2) Significant accounting policies
Basis of Consolidation
Subsidiaries are entities controlled by the Group. The Group
controls an entity when it is exposed to, or has rights to,
variable returns from its involvement with the entity and has the
ability to affect those returns through its power over the entity.
In assessing control, the Group takes into consideration potential
voting rights. The acquisition date is the date on which control is
transferred to the acquirer. The financial statements of
subsidiaries are included in the consolidated financial statements
from the date that control commences until the date that control
ceases. Losses applicable to the non-controlling interests in a
subsidiary are allocated to the non-controlling interests even if
doing so causes the non-controlling interests to have a deficit
balance.
Controlled Joint Venture
Tissue Regenix Group entered a joint venture in January 2016
establishing GBM-V GmbH, a company in Germany.
The results for this entity are consolidated within these
financial statements because the Group controls the majority of the
voting rights.
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.
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 in to the Company, which
usually coincides with the despatch of goods
Bill and hold sales
The Group has bill-and-hold arrangements with customers, and
this revenue is recognised when the company considers that
performance obligations have been met and they meet the following
criteria:
-- 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 to direct it to another customer
Grant Income
Grant income is recognised as earned based on contractual
conditions and is presented as Grant income on the face of the
Statement of comprehensive income.
Foreign Currencies
The individual financial statements of each Group entity are
presented in the currency of the primary economic environment in
which the entity operates (its functional currency). For the
purposes of the consolidated financial statements, the results and
the financial position of each Group entity are expressed in Pounds
Sterling, which is the functional and presentational currency of
the Company and consolidated financial statements.
Exchange differences arising on transaction and monetary items
in the financial statements of individual entities are recorded as
a profit or loss within the income statement.
The assets and liabilities of foreign operations are translated
into sterling using exchange rates at the balance sheet date. The
components of shareholders' equity are stated at historical value.
An average exchange rate for the period is used to translate the
results and cash flows of foreign operations.
Exchange differences arising on translating the results and net
assets of foreign operations are recorded in other comprehensive
incomes and taken to the translation reserve in equity until the
disposal of the investment.
Research and Development
Research costs are charged to profit and loss as they are
incurred. An intangible asset arising from development expenditure
on an individual project is recognised only when all of the
following criteria can be demonstrated:
-- It is technically feasible to complete the product and the
management is satisfied that appropriate regulatory hurdles have
been, or will be achieved
-- Management intends to complete the product and use or sell it
-- There is an ability to use or sell the product
-- It can be demonstrated how the product will generate probable future economic benefits
-- Adequate technical, financial and other resources are
available to complete the development, use or sell the product
-- Expenditure attributable to the product can be reliably measured
Such intangible assets are amortised on a straight-line basis,
from the point at which the assets are ready for use over the
period of the expected benefit, and are reviewed for an indication
of impairment at each reporting date. Other development costs are
charged against profit or loss as incurred since the criteria for
capitalisation are not met.
The costs of an internally generated intangible asset comprise
all directly attributable costs necessary to create, produce and
prepare the asset to be capable of operating in the manner intended
by management. Directly attributable costs include employee costs
incurred on technical development, testing and certification,
materials consumed and any relevant third party cost. The costs of
internally generated developments are recognised as intangible
assets and are subsequently measured in the same way as externally
acquired intangible assets. However, until completion of the
development project, the assets are subject to impairment testing
only.
Exceptional Items
Items which are significant by virtue of their size or nature
and/or which are considered non-recurring are classified as an
exceptional operating item. Such items are included within the
appropriate consolidated income statement category but are
highlighted separately. Exceptional operating items are excluded
from the profit measures used by the Directors to monitor
underlying performance.
Inventories
Inventories are recognised at the lower of cost and net
realisable value. Cost is determined using the first in, first out
method and represents the purchase cost, including transport, for
raw materials, together with a proportion of manufacturing
overheads based on normal levels of activity for work in progress
and finished goods. Appropriate provisions for estimated
irrecoverable amounts are recognised in the income statement when
there is objective evidence that the assets are impaired.
Property, Plant, Equipment and Right of Use assets
Property, plant and equipment assets are stated at their
historical cost of acquisition less any provision for depreciation
or impairment.
Depreciation is provided on all property, plant and equipment
assets at rates calculated to write each asset down to its
estimated residual value evenly over its expected useful life, as
follows:
Buildings over 39
years
Laboratory equipment over 5-7
years
Computer equipment over 3 years
Fixtures and fittings over 5 years
Land is not depreciated.
A Right of Use asset is recognised at commencement of the lease
and initially measured at the amount of the lease liability, plus
any incremental costs of obtaining the lease and any lease payments
made at or before the leased asset is available for use by the
Group. The Right of Use asset is subsequently measured at cost less
accumulated depreciation and any accumulated impairment losses.
Right of Use assets are depreciated on a straight-line basis over
the lease term (39 years).
Intangible Assets
Intangible assets are stated at fair value at acquisition. They
are subsequently held at cost less any provision for impairment or
amortisation. Intangible assets are amortised through
administrative expenses within the income statement over their
expected useful life as follows:
Trademarks over 5 years
Customer relationships over 10
years
Process & IT technology over 10
years
Supplier agreements over 5 years
Impairment of Property, Plant and Equipment, Intangible and
Right of Use assets
At each reporting date, the Group reviews the carrying amounts
of its property, plant and equipment and intangible assets to
determine whether there is any indication that those assets have
suffered an impairment loss. If any such indication exists, the
recoverable amount of the asset is estimated in order to determine
the extent of the impairment loss (if any). For the purposes of
assessing impairment, assets are grouped at the lowest levels for
which there are separately identifiable cash flows (cash generating
units).
Discounted cash flow valuation techniques are generally applied
for assessing recoverable amounts using Board approved five-year
forward- looking cash flow projections and terminal value
estimates, together with discount rates appropriate to the risk of
the related cash generating units.
If the recoverable amount of an asset is estimated to be less
than its carrying amount, the carrying amount of the asset is
reduced to its recoverable amount. An impairment loss is recognised
as an expense immediately.
Share Based Payments
Share options
Equity settled share-based payment transactions are measured
with reference to the fair value at the date of grant, recognised
on a straight line basis over the vesting period, based on the
Company's estimate of shares that will eventually vest. Fair value
is measured using a binomial valuation model.
At each reporting date before vesting, the cumulative expense is
calculated, representing the extent to which the vesting period has
expired and management's best estimate of the achievement or
otherwise of non-market conditions and the number of equity
instruments that will ultimately vest. The movement in cumulative
expense since the previous reporting date is recognised in the
statement of comprehensive income, with a corresponding entry in
equity.
Jointly held shares
Where an employee acquires an interest in shares in the Company
jointly with the Tissue Regenix Employee Share Trust, the fair
value 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, taking into account
the terms and conditions upon which the jointly owned shares were
purchased.
Financial Assets and Liabilities
Trade and other receivables
Trade and other receivables do not carry any interest and are
initially recognised at fair value. They are subsequently measured
at amortised cost using the effective interest rate method, less
any provision for impairment.
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 the company considered the probability
of a default occurring over the contractual life of its trade
receivables balances on initial recognition of those assets.
Impairment provisions are recognised for the group as follows,
representing the expected credit losses over the contracted life of
these balances.
Not overdue 0% of aged receivables
0 to 3 months overdue 0% of aged receivables
to 4 months overdue 25% of aged receivables
to 5 months overdue 50% of aged receivables
Over 5 months 100% of aged receivables
overdue
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 six months.
Share capital
Ordinary shares are classified as equity. Incremental costs
directly attributable to the issue of new shares or options are
shown in equity as a deduction.
Leases
On commencement of a contract which gives the Group the right to
use assets for a period of time in exchange for consideration, the
Group recognises a right of use asset and a lease liability unless
the lease qualifies as a 'short-term' lease (term is 12 months or
less with no option to purchase the lease asset) or a 'low-value'
lease (where the underlying asset is GBP4,000 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.
Taxation
Tax on the profit or loss for the year comprises current and
deferred tax. Tax is recognised in the profit and loss account
except to the extent that it relates to items recognised directly
in equity or other comprehensive income, in which case it is
recognised directly in equity or other comprehensive income.
Current tax is the expected tax payable or receivable on the
taxable income or loss for the year, using tax rates enacted or
substantively enacted at the balance sheet date, and any adjustment
to tax payable in respect of previous years.
Deferred tax is provided on temporary differences between the
carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for taxation purposes. The following
temporary differences are not provided for: the initial recognition
of goodwill; the initial recognition of assets or liabilities that
affect neither accounting nor taxable profit other than in a
business combination, and differences relating to investments in
subsidiaries to the extent that they will probably not reverse in
the foreseeable future. The amount of deferred tax provided is
based on the expected manner of realisation or settlement of the
carrying amount of assets and liabilities, using tax rates enacted
or substantively enacted at the balance sheet date.
Critical Accounting Estimates and Areas of Judgement
Estimates and judgements are continually evaluated and are based
on historical experience and other factors, including expectations
of future events that are believed to be reasonable under the
circumstances. Actual results may differ from these estimates. The
estimates and judgements that have the most significant effects on
the carrying amounts of the assets and liabilities in the financial
information are discussed below:
Judgements
Grant Income
As described in note 4, the Group received loans during the year
totalling GBP815,000 under the US Government's Paycheck Protection
Program ("PPP"). These loans may be forgiven if used for permitted
purposes. The Directors believe that they have fulfilled all of the
necessary conditions and have commenced the process of applying for
forgiveness. The forgiveness of the loan has been recorded within
these financial statements as Grant Income, which is considered to
be a critical judgement as there remains some uncertainty around
the forgiveness process and outcome.
Leases
As disclosed in note 19, the Group recorded a lease liability
during the year in respect of property adjacent to the owned
facility at San Antonio, Texas. This lease includes the option to
purchase the facility within 60 months of lease commencement for a
fixed sum. The Directors have assumed that this option will be
exercised in calculating the lease liability and the corresponding
right of use asset on the basis that they are reasonably certain to
exercise the option as the property is adjacent to the currently
owned facility and there will be significant investment in fitting
out the facility to a very high specification for the purpose of
manufacturing the group's products. The assumption that the option
will be exercised is considered to be a critical judgment given
that there is no absolute certainty that the option will be
exercised.
Estimates
Impairment testing of non-current assets
At each reporting date the Directors review the carrying amount
of the Group's non-current assets to determine whether there has
been any indication that those assets have suffered an impairment
loss. In the current year, the Group recognised no impairment,
other than in respect of the annual goodwill impairment testing as
described below. (2019, an impairment charge of GBP972k against
intangible assets and GBP339k against property, plant and
equipment). In accordance with IFRS, management have performed an
annual impairment test of the goodwill relating to CellRight
Technologies LLC and an impairment charge of GBP6,130k has been
recognised (2019:nil), further details are provided in note 12. By
its very nature, impairment testing involves a high degree of
estimation uncertainty due to the extent that assumptions have to
be made regarding likely future trading performance.
New accounting standards and amendments adopted in the year
During the year, the Company adopted no new standards effective
from the 1st January 2020. The Company has not adopted any new or
amended standards early.
Impact of other new International Financial Reporting
Standards
The following other new standards and amended standards, none of
which have had a material impact on these financial statements, are
mandatory and relevant to the Group for the first time for the
financial period commencing 1 January 2020:
Amendments to References to the Conceptual Framework in IFRS
Standards
Definition of a Business (Amendments to IFRS 3)
Interest Rate Benchmark Reform (Amendments to IFRS 9, IAS 39,
IFRS 16, IFRS 4 and IFRS 7)
Definition of Material (Amendments to IAS 1 and IAS 8)
Standards, Amendments, Improvements & Interpretations issued
but not yet effective
At the date of authorisation of these financial statements the
following standards and interpretations, which have not been
applied in these financial statements, and which are considered
potentially relevant, were in issue:
Applying IFRS 9 'Financial Instruments' with IFRS 4 'Insurance
Contracts' (Amendments to IFRS 4)
Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16
Interest Rate Benchmark Reform - Phase 2
Covid-19-Related Rent Concessions (Amendment to IFRS 16)
The Directors anticipate that the adoption of the amendments to
standards in future periods will have no material impact on the
recognition and measurement of assets, liabilities and the
associated performance of the Group or the Company when the
relevant standards and interpretations come into effect.
3) Segmental reporting
The following table provides disclosure of the Group's revenue
by geographical market based on location of the customer:
2020 2019
000 GBP000
-------------- ------ -------
USA 10,695 10,679
Rest of world 2,134 2,354
-------------- ------ -------
12,829 13,033
-------------- ------ -------
Analysis of revenue by customer
During the year ending 31 December 2020, the Group had one
customer who individually exceeded 10% of revenue. This customer
generated 13% of revenue (2019: no customers).
Operating segments
The Group is organised into BioSurgery, Orthopaedics &
Dental, GBM-V & Cardiac (recently merged due to size) divisions
for internal management, reporting and decision making, based on
the nature of the products of the Group's businesses. Managers
within these divisions report to the Chief Executive Officer. These
are the reportable operating segments in accordance with IFRS 8
"Operating Segments". The Directors recognise that the operations
of the Group are dynamic and therefore, this position will be
monitored as the Group develops.
In accordance with IFRS 8, the Group has derived the information
for its operating segments using the information used by the Chief
Operating Decision Maker. The Group has identified the Chief
Executive Officer as the Chief Operating Decision Maker as he is
responsible for the allocation of resources to the operating
segments and assessing their performance.
Central overheads, which primarily relate to operations of the
Group function, are not allocated to the business unit.
Orthopaedics
BioSurgery & Dental GBM-v & Cardiac Central Total
---------------- ---------------- ----------------- ---------------- ------------------
2020 2019 2020 2019 2020 2019 2020 2019 2020 2019
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
------------------------ ------- ------- ------- ------- -------- ------- ------- ------- -------- --------
Revenue 3,308 4,233 7,446 6,724 2,075 2,076 - - 12,829 13,033
Cost of sales (1,849) (2,535) (3,848) (3,076) (1,236) (1,403) - - (6,933) (7,014)
------------------------ ------- ------- ------- ------- -------- ------- ------- ------- -------- --------
Gross Profit 1,459 1,698 3,598 3,648 839 673 - - 5,896 6,019
Administrative
costs (2,660) (3,729) (4,977) (4,553) (1,104) (991) (1,325) (3,925) (10,066) (13,198)
Exceptional
costs:
Contingent
consideration - - - 1,523 - - - - - 1,523
Impairment of
assets - (983) (6,130) - - (152) (176) (6,130) (1,311)
Restructuring
costs - (72) (14) - (101) - (238) (92) (353) (164)
Litigation costs - (69) - - - - - - - (69)
Grant Income 325 - 490 - - - 40 - 855 -
------------------------ ------- ------- ------- ------- -------- ------- ------- ------- -------- --------
Operating (loss)/profit (876) (3,155) (7,033) 618 (366) (470) (1,523) (4,193) (9,798) (7,200)
Finance
(expense) - - (443) - - - - (460) (443) (460)
------------------------ ------- ------- ------- ------- -------- ------- ------- ------- -------- --------
(Loss)/profit before
taxation (876) (3,155) (7,476) 618 (366) (470) (1,523) (4,653) (10,241) (7,660)
Taxation (22) 159 426 283 129 80 - 32 533 554
------------------------ ------- ------- ------- ------- -------- ------- ------- ------- -------- --------
(Loss)/profit for
the year (898) (2,996) (7,050) 901 (237) (390) (1,523) (4,621) (9,708) (7,106)
------------------------ ------- ------- ------- ------- -------- ------- ------- ------- -------- --------
Revenue from all operating segments derives from the sale of
biologic medical devices. Administrative expenses are broken down
as follows:
Orthopaedics
BioSurgery & Dental GBM-v & Cardiac Central Total
---------------- ----------------- ----------------- ---------------- ------------------
2020 2019 2020 2019 2020 2019 2020 2019 2020 2019
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
------------------------ ------- ------- -------- ------- -------- ------- ------- ------- -------- --------
Staff costs (2,106) (2,862) (2,607) (2,931) (423) (483) (527) (889) (5,663) (7,165)
Sales and marketing
costs (306) (395) (13) (136) - (20) (16) (204) (335) (755)
Research and development (118) (256) (257) (530) (164) (172) (7) (409) (546) (1,367)
Depreciation and
amortisation - (15) (756) (276) (3) (17) (3) (739) (762) (1,047)
Establishment and
administration
costs (130) (201) (1,3444) (680) (514) (299) (772) (1,684) (2,760) (2,864)
Administrative
costs (2,660) (3,729) (4,977) (4,553) (1,104) (991) (1,325) (3,925) (10,066) (13,198)
------------------------ ------- ------- -------- ------- -------- ------- ------- ------- -------- --------
The balance sheet can be analysed segmentally as follows:
Orthopaedics
BioSurgery & Dental GBM-v & Cardiac Central Total
---------------- ---------------- ----------------- ---------------- ----------------
2020 2019 2020 2019 2020 2019 2020 2019 2020 2019
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
-------------------------- ------- ------- ------- ------- -------- ------- ------- ------- ------- -------
Non-current assets
Intangible assets - - 10,931 17,999 - - - - 10,931 17,999
Property, Plant
& Equipment - - 3,214 2,357 4 - 34 - 3,252 2,357
Right of use asset - - 2,292 - - - 166 - 2,458 -
-------------------------- ------- ------- ------- ------- -------- ------- ------- ------- ------- -------
Total non-current
assets - - 16,437 20,356 4 - 200 - 16,641 20,356
-------------------------- ------- ------- ------- ------- -------- ------- ------- ------- ------- -------
Current assets
Inventory 1,308 345 5,530 3,661 150 122 84 57 7,072 4,185
Trade & other receivables 578 1,078 2,142 1,666 504 293 244 537 3,468 3,574
Cash & cash equivalents 181 495 143 87 141 41 9,085 1,757 9,550 2,380
-------------------------- ------- ------- ------- ------- -------- ------- ------- ------- ------- -------
Total current assets 2,067 1,918 7,815 5,414 795 456 9,413 2,351 20,090 10,139
-------------------------- ------- ------- ------- ------- -------- ------- ------- ------- ------- -------
Total assets 2,067 1,918 24,252 25,770 799 456 9,613 2,351 36,731 30,495
-------------------------- ------- ------- ------- ------- -------- ------- ------- ------- ------- -------
Liabilities
Trade & other payables (287) (586) (2,007) (2,163) (174) (154) (539) (882) (3,007) (3,785)
Borrowings - - (2,790) (2,115) - - - - (2,790) (2,115)
Lease liability - - (2,367) - - - (160) - (2,527) -
-------------------------- ------- ------- ------- ------- -------- ------- ------- ------- ------- -------
Total liabilities (287) (586) (7,164) (4,278) (174) (154) (699) (882) (8,324) (5,900)
-------------------------- ------- ------- ------- ------- -------- ------- ------- ------- ------- -------
Net assets/(liabilities) 1,780 (1,332) 17,088 21,492 625 302 8,914 1,469 28,407 24,595
-------------------------- ------- ------- ------- ------- -------- ------- ------- ------- ------- -------
Capital expenditure - 6 3,789 349 - - 224 83 4,013 438
-------------------------- ------- ------- ------- ------- -------- ------- ------- ------- ------- -------
Additions to intangible
assets - 213 215 - - - - - 215 213
-------------------------- ------- ------- ------- ------- -------- ------- ------- ------- ------- -------
4) Taxation
Tax on loss on ordinary activities
2020 2019
GBP000 GBP000
--------------------------------------------------------- ------- -------
Current tax:
UK R&D tax credit (440) (488)
US corporation tax payable - 29
--------------------------------------------------------- ------- -------
(440) (459)
Deferred tax:
Origination and reversal of temporary timing differences (93) (95)
--------------------------------------------------------- ------- -------
Tax credit on loss on ordinary activities (533) (554)
--------------------------------------------------------- ------- -------
Factors affecting the current tax charges
The tax assessed for the year varies from the main rate of
corporation tax as explained below:
2020 2019
GBP000 GBP000
------------------------------------------------------------ -------- -------
Loss on ordinary activities before tax (10,241) (7,660)
Tax at the standard rate of corporation tax 19% (2019: 19%) (1,946) (1,456)
Effects of:
Research and development tax credits received (314) (468)
Surrender of research and development relief for repayable
tax credit including enhancement 432 305
Unutilised tax losses 1,295 1,064
------------------------------------------------------------ -------- -------
Tax credit for the period (533) (554)
------------------------------------------------------------ -------- -------
Unrecognised deferred tax
2020 2019
GBP000 GBP000
--------------------------------------------------------- ------- -------
Tax losses
Losses available to carry forward against future trading
profits 51,104 43,533
*Deferred tax asset - at 19% (2019: 17%) 9,710 7,404
--------------------------------------------------------- ------- -------
* The Group has not recognised a deferred tax asset relating to
these losses as their recoverability is uncertain.
The enacted UK corporation tax rate of 19% forms the basis for
the UK element of the deferred tax calculation, following the UK
budget in 2021 the chancellor announced an increase to the main
rate of corporation tax in the UK to 25% from April 2023, if
applied this would significantly increase the value of the
unrecognised deferred tax asset.
5) Loss per share (basic and diluted)
Basic loss per share is calculated by dividing the loss
attributable to equity holders of the parent by the weighted
average number of ordinary shares in issue during the period
excluding own shares held jointly by the Tissue Regenix Employee
Share Trust and certain employees.
Diluted loss per share is calculated by adjusting the weighted
average number of ordinary shares in issue during the year to
assume conversion of all dilutive potential ordinary shares.
2020 2019
GBP000 GBP000
------------------------------------------------------------ ------- -------
Total loss attributable to the equity holders of the parent (9,709) (6,973)
------------------------------------------------------------ ------- -------
No. No.
---------------------------------------------------- ------------- -------------
Weighted average number of ordinary shares in issue
during the year 4,447,666,932 1,171,867,216
Loss per share
Basic and diluted loss for the year (0.22)p (0.60)p
---------------------------------------------------- ------------- -------------
As set out in note 21 the Company has options issued over
50,803,039 (2019: 19,553,729) ordinary shares and there are
16,112,800 (2019: 16,112,800) jointly owned shares which are
potentially dilutive. There is, however, no dilutive effect of
these issued options as there is a loss for each of the periods
concerned.
6) Lease liabilities
Lease liabilities, excluding short-term and low value leases,
included in the Statement of Financial Position were as
follows:
2020 2019
GBP000 GBP000
-------------------------- -------- --------
Current Lease liabilities (256) -
Non-current liabilities (2,271) -
-------------------------- -------- --------
(2,527) -
-------------------------- -------- --------
Maturity analysis of lease liabilities
The maturity of the gross contractual undiscounted cashflows due
on the Group's lease liabilities (excluding short-term and low
value leases) is set out below based on the period between 31
December 2020 and the contractual maturity date.
2020 2019
Land and buildings GBP000 GBP000
------------------- -------- --------
Less than 6 months 133 -
6 months to 1 year 133 -
1 year to 2 years 287 -
2 years to 5 years 2,948 -
5 or more years - -
------------------- -------- --------
3,501 -
------------------- -------- --------
Disclosure of the carrying amounts of right of use assets by
class and additions to right of use assets has been provided in
note 11.
Effect of leases on financial performance
2020 2019
GBP000 GBP000
--------------------------------------------------------------- -------- --------
Depreciation charge for the year:
Administrative expenses 477 -
Interest expenses for the year on lease liabilities recognised
in 'finance costs' 200 -
--------------------------------------------------------------- -------- --------
Total effect of leases on financial performance 677 -
--------------------------------------------------------------- -------- --------
Lease terms
-- The Group leases properties used for its operations in the UK
and US. Lease terms are 5 years.
-- Terms on specific property leases also include:
-- UK Property: 5 year fixed lease and includes a break clause in 2023
-- US property: 5 year fixed and includes the option to purchase up to 2025
-- The Group average effective borrowing rate for leases at 31 December 2020 was 9%.
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