TIDMTRX
RNS Number : 0417P
Tissue Regenix Group PLC
05 June 2020
Tissue Regenix Group plc
Annual results for the year ended 31 December 2019
and
Notice of AGM
Revenue up 12% year-on-year (8% constant currency)
Fundraising of gross proceeds of GBP14.62m subject to
shareholder approval at a General Meeting
Leeds, 5 June 2020 - Tissue Regenix Group (AIM:TRX) ("Tissue
Regenix", the "Company" or the "Group"), the regenerative medical
devices company, today announces its annual results for the year
ended 31 December 2019.
Financial highlights
-- Increased revenues by 12% (8% constant currency) to GBP13.03m (2018: GBP11.62m)
o BioSurgery sales of dCELL(R) products sales increased by 25%
to GBP4.23m (2018: GBP3.38m)
o Orthopaedics and Dental sales of BioRinse products grew by 5%
to GBP6.72m
(2018: GBP6.40m)
o Joint venture GBM-v sales grew by13% to GBP2.08m (2018:
GBP1.84m)
-- Gross profit increased to GBP6.02m (2018: GBP5.92m)
-- Operating loss narrowed to GBP7.20m (2018: GBP8.69m)
-- Drawdown of $2m of the MidCap Financial Term Loan, with
access to a $3m Revolving Credit Facility as at 31 December
2019
-- Net cash at 31 December 2019 of GBP2.38m (2018: GBP7.82m),
including GBP1m of the MidCap Revolving Credit Facility
Operational highlights
-- Strengthened the San Antonio management team, including
establishing a specialist Donor Services team
-- Orthopaedic donor throughput more than doubled between Q1-Q4 2019
-- Commenced a second shift in the San Antonio facility
-- Outsourced certain product lines to increase manufacturing capacity
-- Lease signed on additional 21,000sq ft manufacturing facility
in San Antonio, which subject to securing financing is ready to
commence clean room fit out
-- Soft launch of DermaPure non-oriented product for surgical and urogynaecology applications
-- Further Group Purchasing Organisation (GPO) approvals for
DermaPure, increasing coverage to c.95% of US GPO hospitals
Post period highlights
-- Q1 revenue increased by 18% year-on-year, despite cyberattack
experienced at San Antonio facility
-- Conditional fundraising raised gross proceeds of GBP14.62m
announced on 22 May, subject to shareholder approval at a General
Meeting on 9 June and admission of shares to AIM
-- New strategic collaboration with a top 10 global healthcare
company for a newly developed product line was announced on 11 May
2020
-- US Government backed loans of $1m secured in April 2020 to
assist with US cost base during COVID-19 pandemic
-- Award of CE Mark for OrthoPure XT announced on 1 June 2020
Gareth Jones, Interim CEO of Tissue Regenix Group,
commented:
"During 2019, recognising the need to optimise our supply chain
and processes to address various operational challenges and support
the growing demand for our products, we concentrated efforts on
implementing a number of efficiency improvements which manifested
in donor throughput more than doubling between Q1-Q4 2019 at the
facility in San Antonio. Despite experiencing manufacturing
capacity constraints and operational challenges, these initiatives
meant we were able to increase our top-line revenue by 12%
year-on-year (8% constant currency). In conjunction with this we
implemented a number of cost control measures in Q4 2019 which will
provide annualised savings of circa. GBP1m. We remain committed to
assessing our ongoing operational cost base to ensure that funds
are deployed in the most efficient manner and efficiencies
maximised, as we work towards a position of break-even. In May
2020, we undertook a fundraise of GBP14.62m, subject to approval by
shareholders at a General Meeting and admission of shares on AIM,
to invest in our manufacturing infrastructure to increase this
capacity further which will allow us to unlock additional revenues
and new partnership opportunities.
As an example of the exciting growth potential of the business
and testament to the strong underlying demand for our portfolio of
regenerative biologic products, following the year-end, we
announced a strategic partnership with a top 10 global healthcare
company for a new product launch. Additionally, the receipt of CE
Mark approval for OrthoPure XT is a significant milestone in the
evolution of our product portfolio and corporate objectives.
We remain confident in our long-term strategy to grow the
business. However, whilst sales were not materially impacted during
Q1 2020, where we delivered 18% year-on-year growth, the Board is
unable to provide clarity on the financial outlook for 2020 until
there is greater visibility around the impact of the COVID-19
pandemic in the market."
Posting of Report and Accounts and Notice of AGM
The Company announces that the Annual Report and Accounts will
be posted to shareholders today together with a notice of Annual
General Meeting (the "AGM") and accompanying form of proxy.
The AGM will be held at the offices of Squire Patton Boggs (UK)
LLP, 6 Wellington Place, Leeds at 10am on 30 June 2020.
The UK Government passed into law mandatory measures in order to
reduce the transmission of COVID-19. These mandatory measures
prohibit, amongst other things, individuals engaging in
non-essential travel and public gatherings of more than two people,
save where the gathering is essential for work purposes (the "Stay
at Home Measures").
The Company is required to hold the AGM in order to implement
the planned fundraise. However the Stay at Home Measures will
significantly restrict our ability to follow a standard shareholder
meeting format. In order to ensure shareholders can comply with the
Stay at Home Measures the Board has concluded that shareholders
should not plan to attend the AGM in person. It is currently
intended that the AGM will be held with only the minimum number of
shareholders present as required to form a quorum under the
Company's Articles of Association, and who are essential for the
business of the AGM to be conducted.
The results of the votes on the proposed resolutions will be
announced in the normal way as soon as practicable after the
conclusion of the AGM.
Having regard to their own safety and that of others,
shareholders are respectfully asked to comply with the Stay at Home
Measures and not make plans to attend the AGM. To ensure the safety
of the limited number of people whose attendance is essential, the
Company will not be able to allow other shareholders to gain access
to the AGM on the day. Given the restrictions on travel and as to
how the meeting itself may be conducted, shareholders are strongly
encouraged to exercise their right to vote and to submit a proxy as
early as possible.
The Annual Report and Accounts, notice of AGM and accompanying
form of proxy, will be available from later on this morning on the
Company's website, www.tissueregenix.com, in accordance with AIM
Rule 20.
For more Information:
Tissue Regenix Group plc
Caitlin Pearson, Head of Communications Tel: 0330 430 3073
--------------------------------------------- ---------------------
Stifel Nicolaus Europe Limited (Nominated Tel: 0207 710 7600
Adviser and Broker)
Jonathan Senior / Alex Price / Ben Maddison
--------------------------------------------- ---------------------
FTI Consulting Tel: 0203 727 1000
Simon Conway / Victoria Foster Mitchell
/ Mary Whittow
============================================= =====================
About Tissue Regenix
Tissue Regenix is a leading medical devices company in the field
of regenerative medicine. Tissue Regenix was formed in 2006 when it
was spun-out from the University of Leeds, UK. 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 November 2012 Tissue Regenix Group plc set up a subsidiary
company in the United States - 'Tissue Regenix Wound Care Inc.',
January 2016 saw the establishment of joint venture GBM-V, a multi-
tissue bank based in Rostock, Germany.
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
wound care scaffolds that enhance healing opportunities of defects
created by trauma and disease. CellRight's human osteobiologics may
be used in spine, trauma, general orthopedic, foot & ankle,
dental, and sports medicine surgical procedures.
Chairman's statement
Introduction
We remain focused on delivering positive, sustainable growth
across key divisions of the business. Our strategic realignment has
been successful, and having fully integrated CellRight Technologies
into the Group, we have achieved considerable commercial and
operational progress. We are well positioned to capitalise on these
achievements, as well as to grow our addressable market
opportunities through the launch of new products, and partnerships,
during 2020 and beyond .
During 2019 our focus was on optimising our supply chain and
operational processes, which allows us to develop and maintain
strong working relationships with our current and potential
strategic partners. As previously announced we have experienced
capacity constraints at our San Antonio facility however, despite
this, we still reported top-line revenue growth of 12%, and saw
continued significant demand for our products. As a result of the
operational initiatives implemented throughout the year, we believe
we are now positioned to achieve continued top-line growth into the
future.
Financial performance
The Group recorded top-line revenue of GBP13.0m (2018: GBP11.6m)
however, the overall performance was impacted by the capacity
constraints experienced. This particularly affected our BioRinse
orthopaedic portfolio, where we continue to see high levels of
demand, from both our current customers and partners such as
Arthrex, Inc. and also potential future opportunities that we are
not currently positioned to serve until the additional capacity
expansion project is completed.
Our DermaPure portfolio, under the BioSurgery division,
continued to see strong growth, increasing sales by 25%
year-on-year, derived primarily from further penetration into key
hospital accounts and the urogynaecology market, with strategic
partner, ARMS Medical.
Our controlled joint venture, GBM-v, has continued to increase
revenue from their corneal business and is now financially
self-sufficient.
The Company renegotiated the terms of the MidCap Financial
funding, secured in June 2019, repaying $5.5m of the initial $7.5m
term loan and at the year end the Group recorded a cash position of
GBP2.4m after drawing down GBP1m of the MidCap Revolving Credit
Facility. The Board has successfully secured alternative financing,
details of which were announced post year end, as discussed further
below.
Operations
Following the review of our supply chain and operational
processes we implemented several initiatives, including
commencement of the recruitment and training of a second shift at
the facility in San Antonio. However, due to the three-four month
lead time for the BioRinse orthopaedic portfolio, the benefits of
this increased processing became evident towards the end of the
year, with an uptick in sales during Q4 which we expect to continue
into 2020.
Our strategy
We made the strategic decision to shift our focus away from
R&D and concentrate on the commercialisation of the existing
product lines. This still allows for product line extensions, such
as DermaPure non-oriented, to be brought to market in a cost
efficient and timely manner, but removes the cost and burden of
organic product development and pre-clinical trials, as we focus on
reaching break even and increasing value for our stakeholders.
We have continued to strengthen our relationships with key
strategic partners, including Arthrex and ARMS Medical. We have
also identified additional opportunities and distribution
agreements that target products and therapeutic areas which are
complementary to current processing activities and will diversify
the Group's sales portfolio.
Management
Following a recurrence of his illness, Steve Couldwell retired
from the position of Chief Executive Officer (CEO) in August 2019.
On behalf of the Board I would like to thank Steve for his
commitment and exceptional leadership as both CEO and, prior to
this, a Non-Executive Director of the Company. Gareth Jones, Chief
Operating Officer, stepped into the interim CEO position where he
remains, and Mike Barker joined as interim Chief Finance Officer in
January 2019 before being formally appointed in August 2019. Due to
family circumstances, Mike stepped down from this position in
November; I would like to thank Mike for his support and guidance
in what was a challenging time for the management team. Kirsten
Lund, Group Financial Controller, was promoted to Group Finance
Director in November 2019.
We strengthened our operational management team in the US
appointing Daniel Lee, President of US Operations, in January 2019,
and Tina Trimble, VP Donor Services, in March 2019. Both bring
significant experience to the team and have been at the forefront
of implementing the successful operational improvements.
Shareholders
In June 2019, Woodford Investment Management, the second largest
shareholder of the Tissue Regenix Group, suspended their Equity
Income Fund, instigating a period of uncertainty. During the year
the composition and nature of our investor base changed with an
increase in smaller funds and individual shareholders. On behalf of
the Board I would like to thank all of our shareholders for their
continued support of the business.
Our employees
Our employees remain a key stakeholder in the success of our
business. We look to maintain a collaborative and supportive
working environment where everyone can excel, and I would like to
thank all employees for their continued hard work and commitment.
Due to the shift in our strategy to focus on the commercial growth
of our existing product portfolio, and as the Group looks to
maintain cash reserves, a restructuring of our employee base was
undertaken in Q4 2019, resulting in a number of redundancies,
primarily from the R&D and clinical teams in the UK.
Post balance sheet events
In January 2020, the Company was subject to a cyber - attack at
our base in San Antonio, Texas. There is not expected to be any
long-term financial implications and, as announced on 15 April
2020, Q1 2020 sales grew by 18% year-on-year, confirming that sales
were not materially impacted by this event.
As with all businesses, the COVID-19 pandemic has been a
challenging time. However, I am encouraged by the work undertaken
by the management team to ensure the health and wellbeing of our
employees and stakeholders whilst also allowing processing at our
San Antonio facility to continue in line with all relevant US
Government protocols. We recently received US Government backed
loans of $1m to assist with the payroll, health insurance and
utility and rent payments in the US during this time.
In the UK, following UK Government advice, our technical and
operations staff were furloughed and processing halted once we
ensured there was sufficient levels of finished goods to meet
near-term demand.
During March 2020, John Samuel stepped down from the position of
Executive Chairman and as a Director of the Board. John had been a
Director of the Company for 12 years and played an important role
in building the Company from a start up to its current form. On
behalf of the Board and all stakeholders, I would like to thank
John for his unwavering commitment to the Company throughout this
time.
In line with our refocused strategy, in May 2020 we entered a
white label (unbranded) manufacturing agreement, launching a new
product line with a top 10 global healthcare company. It is
expected that this agreement will have a material impact on our
top-line revenue during the next two years.
In addition, OrthoPure XT, a decellularised xenograft ligament
was awarded a CE mark in May 2020.
Outlook
We believe there is strong underlying demand for our portfolio
of products, which is further illustrated by our recent
announcement regarding a new strategic collaboration.
The COVID-19 pandemic has affected most businesses during H1
2020. As previously communicated, a number of elective surgical
procedures that utilise our products have been postponed and there
remains ongoing uncertainty around level and duration of the
disruption from the pandemic and therefore, the time it will take
to perform any delayed surgical procedures thereafter. However, the
Group has continued to work closely with partners and distributors
during this time and we remain confident that, once appropriate, we
are well positioned to service the demand for our products and
address these clinical requirements.
Post-period, on 22 May 2020, we announced that gross proceeds of
GBP14. 62m had been conditionally raised through an offer of new
ordinary shares in the Company to institutional and qualifying
retail investors.
This fundraise is conditional on shareholder approval at a
General Meeting of shareholders to be held on 9 June 2020, and also
to admission of the fundraising shares to trading on AIM. If this
does not occur, the Directors would consider alternative sources of
funding, however the Group would only have sufficient working
capital to trade through to the first week of August without taking
any mitigating measures and the Directors may not be in a position
to pursue further the commercial activities of the Group and in
such circumstances would need to take immediate steps to protect
the position of its creditors.
The injection of capital from this fundraising will allow the
Group to accelerate the planned capacity expansion of its US
manufacturing facility and capabilities. Additionally, during 2019,
we made significant progress in optimising processes at the current
facility, such that donor throughput had more than doubled by the
end of the year. Together this investment and the current
operational initiatives will enable us to meet the anticipated
future demand for our products, and allow us to realise new
opportunities that we foresee emerging once the impact of the
COVID-19 pandemic has passed. This, we believe, will translate into
a step change for the business. Therefore, despite the current
near-term uncertainty resulting from the COVID-19 pandemic, the
Board remains confident in the Group's future prospects.
Jonathan Glenn
Interim Chairman
Interim CEO operational review
Introduction
In 2019 we focused on optimising our operational capabilities to
enable us to deliver the ever-increasing volume of product demanded
by our customer base.
During 2019 we implemented a number of efficiency improvements
throughout our supply chain and operations, as we look to increase
throughput at our San Antonio facility to service the increasing
commercial demand from both existing, and new partners, and extend
our reach into additional territories where we see significant
opportunities.
Divisional performance
BioSurgery reported significant underlying growth, with a 25%
year-on-year increase.
This was largely driven by our strategic partnership with ARMS
Medical, specialist distributor for the urogynaecology
applications. Demand is growing in the urogynaecology marketplace
due to the withdrawal of many synthetic mesh products. In September
2019, we undertook a soft launch for a 'non-oriented' DermaPure
product to specifically address these applications.
This product is processed from the second layer of dermis tissue
and therefore has no basement membrane; however, it maintains the
same biomechanical properties, extracellular matrix and
regenerative activity of DermaPure. Removing the requirement for
orientation makes handling and application in surgical settings
much simpler, and initial feedback from clinicians has been
extremely positive; we therefore see great potential for this
product line extension in the future. Outside of the clinical
benefits, this product line extension allows for the utilisation of
layers of the dermis, which were previously unsuitable for
processing, thereby improving donor yields and the number of
patients treated.
After outsourcing a percentage of our DermaPure production to
Community Tissue Services (CTS), we worked closely with them
throughout the year to improve both processing efficiencies and
yields. Production transfers can be operationally challenging,
however, having devoted the necessary resources to ensuring a
smooth transition, we anticipate a significant increase in output
from this partner during 2020.
The Orthopaedics and Dental division was more significantly
impacted due to the capacity constraints experienced throughout the
year, resulting in year-on-year growth of 5%.
Recognising the need to improve our supply chain, during H1 2019
we created a donor services team, recruiting additional specialist
skills. The team worked closely with the production staff and this
manifested in donor processing increasing by more than double
throughout the year, with a commensurate increase seen in yields in
the latter months as supply chain initiatives were pulled through.
In order to ensure that we can continue to increase our processing
and meet demand, we now have agreements in place with a number of
donor recovery agencies resulting in improved access to donors
meeting our quality criteria.
In conjunction with this, during H1 we commenced the hiring and
training of technicians in order to commence a second shift for
processing of the BioRinse products. Due to the highly skilled
nature of this work, in a regulated environment, the hiring process
takes time as technicians need to undergo a rigorous training
programme, which coupled with the three to four month lead time for
the osteoinductivity testing for this product range, meant that we
did not start to see the benefits of this in our revenues until
late in Q4. However, it is anticipated that moving forward into
2020 the additional revenue associated with these initiatives will
become apparent on a consistent basis. The revamping of the front
end of the business has meant that we are in a far stronger
position to capitalise on commercial opportunities during 2020 and
beyond.
In Germany, the Company's controlled joint venture, GBM-v, has
continued to increase sales from their cornea products and has
reached a point of becoming financially self-sustainable through
the revenues generated. They continue to pursue the required
regulatory clearance for the CardioPure portfolio and work closely
with the team in the UK in order to decipher the best path forward
for this portfolio.
Funding
In June 2019 we announced a credit facility of up to $20m with
MidCap, via a term loan split into three tranches and a Revolving
Credit Facility ("RCF"). We immediately drew down the initial $7.5m
term loan and were granted access to a $3m RCF; the additional
tranches were contingent upon agreed revenue targets and a $5m net
equity raise. In November, due to operational challenges discussed,
we renegotiated this agreement repaying $5.5m of the term loan.
This repayment reduced our net cash position at 31 December 2019
to GBP2.4m. However, the Company implemented several cost saving
initiatives to extend the cash runway including the restructuring
of the employee base. In Q4 2019, a number of positions were made
redundant, largely in the R&D and clinical function in Leeds; a
cost saving that is expected to deliver GBP1m per annum from 2020.
In the trading statement released on 22 January 2020, the first
signs of these cost savings were evident. As we move towards break
even we will continue to assess our cost base to ensure funds are
deployed in the most efficient manner.
Personnel
Following his appointed in January 2019 as President of US
Operations, Daniel Lee has been a key member of the team working to
increase our throughput, improve yields, and meet customer
demand.
Alongside Daniel, in Q1 2019 Tina Trimble joined as VP Donor
Services. Tina is well respected throughout the industry holding a
seat on the Board of the American Association of Tissue Banks, and
has become a key member of our team, implementing several
initiatives in order to improve our donor sourcing and
processing.
Product pipeline
During 2019 we undertook a soft launch of DermaPure
non-oriented, specifically for use in urogynaecology applications,
with our strategic partner ARMS Medical, and to date have received
positive feedback from clinicians.
Capacity expansion project
As previously documented we are challenged with capacity
constraints at our San Antonio facility. In the existing facility
we currently face two limiting factors: namely, space for freezers,
which limits the amount of donor tissue we can hold on site, and
clean room capacity. We currently have five clean rooms, of which
four are dedicated to BioRinse products, and one that processes
DermaPure.
With the support of the MidCap funding we were able to take the
first steps towards increasing our manufacturing footprint,
securing a ten year lease on a 21,000 sq. ft facility adjacent to
our existing facility in San Antonio, Texas. We believe our plans,
which are in two phases, will provide a significant capacity
increase and help us fulfil the demand for our products. However,
these expansion plans are subject to completion of the recent
funding.
We signed the lease, with an option to buy, on the new facility
in August 2019. Universal City provided a grant of $0.3m to support
and permit the upgrades of utilities and infrastructure serving the
new facility, which has now been completed.
Phase one of the expansion project will involve moving the
freezer capacity into the new facility, allowing for two additional
clean rooms to be developed, bringing the total number of clean
rooms to seven, in the current facility. This would also increase
our potential freezer capacity by threefold allowing us to hold
more donor tissue onsite. We would expect this phase to be
completed in around six months, which given the three to four month
lead time for BioRinse products, would allow for the first revenues
to become evident roughly nine to ten months after commencement of
this phase.
Our current intention is for phase two to provide a further ten
clean rooms in the new facility. The timing of this phase has not
yet been finalised. Once fully operational, it is expected that
this completed expansion programme will increase the Company's
revenue generation potential by up to c.$36m per year.
Revenue per additional clean room is inherently an estimate and
depends on several factors including the product mix, the number of
shifts, the availability of technicians and donor tissue and
continuing product demand. Nonetheless, we are confident that
enough demand exists to justify the capacity expansions outlined
above.
Post balance sheet events
In January 2020 the Group was hit by a cyber attack, which
temporarily impacted our ability to process at the facility in San
Antonio. We quickly implemented an action plan to mitigate the
potential impact, and believe that there were no indications of any
external transfer of sensitive or financial data from the business.
There was a short-term impact on our ability to service customer
demand as we were unable to release batches for distribution in
line with the necessary regulations.
During the weeks that followed the attack, the San Antonio team
worked to catch up with this demand, and in April 2020 we were able
to report that, despite this incident, revenue increased by 18%
year-on-year for Q1 2020. Following the incident, the Company
reported this attack to all relevant authorities as required, has
reviewed its IT service providers and implemented additional data
security procedures to reduce the risk of a similar incident in the
future.
As with most businesses, the Company was impacted by the
COVID-19 pandemic that began in Q1 2020. The priority of the
Company throughout this time was to protect the health and
wellbeing of our employees and stakeholders, and the Company
ensured to implement all relevant government-led policies in
relation to this. By undertaking certain initiatives, there was
minimal disruption to the processing undertaken at the facility in
San Antonio, which continued to show strong production throughput.
As the impact of COVID-19 becomes more evident, we will continue to
monitor and adapt our approach. During Q2 it is apparent that
reprioritisation of healthcare professionals during this time will
lead to a notable decline in the number of elective procedures
undertaken at hospitals, which was initially most evident in the
urogynaecology and dental applications. We continue to work closely
with our partners and distributors to ensure that, once these
procedures are recommenced in a normalised manner, enough inventory
of all products will be available to meet demand.
At the facility in Leeds where processing of the porcine
products is undertaken, in-line with the UK Government guidelines,
our technical and operations staff were furloughed until at least
the end of June 2020. However, the Group holds sufficient inventory
to meet near-term demand of these particular products.
As a result of the uncertainties surrounding the level and
duration of disruption from COVID-19, we are unable to determine
how long it will take to catch up on postponed surgical procedures
therefore, while sales were not materially impacted during Q1 2020,
the Board is not able to provide clarity on the outlook for 2020
until there is greater visibility around the market
environment.
In May 2020 we announced a strategic collaboration with a top 10
global healthcare company to bring to market a newly developed
product line. This agreement for white label manufacturing follows
collaboration between the R&D teams of both companies using one
of the Group's proprietary technology platforms to address
orthopaedic soft tissue repairs. Agreements such as this underscore
the differentiation of, and increasing market demand for, our
products, providing further validation of the exciting growth
potential for the business once we have completed the planned
expansion of our processing capacity, and ensures that we continue
to drive our commercial strategy forward, as illustrated by our
strategic growth drivers, for the continued success of the
business.
We were also awarded the CE Mark certification for OrthoPure XT
in May 2020, for use in revision of the Anterior Cruciate Ligament
following re-rupture and also the reconstruction of other knee
ligaments, including multi-ligament procedures following
trauma.
On 22 May 2020 the Group announced that it had completed an
equity fundraise, by issuance of ordinary shares, to raise gross
proceeds of GBP14. 62m , which provided the resolutions are passed
at the General Meeting on the 9 June, will allow for the
commencement of the capacity expansion programme and provide
sufficient working capital until at least December 2021. We believe
that this investment will move the Group into a new sphere of
opportunity and competitive market positioning.
Financial overview
Revenue
In the year ended 31 December 2019 revenue increase by 12% on an
underlying basis or 8% constant currency basis to GBP13,033k (2018:
GBP11,619k). As expected, the year was second half weighted
(47%/53%) as throughput in our San Antonio facility more than
tripled in the year. However, due to the lead times involved it is
expected that a significant proportion of this increased processing
will become available for sale during H1 2020.
Revenue from the BioSurgery division, which utilises the legacy
Tissue Regenix dCELL(R) Technology in product DermaPure(R) ,
reported a year-on-year increase in revenues of 25% to GBP4,233k
(2018: GBP3,381k). The withdrawal of many synthetic products from
the urogynaecology market meant that there was increasing demand
for biologic products such as DermaPure(R) . Working closely with
our strategic partner, ARMS Medical, we saw strong demand in this
sector, resulting in a year-on-year growth of 57%. The expectation
going into 2020 is that this sector will continue to experience
high levels of growth.
We continued to expand our GPO coverage and now have access to
c.95% of relevant US hospitals under GPO agreements. This coverage
enabled the business to continue to grow its distribution network
in the US and secure several leading marquee accounts.
The Orthopaedics and Dental division reported annual revenues of
GBP6,724k (2018: GBP6,396k), an increase of 5% year-on-year. The
capacity constraints within the San Antonio facility meant that
output for this division was constrained. Despite these
limitations, demand for products within this division remain
strong, and following several operational changes within the San
Antonio facility during 2019, we expect the orthopaedic portfolio
to experience a notable increase in output in 2020.
Our controlled joint venture in Germany, GBM-v reported high
levels of demand for its cornea products, with year-on-year growth
of 13% to GBP2,076k (2018: GBP1,842k).
Cost of sales and gross profit
Gross profit for the year is GBP6,019k (2018: GBP5,917k). Gross
margin percentage decreased to 46% (2018: 51%) due to product mix
with the CellRight BioRinse portfolio contributing a lower
percentage of overall sales due to capacity constraints, which have
been addressed throughout the year, as discussed. As the business
continues to increase capacity to meet demand, the margins are
expected to recover throughout 2020.
Included in costs of sales is cost of product GBP5,803k
(2018:GBP4,723k) and third party commissions GBP1,211k (2018:
GBP979k).
Administrative expenses
During the year administrative expenses decreased by GBP985k to
GBP13,198k (2018: GBP14,183k), excluding exceptional costs, largely
due to a reduction in research and development and sales and
marketing costs. The increased focus on commercial activities meant
that the Group was able to reduce its research and development
expenditure by GBP268k to GBP1,368k (2018: GBP1,635k). In addition,
the Group sought to reduce its overhead cost base resulting in 18
positions being made redundant in Q4 2019, largely from the UK side
of the business.
Exceptional items
Net assets were assessed for impairment and an expense of
GBP1,311k was posted in recognition of SurgiPure development costs
in BioSurgery segment and fixed assets in the Central and Other
segment.
Redundancy costs in relation to the 18 positions made redundant
in Q4 2019 are accounted for in exceptional items and amounted to
GBP164k.
Litigation costs of GBP69k were charged in the year.
A credit of GBP1,523k was due to the CellRight contingent
consideration which was not met.
Finance income/charges
Finance income of GBP17k (2018: GBP72k) represented interest
earned on cash deposits. Finance charges for the year were reported
at GBP477k (2018: GBP262k), and related primarily to interest
charges and associated costs for the MidCap loan arrangement.
Taxation
The Group continues to invest in developing its product
offering, and as, such is eligible to submit enhanced research and
development tax claims, enabling it to exchange tax losses for a
cash refund. In the year to December 2019, a refund of GBP488k was
receivable (2018: GBP790k). The year-on-year reduction was a result
of the business continuing to move its resources away from research
and development to more commercial activities.
Corporation tax payable in the US amounted to GBP29k (2018:
GBP72k). Gross tax losses carried forward in the UK were GBP43,533k
(2018: GBP43,254k). 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.
Loss for the year
The loss for the year was GBP7,106k (2018: loss GBP8,259k)
resulting in a basic loss per share of (0.60p) (2018: loss
(0.70p)).
Balance sheet
At December 2019, the Group had net assets of GBP24,595k (2018:
GBP32,570k) of which cash in hand totalled GBP2,380k (2018:
GBP7,816k).
Intangible assets decreased through amortisation charges in the
year. A further GBP213k of development costs were capitalised in
the year, which were then fully impaired at year end.
In addition to testing the CellRight cash generating unit (CGU)
for impairment, a full impairment test was performed on the Group's
CGUs as the Group's market capitalisation at 31 December 2019 was
lower than net assets. This impairment testing resulted in an
impairment of GBP1,311k, which has been disclosed within
exceptional items.
Net working capital decreased in the year, which reflects the
continued growth of the business. The balance sheet included
corporations tax receivable of GBP1,035k (2018: GBP1,200k) in
respect of UK research and development tax credits.
As part of the CellRight Technologies acquisition agreement
financial milestone payments were contingent upon certain revenue
targets being achieved. The capacity constraints experienced at the
San Antonio facility meant that these goals were not met for 2019,
as such the costs totalling GBP1,523k were released. This was the
last financial milestone due for payment under this
acquisition.
Borrowings
Non-current liabilities represent the GBP2,286k debt facility.
This includes GBP1,525k of the term loan and GBP761k of the
revolving credit facility.
Dividend
No dividend has been proposed for the year to 31 December 2019
(2018: Nil).
Accounting policies
The Group's consolidated financial information has been prepared
in accordance with International Financial Reporting Standards as
adopted in the EU. The Group's significant accounting policies,
which have been applied consistently throughout the year, are set
out in the report and accounts .
Going concern
These financial statements have been prepared on a going concern
basis, given the current cash flow projections forecast for the
Group to 31 December 2021. Funding requirements are reviewed on a
regular basis by the Group's Chief Executive Officer and Group
Finance Director and are reported to the Board at each Board
meeting, as well as on an ad hoc basis, if requested. Until
sufficient cash is generated from its operations, the Group remains
reliant on external funding including current debt facilities
provided by MidCap, to meet its working capital requirements,
capital investment programme and other financial commitments.
On 22 May, the Group announced that gross proceeds of GBP14.6m
had been conditionally raised through an offer of new ordinary
shares in the Company to Institutional and other qualifying
investors. This fundraise is conditional on shareholder approval at
a General Meeting of shareholders to be held on 9 June 2020 and
also to admission of the fundraising shares to trading on AIM. In
reporting the Group's finances on a going concern basis, the
Directors have assumed the appropriate resolutions at this Meeting
will be passed. However, if the necessary resolution is not passed,
the fundraising will not proceed and the Company would not have
funds immediately available to continue executing its current
business plan. In this eventuality, the Directors would need to
consider alternative sources of adequate funding. Should the
Company be unable to raise enough funds, shareholders could be at
risk of losing all or a substantial amount of their investment.
The COVID-19 pandemic has affected most businesses during H1
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 possible cashflow projections for
the business, has considered a number of scenarios 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, if additional
funds are received as expected, there will not be a significant
long-lasting impact on the capability of the business to carry out
its commercial activities.
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 each
statutory entity within it, and have reviewed the current budget,
cash forecasts and assumptions, as well as the main risk factors
facing the Group as set out on pages 22 to 25 of the financial
statements. They have concluded that it remains appropriate to
prepare the financial statements on a going concern basis, noting
that assumptions relating to the completion of the fundraise give
rise to a material level of uncertainty in respect of the going
concern assumption.
The financial statements do not include any adjustments that
would result in the basis of preparation as a going concern being
inappropriate.
Post balance sheet events
The Group was victim to a cyber attack in January 2020; no
material financial impact has been determined and operations are
fully back up and running.
Due to the impact of the COVID-19 pandemic in Q1 2020, UK
operations and technical staff were furloughed under the Government
job retention scheme, and processing at the UK facility was
temporarily halted. In the US, due to initiatives implemented,
processing at this facility continued without disruption however,
due to the reprioritisation of healthcare professionals during this
time, elective surgeries such as urogynaecology or dental
procedures were postponed. The Company secured over $1m of US
Government backed loans to assist with the US overhead costs during
this time. These loans have a two-year term and carry a 1% annual
interest rate deferred for six months. However, under the Loan
agreements, the principal will not require repayment if the funds
are used to support employee payroll, healthcare, utilities and
rent payments within the US during the next two months. The Company
intends to use the funds to support these activities and therefore
expects the Loan not to require repayment.
Gareth Jones
Interim CEO
Consolidated statement of comprehensive income
For the year ended 31 December 2019
2019 2018
Notes GBP000 GBP000
---------------------------------------------- ------- -------- --------
REVENUE 2 13,033 11,619
Cost of sales (7,014) (5,702)
---------------------------------------------- ------- -------- --------
GROSS PROFIT 6,019 5,917
Administrative expenses before exceptional
items 2 (13,198) (14,183)
Exceptional items (21) (423)
---------------------------------------------- ------- -------- --------
Total administrative expenses (13,219) (14,606)
---------------------------------------------- ------- -------- --------
OPERATING LOSS (7,200) (8,689)
Finance income 17 72
Finance charges (477) (262)
---------------------------------------------- ------- -------- --------
LOSS BEFORE TAXATION (7,660) (8,879)
Tax 3 554 620
---------------------------------------------- ------- -------- --------
LOSS FOR YEAR (7,106) (8,259)
---------------------------------------------- ------- -------- --------
ATTRIBUTABLE TO:
Equity holders of the parent (6,973) (8,186)
Non-controlling interests (133) (73)
---------------------------------------------- ------- -------- --------
(7,106) (8,259)
---------------------------------------------- ------- -------- --------
OTHER COMPREHENSIVE INCOME:
Foreign currency translation differences -
foreign operations (724) 1,360
---------------------------------------------- ------- -------- --------
TOTAL COMPREHENSIVE EXPENSE FOR THE YEAR (7,830) (6,899)
---------------------------------------------- ------- -------- --------
ATTRIBUTABLE TO:
Equity holders of the parent (7,697) (6,826)
Non-controlling interests (133) (73)
---------------------------------------------- ------- -------- --------
(7,830) (6,899)
---------------------------------------------- ------- -------- --------
LOSS PER SHARE
Basic and diluted loss attributable to equity
holders of parent 4 (0.60)p (0.70)p
---------------------------------------------- ------- -------- --------
The loss for the period arises from the Group's continuing
operations.
Consolidated statement of financial position
At 31 December 2019
2019 2018
Notes GBP000 GBP000
------------------------------------------------ ------- -------- --------
ASSETS
Non-current assets
Property, plant and equipment 2,357 2,828
Intangible assets 17,999 19,938
------------------------------------------------ ------- -------- --------
TOTAL NON-CURRENT ASSETS 20,356 22,766
------------------------------------------------ ------- -------- --------
Current assets
Inventory 4,185 2,330
Trade and other receivables 2,539 3,551
Corporation tax receivable 1,035 1,200
Cash and cash equivalents 2,380 7,816
------------------------------------------------ ------- -------- --------
TOTAL CURRENT ASSETS 10,139 14,897
------------------------------------------------ ------- -------- --------
TOTAL ASSETS 30,495 37,663
------------------------------------------------ ------- -------- --------
LIABILITIES
Non-current liabilities
Borrowings (2,115) -
Deferred tax (670) (791)
------------------------------------------------ ------- -------- --------
TOTAL NON-CURRENT LIABILITIES (2,785) (791)
------------------------------------------------ ------- -------- --------
Current liabilities
Borrowings (171) -
Trade and other payables (2,944) (4,302)
------------------------------------------------ ------- -------- --------
TOTAL CURRENT LIABILITIES (3,115) (4,302)
------------------------------------------------ ------- -------- --------
TOTAL LIABILITIES (5,900) (5,093)
------------------------------------------------ ------- -------- --------
NET ASSETS 24,595 32,570
------------------------------------------------ ------- -------- --------
EQUITY
Share capital 5 5,859 5,859
Share premium 86,399 86,398
Merger reserve 10,884 10,884
Reverse acquisition reserve (7,148) (7,148)
Reserve for own shares (831) (831)
Share based payment reserve 983 1,129
Retained earnings deficit (70,936) (63,239)
------------------------------------------------ ------- -------- --------
EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF PARENT 25,210 33,052
Non-controlling interests (615) (482)
------------------------------------------------ ------- -------- --------
TOTAL EQUITY 24,595 32,570
------------------------------------------------ ------- -------- --------
Consolidated statement of changes in equity
For the year ended 31 December 2019
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
2017 5,855 86,398 10,884 (7,148) (831) 1,186 (56,413) 39,931 (409) 39,522
-------------- ------- ------- ------- ----------- ------- ------- --------- --------- ----------- ---------
Loss for the
period - - - - - - (8,186) (8,186) (73) (8,259)
Other
comprehensive
income - - - - - - 1,360 1,360 - 1,360
-------------- ------- ------- ------- ----------- ------- ------- --------- --------- ----------- ---------
Loss and total
comprehensive
expense for
the
period - - - - - - (6,826) (6,826) (73) (6,899)
Exercise of
share
options 4 - - - - - - 4 - 4
Share based
payment
credit - - - - - (57) - (57) - (57)
-------------- ------- ------- ------- ----------- ------- ------- --------- --------- ----------- ---------
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
expense - - - - - - (724) (724) - (724)
-------------- ------- ------- ------- ----------- ------- ------- --------- --------- ----------- ---------
Loss and total
comprehensive
expense for
the
period - - - - - - (7,697) (7,697) (133) (7,830)
Exercise of
share
options - 1 - - - - - 1 - 1
Share based
payment
credit - - - - (146) - (146) - (146)
-------------- ------- ------- ------- ----------- ------- ------- --------- --------- ----------- ---------
At 31 December
2019 5,859 86,399 10,884 (7,148) (831) 983 (70,936) 25,210 (615) 24,595
-------------- ------- ------- ------- ----------- ------- ------- --------- --------- ----------- ---------
Consolidated statement of cash flows
At 31 December 2019
2019 2018
Notes GBP000 GBP000
--------------------------------------------------- -------- -------- --------
OPERATING ACTIVITIES
Loss before taxation (7,660) (8,879)
Adjustment for:
Depreciation of property, plant and equipment 476 598
Amortisation of intangible assets 570 575
Impairment of intangible assets and property,
plant and equipment 1,311 -
Share based payments (146) (57)
Interest receivable (17) (72)
Interest payable 477 262
------------------------------------------------------------- -------- --------
Operating cash outflow before working capital
movements (4,989) (7,573)
------------------------------------------------------------- -------- --------
Decrease/(Increase) in inventory (1,855) 542
Decrease/(Increase) in trade and other receivables 1,076 (1,188)
(Decrease)/Increase in trade and other payables (1,567) 156
------------------------------------------------------------- -------- --------
Cash outflows from operations (7,335) (8,063)
------------------------------------------------------------- -------- --------
Research & Development tax credit received 653 1,225
------------------------------------------------------------- -------- --------
Net cash outflow from operations (6,682) (6,838)
------------------------------------------------------------- -------- --------
INVESTING ACTIVITIES
Interest received 17 72
Purchases of property, plant and equipment (438) (290)
Capitalised development expenditure (213) (116)
Acquisition of subsidiary - (1,564)
------------------------------------------------------------- -------- --------
Net cash outflow from investing activities (634) (1,898)
------------------------------------------------------------- -------- --------
FINANCING ACTIVITIES
Interest paid (384) -
Proceeds from exercise of share options 1 4
Proceeds from new loans 6,479 -
Repayment of loans (4,193) -
------------------------------------------------------------- -------- --------
Net cash inflow from financing activities 1,903 4
------------------------------------------------------------- -------- --------
Decrease in cash and cash equivalents (5,413) (8,732)
Foreign exchange translation movement (23) 125
Cash and cash equivalents at start of period 7,816 16,423
------------------------------------------------------------- -------- --------
CASH AND CASH EQUIVALENTS AT OF PERIOD 2,380 7,816
------------------------------------------------------------- -------- --------
Notes to the financial statements
For the year ended 31 December 2019
1) BASIS OF PREPARATION
The financial statements of Tissue Regenix Group plc are audited
consolidated financial statements for the year ended 31 December
2019.
These include audited comparatives for the year ended 31
December 2018.
The Company is incorporated and domiciled in the United Kingdom
and its registered number is 05969271. The address of the
registered office is Unit 1 and 2 Astley Way, Astley Industrial
Estate, Swillington LS26 8XT. 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.
Going Concern
These financial statements have been prepared on a going concern
basis, given the current cash flow projections forecast for the
Group to 31 December 2021. Funding requirements are reviewed on a
regular basis by the Group's Chief Executive Officer and Group
Finance Director and are reported to the Board at each Board
meeting, as well as on an ad hoc basis, if requested. Until
sufficient cash is generated from its operations, the Group remains
reliant on external funding including current debt facilities
provided by MidCap, to meet its working capital requirements,
capital investment programme and other financial commitments.
On 22 May, the Group announced that gross proceeds of GBP14. 62m
had been conditionally raised through an offer of new ordinary
shares in the Company to Institutional and other qualifying
investors. This fundraise is conditional on shareholder approval at
a General Meeting of shareholders to be held on 9 June 2020 and
also to admission of the fundraising shares to trading on AIM. In
reporting the Group's finances on a going concern basis, the
Directors have assumed the appropriate resolutions at this Meeting
will be passed. However, if the necessary resolution is not passed,
the fundraising will not proceed and the Company would not have
funds immediately available to continue executing its current
business plan. In this eventuality, the Directors would need to
consider alternative sources of adequate funding. Should the
Company be unable to raise enough funds, shareholders could be at
risk of losing all or a substantial amount of their investment.
The COVID-19 pandemic has affected most businesses during H1
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 possible cashflow projections for
the business, has considered a number of scenarios 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, if additional
funds are received as expected, there will not be a significant
long-lasting impact on the capability of the business to carry out
its commercial activities.
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 each
statutory entity within it, and have reviewed the current budget,
cash forecasts and assumptions, as well as the main risk factors
facing the Group as set out on pages 22 to 25. They have concluded
that it remains appropriate to prepare the financial statements on
a going concern basis, noting that assumptions relating to the
completion of the fundraise give rise to a material level of
uncertainty in respect of the going concern assumption.
The financial statements do not include any adjustments that
would result in the basis of preparation as a going concern being
inappropriate.
2) SEGMENTAL REPORTING
The following table provides disclosure of the Group's revenue
by geographical market based on location of the customer:
Year to Year to
31 December 31 December
2019 2018
GBP000 GBP000
-------------- ------------ ------------
USA 10,679 9,434
Rest of world 2,354 2,185
-------------- ------------ ------------
13,033 11,619
-------------- ------------ ------------
Analysis of revenue by customer
During the year ending 31 December 2019 the Group had no
customers who individually exceeded 10% of revenue (2018:no
customers).
Operating segments
The Group is organised into BioSurgery, Orthopaedics &
Dental, Cardiac and GBM-V divisions for internal management,
reporting and decision- making, based on the nature of the products
of the Group's businesses. Managers have been appointed within
these divisions, who report to the Chief Executive Officer. These
are the reportable operating segments in accordance with IFRS8
"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 IFRS8, the Group has derived the information
for its operating segments using the information used by the Chief
Operating Decision Maker. The Group has identified the Chief
Executive Officer as the Chief Operating Decision Maker as he is
responsible for the allocation of resources to the operating
segments and assessing their performance.
Central overheads, which primarily relate to operations of the
Group function, are not allocated to the business unit.
BioSurgery Orthopaedics Cardiac GBM-V Central Total
& Dental
2019 2018 2019 2018 2019 2018 2019 2018 2019 2018 2019 2018
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
--------------- ------- -------- ------- -------- ------- ------- ------- ------- ------- ------- -------- --------
Revenue 4,233 3,381 6,724 6,396 - - 2,076 1,842 - - 13,033 11,619
Cost of
sales (2,535) (1,769) (3,076) (2,676) - - (1,403) (1,257) - - (7,014) (5,702)
--------------- ------- -------- ------- -------- ------- ------- ------- ------- ------- ------- -------- --------
Gross Profit 1,698 1,612 3,648 3,720 - - 673 585 - - 6,019 5,917
Administrative
costs (3,729) (4,169) (4,553) (4,992) (328) (428) (663) (551) (3,925) (4,043) (13,198) (14,183)
Exceptional
costs:
Contingent
consideration - - 1,523 - - - - - - - 1,523 -
Impairment
of assets (983) - - - - - (152) - (176) - (1,311) -
Restructuring
costs (72) - - - - - - - (92) - (164) -
--------------- ------- -------- ------- -------- ------- ------- ------- ------- ------- ------- -------- --------
Litigation
costs (69) (423)) - - - - - - - - (69) (423)
--------------- ------- -------- ------- -------- ------- ------- ------- ------- ------- ------- -------- --------
Operating
loss (3,155) (2,980) (618) (1,272) (328) (428) (142) 34 (4,193) (4,043) (7,200) (8,689)
Finance
income/
(expense) - - - - - - - - (460) (190) (460) (190)
--------------- ------- -------- ------- -------- ------- ------- ------- ------- ------- ------- -------- --------
Loss before
taxation (3,155) (2,980) (618) (1,272) (328) (428) (142) 34 (4,653) (4,233) (7,660) (8,879)
Taxation 159 73 283 543 80 102 - - 32 (98) 554 620
--------------- ------- -------- ------- -------- ------- ------- ------- ------- ------- ------- -------- --------
Loss for
the year (2,996) (2,907) (901) (729) (248) (326) (142) 34 (4,621) (4,331) (7,106) (8,259)
--------------- ------- -------- ------- -------- ------- ------- ------- ------- ------- ------- -------- --------
Revenue from all operating segments derives from the sale of
biologic medical devices.
Administrative expenses are broken down as follows:
BioSurgery Orthopaedics Cardiac GBM-V Central Total
& Dental
2019 2018 2019 2018 2019 2018 2019 2018 2019 2018 2019 2018
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
--------------- ------- -------- ------- -------- ------- ------- ------- ------- ------- ------- -------- --------
Staff costs (2,862) (2,936) (2,931) (2,639) (134) (222) (349) (297) (889) (1,365) (7,165) (7,459)
--------------- ------- -------- ------- -------- ------- ------- ------- ------- ------- ------- -------- --------
Sales and
marketing
costs (395) (901) (136) (125) (5) (25) (15) (20) (204) - (755) (1,071)
--------------- ------- -------- ------- -------- ------- ------- ------- ------- ------- ------- -------- --------
Research
and
development (256) (164) (530) (1,307) (168) (164) (4) - (409) - (1,367) (1,635)
--------------- ------- -------- ------- -------- ------- ------- ------- ------- ------- ------- -------- --------
Depreciation
and
amortisation (15) (20) (276) (279) - - (17) (7) (739) (867) (1,047) (1,173)
--------------- ------- -------- ------- -------- ------- ------- ------- ------- ------- ------- -------- --------
Establishment
and
administration
costs (201) (148) (680) (642) (21) (17) (278) (227) (1,684) (1,811) (2,864) (2,845)
--------------- ------- -------- ------- -------- ------- ------- ------- ------- ------- ------- -------- --------
Administrative
costs (3,729) (4,169) (4,553) (4,992) (328) (428) (663) (551) (3,925) (4,043) (13,198) (14,183)
--------------- ------- -------- ------- -------- ------- ------- ------- ------- ------- ------- -------- --------
The balance sheet can be analysed segmentally as follows:
BioSurgery Orthopaedics Cardiac GBM-V Central Total
& Dental
2019 2018 2019 2018 2019 2018 2019 2018 2019 2018 2019 2018
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
------------ ------ ------- ------- ------- ------ ------- ------- ------- ------- ------- ------- -------
Non-current
assets
------------ ------ ------- ------- ------- ------ ------- ------- ------- ------- ------- ------- -------
Intangible
assets - 759 17,999 19,179 - - - - - - 17,999 19,938
------------ ------ ------- ------- ------- ------ ------- ------- ------- ------- ------- ------- -------
Property,
Plant &
Equipment - 26 2,357 2,356 - - - 156 - 290 2,357 2,828
------------ ------ ------- ------- ------- ------ ------- ------- ------- ------- ------- ------- -------
Total
non-current
assets - 785 20,356 21,535 - - - 156 - 290 20,356 22,766
------------ ------ ------- ------- ------- ------ ------- ------- ------- ------- ------- ------- -------
Current
assets
------------ ------ ------- ------- ------- ------ ------- ------- ------- ------- ------- ------- -------
Inventory 345 222 3,661 1,957 - - 122 74 57 77 4,185 2,330
------------ ------ ------- ------- ------- ------ ------- ------- ------- ------- ------- ------- -------
Trade &
other
receivables 1,078 939 1,666 2,856 155 200 138 121 537 635 3,574 4,751
------------ ------ ------- ------- ------- ------ ------- ------- ------- ------- ------- ------- -------
Cash & cash
equivalents 495 170 87 409 8 2 33 35 1,757 7,200 2,380 7,816
------------ ------ ------- ------- ------- ------ ------- ------- ------- ------- ------- ------- -------
Total
current
assets 1,918 1,331 5,414 5,222 163 202 293 230 2,351 7,912 10,139 14,897
------------ ------ ------- ------- ------- ------ ------- ------- ------- ------- ------- ------- -------
Total assets 1,918 2,116 25,770 26,757 163 202 293 386 2,351 8,202 30,495 37,663
------------ ------ ------- ------- ------- ------ ------- ------- ------- ------- ------- ------- -------
Current
liabilities
------------ ------ ------- ------- ------- ------ ------- ------- ------- ------- ------- ------- -------
Trade &
other
payables (586) (553) (2,163) (2,474) (42) (42) (112) (102) (882) (1,922) (3,785) (5,093)
------------ ------ ------- ------- ------- ------ ------- ------- ------- ------- ------- ------- -------
Borrowings - - (2,115) - - - - - - - (2,115) -
------------ ------ ------- ------- ------- ------ ------- ------- ------- ------- ------- ------- -------
Total
liabilities (586) (553) (4,278) (2,474) (42) (42) (112) (102) (882) (1,922) (5,900) (5,093)
------------ ------ ------- ------- ------- ------ ------- ------- ------- ------- ------- ------- -------
Net assets 1,332 1,563 21,492 24,283 121 160 181 284 1,469 6,280 24,595 32,570
------------ ------ ------- ------- ------- ------ ------- ------- ------- ------- ------- ------- -------
Capital
expenditure 6 6 349 204 - - - 54 83 26 438 290
------------ ------ ------- ------- ------- ------ ------- ------- ------- ------- ------- ------- -------
Additions
to
intangible
assets 213 116 - - - - - - - - 213 116
------------ ------ ------- ------- ------- ------ ------- ------- ------- ------- ------- ------- -------
3) TAXATION
Tax on loss on ordinary activities
2019 2018
GBP000 GBP000
--------------------------------------------------------- -------- --------
Current tax:
UK corporation tax credit on losses of period (488) (790)
US corporation tax payable 29 72
--------------------------------------------------------- -------- --------
(459) (718)
Deferred tax:
Origination and reversal of temporary timing differences (95) 98
--------------------------------------------------------- -------- --------
Tax credit on loss on ordinary activities (554) (620)
--------------------------------------------------------- -------- --------
Factors affecting the current tax charges
The tax assessed for the year varies from the main rate of
corporation tax as explained below:
2019 2018
GBP000 GBP000
----------------------------------------------------------- -------- --------
Loss on ordinary activities before tax (7,660) (8,879)
Tax at the standard rate of corporation tax 19% (2018:19%) (1,456) (1,687)
Effects of:
Research and development tax credits received (468) (583)
Surrender of research and development relief for
repayable tax credit including enhancement 305 203
Other 85 170
Unutilised tax losses 980 1,277
----------------------------------------------------------- -------- --------
Tax credit for the period (554) (620)
----------------------------------------------------------- -------- --------
Unrecognised deferred tax
2019 2018
GBP000 GBP000
------------------------------------------------- -------- --------
Tax losses
Losses available to carry forward against future
trading profits 43,533 43,254
Deferred tax asset - unrecognised* 17% 7,404 7,353
------------------------------------------------- -------- --------
* The Group has not recognised a deferred tax asset relating to
these losses as their recoverability is uncertain.
4) 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.
2019 2018
GBP000 GBP000
------------------------------------------------- -------- --------
Total loss attributable to the equity holders of
the parent (6,973) (8,186)
------------------------------------------------- -------- --------
No. No.
---------------------------------------------------- ------------- -------------
Weighted average number of ordinary shares in issue
during the year 1,171,867,216 1,171,633,442
Loss per share
Basic and diluted loss for the year (0.60)p (0.70)p
---------------------------------------------------- ------------- -------------
As set out in note 19.The Company has issued options over
19,553,729 (2018: 53,577,615) ordinary shares and there are
16,112,800 (2018: 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.
5) SHARE CAPITAL
Share
capital
Number GBP000
-------------------------------------------- ------------- --------
Total Ordinary shares of 0.5p each as at 31
December 2017 1,170,990,924 5,855
Share options exercised 739,899 4
-------------------------------------------- ------------- --------
Total Ordinary shares of 0.5p each as at 31
December 2018 1,171,730,823 5,859
Share options exercised 240,499 -
-------------------------------------------- ------------- --------
Total Ordinary shares of 0.5p each as at 31
December 2019 1,171,971,322 5,859
-------------------------------------------- ------------- --------
Reserves of the Group represent the following:
Share Premium
Consideration received for shares issued above their nominal
value net of transaction costs.
Merger Reserve
Consideration and nominal value of the shares issued during a
merger and the fair value of the assets transferred differ.
Reverse Acquisition
Retained earnings of an acquisition
Own shares held
The Company's authority to purchase its own shares is set out in
its Articles of Association and approved by the shareholders at the
Annual General Meeting.
Share-based Payment Reserve
The cumulative share-based payment expense.
Retained Earnings
Cumulative profit and loss net of distributions to owners.
As permitted by the provisions of the Companies Act 2006, the
Company does not have an upper limit to its authorised share
capital. All shares are ordinary shares which are fully paid and
entitle the holder to full voting rights, to full participation or
distribution of dividends.
As described in note 20, there were employee related share
options outstanding at 31 December 2019 over 32,569,731 shares
(2018: 69,700,415 shares) and options issued to providers of
borrowings over 3,096,798 shares (2018: nil).
6) POST BALANCE SHEET EVENTS
On 22 May, the Group announced that gross proceeds of GBP14.6m
had been conditionally raised through an offer of new ordinary
shares in the Company to Institutional and qualifying retail
investors. All conditions attached to this fundraise have since
been satisfied, save for the requirement that the issuance of these
new shares be approved at a General Meeting of shareholders to be
held on 9 June 2020.
The COVID-19 pandemic has affected most businesses during H1
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 possible cashflow projections for
the business, has considered a number of scenarios 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, if additional
funds are received as expected, there will not be a significant
long-lasting impact on the capability of the business to carry out
its commercial activities. Whilst COVID-19 has had a significant
short term impact on the business, the Directors remain confident
with the long term prospects for the group and they do not
therefore believe that the pandemic gives rise to any particular
concerns regarding the carrying values of assets reported at 31
December 2019.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR FIMMTMTBMTMM
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June 05, 2020 02:00 ET (06:00 GMT)
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