TIDMTRX
RNS Number : 5982T
Tissue Regenix Group PLC
21 March 2023
Tissue Regenix Group plc
('Tissue Regenix', 'Group' or the 'Company')
Final results for the year ended 31 December 2022
Annual Report and Notice of AGM
Tissue Regenix (AIM: TRX), the regenerative medical device
group, announces its audited results for the year ended 31 December
2022, having delivered on its strategy for growth whilst achieving
strong commercial traction. Across the period Tissue Regenix has
improved margins, recorded over 20% revenue growth and reported
positive Adjusted EBITDA for the first time in the fourth quarter
of 2022, illustrating it is well positioned to drive profitable and
sustainable growth.
Financial Highlights
-- Group revenues increased by 24% to USD24,476k (2021: USD19,746k )
o BioRinse(R) increased 26% to USD16,049k (2021: USD12,711k)
driven by growth across the allograft segments
o dCELL(R) increased 25% to USD5,301k (2021: USD4,246k) as the
effects of the commercial reorganisation in 2022 gained
traction
o GBM-V increased 12% to USD3,126k (2021: USD2,789k) (24%
constant currency), driven by increased donor tissue supply
-- Gross profit of USD11,258k (2021: USD8,476k ). Significant
improvement in gross margin - 46% (FY 2021: 43%) due to a price
increase in the BioRinse segment and further efficiencies
-- Positive Adjusted EBITDA for fourth quarter of 2022 due to
sales growth and tight expense management
-- Cash position at 31 December 2022 of USD 5,949k (2021: USD
7,709k ) to support the current business growth plan
Operational Highlights
-- Addition of VNEW(TM) Fascia Lata product for the Group's
Urological/gynaecological partner ARMS Medical
-- Distribution agreements and initiation for OrthoPure(R) XT in
Italy, Germany, and agreement for China and Hong Kong (post-period
end)
-- Increased efficiencies in donor processing provide for a c.
USD10.0m additional sales revenue potential from the Group's
existing footprint. Phase 2 expansion now not required until
2025
-- 124% more donors sourced to increase supply and meet the
needs of the Group's commercial partners
-- Commercial reorganisation of dCELL division has begun to show
benefits with renewed sales growth, as well as 41 new distributors
hired and trained
-- Identified and are in the process of establishing a
third-party logistics provider to provide distribution services to
the European Union and the UK
Post-period Highlight
-- The Group revised and expanded its credit facility to
USD10,000k (from the current USD5,000k), and the credit facility
term has been extended to 2028
Jonathan Glenn, Chair of Tissue Regenix, commented: "During what
has been a year of immense progress with some notable milestones
achieved, we have continued to demonstrate and realise operational
and commercial growth . This has been the result of our continued
focus on our 4S strategy - Supply, Sales Revenue, Sustainability
and Scale. We have experienced over 20% revenue growth across the
Group, resulting in a positive adjusted EBITDA for the fourth
quarter of 2022. Execution of this strategy will continue to
provide us with the opportunity to build shareholder value as we
broaden our opportunities in regenerative medicine, addressing many
critical unmet clinical needs around the globe."
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 Company's AGM will be held at DLA Piper, 160 Aldersgate St,
Barbican, London EC1A 4HT, on 27 April 2023 at 1.00 pm.
Shareholders are invited to ask the Board questions about the
Accounts or the AGM by email emailing 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.
Proposed Share Consolidation
The Company currently has 7,035,794,890 Existing Ordinary Shares
of 0.1 pence each in issue. The middle market share price of each
Ordinary Share as at close on 20 March 2023 was 0.605 pence, giving
a market capitalization of GBP42.57 million. The Directors consider
that the number of Existing Ordinary Shares is not only unwieldly
in volume for a company of Tissue Regenix's market capitalisation,
but when combined with the prevailing share price, is not conducive
to an orderly market. The Directors believe that both these factors
may have the potential to cause a de-stabilising effect on the
share price due to small trading volumes having a disproportionate
effect on share prices.
The Board believes that a consolidation of the Company's
Ordinary Share Capital will result in a more appropriate number of
shares in issue for the Company. Accordingly, the Board has
proposed a capital reorganisation in early 2023, which will result
in shareholders holding one new Ordinary Share for every 100
existing Ordinary Shares ('the Consolidation').
The Board anticipates that the Consolidation may also help to
make the Company's shares more attractive to investors and may
result in a narrowing of the bid/offer spread, thereby improving
liquidity.
For the avoidance of doubt, there is no present intention to
raise any equity capital or issue any further shares in relation to
our growth plans as Tissue Regenix is more than adequately funded
to execute on its strategy.
Investor Briefing
Daniel Lee, Chief Executive Officer, and David Cocke, Chief
Financial Officer, will host a live online presentation relating to
the final results via the Investor Meet Company platform at 1.30pm
on Thursday 23 March 2023. The presentation is open to all existing
and potential shareholders.
Investors can sign up to Investor Meet Company for free and
register for the presentation here:
https://www.investormeetcompany.com/tissue-regenix-group-plc/register-investor
Investors who already follow Tissue Regenix on the Investor Meet
Company platform will be de facto invited.
For more information:
Tissue Regenix Group plc www.tissueregenix.com
David Cocke, Chief Financial Officer Via Walbrook PR
finnCap Ltd (Nominated Adviser and Broker)
Emily Watts/Geoff Nash/George Dollemore -
Corporate Finance
Nigel Birks/Harriet Ward - ECM
Walbrook PR (Financial PR & IR) Tel: +44(0)20 7933 8780
Alice Woodings / Lianne Applegarth TissueRegenix@walbrookpr.com
About Tissue Regenix (www.tissueregenix.com)
Tissue Regenix is a leading medical device Group in the field of
regenerative medicine. The Group's patented decellularisation
technology ('dCELL(R)') removes DNA and other cellular material
from animal and human soft tissue, leaving an acellular tissue
scaffold which is not rejected by the patient's body and can then
be used to repair diseased or damaged body structures. Current
applications address many critical clinical needs in sports
medicine, foot and ankle and wound care.
In August 2017, Tissue Regenix acquired CellRight
Technologies(R), a biotech company that specialises in regenerative
medicine and is dedicated to the development of high quality,
innovative tissue scaffolds, which can enhance healing
opportunities in defects created by trauma and disease.
CellRight(R)'s human tissue products may be used in spine, trauma,
general orthopaedic, dental and ophthalmological surgical
procedures.
Joint Chair & CEO Statement
2022 performance
2022 has been a solid year of growth, marked by achieving
several new milestones for the Group. As we had forecast, our
top-line revenues exceeded the prior year and continued a positive
growth trajectory. Our three main business units all demonstrated
growth building on the strong and sustainable market position we
have built for our company. As a result, the Group has demonstrated
sales growth greater than its peers over the past three years and
succeeded in meeting market expectations. This is despite the
significant headwinds faced by commercial healthcare organisations
in 2022. We are pleased that the Group continued to execute on its
plans to deliver further operational and commercial growth. We have
continued to expand our distribution network with new products and
increased the number of strategic partners and distributors we work
with to broaden the adoption of our innovative products. All of
this could not have happened without the talented and dedicated
employees of the Group, which we would like to thank for their hard
work.
Strategy
Our focus remains on the 4S strategy which continues to be the
foundation for how we operate, execute and drive our growth:
-- Supply - highlighted by the fundamental ability to source
donor tissue and having the capacity to produce various graft
products
-- Sales Revenue - to distribute the finished grafts to the
clinicians and institutions that need these products to treat
patients
-- Sustainability - to manage sales revenue along with expenses
to be a profitable entity that does not need additional external
capital to operate
-- Scale - to utilise the first three S's to continue to invest
in and grow the business, license or acquire new products,
technologies and companies
We believe any significant issues with tissue supply are now
behind us and have stabilised, given that capacity has been
increased to service our needs through to 2025. Our sales growth
continues across all divisions, highlighted by achieving an
important milestone for the Group of an adjusted EBITDA profitable
fourth quarter of 2022. Sustainability remains a key focus and by
delivering this we will create new opportunities for the Group with
respect to scale, internally and externally.
BioRinse
Through a primary focus on the United States ('US') orthopaedics
and dental markets, our BioRinse portfolio reported a strong
performance in 2022 with sales of USD16,049k (2021:USD12,711k). The
26% growth was led by confidence in our ConCelltrate (R)
demineralised bone matrix, and AmnioWorks(TM) birth tissue product
families. Our strategic partners continue to have confidence in the
superior performance of our products and our ability to deliver
products in the required quantities and timeframes due to our
elevated processing capacity. Since the completion of the Phase 1
expansion, we have been able to supply products and adjust to
unanticipated customer needs in half the amount of time. Achieving
these service levels with our partners and distributors across all
the surgical specialties we serve (orthopaedics, sports medicine,
spine, dental, trauma, others), has earned us a solid and much
improved reputation in the industry. Our growth rate is above the
market rate for the period (see Market Overview for more details on
underlying market growth rates), with our top five product families
demonstrating a greater than 18% year-on-year revenue growth. We
believe we are taking market share, with the opportunity to deliver
further significant and sustainable growth in the years ahead.
Our additional capacity provides for further opportunities both
in the US and the rest of the world. In the period, we began our
discussions and efforts to distribute allograft tissue outside the
US, identifying target markets and distribution partners. We also
engaged a third-party logistics partner and began the required
regulatory approvals to expand into Europe. We expect to initiate
commercial distribution in select markets in 2023 and are excited
about the opportunities that we can see.
dCELL
In 2022, the dCELL commercial business was restructured to bring
our commercial leadership closer to our customers, distributors and
clinicians. One objective was to increase our distribution
footprint in areas where we had established business by adding a
further 32 distributors. We exceeded that goal by adding 41
distributors by the end of the calendar year, and as a result sales
revenue for this division was USD5,301k (2021:USD4,246k) an
increase of 25%. The demand for dCELL products with our
urological/gynecological partner increased during 2022 driven by
continued market penetration of Dermapure, non-oriented DermaPure
and increased utilisation of the pre-shaped VNEW product. We
launched VNEW(TM) Fascia Lata in late 2022 and anticipate this
product will develop significant traction in 2023.
During the period, the market for elective surgeries in the EU
rebounded, so our efforts to set up distribution of OrthoPure XT
started to gain momentum. OrthoPure XT is the only non-human
biologic tissue graft available to the market for certain anterior
cruciate ligament reconstruction procedures. This product was
introduced into Italy and Germany in 2022 and we expect more
significant revenue contributions in 2023.
Advancing the clinical science of a new and novel product such
as OrthoPure XT provides benefits to growth in the product's life
cycle. In April 2022, the four-year clinical experience with
OrthoPure XT was presented at the 20th European Society of Sports
Traumatology, Knee Surgery & Arthroscopy Congress in Paris. The
continued positive long term safety and performance of OrthoPure XT
has important implications in this high demand application. A
manuscript on the five-year clinical experience is in preparation
and planned for submission to a major European publication.
GBM- V
The GBM-V joint venture operates in a Good Manufacturing
Practices facility which has been producing commercial corneal
products since 2016. In 2022, the combination of increased supply
and yield improvements resulted in the achievement of a record year
of distributed corneal grafts, with revenues up 12% (up 24% at
constant currency) to USD3,126k (2021: USD2,789k).
New strategic partners and distributors
We continued to meet operational milestones, support the growth
of our commercial partners and secure additional strategic
partnerships or distributorships in 2022.
For BioRinse, our top customers change annually due to market
dynamics but we continued to bring on additional strategic partners
and distributors, signing 10 agreements in 2022, for specialties
such as spine and dental. Across the BioRinse portfolio we
experienced a 5% increase in the number of orders we processed.
For dCELL, we increased the number of distributors,
substantially ahead of our internaltargets. Overall revenue was up
25% versus prior year and neared the levels seen pre-pandemic.
Orders for dCELL products increased by 20% versus the prior year
which translated into 29% more units shipped. The addition of new
distributors also enabled us to penetrate existing accounts more
deeply, with revenue up 80% in some existing hospital systems.
In 2022, we introduced VNEW Fascia Lata produced for our
Urological/gynaecological partner ARMS Medical. The fascia lata
tissue is underutilised so this product enabled us to use tissue
which would otherwise be discarded and meets with our mission of
maximising the gift of human tissue donation whilst also helping us
to improve our gross marginThis type of tissue is used as a sling
in stress urinary incontinence procedures, which affects about 10%
of the female population. We currently await the introduction of
two other new products through our strategic partners.
The pandemic impacted the launch of OrthoPure XT into the UK and
selected European markets, however the market for elective
surgeries in the EU has rebounded since, and our efforts to setup
distribution of the product has started to gain momentum. In March
2022, we signed an agreement with Geistlich Biomaterials Italia, a
subsidiary company of Geistlich Pharma AG, which included a
commitment to advance the clinical science for OrthoPure XT. Sales
and clinical use of OrthoPure XT have begun in Italy and initial
feedback has been positive. In November 2022, we signed an
agreement with 2Med GmbH to be our exclusive distributor in Germany
and we filled an initial stocking order. To aid us in bringing on
distribution partners as part of our European growth strategy, we
have engaged a seasoned sports medicine commercial consultant to
identify these partners for OrthoPure XT.
Post year end, we signed an agreement with Kingsung Medical
Group ('Kingsung') for the exclusive distribution of OrthoPure XT
into China and Hong Kong. As part of the agreement, Kingsung will
share the cost to obtain regulatory approval in China. It is
estimated that the current market for ligament reconstruction
procedures in China and Hong Kong is approximately 200k - 250k
procedures and growing. This opportunity compares favourably to the
size of the United States market, with ligament reconstruction
procedures there estimated to be in the range of 250k-400k.
Further product line extensions or product improvements are
anticipated during 2023 which will continue to drive our organic
growth, efficiently utilising our facility and tissues and
supporting the commercial efforts of our organisation and strategic
partners.
Operations
2022 was a successful year for the Group following the
completion of the Phase 1 capacity expansion programme in San
Antonio in 2021, which provided additional space for donor storage,
processing and production, and distribution and laid the foundation
for future growth.
To meet the need of our commercial partners and our focus on
supply, in 2022 we sourced 124% more donors overall. Though we
processed fewer Musculoskeletal donors in 2022, our capacity
shifted to the fluctuating demands for Dermis and Amnion where
processing increased by 135% and 130%, respectively.
The additional capacity for storage has alleviated our concerns
for tissue supply for use in producing products. In 2022 we
implemented a programme to help us manage the inventory of released
donor tissue by making some of it available to other processing
companies, subsequently establishing a number of ongoing
relationships with other tissue processors. This programme aligns
with our responsibility to honour the gift of tissue donation
through utilisation in a timely manner for products that can help
patients.
Following the addition of two sterile packaging rooms at our San
Antonio facility, we have realised some unanticipated gains to our
overall capacity for processing and production. This additional
capacity is estimated to add c.USD10 million of revenue generation
potential. This has effectively delayed our need for the 10
additional clean rooms in the Phase 2 expansion from 2024 until
2025. The expansion has also provided more flexibility in terms of
how we can schedule processing and production. As a result, we have
been able to respond to orders or unanticipated changes in almost
half the amount of time required prior to the Phase 1
expansion.
All of the Group's tissue operations in the US are regulated by
the Food and Drug Administration ('FDA') and need to comply with
American Association of Tissue Banks ('AATB') certification
requirements. Following reinspection by the AATB, we received
recertification in December 2022 till March 2025.
Our UK Operations in Garforth received ISO 13485 recertification
in January 2022 and also completed a surveillance audit by our
notified body. As a result of a change in medical device regulation
in the European Union from the Medical Device Directive to the
Medical Device Regulation ('MDR') our UK team submitted our MDR
update in mid-2022 and have been informed that review will not
begin till mid 2023 due to the backlog created by the MDR
requirement. The team has processed and shipped the OrthoPure XT
device to meet the commercial demands of our European partners.
The impact of the pandemic
The prolonged effects of the pandemic are evident and we still
see issues with staff shortages at healthcare institutions
impacting elective procedures and we are still seeing component and
material supply chain issues affecting our operations or those of
our material or equipment providers due to global supply issues.
These supply chain issues have indirect effects as they have also
lengthened the timelines of our third party vendors and services.
Wage inflation and the tight labour market have made it competitive
for all to retain or recruit talented personnel. Our resilience and
resourcefulness will continue to minimise the impact of any lasting
pandemic related issues.
Organisational changes
In January 2022 Kirsten Lund was appointed into the Europe,
Middle East and Africa ('EMEA') Business Director role and remains
as our Corporate Secretary. Capitalising on her experiences within
the organisation, Kirsten will coordinate and drive our efforts to
establish commercial distribution focused in the EMEA region.
We will continue to invest in resources which will grow our
organisation across all divisions. Additions to our commercial team
in BioRinse and dCELL will bring further opportunities to our
organisations and spread our footprint in the US and the rest of
the world.
Outlook
We will continue to build on our 4S Strategy to provide a solid
foundation for the future, with sales revenue and sustainability
becoming the priorities in 2023. The Group is well prepared for
additional market fluctuations as markets continue to normalise
post-pandemic.
The BioRinse products will remain the dominant revenue
contributor in 2023 whilst growth will come from existing and new
partners as well as new products. We anticipate significant growth
from our dCELL as we continue to invest and expand into markets
which historically have been underrepresented, while our GBM-V
joint venture consistently identifies opportunities to increase its
tissue supply or other opportunities to maintain growth.
Our geographic outreach with our human tissue dCELL and BioRinse
portfolios will expand as we sign agreements with additional
distributors. Alongside this, OrthoPure XT will be introduced into
additional EU and other markets in 2023.
In 2023, we aim to pursue the commercialisation of those
products which utilise our core technology platforms, provide
product line extensions that are fast to market, and address a
specific clinical or commercial need. Whilst we will continue to
assess when we need to invest in further capacity expansion, we
will develop further efficiencies and be creative in our business
practices, whilst looking at all opportunities to scale the
business for additional longer term growth.
A combination of the team that we have in place; the products we
currently have and the pipeline of new products we are developing;
the commercial relationships we have and the distribution base that
we have established all give the Board optimism about the future,
both short and long term, for the Company. We believe that we are
extremely well positioned to take advantage of the opportunities in
front of us and to create a profitable, sustainable, cash
generative company for shareholders.
We are all excited by the significant opportunities.
Jonathan Glenn
Chair
Daniel Lee
Chief Executive Officer
20 March 2023
Financial Review
Revenue
During the year ended 31 December 2022, revenue increased by 24%
to USD24,476k (2021: USD19,746k).
The Group experienced growth across all three key business
segments for the year as more fully described below:
-- The BioRinse segment increased top line sales by 26% to
USD16,049k (2021: USD12,711k) driven by growth across the allograft
segments led by the ConCelltrate and AmnioWorks product
families.
-- Revenue from the dCELL division increased 25% to USD5,301k
(2021: USD4,246k) as the commercial reorganisation implemented in
2022 gained traction.
-- The Group's joint venture, GBM-V, based in Rostock, Germany,
increased sales by 12% (up by 24% at constant currency) to
USD3,126k (2021: USD2,789k) as a result of increased tissue
supply.
Cost of sales and gross profit
Gross profit for the year was USD11,258k (2021: USD8,476k).
Gross margin percentage increased to 46% (2021: 43%). In early
2022, a price increase was put in place in the BioRinse division to
address the cost pressures associated with the inflationary
environment. The benefits of this increase were offset slightly due
to a margin reduction in the dCELL segment caused by a one-off
provision (c. USD447k) related to a supply contract
termination.
Included in costs of sales is cost of product USD10,053k (2021:
USD10,348) and third-party commissions USD1,205k (2021:
USD922k).
Administrative expenses
During 2022, administrative expenses before exceptional items
increased by USD769k, or 6%, to USD13,268k (2021: USD12,499k)
driven primarily by additional staffing costs.
Exceptional items
There were no exceptional items recorded during the year ended
31 December 2022 (2021: USD355k).
Finance income/charges
Finance income of USD8k (2021: USD3k) represented interest
earned on cash deposits. Finance charges for the year were reported
at USD826k (2021: USD767k) and related primarily to interest
charges and associated costs in respect of the MidCap Financial
Trust ('MidCap') loan arrangement.
Loss for the year
The loss for the year was USD2,596k (2021 loss: USD4,985k)
resulting in a basic loss per share of 0.04 cents (2021 loss per
share: 0.07 cents). The reduction in the loss for the year was
driven by the increases in sales revenue and gross margin
percentage.
Taxation
The Group continues to invest in developing its product
offering, and as such is eligible to submit enhanced research and
development tax claims, enabling it to exchange tax losses for a
cash refund. In the year to December 2022, a refund of USD401k was
receivable (2021: USD534k). The year-on-year reduction was a result
of the business continuing to move its resources away from research
and development to more commercial activities.
Corporation tax payable in the US amounted to USD nil (2021: USD
nil). A corporation tax credit of USD232k (2021: USD157k) was
recognised in the period. Gross tax losses carried forward in the
UK were USD58,900k (2021: USD60,779k). The Group does not currently
pay tax in the UK. A deferred tax asset has not been recognised as
the timing and recoverability of the tax losses remain
uncertain.
Statement of Financial Position
At December 2022, the Group had net assets of USD30,401k (2021:
USD33,392k) of which cash in hand totalled USD5,949k (2021:
USD7,709k).
Inventory levels increased 12% against the 24% sales revenue
increase at USD10,882k (2021: USD9,719k) as the BioRinse and dCELL
segments managed stock levels closely to increase inventory
turnover while also keeping adequate stock levels to meet customer
demand.
Intangible assets decreased slightly to USD15,061k (2021:
USD15,064k) in the year. A further USD709k of development costs
were capitalised in the year. The balance of movements in this
account relate to amortisation.
The Directors carried out the annual impairment review, as
required by IAS 36, to determine whether there was any requirement
for an impairment provision in respect of its non-current assets at
31 December 2022.
The results of the test indicated that the recoverable amount of
the Group's non-current assets was at least equal to the carrying
amount of those assets and, therefore, no provision for impairment
was required at 31 December 2022 (2021: USD nil).
Working capital decreased slightly in the year to USD9,365k
(2021: USD9,992k), driven by an increase in inventory from
continued growth in manufacturing activities and an increase in
trade receivables due to sales growth, offset by an increase in
trade and other payables and an increase in the current portion of
loans and borrowings. (See subsequent development paragraph below
for more information on the Group's credit facilities.) The
Statement of Financial Position included corporation tax receivable
of USD401k (2021: USD534k) in respect of UK research and
development tax credits.
Borrowings and lease liability
Borrowings include the USD6,258k debt facility through MidCap
and the USD3,350k lease liability related to the Group's leasehold
in San Antonio, TX (2021: USD4,465k and USD3,482k respectively).
The MidCap debt facility includes USD2,000k in respect of the term
loan and USD4,387k in respect of the revolving credit facility, net
of USD129k of capitalised debt issue costs.
Dividend
No dividend has been proposed for the year to 31 December 2022
(2021: Nil).
Accounting policies
The Group's consolidated financial information has been prepared
in accordance with UK adopted International Accounting Standards
('UK adopted IAS').
Going concern
The Group financial statements have been prepared on a going
concern basis based on cash flow projections approved by the Board
for the Group for the period to 31 December 2024 (the 'Cash Flow
Projections'). Funding requirements are reviewed on a regular basis
by the Group's Chief Executive Officer and Chief Financial Officer
and are reported to the Board at each Board meeting, as well as on
an ad hoc basis, if requested. The Cash Flow Projections show that
the Group will continue to consume cash over the forecast period.
Until sufficient cash is generated from its operations, the Group
remains reliant on cash reserves of USD5.9 million at 31 December
2022 and the ongoing support of MidCap (borrowings of USD6.3
million at 31 December 2022) to meet its working capital
requirements, capital investment programme and other financial
commitments. As of December 31, 2022, repayment on the MidCap
borrowings is scheduled to begin in July 2023 (See subsequent
development paragraph below for more information on the MidCap
borrowings).
In compiling the Cash Flow Projections, the Board has considered
a downside scenario regarding the effect of reduced and delayed
revenues due to slower market uptake of the Group's product
offering. The Cash Flow Projections prepared by the Board,
including the downside scenario, indicate that the Group will still
have cash reserves at the end of the forecast period. The Group's
Cash Flow Projections assume that the MidCap revolving credit
facility is available throughout the forecast period and the term
loan repayment begins in 2024 (see subsequent development paragraph
below for more information on the MidCap borrowings). The
availability of these facilities is dependent upon compliance with
a rolling twelve-month revenue covenant which is measured on a
monthly basis. The Cash Flow Projections, including the downside
scenario, indicate compliance with this covenant throughout the
forecast period. In summary, the Directors have considered their
obligations in relation to the assessment of the going concern
basis for preparation of the financial statements of the Group and
have reviewed the Cash Flow Projections, including the downside
scenario. On the basis of their assessment, they have concluded
that the going concern basis remains appropriate for use in these
financial statements.
Subsequent developments
In January 2023, the Group elected to increase its current
revolving credit facility from USD5 million to USD10 million and
extend the maturity until 2028. Repayment of the term loan will be
made in equal instalments commencing in 2024. Although this
financing is not dictated by the current business plan, which is
fully funded by the Group's year end cash position, the additional
liquidity is a prudent measure.
The Board believes that a consolidation of the Company's
Ordinary Share Capital will result in a more appropriate number of
shares in issue for the Company. Accordingly, the Board has
proposed a capital reorganisation in early 2023, which will result
in shareholders holding one new Ordinary Share for every 100
existing Ordinary Shares ('the Consolidation').
Cautionary statement
The strategic report, containing the strategic and financial
reports of the Group contains forward-looking statements that are
subject to risk factors associated with, amongst other things,
economic and business circumstances occurring from time to time
within the markets in which the Group operates. The expectations
expressed within these statements are believed to be reasonable but
could be affected by a wide variety of variables beyond the Group's
control. These variables could cause the results to differ
materially from current expectations. The forward-looking
statements reflect the knowledge and information available at the
time of preparation.
David Cocke
Chief Financial Officer
20 March 2023
Consolidated Statement of Income
For the year ended 31 December 2022
2022 2021
USD'000 USD'000
----------------------------------- -------- --------
Revenue 24,476 19,746
Cost of sales (13,218) (11,270)
------------------------------------ -------- --------
Gross profit 11,258 8,476
Administrative expenses (13,268) (12,499)
Exceptional items - (355)
Operating loss (2,010) (4,378)
Finance income 8 3
Finance charges (826) (767)
------------------------------------ -------- --------
Loss on ordinary activities before
taxation (2,828) (5,142)
Taxation 232 157
------------------------------------ -------- --------
Loss for the year (2,596) (4,985)
------------------------------------ -------- --------
Loss for the year attributable to:
Owners of the parent company (2,695) (4,792)
Non-controlling interest 99 (193)
------------------------------------ -------- --------
(2,596) (4,985)
----------------------------------- -------- --------
Loss per Ordinary Share
Basic and diluted, cents per share (0.04) (0.07)
------------------------------------ -------- --------
The loss for the year arises from the Group's continuing
operations.
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2022
2022 2021
USD'000 USD'000
-------------------------------------------- -------- --------
Loss for the year (2,596) (4,985)
--------------------------------------------- -------- --------
Other comprehensive income
Items that may be subsequently reclassified
to profit or loss:
Foreign currency translation differences (653) (4)
--------------------------------------------- -------- --------
Total comprehensive loss for the year (3,249) (4,989)
--------------------------------------------- -------- --------
Total comprehensive loss for the year
attributable to:
Owners of the parent company (3,348) (4,796)
Non-controlling interest 99 (193)
--------------------------------------------- -------- --------
(3,249) (4,989)
-------------------------------------------- -------- --------
Consolidated Statement of Financial Position
As at 31 December 2022
2022 2021
USD'000 USD'000
------------------------------- --------- ---------
Assets
Non-current assets
Property, plant and equipment 5,740 5,708
Right-of-use assets 3,203 3,388
Intangible assets 15,061 15,064
-------------------------------- --------- ---------
24,004 24,160
------------------------------- --------- ---------
Current assets
Inventory 10,882 9,719
Trade and other receivables 4,803 4,101
Corporation tax receivable 401 534
Cash and cash equivalents 5,949 7,709
-------------------------------- --------- ---------
22,035 22,063
------------------------------- --------- ---------
Total assets 46,039 46,223
-------------------------------- --------- ---------
Liabilities
Non-current liabilities
Loans and borrowings (5,258) (4,465)
Deferred tax (520) (640)
Lease liability (3,216) (3,364)
(8,994) (8,469)
------------------------------- --------- ---------
Current liabilities
Trade and other payables (5,510) (4,244)
Loans and borrowings (1,000) -
Lease liability (134) (118)
-------------------------------- --------- ---------
(6,644) (4,362)
------------------------------- --------- ---------
Total liabilities (15,638) (12,831)
-------------------------------- --------- ---------
Net assets 30,401 33,392
-------------------------------- --------- ---------
Equity
Share capital 15,950 15,947
Share premium 134,179 134,173
Merger reserve 16,441 16,441
Reverse acquisition reserve (10,798) (10,798)
Reserve for own shares (1,257) (1,257)
Share-based payment reserve 824 1,573
Cumulative translation reserve (1,958) (1,305)
Retained deficit (122,129) (120,432)
-------------------------------- --------- ---------
Equity attributable to owners
of the parent company 31,252 34,342
Non-controlling interest (851) (950)
-------------------------------- --------- ---------
Total equity 30,401 33,392
-------------------------------- --------- ---------
Consolidated Statement of Changes In Equity
For the year ended 31 December 2022
Reserve Share-
Reserve for based Cumulative
Share Share Merger acquisition own payment translation Retained Non-controlling Total
capital premium reserve reserve shares reserve reserve deficit Total interest equity
USD'000 USD'000 USD'000 USD'000 USD'000 USD'000 USD'000 USD'000 USD'000 USD'000 USD'000
============== ======= ======= ======= =========== ======= ======= =========== ========= ========= =============== =========
At 31 December
2020 15,947 134,173 16,441 (10,798) (1,257) 1,463 (1,301) (115,640) 39,028 (757) 38,271
============== ======= ======= ======= =========== ======= ======= =========== ========= ========= =============== =========
Transactions
with owners in
their capacity
as owners:
Share-based
payments - - - - - 110 - - 110 - 110
============== ======= ======= ======= =========== ======= ======= =========== ========= ========= =============== =========
Total
transactions
with owners
in
their
capacity
as owners - - - - 110 - - 110 - 110
============== ======= ======= ======= =========== ======= ======= =========== ========= ========= =============== =========
Loss for the
year - - - - - - - (4,792) (4,792) (193) (4,985)
============== ======= ======= ======= =========== ======= ======= =========== ========= ========= =============== =========
Other
comprehensive
income :
Currency
translation
differences - - - - - - (4) - (4) - (4)
============== ======= ======= ======= =========== ======= ======= =========== ========= ========= =============== =========
Total other
comprehensive
income for
the
year - - - - - - (4) - (4) - (4)
============== ======= ======= ======= =========== ======= ======= =========== ========= ========= =============== =========
Total
comprehensive
income for
the
year - - - - - - (4) (4,792) (4,796) (193) (4,989)
============== ======= ======= ======= =========== ======= ======= =========== ========= ========= =============== =========
At 31 December
2021 15,947 134,173 16,441 (10,798) (1,257) 1,573 (1,305) (120,432) 34,342 (950) 33,392
Transactions
with owners
in
their
capacity
as owners :
Exercise of
share
options 3 6 - - - - - - 9 - 9
Transfer tor
retained
deficit
in respect of
lapsed,
expired
and exercised
options - - - - - (998) - 998 - - -
Share-based
payments - - - - - 249 - - 249 - 249
============== ======= ======= ======= =========== ======= ======= =========== ========= ========= =============== =========
Total
transactions
with owners
in
their
capacity
as owners 3 6 - - - (749) - 998 258 - 258
============== ======= ======= ======= =========== ======= ======= =========== ========= ========= =============== =========
Loss for the
year - - - - - - - (2,695) (2,695) 99 (2,596)
============== ======= ======= ======= =========== ======= ======= =========== ========= ========= =============== =========
Other
comprehensive
income :
Currency
translation
differences - - - - - - (653) - (653) - (653)
============== ======= ======= ======= =========== ======= ======= =========== ========= ========= =============== =========
Total other
comprehensive
income for
the
year - - - - - - (653) - (653) - (653)
============== ======= ======= ======= =========== ======= ======= =========== ========= ========= =============== =========
Total
comprehensive
income for
the
year - - - - - - (653) (2,695) (3,348) 99 (3,249)
============== ======= ======= ======= =========== ======= ======= =========== ========= ========= =============== =========
At 31 December
2022 15,950 134,179 16,441 (10,798) (1,257) 824 (1,958) (122,129) 31,252 (851) 30,401
============== ======= ======= ======= =========== ======= ======= =========== ========= ========= =============== =========
Consolidated Statement of Cash Flows
For the year ended 31 December 2022
2022 2021
USD'000 USD'000
------------------------------------------ -------- --------
Operating activities
Loss on ordinary activities before
taxation (2,828) (5,142)
Adjustments for:
Finance income (8) (3)
Finance charges 826 767
Depreciation of property, plant and
equipment 353 258
Depreciation of right-of-use assets 164 103
Amortisation of intangible assets 618 730
Share-based payments 249 110
Unrealised foreign exchange (gain)/loss (239) 55
------------------------------------------- -------- --------
Operating cash outflow before movements
in working capital (865) (3,122)
Increase in inventory (1,163) (115)
Increase in trade and other receivables (702) (512)
Increase in trade and other payables 1,249 159
------------------------------------------- -------- --------
Net cash used in operations (1,481) (3,590)
Research and development tax credits
received 187 615
Net cash used in operating activities (1,294) (2,975)
------------------------------------------- -------- --------
Investing activities
Interest received 8 3
Purchase of property, plant and equipment (381) (1,550)
Capitalised development expenditure (709) (497)
Net cash used in investing activities (1,082) (2,044)
------------------------------------------- -------- --------
Financing activities
Proceeds from exercise of share options 9 -
Proceeds from loans and borrowings 1,708 602
Interest paid on loans and borrowings (450) (391)
Lease liability payments (66) (102)
Lease interest payments (291) (301)
------------------------------------------- -------- --------
Net cash generated from/used in financing
activities 910 (192)
------------------------------------------- -------- --------
Net decrease in cash and cash equivalents (1,466) (5,211)
Cash and cash equivalents at beginning
of year 7,709 12,968
Effect of movements in exchange rates
on cash held (294) (48)
------------------------------------------- -------- --------
Cash and cash equivalents at end
of year 5,949 7,709
------------------------------------------- -------- --------
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022
1. Significant accounting policies
Basis of preparation
The financial information set out herein does not constitute
statutory accounts as defined in Section 434 of the Companies Act
2006.
The financial information for the year ended 31 December 2022
has been extracted from the Company's audited financial statements
which were approved by the Board of Directors on 20 March 2023 and
which, if adopted, will be delivered to the Registrar of Companies
for England and Wales.
The financial information for the year ended 31 December 2021
has been extracted from the Company's audited financial statements
which were approved by the Board of Directors on 14 March 2022.
Statutory accounts for the years ended 31 December 2022 and 31
December 2021 have been reported on by the auditor. Their reports
for both years (i) were unqualified; (ii) did not include a
reference to any matters to which the auditor drew attention by way
of emphasis without qualifying their audit report and (iii) did not
contain a statement under section 498(2) or 498(3) of the Companies
Act 2006.
The information in this preliminary statement has been extracted
from the audited financial statements for the year ended 31
December 2022 and as such, does not contain all the information
required to be disclosed in the financial statements prepared in
accordance with UK adopted International Accounting Standards
('IAS').
The Company is a public limited company incorporated and
domiciled in England and whose shares are quoted on AIM, a market
operated by The London Stock Exchange.
The address of the registered office is 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 2024 (the 'Cash Flow
Projections'). Funding requirements are reviewed on a regular basis
by the Group's Chief Executive Officer and Chief Financial Officer
and are reported to the Board at each Board meeting, as well as on
an ad hoc basis if requested. The Cash Flow Projections show that
the Group will continue to consume cash over the forecast period.
Until sufficient cash is generated from its operations, the Group
remains reliant on cash reserves of USD5.9 million at 31 December
2022 and the ongoing support of MidCap (borrowings of USD6.3
million at 31 December 2022) to meet its working capital
requirements, capital investment programme and other financial
commitments.
In compiling the Cash Flow Projections, the Board has considered
a downside scenario regarding the effect of reduced and delayed
revenues due to slower market uptake of the Group's product
offerings. The Cash Flow Projections prepared by the Board,
including the downside scenario, indicate that the Group will still
have cash reserves at the end of the forecast period. The Group's
Cash Flow Projections assume that the MidCap revolving credit
facility is available throughout the forecast period and the term
loan repayment will begin in 2024 in accordance with the revised
terms agreed in January 2023. The availability of these facilities
is dependent upon compliance with a rolling 12-month revenue
covenant which is measured on a monthly basis. The Cash Flow
Projections indicate compliance with this covenant throughout the
forecast.
In summary, the Directors have considered their obligations in
relation to the assessment of the going concern basis for the
preparation of the financial statements of the Group and have
reviewed the Cash Flow Projections. On the basis of their
assessment, they have concluded that the going concern basis
remains appropriate for use in these financial statements.
2. Critical accounting judgements and key sources of estimation uncertainty
In the application of the Group's accounting policies, the
Directors are required to make judgements, estimates and
assumptions about the carrying amounts of the assets and
liabilities that are not readily apparent from other sources. The
estimates and associated assumptions are based on historical
experience and other factors that are considered to be relevant.
Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an
ongoing basis. Revisions to accounting estimates are recognised in
the period in which the estimate is revised if the revision affects
only that period or in the period of the revision and future
periods if the revision affects both the current and future
periods.
The following are the critical judgements and estimations that
the Directors have made in the process of applying the Group's
accounting policies and that have the most significant effect on
the amounts recognised in the financial statements:
Judgements and estimations
Recoverability of non-current assets
The Directors carried out the annual impairment review, as
required by IAS 36, to determine whether there was any requirement
for an impairment provision in respect of its non-current assets at
31 December 2022.
The carrying amount of non-current assets at 31 December 2022
was USD24.0 million (2021: USD24.2 million).
The Group's non-current assets include intangible assets and
goodwill arising on the acquisition of CellRight Technologies LLC,
which are considered to be a single cash generating unit ('CGU').
Only the assets included in the CGU are subject to impairment
review.
The aggregate carrying value of the CGU was assessed for
impairment based on value in use which requires the Directors to
estimate the future cash flows expected to arise from the CGU using
a suitable discount rate in order to calculate present value. The
future cash flows expected to arise were calculated using a
discount rate of 18.3% (2021: 14.6%) based on the weighted average
cost of capital. The impairment test indicated that the recoverable
amount was at least equal to the carrying amount of the assets and,
therefore, no provision for impairment was required at 31 December
2022 (2021: USD nil).
It is possible that any, or all of these key assumptions may
change, which may then impact the estimated values of the Group's
non-current assets, and this may then require a material adjustment
to the carrying value of the assets in future periods.
Fair value of share-based payments
Equity settled share-based payment transactions are measured by
reference to the fair value at the date of grant, recognised on a
straight-line basis over the vesting period, based on the Group's
estimate of shares that will eventually vest.
The Group is required to make a number of judgements and
estimations when measuring the fair value of options granted during
the year, including use of the appropriate fair value model, inputs
to that model and estimations in relation to the anticipated
vesting period.
The Directors consider that the appropriate model for
calculating the fair value of options is the binomial model, where
the performance conditions of grants are market-based, the Monte
Carlo model where there are multiple performance conditions and the
Black-Scholes model where there are non-market related performance
conditions.
At each reporting date before vesting, the cumulative expense is
calculated, representing the extent to which the vesting period has
expired and management's best estimate of the achievement or
otherwise of non-market conditions and the number of equity
instruments that will ultimately vest. The movement in cumulative
expense since the previous reporting date is recognised in the
consolidated statement of comprehensive income, with a
corresponding entry in equity.
It is possible that these estimates may vary at each reporting
date resulting in an adjustment to the allocation of the fair value
over the remaining vesting period.
3. Segmental information
The following table provides disclosure of the Group's revenue
by geographical market based on the location of the customer:
2022 2021
USD'000 USD'000
-------------- --------- -----------
US 20,711 16,883
Rest of World 3,765 2,863
--------------- --------- ---------
24,476 19,746
--------------- --------- ---------
Analysis of revenue by customer
During the year ended 31 December 2022, the Group had one
customer who individually exceeded 10% of revenue. This customer
generated 13% of revenue (2021: one customer who generated 14% of
revenue).
Operating segments
In accordance with IFRS 8, the Group has derived the information
for its operating segments using the information used by the chief
operating decision-maker, who has been identified as the Board of
Directors.
The Board of Directors has determined that the Group has three
operating segments for internal management, reporting and
decision-making purposes, namely dCELL, BioRinse, and GBM-V.
Central overheads, which primarily relate to operations of the
Group function, are not allocated to an operating segment.
Revenue from all operating segments derives from the sale of
biological medical devices.
Segmental information is presented below.
dCELL BioRinse GBM-V Central Total
2022 2022 2022 2022 2022
USD'000 USD'000 USD'000 USD'000 USD'000
Income Statement
------------------------- ------------- -------- -------- -------- --------- ---------
Revenue 5,301 16,049 3,126 - 24,476
------------------------- ------------- -------- -------- -------- --------- ---------
Gross profit 1,829 8,258 1,171 - 11,258
------------------------- ------------- -------- -------- -------- --------- ---------
Depreciation (10) (394) - (113) (517)
------------------------- ------------- -------- -------- -------- --------- ---------
Amortisation - (618) - - (618)
------------------------- ------------- -------- -------- -------- --------- ---------
Operating (loss)/
profit (994) 678 409 (2,103) (2,010)
Net finance
charges - (818) - - (818)
------------------------- ------------- -------- -------- -------- --------- ---------
(Loss)/profit
before taxation (994) (140) 409 (2,103) (2,828)
Taxation 112 120 - - 232
------------------------- ------------- -------- -------- -------- --------- ---------
(Loss)/profit
for the year (882) (20) 409 (2,103) (2,596)
------------------------- ------------- -------- -------- -------- --------- ---------
dCELL BioRinse GBM-V Central Total
2021 2021 2021 2021 2021
USD'000 USD'000 USD'000 USD'000 USD'000
Income Statement
------------------------------ -------- -------- -------- -------- --------- ---------
Revenue 4,246 12,711 2,789 - 19,746
------------------------------ -------- -------- -------- -------- --------- ---------
Gross profit 1,720 5,852 904 - 8,476
------------------------------ -------- -------- -------- -------- --------- ---------
Exceptional items (183) (120) - (52) (355)
------------------------------ -------- -------- -------- -------- --------- ---------
Depreciation (18) (305) (3) (35) (361)
------------------------------ -------- -------- -------- -------- --------- ---------
Amortisation - (730) - - (730)
------------------------------ -------- -------- -------- -------- --------- ---------
Operating loss (1,236) (1,043) (154) (1,945) (4,378)
Net finance charges 1 (757) - (8) (764)
------------------------------ -------- -------- -------- -------- --------- ---------
Loss before taxation (1,235) (1,800) (154) (1,953) (5,142)
Taxation 37 120 - - 157
------------------------------ -------- -------- -------- -------- --------- ---------
Loss for the year (1,198) (1,680) (154) (1,953) (4,985)
------------------------------ -------- -------- -------- -------- --------- ---------
dCELL BioRinse GBM-V Central Total
2022 2022 2022 2022 2022
USD'000 USD'000 USD'000 USD'000 USD'000
Statement of Financial
Position
------------------------------ -------- -------- -------- -------- --------- ---------
Non-current assets 1,376 22,382 13 233 24,004
Current assets 3,571 14,998 806 2,660 22,035
------------------------------ -------- -------- -------- -------- --------- ---------
Total assets 4,947 37,380 819 2,893 46,039
------------------------------ -------- -------- -------- -------- --------- ---------
Non-current liabilities - (8,921) - (73) (8,994)
Current liabilities (736) (5,171) (255) (482) (6,644)
------------------------------ -------- -------- -------- -------- --------- ---------
Total liabilities (736) (14,092) (255) (555) (15,638)
------------------------------ -------- -------- -------- -------- --------- ---------
Net assets 4,211 23,288 564 2,338 30,401
------------------------------ -------- -------- -------- -------- --------- ---------
Capital expenditure 124 230 9 36 399
------------------------------ -------- -------- -------- -------- --------- ---------
Additions to intangible
assets 549 160 - - 709
------------------------------ -------- -------- -------- -------- --------- ---------
dCELL BioRinse GBM-V Central Total
2021 2021 2021 2021 2021
USD'000 USD'000 USD'000 USD'000 USD'000
Statement of Financial
Position
------------------------------ -------- -------- -------- -------- --------- ---------
Non-current assets 808 23,005 5 342 24,160
Current assets 3,326 11,310 706 6,721 22,063
------------------------------ -------- -------- -------- -------- --------- ---------
Total assets 4,134 34,315 711 7,063 46,223
------------------------------ -------- -------- -------- -------- --------- ---------
Non-current liabilities - (8,348) - (121) (8,469)
Current liabilities (428) (3,129) (249) (556) (4,362)
------------------------------ -------- -------- -------- -------- --------- ---------
Total liabilities (428) (11,477) (249) (677) (12,831)
------------------------------ -------- -------- -------- -------- --------- ---------
Net assets 3,706 22,838 462 6,386 33,392
------------------------------ -------- -------- -------- -------- --------- ---------
Capital expenditure 2 1,594 3 105 1,704
------------------------------ -------- -------- -------- -------- --------- ---------
Additions to intangible
assets - 497 - - 497
------------------------------ -------- -------- -------- -------- --------- ---------
4. Taxation
2022 2021
USD'000 USD'000
-------------------------------- -------- --------
Current tax:
UK R&D tax credit (112) (37)
---------------------------------- -------- --------
Deferred tax:
Origination and reversal of
temporary timing differences (120) (120)
---------------------------------- -------- --------
Tax credit on loss for the year (232) (157)
---------------------------------- -------- --------
There has been no impact due to changes in UK taxation rates
during the years reported. The enacted UK corporation tax rate of
25% forms the basis for the UK element of the deferred tax
calculation, following the UK budget in 2021, when the chancellor
announced an increase to the main rate of corporation tax in the UK
to 25% from April 2023.
Unrelieved tax losses carried forward, as detailed below, have
not been recognised as a deferred tax asset as there is currently
insufficient evidence that the asset will be recoverable in the
foreseeable future. The losses must be utilised in relation to the
same operations.
2022 2021
USD'000 USD'000
-------------------------- -------- --------
Tax losses
Losses available to carry
forward 58,900 60,779
--------------------------- -------- --------
Unrecognised deferred
tax asset at 25% (2021:
25%) 14,725 15,195
--------------------------- -------- --------
The comparative tax losses and unrecognised deferred tax asset
have been restated to include the impact of R&D tax credits
which had previously been omitted.
5. Loss per Ordinary Share
Basic loss per Ordinary Share is calculated by dividing the net
loss for the year attributable to owners of the parent company, by
the weighted average number of Ordinary Shares in issue during the
year, excluding own shares held jointly by the Tissue Regenix
Employee Share Trust and certain employees.
Diluted loss per Ordinary Share is calculated by dividing the
net loss for the year attributable to owners of the parent company,
by the weighted average number of Ordinary Shares in issue during
the year adjusted for the dilutive effect of potential Ordinary
Shares arising from the Company's share options and jointly owned
shares.
The calculation of the basic and diluted loss per Ordinary Share
is based on the following data:
2022 2021
USD'000 USD'000
------------------------------------ --------------- ---------------
Losses
------------------------------------- --------------- -----------------
Losses for the purpose of basic
and diluted loss per Ordinary
Share being net loss for the
year attributable to owners
of the parent company (2,695) (4,792)
------------------------------------- --------------- ---------------
Number Number
------------------------------------ --------------- ---------------
Number of shares
------------------------------------- --------------- ---------------
Weighted average number of Ordinary
Shares for the purpose of basic
and diluted loss per Ordinary
Share 7,034,521,811 7,033,077,499
------------------------------------- --------------- ---------------
Basic and diluted, cents per
share (0.04) (0.07)
------------------------------------- --------------- ---------------
The Company has options issued over 200,929,300 (2021:
106,832,872) Ordinary Shares, warrants issued over 3,096,798 (2021:
3,096,798) Ordinary Shares and there are 16,112,800 (2021:
16,112,800) jointly owned Shares which are potentially
dilutive.
Due to the losses incurred from continuing operations in the
years reported, there is no dilutive effect from the existing share
options and jointly owned shares.
6. Lease liabilities
2022 USD'000 2021
USD'000
------------------------------ ------------- --------
Current lease liabilities 134 118
Non-current lease liabilities 3,216 3,364
-------------------------------- ------------- --------
At 31 December 3,350 3,482
-------------------------------- ------------- --------
Maturity analysis of leases
The maturity of the gross contractual undiscounted cashflows due
on the Group's lease liabilities is set out below based on the
period between 31 December 2022 and the contractual maturity
date.
2022 USD'000 2021
Land and buildings USD'000
--------------------- --------------------- --------
Less than 6 months 203 202
6 months to 1 year 203 208
1 year to 2 years 412 420
2 years to 5 years 3,107 3,518
----------------------- --------------------- --------
3,925 4,348
--------------------- --------------------- --------
The movement in lease liabilities during the year was:
2022 USD'000 2021
USD'000
------------------------------- --------------------- --------
At 1 January 3,482 3,407
Cash flows - financing
activities (357) (403)
Non-cash movements - additions 291 456
Non-cash movements - foreign
exchange movement (66) 22
At 31 December 3,350 3,482
--------------------------------- --------------------- --------
Effect of leases on financial performance
2022 USD'000 2021
USD'000
----------------------------- ------------- --------
Depreciation of right-of-use
assets 164 103
Interest expense 291 301
455 404
----------------------------- ------------- --------
The Group leases properties used for its operations in the UK
and US.
UK property: Five-year fixed lease which includes a break clause
in 2023.
US property: Five-year fixed lease which includes an option to
purchase up to November 2024.
The Group's average effective borrowing rate for leases on 31
December 2022 was 9% (2021: 9%).
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