Tissue Regenix Group (TRX) 2021年年度報告「LSE」.pdf

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1、Annual Report and Financials for year ended 31 December 2021Annual Report and Accounts 20211Contents Business overview2 Strategic report3 Chairmans Statement3 Chief Executive Officers Statement5 Financial Review9 Market Overview12 Principal Risk and Uncertainties12 Section 172 Statement16 Governance

2、17 Management Team17 Board of Directors20 Corporate Governance Statement21 Directors Remuneration Report25 Directors Report28 Directors Responsibilities Statement30 Financial Statements31 Independent Auditors Report31 Consolidated Statement of Income38 Consolidated Statement of Comprehensive Income3

3、9 Consolidated Statement of Financial Position40 Consolidated Statement of Changes in Equity41 Consolidated Statement of Cash Flows42 Notes to the Consolidated Financial Statements43 Company Statement of Changes in Equity69 Company Statement of Financial Position70 Notes to the Company Financial Sta

4、tements71 Other76 Notice of Annual General Meeting76 Company and Adviser Information80 2Tissue Regenix Group plcBusiness Overview Tissue Regenix Group plc(AIM:TRX)is an international,pioneering medical technology company in the field of regenerative medicine,focusing on the development of tissue eng

5、ineering products using our two platform technologies,dCELL,addressing soft tissue needs,and BioRinse,providing sterile bone allografts.We are currently helping to transform the treatment of patients in key surgical applications:BioSurgery,Orthopaedics(sports medicine/spine),Dental,General,Plastic S

6、urgery,Urology/Gynaecology,and Ophthalmology.More details on our platform technologies are contained below:dCELL Our patented decellularisation(dCELL)technology removes DNA and other cellular material from animal and human soft tissue leaving an acellular tissue scaffold which is not rejected by the

7、 patients body and can then be used to repair diseased or damaged body parts.Current applications address many critical clinical needs,such as foot and ankle surgery,orthopedics,sports medicine,urological-gynaecological and wound care.This business segment operates primarily under the TRX BioSurgery

8、 brand.BioRinse Our BioRinse technology is primarily utilised to provide a natural bone filler solution,tested for osteoinductivity which can stimulate and regenerate native bone growth.This process has the potential to provide superior clinical outcomes as it contains 100%allograft bone,tested to d

9、emonstrate the presence of the key natural bone growth factors,and available in various physical forms.This business segment operates primarily under the CellRight Technologies brand.The Groups main facility is in San Antonio,Texas,and is used for human tissue and processing dCELL and BioRinse produ

10、cts.As part of the Phase 1 expansion,completed in 2021,we relocated facilities designated for distribution and frozen tissue storage as well as adding two clean rooms at the existing San Antonio facility,bringing the total number of clean rooms to seven.We also have facilities in Leeds,UK,for proces

11、sing porcine tissue and OrthoPure XT,as well as our controlled joint venture GBM-v in Rostock Germany for our human tissue in the EU.Annual Report and Accounts 20213Chairmans Statement Introduction Despite the ongoing challenges posed by the COVID-19 pandemic,in 2021 we saw continued positive moment

12、um in creating long-term sustainable shareholder value.The Group returned to double digit revenue growth,thanks largely to an exceptionally strong performance in the US.I would like to extend my thanks to the Executive team and all our employees for what has been achieved over the last year.The Grou

13、p has delivered robust financial and operational performances and ended the period in a strong financial position that supports the current business growth plan.Clear strategy Our ambition is to create a commercially focused global regenerative medicine company addressing soft tissues and bone,opera

14、ting in a high-growth sector with a multi-billion-dollar addressable market.Through its platform technologies,the Group can commercialise its regenerative medicine products,helping to transform the treatment of patients in key surgical applications.The main focus of the Groups strategy is the commer

15、cialisation of its product portfolio.2021 has seen significant delivery of our strategy within our four key areas of focus(Supply,Sales Revenue,Sustainability and Scale),providing clear strategic direction of the Groups ambitions and delivering shareholder value The following are notable achievement

16、s in the period:lAccelerated market penetration in the US,the largest healthcare market in the world:l The BioRinse division performed strongly in 2021,aided by the completion of the first phase of the manufacturing expansion l The Group saw a strong comparative sales performance due to its diverse

17、surgical specialties lNew partnership agreements:l During the year we identified and signed additional opportunities and distribution agreements that target products and therapeutic areas which are complementary to our current processing activities to diversify the Groups sales portfolio further l T

18、he Group was successful in signing new strategic partners and expanded its customer base following the acquisition of three of the Groups existing strategic partners by larger organisations,where we benefit from greater market penetration l The Group also secured additional donor sourcing agreements

19、 in the US lPhase 1 manufacturing facility expansion in San Antonio,Texas:l Completed on time and on budget l The completion of the manufacturing expansion increases the Groups revenue generation potential and processing efficiency as well as providing additional donor storage capacity lReorganisati

20、on of US dCELL divisional operations:l The Group completed restructuring of the operational and commercial activities for the dCELL division which will provide an opportunity to increase new customer wins as well as increased penetration and upsell of existing accounts lExpansion of product portfoli

21、o and additional product line extensions:l During the year,the Group successfully launched product line extensions in its dCELL division;DermaPure Meshed,VNEW and MatrixND 4Tissue Regenix Group plcBoard With confirmation of my appointment as Non-Executive Chairman in February 2021 and other Board ap

22、pointments announced in the first quarter of 2021,we now have a strong,commercially focused Board and executive leadership in Danny Lee and David Cocke,collectively committed to creating long-term sustainable value and growth of the Group through an increased portfolio offering and market penetratio

23、n.In January 2021,Trevor Phillips and Brian Phillips(no relation)were appointed to the Board as Non-Executive Directors.Brian and Trevor bring a wealth of experience particularly regarding operations and corporate development in the life sciences industry and financial management,which have been key

24、 in driving the Groups success during 2021.Brian Phillips is Chair of the Audit Committee and Trevor Phillips is Chair of the Remuneration Committee.Shortly following these appointments in January,David Cocke was appointed CFO of the Group alongside Danny Lee,CEO,based in San Antonio,Texas.David has

25、 30 years experience in senior finance and operations roles having previously been CFO at Aperion Biologics,Inc.and founding NuPak Medical Ltd.in 1997 which was later acquired by Katena Products,Inc.in 2017.Financial overview Trading in the year was robust with a return to double digit revenue growt

26、h and in line with management expectations despite the challenges of the COVID-19 pandemic.A particularly strong growth performance was seen by the BioRinse division aided by the completion of the Phase 1 of the manufacturing expansion project.The Groups cash position at year end supports our curren

27、t business growth plan.2022 Outlook Despite another year with continuing challenges posed by the pandemic and the postponement of elective surgeries across all specialties,we continue to make encouraging progress on our strategy,deliver revenue growth,expand our product portfolio and deliver operati

28、onal efficiency.Importantly,while we recognise the ongoing challenges of COVID-19,we continue to see strong demand for our products and the Board is optimistic as we see a return to pre-pandemic conditions,this demand will drive sales revenue growth as the Group moves towards profitability.On behalf

29、 of the Board,I would like to thank Danny and David for their excellent leadership along with the rest of our management team and employees for their hard work to achieve a strong recovery despite the external challenges over the year.We would also like to thank our shareholders,our business partner

30、s and suppliers for their continued support throughout 2021,and we look forward with optimism for the year ahead.Jonathan Glenn Chairman 14 March 2022 Chairmans Statement continuedAnnual Report and Accounts 20215Chief Executive Officers Statement In my first full year as CEO of the Group,we have est

31、ablished a clear strategy,accelerated market penetration in the US and expanded our customer base and product portfolio whilst increasing our processing efficiency and donor storage capacity.These full year results reflect the progress we have made as we drive towards profitability.I am pleased to r

32、eport that the Group performed admirably during 2021 despite the ongoing global challenges posed by the pandemic when hospitals,governments and healthcare providers postponed elective surgeries across all specialties.Despite these challenges we continued to make progress and reinvigorate commercial

33、growth.As our products experienced broader adoption,this growth was supported by the Groups dedicated and resilient employees.Strategy The tissue engineering market is anticipated to grow significantly and is projected to reach$6.8bn by 2027,growing at a 14%Compound Annual Growth Rate(CAGR)from 2020

34、 owing to increases in the prevalence of chronic diseases and trauma emergencies,increased awareness of tissue engineering,and potential pipeline products.More detail on our markets and opportunities is contained in the Market Overview on page 12.In 2021,we announced our 4S strategy as the foundatio

35、n of how we operate and drive our growth:l Supply highlighted by the fundamental ability to source donor tissue and having the capacity to produce various graft products l Sales Revenue to distribute the finished grafts to the clinicians and institutions that need these products to treat patients l

36、Sustainability to manage sales revenue along with expenses to be a profitable entity that does not need additional external capital to operate l Scale to utilise the first three Ss to continue to invest and grow the business,license or acquire new products,technologies and companies Our focus on the

37、 4Ss across all divisions and departments provides a 360-degree approach and strategic direction for our future success.We believe this focus will allow the Group to achieve above-market growth rates,as we have demonstrated in 2021 with a 20%growth rate over 2020.BioRinse(Bone)Orthopaedics and denta

38、l markets in the US reported a strong performance in 2021 and our 33%year-on-year growth we experienced in 2021 surpassed many others in this space.This is indicative of the continued confidence in our products,strong performance of our distributors and strategic partners,our participation in divers

39、e surgical specialties and the addition of new distributors.dCELL(Soft Tissue)A strategic review was performed on the dCELL division with the objective of driving increased sales revenue momentum.This review indicated that a flatter,more customer-facing commercial organisation could yield enhanced c

40、ustomer penetration.As a result,we compressed three layers of management into one,pushing our commercial management closer to the end users and sales channel partners.In addition,in January 2021 we restructured the operations of this segment to become more efficient and reduce the overhead cost base

41、 by c.$700k on an annualised basis.As the pandemic continued into 2021,distributors faced numerous challenges with the dCELL product line due to the postponement of elective surgical procedures.As a result,sales in this division were flat year-on-year.However,the demand for our DermaPure products in

42、creased in the urological/gynaecological sector driven by orders from ARMS Medical,which were up 24%from the previous year.6Tissue Regenix Group plcChief Executive Officers Statement continuedThe EU and its member countries experienced volatility throughout 2021,especially in elective surgeries.Orth

43、oPure XT,the first non-human biologic graft available to the market,is used in the reconstruction of the Anterior Cruciate Ligament(ACL)and can be used following re-rupture,the reconstruction of other knee ligaments in multi-ligament procedures following trauma,and primary ACL procedures where the a

44、utograft is unavailable or inadequate.In mid-2020 we received the CE Mark for OrthoPure XT and in November 2020 launched the product into a limited number of European markets.However,the pandemic caused postponement of many elective ACL procedures,so we plan to relaunch in 2022 when more normal cond

45、itions resume.We expect to gain market traction in the UK and EU and remain confident that OrthoPure XT will begin to add revenues in 2022.The pandemic delayed our plans to expand the geographic outreach of our dCELL and BioRinse portfolios into new territories and we anticipate demand for our dCELL

46、 products will resume as surgical procedures return to pre-pandemic levels.In 2022 we plan to establish a logistical partner and distributors in select European markets for our human tissue products which will be made possible by our increased processing capacity.dCELL product line extensions We con

47、tinued to pursue the commercialisation of products which utilise our core technology platforms,provide product line extensions that are fast to market and address a specific clinical or commercial need.In 2021 we introduced three new products which utilise our dCELL technology platform:l DermaPure M

48、eshed;used to treat wounds where additional surface area coverage and wound drainage is needed(approximately 70,000 procedures in the US per annum)and eliminates time consuming manual meshing in the operating room.Targeted for use by general,plastic and trauma surgeons who treat patients with condit

49、ions that result in loss of integumental tissue(skin),requiring replacement,repair,or reconstruction l VNEW;a pre-cut dermal allograft that can be used in pelvic organ prolapse procedures(approximately 300,000 procedures in the US per annum)which are frequently performed in women post childbirth.ARM

50、S Medical,our exclusive distributor for this product,placed their initial stocking order in August and re-ordered in December l Matrix ND;a dermal allograft designed for use in dental or oral and maxillofacial procedures for soft tissue repair coverage and augmentation which was developed to meet th

51、e need of our dental partners(approximately 400,000 procedures in the US per annum).A dental membrane is frequently used in conjunction with dental bone grafting procedures Additional product line extensions and product improvements are anticipated during 2022 which will contribute to our organic gr

52、owth and support the commercial efforts of our organisation and strategic partners.GBM-v Our controlled joint venture in Germany,GBM-v,grew 6%in 2021 despite continued impacts from the pandemic on elective procedures,specifically for corneal transplants in Germany.The demand for corneal tissue conti

53、nues to outpace supply,but the market has been suppressed due to the postponement of elective surgeries with many patients electing to defer to avoid entering healthcare institutions.We expect this growth to continue and accelerate as more normalised conditions return.New strategic partners and dist

54、ributors Despite the challenges of the pandemic,we continued to be successful in securing new strategic partners and distributors and saw a 36%increase in the units shipped in 2021.One partial explanation for this increase in shipments was the consolidation of several of our strategic partners.Three

55、 of these were acquired by larger entities that have a more significant presence in the marketplace and importantly more distribution outlets.As an example,one of our BioRinse customers was acquired in 2021,and orders increased by 142%year-on-year under Annual Report and Accounts 20217Chief Executiv

56、e Officers Statement continuedthe new ownership.We also signed new agreements with four strategic partners and distributors who target specialty markets such as spinal and dental.Manufacturing facilities In February 2021,San Antonio experienced an unprecedented snowstorm and freeze which impacted el

57、ectrical and water services throughout the state of Texas.This temporarily affected our ability to process at the facility in San Antonio,but the power loss did not impact materials in storage in the ultra-low temperature freezers.We were unable to service customer demand the following week as deliv

58、ery services had also been impacted and had limited capacity.During the weeks that followed,the team worked to catch up with demand and service all our customers.In the future,any impact to the Group due to a power grid failure will be partially addressed through a battery back-up system to be imple

59、mented in 2022.The relocation in October 2020 of our operations in the UK to Garforth,Leeds and reinitiating the processing of the OrthoPure XT product,required the product to be recertified for the CE Mark.The recommendation for certification of the facility to ISO 13485 was received in February 20

60、21.In mid-2021 we completed our Phase 1 capacity expansion programme in San Antonio on time and on budget.The Phase 1 expansion comprised of fitting out approximately half of a 21,000 sq.ft.building that is adjacent to our existing facility in San Antonio to provide improvements in key areas:donor s

61、torage,processing,production,and distribution.We moved the bulk of our storage freezer space to the new facility in mid-March and added capacity through the purchase of new,more efficient ultra-low temperature freezers to triple our donor tissue storage capabilities which will meet demand over the n

62、ext 3-5 years.The expansion also included a new distribution facility which consolidated this function and its personnel to one location.The anticipated labour and time savings in processing orders was realised in 2021 as we increased unit shipments by 36%with only one additional member of staff.The

63、 move of freezer storage and personnel into the new building freed up space for processing and production in the existing facility.Two sterile packaging rooms were added in the existing facility,which brought the total number of clean rooms to seven.The new sterile packaging rooms and installation o

64、f additional processing equipment increased our BioRinse portfolio processing capacity by c.50%.Space created by the move to the new building was also utilised to set up additional workspace for downstream production activities such as final product boxing and labelling.When the Phase 1 expansion is

65、 up and running at full capacity,the Groups revenue generation potential will be c.$30m per year within the existing facility footprint.For Phase 2,it is our intention to build an additional ten clean rooms in the new facility,which will meet our capacity needs for the next 57 years as we grow our p

66、ortfolio,markets,customer base and global presence.The impact of COVID-19 The pandemic continued to stunt the surgical marketplace when hospitals,governments and health care providers halted elective procedures across all specialties.A partial return to normality occurred in the second quarter of 20

67、21 before the Delta variant affected elective procedures in the third and early fourth quarter of 2021.These disruptions led to unpredictable demand for our products,however a healthy inventory meant we could respond as needed to changes in the marketplace.We remained diligent at all our facilities

68、and implemented the initiatives and guidelines necessary to minimise disruption.We had already expanded our donor sourcing efforts in 2020 and in 2021 these efforts were further expanded to other tissue processors for the procurement or disbursement of donor tissue.Tissue processors have the respons

69、ibility to be the stewards of the gift of tissue donation,so we need to consider all avenues for donor tissue to be utilised in meeting the donor families wishes.8Tissue Regenix Group plcOutlook Our positive financial performance during such uncertain circumstances has set our trajectory to be even

70、greater in 2022 as the Group and our partners expect to emerge from the pandemic.In 2021 we saw particularly strong growth in BioRinse and with the completion of the manufacturing expansion we expect this solid performance to continue.As markets start to return to pre-pandemic levels the Group is we

71、ll positioned to meet the demand now that we have the capacity and inventory in place to do so.The implementation of a new commercialisation strategy for the dCELL products is expected to enable greater market penetration and we look forward to increasing sales revenue momentum from this segment as

72、well as our additional product line extensions in 2022.I am confident in our growth strategy,our products and their potential to benefit patients in what will hopefully be a less unsettled year ahead.With the changes we have made in 2021 the business is well positioned to service our customers and d

73、rive shareholder value.I look forward to the continuing success of the Group in the coming year and as we move towards profitability.Daniel Lee Chief Executive Officer 14 March 2022 Chief Executive Officers Statement continuedAnnual Report and Accounts 20219With effect from 1 January 2021,the Groups

74、 presentation currency changed from pounds sterling(“”)to United States dollar(“$”)as the Directors considered the USD to be more representative of the geography in which the Group primarily operates.Revenue In the year ended 31 December 2021 revenue increased by 20%to$19,746k(2020:$16,473k).The fin

75、ancial performance for the year was impacted at times by the ongoing coronavirus pandemic,as Q1 saw ongoing effects of the initial wave of the pandemic before widespread vaccine rollouts took place in the US,and the Q3 and early Q4 sales were affected by the Delta variant,before rebounding positivel

76、y in November and December 2021.The BioRinse segment performed strongly in 2021,aided by the completion of the first phase of the expansion of the Groups manufacturing capacity in San Antonio,TX.This unit successfully grew top line sales by 33%,to$12,711k(2020:$9,562k)as the BioRinse division used i

77、ts strong relationships with strategic partners to take market share in the US.Revenue from DermaPure,under the DCell division,was slower to respond to the easing of the pandemic and associated restrictions with 2021 sales flat at$4,246k(2020:$4,247k).The Groups joint venture,GBM-v,based in Rostock,

78、increased revenues 5%to$2,789k(2020:$2,664k)despite continued market disruptions from the pandemic that continued throughout 2021.Cost of sales and gross profit Gross profit for the year was$8,476k(2020:$7,570k).Gross margin percentage decreased to 43%(2020:46%).In 2021 the Group transferred certain

79、 excess tissues at a reduced margin in order to honour the gift of tissue donation and prudently manage the statement of financial position by reducing slow moving inventory.Those transfers will not recur in future periods.In addition,the Group experienced supply chain driven price increases in the

80、period.A price increase was put in place in the BioRinse division to address the cost pressures.Included in costs of sales is cost of product$10,348k(2020:$7,699k)and third-party commissions$922k(2020:$1,204k).Administrative expenses During 2021 administrative expenses before exceptional items decre

81、ased by$351k to$12,574k(2020:$12,925k).Exceptional items Exceptional items decreased by$7,969k to$355k primarily driven by the impairment charge in 2020(2020:$8,324k).Restructuring costs of$52k related to a redundancy in the Central segment were charged in theyear.Restructuring costs of$183k were ch

82、arged to the DCell division as a result of a restructuring of that division in January 2021.The February 2021 winter storm event in Texas resulted in a charge of$120k at the BioRinse division relating to non-productive time and spoilage.Finance income/charges Finance income of$3k(2020:$3k)represente

83、d interest earned on cash deposits.Finance charges for the year were reported at$692k(2020:$571k)and related primarily to interest charges and associated costs for the MidCap loan arrangement.Financial Review 10Tissue Regenix Group plcFinancial Review continuedLoss for the year The loss for the year

84、 was$4,985k(2020 loss:$12,465k)resulting in a basic loss per share of(0.07 cents)(2020 loss:0.28 cents).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 ca

85、sh refund.In the year to December 2021,a refund of$534k was receivable(2020:$1,120k).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$0k(2020:$0k).A

86、corporation tax credit of$157k(2020:$684k)was recognized in the period.Gross tax losses carried forward in the UK were$73,643k(2020:$69,399k).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 uncertai

87、n.Statement of Financial Position At December 2021,the Group had net assets of$33,392k(2020:$37,817k)of which cash in hand totalled$7,709k(2020:$12,968k).Inventory remained stable at$9,719k(2020:$9,604k)as the BioRinse and DCell segments managed stock levels closely to increase inventory turnover wh

88、ile also keeping adequate stock levels to meet customer demand.Intangible assets increased slightly to$15,064k(2020:$14,845k)in the year.A further$497k of development costs were capitalised in the year.The balance of movements in this account relate to amortisation.A full impairment test was perform

89、ed on each of the Groups CGUs to determine whether the property,plant and equipment,right-of-use,or intangible assets have suffered an impairment loss.This assessment resulted in no indication of impairment and no charges were recognized for the year.Working capital increased slightly in the year to

90、$9,700k(2020:$9,992k),driven by an increase to inventory from continued growth in manufacturing activities.The statement of financial position included corporation tax receivable of$534k(2020:$1,120k)in respect of UK research and development tax credits.Borrowings/Lease liability Non-current liabili

91、ties include the$4,465k debt facility through MidCap and the$3,072k lease liability related to the Groups leasehold in San Antonio,TX(2020:$3,788k and$3,084k respectively).The MidCap debt facility includes$2,000k of the term loan and$2,465k of the revolving credit facility,net of$184k of capitalised

92、 debt issue costs.More information on these obligations is provided on page 63.Dividend No dividend has been proposed for the year to 31 December 2021(2020:Nil).Accounting policies Following the departure from the EU,the Groups consolidated financial information has been prepared in accordance with

93、UK adopted international accounting standards(UK adopted IAS).The Groups significant accounting policies,which have been applied consistently throughout the year,are set out on pages 43 to 50.Going concern The Group financial statements have been prepared on a going concern basis based on cash flow

94、projections approved by the Board for the Group for the period to 31 December 2023(the“Cash Flow Projections”).Funding requirements are reviewed on a regular basis by the Groups Chief Executive Officer and Chief Financial Officer Annual Report and Accounts 202111Financial Review continuedand are rep

95、orted 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$7.7m at 31 Dec

96、ember 2021 and the ongoing support of MidCap Financial Trust(“MidCap”)(borrowings of$4.5m at 31 December 2021)to meet its working capital requirements,capital investment programme and other financial commitments.Repayment on the MidCap borrowings is scheduled to begin in July 2023.The COVID-19 pande

97、mic continued to affect most healthcare businesses in 2021,as the emergence of the Delta and Omicron variants extended the timeline for a return to normal healthcare procedure volumes.Given the uncertainty around the level and duration of disruption from COVID-19,it is difficult to determine how lon

98、g the current situation may last,and the time taken to catch-up any postponed surgical procedures thereafter.However,the Board,in compiling the Cash Flow Projections,has considered a downside scenario regarding the effect of reduced and delayed revenues due to COVID-19 and has undertaken market soun

99、dings regarding the likely timeframe for the recommencement of procedures.It has concluded that there will not be a significant long-lasting impact on the ability of the business to carry out its commercial activities.The Cash Flow Projections prepared by the Board,including the downside scenario,in

100、dicate that the Group will still have cash reserves at the end of the forecast period.The Groups Cash Flow Projections also assume that the MidCap facilities are available throughout the forecast period as the repayment is not due to start until H2 2023.The availability of these facilities is depend

101、ent upon compliance with a rolling twelve-month revenue covenant which is measured on a monthly basis.The Cash Flow Projections indicate compliance with this covenant throughout the forecast period.In summary,the Directors have considered their obligations in relation to the assessment of the going

102、concern basis for preparation of the financial statements of the Group and have reviewed the Cash Flow Projections.On the basis of their assessment,they have concluded that the going concern basis remains appropriate for use in these financial statements.Subsequent development In January 2022 the Gr

103、oup elected to exercise its option to increase its current revolving credit facility from$3.0m to$5.0m.Although this financing is not dictated by the current business plan,which is fully funded by the Groups year end cash position,the additional liquidity is a prudent measure to provide additional c

104、ash resources in the face of future risks posed by COVID-19.Future development The emergence of the Omicron variant in late 2021 has caused disruptions in the US healthcare system and supply chains worldwide.Although Omicron appears to have milder complications than prior variants,it remains difficu

105、lt to predict at what pace a return to pre-pandemic procedural levels will occur.Principal risks and uncertainties The principal risks and uncertainties facing the Group are set out on page 12.Cautionary statement The strategic report,containing the strategic and financial reports of the Group conta

106、ins 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 cou

107、ld be affected by a wide variety of variables beyond the Groups 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

108、 14 March 202212Tissue Regenix Group plcMarket Overview Regenerative Medicine Regenerative medicine is an interdisciplinary field which focuses on providing safe and reliable ways to repair,restore,or replace damaged tissues or organs.Tissue engineering is one of the main components of regenerative

109、medicine.Tissue engineering applies principles of engineering and life sciences towards development of biological substitutes that restore,maintain,or improve tissue function.For this process,cells and biomolecules are combined with scaffolds.Scaffolds are artificial or natural structures that provi

110、de the foundation for the cells and biomolecules.Our products and technologies enable the Group to participate in the key areas of tissue engineering:scaffolds and biomolecules.Global tissue engineering market The tissue engineering market is anticipated to grow significantly and is projected to rea

111、ch$6.8billion by 2027,growing at a 14%CAGR from 2020 owing to increases in prevalence of chronic diseases and trauma emergencies,rise in awareness related to tissue engineering,and potential pipeline products(source:https:/ in the number of R&D activities coupled with the rise in awareness of tissue

112、 engineering in emerging economies are expected to support the market growth.Principal risk and uncertainties The Directors continually identify,monitor,and manage the risks and uncertainties of the Group.The Group maintains a comprehensive risk register that is regularly reviewed by the Board as pa

113、rt of these risk management responsibilities.Risk is inherent in all businesses and the Group acts to manage these risks.Set out below are certain risk factors which could have an impact on the Groups long-term performance and mitigating factors adopted to alleviate these risks.This list does not pu

114、rport to be an exhaustive summary of the risks affecting theGroup.Commercial Competition risk Should there be a competitive product that outperforms one of the Group products we could lose customers and distribution opportunities.Should a competitor bring a product to market before us they could pot

115、entially have an advantage in gaining market share.We continually monitor the commercial and competitive landscape and look to stay ahead of the trend with innovative product development and line extensions.The Group works with partners to identify potential market opportunities.The Group also colle

116、cts post-marketing clinical data to ensure that the product offering remains differentiated.Customer Concentration The Group has a number of key customers,however,should the Group be overdependent on a single customer and not maintain a diversified customer base,it could become exposed if that custo

117、mer reduced their ordering pattern or move their business elsewhere.In this case,the Group could be subject to material sales revenue losses and also experience an excess of inventory that had been processed in line with expectations.The Group continues to augment its product portfolio with line ext

118、ensions and new product launches providing diversified clinical applications.During 2021,the Group introduced three new products as line extensions for the dCELL segment.The Group is able to reduce this risk with distribution of its products into multiple disciplines and in some cases with multiple

119、customers in the same discipline and with a hybrid of strategic partners,distributors as well as direct sales.Operational Human resources The Group has a high level of reliance on the skills and knowledge of its management and employees,many of whom have considerable sector experience or other speci

120、alist expertise,making them attractive to competitors and not always easy to replace.As the business continues to scale and to expand its market presence,our requirements for high-calibre people continue to increase.The loss of key staff could potentially weaken the Groups operational/management cap

121、abilities,potentially impeding its ability to grow or maintain Annual Report and Accounts 202113Market Overview continuedefficient operations.To mitigate this risk,the Group maintains competitive incentive and reward structures which are benchmarked against industry standards.The compensation levels

122、 are designed to be attractive to existing employees and enable us to continue to attract high quality applicants for new roles.As a regulated business,we have clearly defined roles and responsibilities,supported by documented systems and procedures,to provide a level of continuity in the event an e

123、mployee leaves the Group.Finally,suitable legal agreements are in place with management and employees to include necessary confidentiality and non-compete clauses.Tissue supply As our products are based around human and animal tissues,failure to source good quality,ethically handled tissues could re

124、sult in the inability to produce products in line with specifications and therefore incur lost sales revenue,reputational damage,customer dissatisfaction and potential regulatory breaches.To address this risk,we have an experienced donor services department in the US who has expanded the number of d

125、onor agencies that we work with in the US,whilst in the UK we have two suppliers for the required porcine tissues.All suppliers are comprehensively qualified to meet the Groups internal standards and those imposed by third party moderators.Manufacturing capacity Our commercial strategy is built arou

126、nd the establishment of successful strategic and distribution partnerships,which increase the demand on our production and manufacturing capabilities.If we are unable to expand in line with this demand this could result in a loss of business through customer dissatisfaction and reputational damage.T

127、o address this potential constraint,the Group completed a capacity expansion in H1 2021 which provides a c.50%increase in processing capacity.In addition,the group has a outsource agreement in place covering a portion of the dCELL segments production requirements.Finance and IT Finance We require in

128、vestment into our working capital and infrastructure to bring our product portfolio to market and service the increasing demand from our current and future customers.Without this,the Group will be unable to deliver the anticipated future revenue growth.The equity fundraise in June 2020 provided both

129、 investment and working capital,which is expected to fund the Group to profitability,however,the ongoing impact of COVID-19 on elective surgeries has,and may continue to,alter the timeline to profitability.The Group has elected to increase its revolving credit facility from$3.0m to$5.0m,which can pr

130、ovide non-dilutive financing.To the extent that additional funds are required,there are no assurances that these funds could be raised,and if they could,if those terms would be non-dilutive to current shareholders.To address these risks,the Board has oversight of all significant cash spends and a we

131、ll-established control environment,which includes internal forecasting,monthly reporting and approval limits on all purchase orders.In order to maintain the cash position,the Company reviews business priorities and demands to ensure that funds are invested in the most appropriate manner to deliver a

132、 return on investment and grow the business.Information technology The Company is reliant upon information systems in all aspects of its operations.Any failure of systems could impact the Groups ability to process and distribute products,lead to a data security breach,loss of financial information a

133、nd have potential financial implications.The Group was subject to a cyber security incident in January 2020.No ongoing material impact to the business was experienced,however,processing and production was temporarily halted at the San Antonio facility while the restoration and testing of systems was

134、 completed.The Group has since upgraded its IT service providers and implemented additional security procedures.These procedures are continually reviewed and updated as required.The Group has an established disaster recovery plan and ensures that secure backups are held off-site in case of a breach.

135、Finally,a global cybersecurity insurance policy has been put in place to help offset the financial impact of a future breach.14Tissue Regenix Group plcMarket Overview continuedClinical/Regulatory Product liability risk Should a product fail upon implantation or incur an adverse reaction due to the p

136、roduct properties,the Group would be at risk of legal action,potential loss of sales revenue through product retraction from the market and reputational damage.To address these risks,before commercialisation,a series of quality assurance,clinical and safety checks are run dependent on the nature of

137、the product and comprehensive training is provided.In addition,the Group maintains quality management systems which are compliant with the local markets in which we operate.Product liability insurance is in place in case of adverse events.Licensure/Accreditation As the Group operates in a highly reg

138、ulated environment,the loss of a license to manufacture or sell products within a territory would result in reputational and financial damage to the Company.The Group employs regulatory experts and consultants for each territory in which manufacturing takes place,or where the Group looks to navigate

139、 a regulatory clearance for a product.The Group maintains quality management systems and has a track record of positive feedback following external audits and operates in established controlled environments to minimize potential process variations.Impact of regulatory changes In line with licensure

140、and accreditation,the Group operates in a highly regulated environment.Biologics is an area of high growth and additional regulatory standards and requirements are subject to change in any market in which we participate.Internally and with the help of regulatory experts,we seek to understand and rev

141、iew our compliance with any pending regulatory changes.As an example,May 2021 marked the end of the discretionary compliance and enforcement Policy for Certain Human Cells,Tissues,or Cellular or Tissue-based Products(HCT/Ps)by the U.S.Food and Drug Administration.This did not require any changes for

142、 our Group at this time.Political and economic risk Group performance could be adversely impacted by factors beyond our control such as the economic conditions in key markets and political uncertainty.The macroeconomic climate and continued uncertainty surrounding the impact of Brexit on the UK econ

143、omy and the US political and economic landscape could negatively affect the Groups ability to commercialize its products.An economic downturn,fiscal or monetary policy changes,or unexpected developments linked to worsening economic conditions may have a negative impact on sales revenue and profit.Th

144、e Group monitors macroeconomic developments to ensure that it responds swiftly as they materialise.COVID-19 The global economy continues to face uncertainty due to the COVID-19 pandemic,which has,and may continue to have,a significant impact on global healthcare procedures,supply chains,capital mark

145、ets and commodity prices as well as effects at the Group level with respect to staffing shortages and supply shortages.In 2021 the Group remained flexible and proactive in responding to and addressing its needs by enacting enhanced virus safety protocols and expanding its supply chain while still gr

146、owing the sales line.Financial risk management The Group has instigated certain risk management policies covering financial assets and liabilities which are set out in note 17 to the financial statements.Annual Report and Accounts 202115Market Overview continuedKey performance indicators The Groups

147、KPIs include a range of financial and non-financial measures.The Board considers the main financial KPIs for the Group to be sales revenue growth and cash resources(see Chief Executive Officers operational review on page 5).The Board also considers non-financial KPIs such as new distribution agreeme

148、nts signed,measuring clinical data collection,new account wins,improving the product development portfolio,and increasing manufacturing capacity and supply.16Tissue Regenix Group plcThe Directors acknowledge their duty under S.172 of the Companies Act 2006 and consider that they have,both individual

149、ly and together,acted in the way that,in good faith,would be most likely to promote the success of the Company for the benefit of its members as a whole.In doing so,they have had regard(amongst other matters)to:the likely consequences of any decision in the long term.The Groups long-term strategy is

150、 outlined on page 1 of this report.The principal risks and uncertainties are discussed on page 12 of this report.Throughout the year,management and Directors look to meet with,and update,institutional and retail investors through a variety of platforms,whether it be by face-to-face meeting,telephone

151、 conversation,annual general meeting,retail investor forum,website,social media,or news announcements.Key topics of engagement for investors throughout the year were around:The changes to the Executive management team,changes to the Non-Executive Directors,completion of the Phase 1 expansion in the

152、BioRinse segment,the response and implications of the ongoing COVID-19 pandemic,and full year and interim financial results and reports.the interests of the Groups employees.The long-term success of the Group is built around our highly skilled and experienced workforce.Our technicians are highly spe

153、cialised,and we have world class processing and development expertise at all facilities.We look to create an environment where all employees can excel and value both practical experience as well as academic qualifications.We believe in investing in our workforce to maintain a low turnover rate and b

154、uild an agile and adaptive workforce who can successfully navigate the ever-evolving industry landscape to maintain our competitive positioning.We support employees with further education and qualifications and provide a remuneration and benefits framework that supports a healthy work/life balance a

155、nd is competitive with industry standards.Key topics of engagement for employees throughout the year were around:the response to the ongoing COVID-19 pandemic and the completion of the capacity expansion project in SanAntonio.the need to foster the Groups business relationships with suppliers,custom

156、ers and others.Suppliers are fundamental to the Groups ability to source high-quality raw materials and ethically sourced and handled tissues.We look to partner with suppliers who can augment our internal capabilities and build long-term relationships.Key topics of engagement for suppliers throughou

157、t the year were around:The implication of the COVID-19 pandemic,availability of supplies,and any variances to payment practices.In addition,relationships with donor sources were expanded to include tissue types not commercially distributed by the Group,thereby maximizing the gift of tissue donation.

158、With respect to customers,they include prestigious key opinion leaders whose expertise assists with driving the clinical discussion around the differentiating properties of our product portfolio.This type of engagement and clinical advocacy is crucial as we work to grow our clinical data portfolio,i

159、mprove product and brand recognition and increase the number of patients who can benefit from our portfolio.The needs of customers of the dCELL division were considered in its reorganisation strategy,as the new approach puts commercial management closer and therefore more responsive to customer need

160、s.Key topics of engagement for customers and opinion leaders throughout the year were around:changing practices and expectations regarding performance of our clinical solutions and new product developmentopportunities.the impact of the Groups operations on the community and the environment.The Board

161、 is mindful of the potential social and environmental impacts of the Groups activities.The Board is committed to minimising the environmental effect of the Groups activities wherever possible and seeks rigorous compliance with relevant legislation.More discussion on the Groups environmental initiati

162、ves is contained in the Corporate Governance Statement on page 21.The Group also looks to engage with the local communities and support relevant charities wherever possible.the desirability of the Group maintaining a reputation for high standards of business conduct.Our intention is to behave in a r

163、esponsible manner,operating within the high standard of business conduct and good corporate governance,as highlighted in the Corporate Governance Statement on page 21.the need to act fairly as between members of the Group.The Groups intention is to behave responsibly towards all its shareholders and

164、 treat them fairly and equally,so that they too may benefit from the successful delivery of the Groups strategic objectives.The Groups website https:/.has a section dedicated to investor matters that details,amongst other things,all financial reports,press releases and other regulatoryfilings.The St

165、rategic Report on pages 3 to 16 was approved by the Board on 14 March 2022 On behalf of the Board Daniel Lee Chief Executive Officer 14 March 2022Section 172 statementAnnual Report and Accounts 202117Governance Management team We have a senior management team with extensive experience in the healthc

166、are industry.They are challenged and supported by an experienced and well-balanced Board of Non-Executive Directors,together with the teams of employees that they lead.Daniel Lee Chief Executive Officer(CEO)Daniel Lee has 30 years experience in the medical device and biologics industry,ranging from

167、product innovation to commercialisation to corporate management.Daniel was appointed CEO in November 2020 after initially joining the Group as President of U.S.Operations in January 2019.Prior to this,Danny was the Chief Executive Officer for Scaffold Biologics and Aperion Biologics.His previous sen

168、ior management roles include global marketing for OsteoBiologics(acquired by Smith&Nephew Endoscopy in 1996)and marketing activities for Regeneration Technologies(now RTI Surgical),a leading allograft tissue processor.Danny spent the first 10 years of his career in R&D with the U.S.Surgical Corporat

169、ion(now Medtronic).Danny received his B.E.S.degree in Materials Science and Engineering from the Johns Hopkins University,and his M.S.in Biomedical Engineering from the University of Alabama at Birmingham.He has 13 patents on implants and instruments used in orthopaedic and general surgery.Danny is

170、also a Certified Tissue Bank Specialist(CTBS)from the American Association of Tissue Banks(AATB).David Cocke Chief Financial Officer(CFO)David Cocke has 30 years of experience in the medical device industry holding senior finance and operations positions.In 1997,David was a founding partner of NuPak

171、 Medical,Ltd.,an ISO-certified contract manufacturer of sterile disposable medical devices.NuPak Medical,Ltd.was acquired by Katena Products,Inc.in 2017 and David remained with the business post-acquisition until joining the Group in January 2021.David was also Chief Financial Officer at Aperion Bio

172、logics from 2008-2017.Prior to this,David was Senior Director for Finance and Operations at Kinetic Concepts from 1993-1996.David began his career in the corporate finance sector,working at GE Capital in its Corporate Finance Group and at Salomon Brothers Inc in its Investment Banking Group.David re

173、ceived his B.B.A in Business Honors(magna cum laude)from the University of Texas at Austin and his M.B.A from the University of Virginias Darden Graduate School of Business Administration.He has two patents covering medical devices.Gerald Sharpe Vice President Strategic Partnerships Gerald Sharpe ha

174、s over 11 years experience in the orthobiologics industry,working for two differentiated allograft tissue processors.His focus is commercialisation and business development.He joined CellRight Technologies as Regional Sales Manager in September 2014,before being appointed as Vice President-Strategic

175、 Partnerships in January 2019.Gerald is proficient in the spine,sports medicine,foot and ankle,dental,and ocular markets of the business.Prior to joining CellRight,Gerald was Regional Sales Manager and Director of Client Services for TissueNet.His previous sales roles include Vice President of Busin

176、ess Development for SolomonFX.Gerald received his Bachelor of Science degree in Marketing from the University of Central Florida.Christine Rowley Technical and Operations Director,UK 18Tissue Regenix Group plcGovernance continuedChristine has over 17 years experience in the medical device biologics

177、industry,joining Tissue Regenix in 2010.She has worked in all areas of product development and commercialisation,and has led the development of the OrthoPure XT device from product feasibility through to market approval and launch.Christines experience covers a wide range of activities,including new

178、 product development,process optimisation and design transfer,design verification and validation,clinical trial design and execution,regulatory submissions,and quality control,almost exclusively working with class III xenograft implants.Christine has held leadership roles within the product developm

179、ent,regulatory,clinical and quality sectors,and has achieved market clearance of xenograft medical devices in multiple countries worldwide.Christine has several patents associated with the decellularisation and manipulation of collagenous tissues for potential health care benefits.Christine has a Ba

180、chelor of Science degree in Biological Sciences from the University of Exeter(UK).Tina Trimble VP,Donor Services,US Tina Trimble has over 30 years of tissue banking industry experience and joined CellRight Technologies as VP,Donor Services in March 2019.Tina has worked with other tissue banks in lea

181、dership roles such as Community Tissue Services,Regeneration Technologies,Tutogen Medical and most recently,Bone Bank Allografts.Tina is a Certified Tissue Bank Specialist,and currently serves on the American Association of Tissue Banks(AATB)Exam Committee,American Board of Accredited Tissue Banks,B

182、irth Tissue Council and most recently on the AATB Board of Governors from 2018-2020 and Chair of the Processing and Distribution Council.Prior to that,Tina served on the AATB Accreditation Committee,VC Processing and Distribution Council,Education and Program committees and is currently a member of

183、AORN and ASQ.Lance Johnson VP,Quality and Regulatory,US Lance Johnson has over 30 years experience in FDA Requirements and Quality Systems.His experience includes over 10 years at the executive level for primarily class III medical device implant companies.Prior to joining CellRight Technologies as

184、VP,QA/RA,Lance was the Vice President of Quality for EndoStim Inc,an active implant device manufacturer located in Austin,TX.Lance also worked in the xenograft device industry as VP of Quality for Aperion Biologics,and in the orthopedic spine industry as Quality Manager for Zimmer Spine and Abbott S

185、pine.In addition to his industry experience,he spent 16 years as an active investigator with the FDA.Lance specialised in medical device compliance and worked in both the San Francisco and Dallas districts.He spent 12 years as the resident in charge of the Austin,Texas field office and as contributo

186、r to the FDA international cadre.Lance received his Bachelor of Science degree in Biotechnology from Oklahoma State University.Kirsten Lund Group Finance Director and Company Secretary Kirsten Lund brings over 11 years of finance experience to the company and was promoted to the position of Group Fi

187、nance Director in November 2019 after three years as Group Financial Controller.Kirsten has supported the CFO,led the finance teams in both the UK and US,and advised the Board on all financial matters relating to the Group.Starting January 2022 Kirsten has transitioned into the position of EMEA Dire

188、ctor and works closely with the management team to help drive forward the strategy of the business into new markets.Utilising the knowledge acquired over the years in the healthcare sector,Kirsten provides invaluable experience and understanding around the Company structure and routes to market.Kirs

189、ten received her Bachelor of Science degree from the University of Derby and successfully completed the ACCA qualification after joining Tissue Regenix in 2010,qualifying in 2015.Annual Report and Accounts 202119Governance continuedPatti Gary VP,Clinical Affairs Patti J.Gary has nearly 30 years of e

190、xperience in the medical device and tissue industry.Her experience provides a unique combination of sales and clinical roles.She joined Tissue Regenix as Senior Director of Clinical Affairs in July 2013,before being appointed to VP of Clinical Affairs in March 2015.Prior to joining Tissue Regenix,Pa

191、tti was Sales Director for PolyRemedy.Her previous roles include Professional Education Manager,Corporate Healthcare Director and Director of Clinical Services for Systagenix(acquired by Acelity).Prior to Systagenix,Patti was Post-Acute National Accounts Director and District Sales Manager for Aceli

192、ty.Her journey in industry began at Hill-Rom as an Account Manager.Patti was also the owner and President of Positive Outcomes,Inc.where she developed clinical and financial tools(HealQuest,HealPROtocols and Healware)to drive standardized processes for wound management.HealPROtocols was acquired by

193、Acelity.Her depth of knowledge spans clinical,regulatory,reimbursement and sales,all of which have contributed to her success.Patti is a Registered Nurse and a Certified Wound Care Nurse.She graduated from Louisiana State University Health Sciences Center School of Nursing.20Tissue Regenix Group plc

194、Board of Directors Jonathan Glenn Non-Executive Chair Jonathan was most recently CEO of Consort Medical from December 2007 until its acquisition for 505m by Recipharm AB in early 2020.Jonathan originally joined Consort Medical as Group Finance Director from September 2006 to December 2007,and prior

195、to this,Jonathan was global Head of Finance at Celltech Group plc,and later Chief Financial Officer of Akubio Ltd,a Cambridge-based developer of instrumentation for the life sciences industry.Jonathan is a member of the Institute of Chartered Accountants in England and Wales.Jonathan joined the grou

196、p in January 2016.He serves on the Audit Committee.Daniel Lee Chief Executive Officer(see details in Management Team above)David Cocke Chief Financial Officer (see details in Management Team above)Shervanthi Homer-Vanniasinkam Non-Executive Director Shervanthi Homer-Vanniasinkam graduated in medicin

197、e from Mysore University Medical School in India,and is a Fellow of both the Royal College of Surgeons of Edinburgh,and the Royal College of Surgeons of England.She was appointed Consultant Vascular Surgeon at Leeds General Infirmary in 1995,a post she continues to hold.Her concomitant posts include

198、:Founding Co-Director of the novel medical undergraduate scholarship programme,EXSELLeeds;Founding Professor of Surgery,University of Warwick Medical School&University Hospitals Coventry and Warwickshire;Professor of Engineering&Surgery,University College London.Professor Homer-Vanniasinkam joined t

199、he group in June 2016.She serves on the Remuneration Committee.Professor Homer-Vanniasinkam has published over 100 papers and book chapters,delivered over 300 presentations,and has a significant research grant portfolio(several m,to date).She has an outstanding track record of national(Universities

200、of Leeds,London,Warwick)and international(Harvard,Yale,Singapore,India)collaborative research programmes that encompass basic,translational and clinical studies.Professor Homer-Vanniasinkam is currently a Visiting Scholar at Harvard University and the Yeoh Ghim Seng Visiting Professor of Surgery at

201、the National University of Singapore.Trevor Phillips Non-Executive Director Trevor Phillips is the current Chairman of the Board at NEPeSMO and has extensive experience in the UK and US in corporate development,M&A and operations in the pharmaceutical and life science industries,including previously

202、 held positions as Executive Chairman of hVIVO(2017-2020),Chief Operating Officer for Vectura Group plc(2011-2017)and former CEO and COO of Critical Therapeutics,Inc.(2002-2008).Trevor holds a BSc,Microbiology from the University of Reading,a PhD,Microbial Biochemistry from Swansea University and an

203、 MBA from Henley Business School.Trevor joined the group in January 2021.He is Chair of the Remuneration Committee and also serves on the Audit Committee.Brian Phillips Non-Executive Director Brian Phillips is an entrepreneurial investment professional with over 25 years experience.Brian is the curr

204、ent Principal of Ethos partners which he co-founded in 2018 to assist individuals in establishing a portfolio of assets under private equity investments.Prior to this,Brian was Chief Investment Officer at Greenhill Capital Partners Europe LLP where he was responsible for setting up their UK business

205、(2006-2010)and Managing Director of LGV Capital(2000-2006).Brian holds a B.Acc from Glasgow University and qualified as a Chartered Accountant with KMPG.Brian joined the group in January 2021.He is Chair of the Audit committee and also serves on the Remuneration Committee.Annual Report and Accounts

206、202121Corporate Governance Statement The Board believes in the importance of good corporate governance and is aware of its responsibility for overall corporate governance,and for supervising the general affairs and business of the Company and its subsidiaries.The Group is listed on the Alternative I

207、nvestment Market(AIM)of the London Stock Exchange and is subject to the continuing requirements of the AIM Rules.AIM-listed companies are required to apply a recognised corporate governance code.The Group applies the Quoted Companies Alliance Corporate Governance Code(the“QCA Code”).The Board consid

208、ers that it has complied with the QCA Code throughout the year.This section provides general information on the Groups adoption of the QCA Code.Our strategy and business model and approach to risk Through our platform technologies,we commercialise regenerative medicine products,helping to transform

209、the treatment of patients in key surgical applications.We aim to implement a business model that ensures our product portfolios have the market reach to deliver novel tissue engineering solutions to patients.In 2021,we announced our 4S strategy as the foundation of how we operate and drive our growt

210、h:l Supply highlighted by the fundamental ability to source donor tissue and having the capacity to produce various graft products l Sales Revenue to distribute the finished grafts to the various patients,clinicians and institutions that need these products to treat patients l Sustainability to mana

211、ge sales revenue along with expenses to be a profitable entity that does not need additional external capital to operate l Scale to utilise the first three Ss to continue to invest and grow the business,license or acquire new products,technologies and companies Our focus on the 4Ss across all divisi

212、ons and departments provides a 360-degree approach and strategic direction for our future success.We believe this focus will allow the Group to achieve above-market growth rates.The Board carefully considers the strengths,weaknesses,opportunities and risks facing the Group,and endeavours to minimise

213、 the impact of weaknesses and risks by employing the necessary mitigating actions.We process tissues at our facilities in the UK,Europe and North America.The Group has an experienced and dedicated management and scientific team,and the prominent risks facing the Group are kept under review and updat

214、ed as necessary;the Board ensures to review a detailed risk matrix on a rolling basis as part of the formal Board meetings.Details of risks identified are set out on pages 12 to 14 of this report.The Group maintains a central finance team,with three team members based in the UK and three in the US.T

215、he Group seeks to operate consistent accounting policies and engages annual external audits from professional auditors of its financial results and reports,findings from which are presented to the Board.The Board review monthly financial reports including key performance indicators provided by the C

216、FO in respect of the management of cash within the business and review against budgets and forecasts.The Group also has a number of operational controls that all employees are expected to adhere to including management structure,Board reserved matters,financial monitoring,internal policies,codes of

217、conduct and training,health and safety monitoring and IT controls.The regulatory and quality teams at each facility maintain a comprehensive quality management system with each employee having a personal training record.As noted above,the Group regularly audits its suppliers to ensure that the highe

218、st ethical standards are maintained.In respect of its intellectual property rights,the Group engages a professional patent and trademark attorney to monitor its intellectual property portfolio.Board of Directors The Board is responsible for leading and controlling the activities of the Group,with ov

219、erall authority for the management and conduct of the Groups businesses,together with its strategy and development.Annual strategy meetings are held wherein management and the Board interact to review performance and set strategic and operational plans for the coming year.For more information on our

220、 Board of Directors,see page 20.22Tissue Regenix Group plcCorporate Governance Statement continuedComposition of the Board The Board is comprised of three independent Non-Executive Directors,the Non-Executive Chairman,and two Executive Directors,the Chief Executive Officer and the Chief Financial Of

221、ficer;reflecting a blend of different experiences and backgrounds.The function of the Chairman is to supervise and manage the Board and to ensure its effective control of the business.The Board believes that the composition of the Board brings a desirable range of skills and experience in light of t

222、he Groups challenges and opportunities as a public company,while at the same time ensuring that no individual(or a small group of individuals)can dominate the Boards decision-making.There is a clear division of responsibility between the Chairman and CEO position,with the Chairman advising and leadi

223、ng the Board,as well as making himself available to meet with shareholders.The CEO is responsible for implementing the strategy of the Group and managing day-to-day business activities of the Group.Training is made available to each Non-Executive Director(NED)to ensure that they are completely aware

224、 of their regulatory responsibilities and requirements.A formal Board appraisal is conducted annually to ensure that the Board continues to function effectively.The Board aims to meet formally at least 8 times a year,with provision being made to join via telephone or video conference if a member of

225、the Board is unable to attend in person.A monthly Board report is produced,and meeting agendas and Board papers are circulated in advance of each meeting so that the Board can properly consider the matters to be discussed.Outside of the scheduled meetings,the Board will meet to discuss ad hoc busine

226、ss events where necessary,and the CEO keeps the Board fully informed of any business developments that could positively or negatively impact the performance or value of the Company;any business decisions that require formal Board approval,or any event that could impact the Board or individual member

227、 carrying out their duties and regulatory responsibilities.The Company maintains minutes of formal and ad hoc Board meetings.The Board added three members in 2021:Trevor Phillips(joined 05 January 2021),Brian Phillips(joined 05 January 2021)and David Cocke(joined 21 January 2021.)No members left the

228、 Board in 2021.In 2021,there were 11 Board meetings.All Directors were present for all meetings.In addition,there were 2 Audit Committee meetings,with no absences,and 2 Remuneration Committee meetings,again with no absences.The Non-Executive Directors are appointed through formal non-executive appoi

229、ntment letters,which contain a three-month notice period.The non-executive appointment letters contain an indicative time commitment of 20days per annum;however,these indicate that this is an estimate and that all Directors are expected to commit sufficient time to fully discharge their responsibili

230、ties.The Company has not had any issues with regular non-attendance at meetings.Executive Directors have formal service contracts,which require them to work full-time in the business and have no other significant outside business commitments.These service agreements have a maximum of six-months noti

231、ce to terminate.The Company follows the provisions in its Articles of Association in respect of the retirement and reappointment of Directors at its Annual General Meeting each year.The Board is satisfied that it has a suitable balance between independence and knowledge of the business to allow it t

232、o discharge its duties and responsibilities effectively and that effective controls have been put in place.The Board also operates two sub-committees,the Audit and Remuneration Committees,to ensure compliance with market regulations.The Audit Committees primary responsibilities are to monitor the in

233、tegrity of the financial affairs and statements of the Group,to ensure that the financial performance of the Group and any subsidiary is properly measured and reported,and to review reports from the Groups external auditor relating to the accounting and internal controls.The Audit Committee also rec

234、ommends to the Board the appointment and reappointment of the external auditor.The Audit Committee considers the scope and results of the external audit and its cost effectiveness.It also reviews the fees,independence,and objectivity of the external auditor by discussing with the auditor their annua

235、l assessment regarding their independence,policies and procedures,and analysing the audit and non-audit work.The Audit Committee also plays a key role in supporting the Board with the ongoing risk assessment and management framework for the Group.Annual Report and Accounts 202123Corporate Governance

236、 Statement continuedThe Groups external auditor has unrestricted access to the Audit Committee and attends the Audit Committee meetings throughout the year.The Executive Directors attend the Audit Committee meeting by invitation only.The Audit Committee comprises of Brian Phillips,Trevor Phillips an

237、d Jonathan Glenn.The Audit Committee meets at least twice per year and is chaired by Brian Phillips who is a Chartered Accountant and has relevant financial experience.The Remuneration Committee comprises of Trevor Phillips,Brian Phillips and Shervanthi Homer-Vanniasinkam.The Remuneration Committee

238、meets no fewer than twice per year and is chaired by Trevor Phillips who has many years of relevant operational and commercial industry experience.Risk management and internal control The Board is responsible for maintaining a sound system of internal controls.These measures are designed to minimise

239、 any potential risks identified and provide reasonable,but not absolute assurance against material misstatement or loss.The Board confirms that it has established a sound system of internal controls.Some key features of the internal control system are:l well established financial reporting and contr

240、ol systems l the Board actively identifies,evaluates and monitors the risks inherent in the business and ensure that appropriate controls and procedures are in place to manage these risks l there is a clearly designed organisation and reporting structure l the Group has operational,accounting and em

241、ployment policies in place In addition,the Board regularly assess the internal control environment under which the business operates and where appropriate implements additional measures to ensure that adequate controls are maintained.Employees The Group places value on the involvement of its employe

242、es and they are regularly briefed on the Groups activities.The Group closely monitors staff attrition rates which it seeks to maintain at low levels and aims to structure staff compensation levels at competitive rates to attract and retain high calibre personnel.Equal opportunities The Group is comm

243、itted to ensuring that equal opportunities are provided to all employees and potential employees,and do not discriminate on the basis of age,gender,ethnicity,religion,disability,sexual orientation,or marital status.All employees are expected to conduct themselves in an appropriate manner adhering to

244、 our non-discrimination policy.In all aspects of our business the Group looks to act in ways that are compliant with the applicable laws and regulations,providing our employees with a work environment that is professional,ethical and fair.Environment As with all businesses the emphasis on environmen

245、tal sustainability is important and subject to increasing scrutiny and regulation.All employees are involved in the initiatives implemented to decrease the Groups carbon footprint,energy consumption and environmental sustainability efforts.During 2021,the Group implemented environmental sustainabili

246、ty initiatives as noted below:l Continued to upgrade to LED lighting alternatives in our offices,clean rooms and sterile packaging areas,including the use of occupancy sensors in the Groups Phase 1 facility expansion l Substituted 100%recycled corrugated boxes in certain high volume packaging applic

247、ations l Substituted envelopes for boxes in selected finished good packaging applications,which reduced the amount of paper products used to process these orders 24Tissue Regenix Group plcCorporate Governance Statement continuedl In its facility expansion,installed high efficiency ultra-low temperat

248、ure freezers which use natural refrigerants l Installed an advanced environmental control system in its facility expansion,which has occupant sensitive thermostats and high efficiency cooling units to minimise electricity usage Social,community,and human rights The Board recognises that the Group ha

249、s a duty to be a good corporate citizen and to respect the laws in the markets in which it operates.It contributes as far as is practicable to the local communities in which it operates and takes a responsible and positive approach to employment practices.The Group,led by the Chief Executive Officer

250、,maintains open and transparent channels of communication with all employees in order to promote values and behaviours which consistently reflect the Groups ethos,and to ensure that employees are aware of Company developments and successes.Operating in an industry based upon the processing of human

251、and animal derived tissues demands the highest ethical standards,and the Group aspires to maintain these across all business functions and relations.The Company undertakes regular audit checks to ensure that partners,suppliers and employees comply with the ethical standards and operate to meet our e

252、xpectations.The Group employs a vigorous code of conduct and ethics to ensure it operates with a level of social responsibility across the business every day.Through the gift of tissue donation,the Group has the ability to positively impact hundreds of patients lives,therefore,we must treat each gif

253、t with the utmost respect and provide the next of kin with information around how many patients the donation has helped,if requested;something that can often help in the grieving process.Relations with shareholders The Board believes that maintaining regular and transparent dialogue with shareholder

254、s is important in order to ensure that there is a clear understanding of strategic objectives,financial and operational performance and governance of the Group.The Group actively engages with its shareholders throughout the year both through direct meetings,website and social media communications an

255、d stock exchange announcements.Commissioned analyst research notes are made available on the Companys website as well as clinical case studies and published papers.Senior management,typically the CEO and CFO aim to meet with,or speak with,significant shareholders at least twice in a year usually aft

256、er the interim and preliminary results announcements,to provide an update on strategy and progress of the Group as a whole,and to receive shareholder feedback.The Group also undertakes several publicly available updates to all shareholders,through forums such as interviews,trading updates and PR ann

257、ouncements.In 2021,the Group undertook two Investor Meet Company retail investor presentations as part of the full year and interim results investor roadshows,with 94 individuals attending the preliminary results presentation in April 2021 and 108 individuals attending the interim results presentati

258、on in September 2021.In accordance with AIM Rule 26,there is an Investors section on the Groups website,which is kept up to date.Information is provided regarding our business,results and financial performance,investor news and copies of our Annual Reports and Accounts.The Group holds an Annual Gene

259、ral Meeting(AGM)each year at which all shareholders are welcome to attend and speak with management.At the AGM,separate resolutions will be proposed for each substantially different issue.The outcome of the voting on AGM resolutions is disclosed by means of an announcement on the London Stock Exchan

260、ge.Annual Report and Accounts 202125Directors Remuneration Report Remuneration policy The Groups remuneration policy is designed to provide Executive Directors with a competitive market-based package in order to reward individual and Group performance and deliver outstanding shareholder returns.The

261、Remuneration Committee is committed to ensuring that the Groups key management team is incentivised to drive sustainable earnings growth and returns to shareholders,thereby creating a genuinely strong alignment of interests between management and investors.It is the Groups policy that Executive Dire

262、ctors should have contracts with an indefinite term providing for a maximum of six months notice.In the event of early termination,the Executive Directors contracts provide for compensation up to a maximum of basic salary for the notice period.Non-Executive Directors are employed on letters of appoi

263、ntment which may be terminated on no less than three months notice.Companies with securities listed on AIM do not need to comply with the UKLA Listing Rules.The Remuneration Committee is,however,committed to maintaining high standards of corporate governance and disclosure and has applied the guidel

264、ines as far as practical given the current size and development of theGroup.Further details on risk in the remuneration policy is available below.Remuneration Committee The Remuneration Committees primary responsibilities are to review the performance of the Executive Directors of the Group and to d

265、etermine the broad policy and framework for their remuneration and the terms and conditions of their service and that of senior management(including the remuneration of and grant of options or shares to such persons under any share scheme adopted by the Group).The 2021 Remuneration Committee compris

266、es Trevor Phillips as Chair of the Committee,Brian Phillips and Shervanthi Homer-Vanniasinkam.The Committee meets no fewer than twice in each financial year.The main elements of the remuneration packages for Executive Directors and senior management are:Basic annual salary The base salary is reviewe

267、d annually at the beginning of each year.The review process is undertaken by the Remuneration Committee taking into account several factors,including the current position and development of the Group,individual contribution and market salaries for comparable organisations.The Committee also approves

268、 the level of the pool for salary reviews for all staff.Discretionary annual bonus All Executive Directors and senior managers are eligible for a discretionary annual bonus,which is paid in accordance with a bonus scheme developed by the Remuneration Committee.This takes into account individual cont

269、ribution,business performance and commercial progress,against Corporate and individual goals set at the beginning of the year,in accordance with the Groups strategy along with financial results.Long term incentive plan The Group has replaced the existing deferred annual bonus(DAB)plan,with a new Lon

270、g Term Incentive Plan(LTIP)for Executive Directors and senior management.The LTIP awards are made annually,with the initial awards made in 2021,to the Executive Directors and those senior management members recommended to participate by the Executive Directors and approved by the Board.Awards are ba

271、sed upon a predetermined percentage of an individuals annual salary and will vest over a period of three years.26Tissue Regenix Group plcDirectors Remuneration Report continuedThe final vesting of the awards is determined by performance against vesting criteria,set by the Remuneration Committee at t

272、he time of grant,and adjudged by the Remuneration Committee in the period prior to the nominated vesting date.The goals are set against key aspects of Group performance,defined to be Total Shareholder Return(TSR),Revenue Growth,Profitability and individual performance against personal performance go

273、als.Weighting is set at 80%of the vesting directed at Group performance over the period against the three corporate goals and 20%against personal performance goals.As part of the LTIP rules the Executive Directors are required to use vested LTIPs to build a shareholding in the Group to a level of 10

274、0%of base salary over a period of six years.Remuneration policy for Non-Executive Directors Remuneration for Non-Executive Directors is set by the Chairman and the Executive members of the Board.Non-Executives do not participate in bonus schemes.Directors remuneration The remuneration of the main Bo

275、ard Directors of Tissue Regenix who served in the year to 31 December 2021 was:Salary and Total December Total December fees BonusBenefits 2021 2020$000$000$000$000$000 John Samuel(resigned 20/03/20)31 Gareth Jones (resigned 17/11/2020)629 Randeep Grewal(resigned 4/12/2020)65 Jonathan Glenn 100 100

276、39 Alan Miller(resigned 4/12/2020)74 Shervanthi Homer-Vanniasinkam 41 41 39 Daniel Lee(appointed 16/11/20)290 19716 503 36 David Cocke(appointed 21/01/21 206 10111 318 Brian Phillips(appointed 05/01/21)48 48 Trevor Phillips(appointed 05/01/21)48 48 733 29827 1,058 913 Within 2020 the total bonus pay

277、ments were$154k and benefits were$30k.Included within the salary is$63k for loss of office and$108k in lieu of notice.Directors shareholdings Directors interests in the shares of the Company,including family interests at 31 December 2021 were:31-Dec-2131-Dec-21 31-Dec-20 31-Dec-20 Number%Number%Jona

278、than Glenn 40,600,0000.58 40,600,000 0.58 Shervanthi Homer-Vanniasinkam 1,628,2220.02 1,628,222 0.02 Trevor Phillips 2,777,7700.04 Brian Phillips 15,322,7560.22 Daniel Lee 3,477,2000.05 David Cocke 3,907,0000.06 Annual Report and Accounts 202127Directors Remuneration Report continuedDirectors Intere

279、st in LTIPS At 1 January Exercised Lapsed Granted December Exercise 2020 during year during yearduring year 2021 price LTIP scheme options Daniel Lee(Note 1)28,321,603 28,321,603 0.01 pence David Cocke(Note 1)14,649,105 14,649,105 0.01 pence Note 1.There were employment period and performance condit

280、ions in relation to the options granted on 28 April 2021 which are subject to continued service over a period of three years and satisfaction of customary performance conditions relating to growth in total shareholder return,annual revenue targets,annual profitability targets and personal performanc

281、e targets.On behalf of the Board Trevor Phillips Chairman of the Remuneration Committee 14 March 2022 28Tissue Regenix Group plcThe Directors present their report and consolidated financial statements for Tissue Regenix Group plc,and its subsidiary undertakings for the year ended 31 December 2021.Pr

282、incipal activity The principal activity of the Group is the exploitation of innovative platform technologies in the field of regenerative medicine and tissue engineering.The Company is principally a holding company incorporated and domiciled in-the UK and is listed on the London Stock Exchanges Alte

283、rnative Investment Market(AIM).The subsidiary undertakings of the Group are listed in note C10 of the Companys financial statements.Business model A description of the Groups business model is included on page 2.Explanations of activities and how it seeks to add value are included in the Chairmans s

284、tatement on page 3 to 4 and the Chief Executive Officers statement on pages 5 to 8.Business review and results A review of the Groups performance and future prospects is included in the Chairmans statement on pages 3 to4 and Chief Executive Officers statement on pages 5 to 8.A review of the Groups f

285、inancial performance is within the Financial overview on pages 9 to 11.The loss for the 12 months attributable to equity holders of the parent was($4,792k)(2020:$12,466k).The Directors do not recommend the payment of a dividend(2020:nil).Share capital and funding Full details of the Group and Compan

286、ys share capital movements during the year are given in note 22 to the financial statements.Directors and their interests The following Directors held office in the year:Jonathan Glenn Shervanthi Homer-Vanniasinkam Daniel Lee Trevor Phillips-Appointed 5 January 2021 Brian Phillips-Appointed 5 Januar

287、y 2021 David Cocke-Appointed 21 January 2021 Directors interests in the shares of the Group,including family interests,are included in the remuneration report on beginning on 25.Directors indemnity insurance The Group has maintained insurance throughout the year for its Directors and officers agains

288、t the consequences of actions brought against them in relation to their duties for the Group.Directors Report Annual Report and Accounts 202129Corporate governance The corporate governance report is set out beginning on page 21.Substantial shareholders As at 31 December 2021,shareholders holding mor

289、e than 3%of the share capital of Tissue Regenix Group plc were:Number%of Name of shareholderof shares voting rights Lombard Odier944,244,61913.43 Harwood Capital(London)778,500,00011.32 Mr Richard Griffiths(UK)764,250,00010.87 IP Group(London)660,837,5679.40 Premier Miton Investments(London)523,553,

290、7847.45 Employment policies The Group is committed to keeping employees as fully informed as possible regarding the Groups performance and prospects and seeks their views,wherever possible,on matters which affect them as employees.Statement as to disclosure of information to the Auditor The Director

291、s who were in office on the date of approval of these financial statements have confirmed,that as far as they are aware,there is no relevant audit information of which the Auditor is unaware.Each of the Directors has confirmed that they have taken all the steps that they ought to have taken as Direc

292、tors in order to make themselves aware of any relevant audit information and to establish that it has been communicated to the Auditor.Financial instruments Further details of financial risk management objectives and policies are set out in note 17 of the financial statements.Auditor RSM UK Audit LL

293、P have indicated willingness to continue in office,in accordance with the recommendation of the Audit Committee and section 489 of the Companies Act 2006.A resolution to reappoint RSM as the Companys Auditor will be proposed at the forthcoming Annual General Meeting.Strategic report The Group has ch

294、osen in accordance with Companies Act 206 s414C(11)to set out in the Groups strategic report information required by Large and Medium-sized Companies and Groups(Accounts and Reports)Regulations 2008,Sch 7 to be contained in the Directors report in relation to research and development,and future deve

295、lopments.The Directors Report was approved by the Board on 14 March 2022.On behalf of the Board Daniel Lee Chief Executive OfficerDirectors Report continued30Tissue Regenix Group plcThe directors are responsible for preparing the Strategic Report,the Directors Report,and the financial statements in

296、accordance with applicable law and regulations.Company law requires the directors to prepare group and company financial statements for each financial year.The directors have elected under company law and are required by the AIM Rules of the London Stock Exchange to prepare group financial statement

297、s in accordance with UK-adopted International Accounting Standards and have elected under company law to prepare the company financial statements in accordance with United Kingdom Generally Accepted Accounting Practice(United Kingdom Accounting Standards and applicable law).The group financial state

298、ments are required by law and UK-adopted International Accounting Standards to present fairly the financial position and performance of the group.The Companies Act 2006 provides in relation to such financial statements that references in the relevant part of that Act to financial statements giving a

299、 true and fair view are references to their achieving a fair presentation.Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the group and the company and of the profit or loss of the grou

300、p for that period.In preparing each of the group and company financial statements,the directors are required to:a.select suitable accounting policies and then apply them consistently;b.make judgements and accounting estimates that are reasonable and prudent;c.for the group financial statements,state

301、 whether they have been prepared in accordance with UK-adopted International Accounting Standards;d.for the company financial statements state whether applicable UK accounting standards have been followed,subject to any material departures disclosed and explained in the company financial statements;

302、e.prepare the financial statements on the going concern basis unless it is inappropriate to presume that the group and the company will continue in business.The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the groups and the companys trans

303、actions and disclose with reasonable accuracy at any time the financial position of the group and the company and enable them to ensure that the financial statements comply with the requirements of the Companies Act 2006.They are also responsible for safeguarding the assets of the group and the comp

304、any and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.The directors are responsible for the maintenance and integrity of the corporate and financial information included on the Tissue Regenix Group plc website.Legislation in the United Kingdom g

305、overning the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.Directors Responsibilities Statement Annual Report and Accounts 202131Opinion We have audited the financial statements of Tissue Regenix Group plc(the parent company)and its subsidia

306、ries(the group)for the year ended 31 December 2021 which comprise the Consolidated Statement of Income,the Consolidated Statement of Comprehensive Income,the Consolidated and Company Statements of Financial Position,the Consolidated and Company Statements of Changes in Equity,the Consolidated Statem

307、ent of Cash Flows and notes to the financial statements,including significant accounting policies.The financial reporting framework that has been applied in the preparation of the group financial statements is applicable law and UK-adopted International Accounting Standards.The financial reporting f

308、ramework that has been applied in the preparation of the parent company financial statements is applicable law and United Kingdom Accounting Standards,including Financial Reporting Standard 101“Reduced Disclosure Framework”(United Kingdom Generally Accepted Accounting Practice).In our opinion:lthe f

309、inancial statements give a true and fair view of the state of the groups and of the parent companys affairs as at 31 December 2021 and of the groups loss for the year then ended;lthe group financial statements have been properly prepared in accordance with UK-adopted International Accounting Standar

310、ds;lthe parent company financial statements have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice;and lthe financial statements have been prepared in accordance with the requirements of the Companies Act 2006.Basis for opinion We conducted our audit in

311、accordance with International Standards on Auditing(UK)(ISAs(UK)and applicable law.Our responsibilities under those standards are further described in the Auditors responsibilities for the audit of the financial statements section of our report.We are independent of the group and the parent company

312、in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK,including the FRCs Ethical Standard as applied to listed entities and we have fulfilled our other ethical responsibilities in accordance with these requirements.We believe that the audit

313、evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.Summary of our audit approach Key audit mattersGroup l Goodwill impairment Parent Company l Impairment of intercompany receivables MaterialityGroup l Overall materiality:US$345,000(2020:290,000)l Performance m

314、ateriality:US$258,000(2020:217,000)Parent Company l Overall materiality:222,000(2020:222,000)l Performance materiality:166,000(2020:166,000)ScopeOur audit procedures covered 100%of revenue,99%of total assets and 93%of loss before taxation.Independent Auditors Report to the Members of Tissue Regenix

315、Group PLC 32Tissue Regenix Group plcKey audit matters Key audit matters are those matters that,in our professional judgment,were of most significance in our audit of the group and parent company financial statements of the current period and include the most significant assessed risks of material mi

316、sstatement(whether or not due to fraud)we identified,including those which had the greatest effect on the overall audit strategy,the allocation of resources in the audit and directing the efforts of the engagement team.These matters were addressed in the context of our audit of the group and parent

317、company financial statements as a whole,and in forming our opinion thereon,and we do not provide a separate opinion on these matters.Goodwill impairment Key audit matter descriptionThe non-current assets of the CellRight Technologies LLC(“CellRight”)cash generating unit(CGU)includes goodwill of US$1

318、1.6m(after a cumulative impairment charge of US$7.9m)and this CGU is subject to annual impairment testing.The CellRight CGU is a legal entity in its own right and forms part of the BioRinse operating segment.Management have disclosed details relating to their impairment test in notes 4 and 14.Impair

319、ment testing requires management to compare the carrying amount of the CGUs attributable assets and liabilities with the higher of fair value less costs of disposal and value in use(the“Recoverable Amount”).Where the carrying amount is higher than Recoverable Amount then an impairment charge arises.

320、Impairment testing involves a significant degree of judgement because managements determination of value in use is based on a number of assumptions,including an assessment of future performance in a high growth sector,and the selection of an appropriate discount rate.Significant impairment charges h

321、ave arisen in previous periods and the Group overall continues to be loss making.Any recorded impairment charge would most likely have a material impact on the financial statements and we therefore considered this matter to be one of the matters of most significance in the current year audit.Managem

322、ent provided us with an impairment model for the CellRight CGU.We performed audit work on this model,which included:l Checking the calculations contained within the model,including reperforming the comparison of the Recoverable Amount with the carrying amount and agreeing the carrying amount to the

323、accounting records.l Using a specialist to check the appropriateness of the method and the mathematical calculation of value in use within the model and to obtain an independent estimate of an appropriate discount rate.l Challenging management to support key assumptions within the model,particularly

324、 forecast revenue growth.l Reviewing the disclosures made in the financial statements to ensure that they were in accordance with the applicable financial reporting framework.How the matter was addressed in the auditIndependent Auditors Report to the Members of Tissue Regenix Group PLC continuedAnnu

325、al Report and Accounts 202133Impairment of intercompany receivables Key audit matter descriptionAt the 31 December 2021,the carrying value of amounts due from group undertakings amounted to 15.7m after recording an ECL provision of 63.9m(see notes C2 and C6).A reversal of 0.3m of the existing provis

326、ion arose in the current year.The parent company has loans due from subsidiary undertakings that are currently loss making.The loans are repayable on demand and the subsidiary undertakings do not have sufficient liquid assets to make repayment should the parent company call in the loans.One of the m

327、ost significant matters in the current year audit of the parent company is that management are required to calculate an expected credit loss(“ECL”)provision in accordance with IFRS9 Financial Instruments.The calculation of ECLs involves a significant degree of judgement and estimation as management

328、have to make assumptions about future cash generation and consider multiple scenarios through which the balances may be recovered.Given the magnitude of the loan balances we considered this matter to be one of the matters of most significance in the current year audit.We obtained managements calcula

329、tion of the ECL and the underlying calculations prepared to support the carrying value of the balance and performed work as follows:l Assessed the reasonableness of the scenarios considered by management and the probabilities assigned to each.l Ensured that the cash flow forecasts used were consiste

330、nt with the latest Board approved forecasts.l Recalculated the computation of the ECL Our application of materiality When establishing our overall audit strategy,we set certain thresholds which help us to determine the nature,timing and extent of our audit procedures.When evaluating whether the effe

331、cts of misstatements,both individually and on the financial statements as a whole,could reasonably influence the economic decisions of the users we take into account the qualitative nature and the size of the misstatements.Based on our professional judgement,we determined materiality as follows:Grou

332、pParent company How the matter was addressed in the audit222,000(2020:222,000)US$345,000(2020:290,000)Overall materiality0.5%of net assets.The percentage applied to the benchmark has been restricted for the purpose of calculating an appropriate component materiality.1.75%of total revenueBasis for de

333、termining overall materialityIndependent Auditors Report to the Members of Tissue Regenix Group PLC continued34Tissue Regenix Group plcGroupParent company Materiality levels in respect of the disclosure requirements for the group and parent company in relation to directors emoluments including share-based payment transactions were set at a reduced level of US$25,000.This reduced level has been set