• directors' report
• corporate governance
• directors' remuneration report
• independent auditors' report

directors' remuneration report

Introduction

The following is a report of the Remuneration Committee (the Committee) which has been approved by the Board of Directors of Renovo Group plc for submission to shareholders. This report has been prepared pursuant to Section 421 of the Companies Act 2006 in accordance with the Directors’ Remuneration Report Regulations 2002 (the Regulations). It is the Company’s statement of how it has applied the principles of good governance relating to Directors’ remuneration and is intended to communicate Renovo Group plc’s policies and practices on Executive remuneration to the Company’s shareholders and relevant institutions.

In accordance with Section 439 of the Companies Act 2006 an ordinary resolution will be submitted to the AGM to approve the Directors’ Remuneration Report for the year ended 30 September 2009.

Operation of the Remuneration Committee

Membership of the Remuneration Committee

The Committee consists wholly of Independent Non-executive Directors in compliance with the Financial Reporting Council’s Combined Code on Corporate Governance of June 2006 (the Combined Code). The members of the Committee are Dr Arthur Rosenthal (Chairman), Dr David Ebsworth, Dr Barrie Thorpe, Mr John Goddard and Mrs Susan Taylor, who joined the Committee on her appointment to the Board in November 2008. This enlarged membership is to facilitate succession planning after the announced Board changes in February 2010. The Committee going forward will consist of Dr Barrie Thorpe (Chairman), Mr John Goddard and Mrs Susan Taylor.

At the invitation of the Chairman of the Committee, the Chairman of the Board, the Chief Executive Officer (or any other member of the Board), the Vice President of Human Resources or any external adviser may attend meetings of the Committee. The Committee has the power to require the attendance of the Chief Financial Officer at any meeting. No Committee attendee may participate in any discussions or decision relating to their own remuneration.

Terms of reference

The Committee’s terms of reference remain in compliance with the Combined Code. The Committee meets not less than twice a year and has responsibility for making recommendations to the Board of Directors:

• on the Group’s policy on the remuneration of the Chairman, Executive Directors and other Senior Executives;
• for the determination, within agreed terms of reference, of the remuneration of the Chairman and of specific remuneration and incentive packages for each of the Executive Directors, including pension rights and any compensation payments;
• for the implementation of executive incentive plans; and
• on recruitment, retention and termination policies and procedures for Executive Directors. In accordance with the Committee’s terms of reference, no Director may participate in discussions relating to their own terms and conditions of service or remuneration.

Advisers

The Committee, from time to time, sought advice from Company counsel (Morrison & Foerster (UK) LLP) on remuneration issues. The following individuals, upon request of the Chairman, provided information and services that materially assisted the Committee with its deliberations:

• Prof Mark Ferguson (Chief Executive Officer);
• Mr David Blain (Chief Financial Officer); and
• Mrs Collette Butterworth (Vice President of Human Resources).

Between 1 October 2008 and 30 September 2009, the Committee met seven times to discuss and agree remuneration principles and policies, including reviewing the competitiveness of remuneration of its Executives and the appropriateness of the Company’s incentive arrangements. With the exception of Dr Rosenthal who missed an unscheduled additional meeting, all serving members of the Committee were present at each meeting and Mrs Susan Taylor attended all meetings following her appointment.

Matters considered by the Committee

A summary of the matters considered at the Committee meetings over the past year and actions taken is as follows:

• consideration of feedback from shareholders to the Chairman, Non-executive Directors and Chief Executive Officer;
• a review of Executive Director remuneration and long-term incentive awards to the Executive Directors;
• agreeing performance of the Group against various criteria for annual cash bonus and share incentive schemes for the year to 30 September 2009 and agreeing the level to which Executive Directors had achieved against the personal performance criteria relevant to bonus awards;
• following the review, approving any pay, cash bonus or share awards to the Executive Directors and any conditions attached to such awards;
• review of the Executive Directors’ objectives for 2009 and 2010;
• approving the remuneration and LTIP award for Mr David Blain when joining the Board as Chief Financial Officer;
• approving the severance arrangements for the resignation of Dr Sharon O’Kane from the Board;
• review of the remuneration of the Company Chairman and Non-executive Directors;
• consideration and approval of long-term incentive awards to a small group of senior staff below the level of Executive Director;
• review of remuneration as part of the Company restructuring plan and the new staffing and reporting structures;
• agreeing and approving the voluntary severance scheme for the Company restructuring;
• confirming and agreeing the position of each share option scheme (CSOP, ESOP and LTIP) for those staff to be made redundant;
• agreeing and approving the cash bonus and share option award schemes designed to motivate and retain staff after the restructuring;
• reviewing the remuneration of all other employees;
• reviewing the structure and setting the parameters and objectives for the 2009/2010 bonus and share incentive awards for all other employees;
• succession planning and future Committee membership; and
• review of the Committee’s effectiveness.

Meetings with shareholders

The Chairman and Non-executive Directors (including the Chairs of the Remuneration and Audit Committees and the Senior Independent Non-executive Director) met with shareholders during the year. Additionally, the Chief Executive Officer and Chief Financial Officer met regularly with shareholders and were occasionally accompanied by the Chairman and/or a Non-executive Director. Shareholder views and feedback, e.g. on the restructuring plan, Board size and Director remuneration, have been considered by the Remuneration Committee when setting and applying the remuneration policy for this year.

Remuneration policy

The Company’s remuneration policy aims at attracting, motivating and retaining qualified and experienced Senior Executives and managers whilst ensuring that the interests of employees are in line with the interests of shareholders. The Committee reviews the remuneration policy on a regular basis to ensure that it is in line with the Group’s business strategy and recognises key developments in remuneration market practice. The Committee regularly reviews the Remuneration Guidance issued by the FSA, Risk Metrics, PIRC as well as updates on market practice and trends from a variety of organisations. The Company’s remuneration review takes place annually in October. Prior to this date, the Committee meets to discuss the remuneration of Executive Directors and senior managers. The Chief Executive Officer makes recommendations to the Committee regarding the remuneration of each of his direct reports and the overall remuneration framework of all permanent employees (temporary employees are excluded from the review). The Committee, while the Chief Executive Officer is absent, discusses the remuneration of the Chief Executive Officer based on recommendations from the Chairman of the Board. The Chairman of the Board and members of the Committee meet with individual shareholders, on request, to discuss Renovo’s Remuneration Policy and to obtain feedback and suggestions. When determining the pay of Directors, the Remuneration Committee reviews the pay of all levels of staff within Renovo and considers the Directors’ pay in the context of pay elsewhere within the Company.

The policy set out in this report has been applied during the year ended 30 September 2009 and is intended to apply in the year ending 30 September 2010. Where relevant, the description below includes a summary of the application of this policy during the year by the Committee, in addition to an explanation of the policy itself. The remuneration policy is based upon the following three key principles:

Pay for performance linked to key strategic milestones

Variable pay elements are underpinned by performance metrics which are linked to Renovo’s key strategic milestones to ensure alignment between the Company’s long-term strategy and the relevant remuneration objectives. Each year the Committee sets one year targets, in respect of the annual Short-term Incentive (STI) plan which, if achieved, is paid in cash and different, longer-term three year targets in respect of the Long-term Incentive Plan (LTIP).

Market competitive pay

Total remuneration levels are reviewed regularly relative to other UK Official List biotechnology and pharmaceutical companies of similar size and scope. For base salary and variable pay of the Executive Directors and senior management, the Committee aims for levels generally between the market median and upper quartile, however it is acknowledged that flexibility may be necessary in special circumstances.

Reward for outstanding performance

In the event performance significantly exceeds challenging targets, the Committee may provide rewards that acknowledge these achievements.

Components of remuneration

The intended balance, purpose and performance measures of the remuneration package are summarised in the table below and discussed in further detail beneath it. In general, the policy aims to provide a market competitive package, which delivers more reward to the Executive Directors (and value to the Company) if the strategic targets determining the variable component are met. The composition of the package is also designed to aid retention of key Senior Executives and Managers.

Component	Purpose	Performance measure
Base salary	Market competitive levels	Individual contribution
STI	Focus on annual performance targets	Personal and departmental objectives
		Corporate milestones for the year
LTIP	Focus on long-term strategic targets	Long-term corporate milestones
		Renovo’s share price performance relative to FTSE All Share Index
Executive Share Option Plan*	Focus on longer-term share price	Renovo’s share price performance relative to FTSE All Share Index
	Individual performance	Personal objectives

* The Committee does not currently intend to grant share options to Executive Directors or the senior management team under this plan.

Base salary

The Renovo Board recognises that the success of the Company hinges on the performance and abilities of its employees. Therefore, as a matter of policy, Renovo remunerates all its Executive Directors and employees by taking into account comparable external market data and individual contributions.

Variable pay

The STI is intended to reward the achievement of significant one year targets which are determined by the Committee annually and disclosed later in this report. The LTIP is intended to reward the achievement of different long-term three year targets which are determined by the Committee annually and disclosed later in this report. Both the one year and three year targets set by the Committee are considered by the Committee to build significant shareholder value in Renovo, if met, and require stretching performance by the Executive Directors.

Base salary: application of the policy

2008–2009

As disclosed in last year’s Annual Report, taking into account the reduced market value of the Company, and the general economic environment, the base salaries of the Executive Directors were not increased.

2009–2010

For the year commencing 1 October 2009, taking into account the general economic environment, the base salaries of the Executive Directors will not be increased for the forthcoming year. This is the second consecutive year in which the base salaries of the Executive Directors have not been increased.

Short-term Incentive (STI)

Proposals are made by the Chief Executive Officer for the other Executive Directors and by the Chairman (in the Chief Executive Officer’s absence) for the Chief Executive Officer, discussed, amended and approved by the Committee, with regard to the corporate and personal Executive Director objectives that must be met each financial year for the annual bonus to be paid. The purpose of the bonus is to incentivise and reward Executive Directors for achieving excellent performance.

The STI plan is focused on the achievement of: (i) personal and departmental objectives; (ii) corporate milestones; and (iii) Company financial capability. Measure (iii) influences the absolute level of the award.

Setting and measurement of STI performance conditions

For the Chief Executive Officer, the performance measures in (i) and (ii) have a 25:75 weighting and for the other Executive Directors the weighting is 40:60. The corporate milestones are based upon the development of Renovo’s clinical and pre-clinical products. The Committee assigned a higher ratio of overall Company performance to the Executive Directors’ STIs reflecting the requirement for them to work as a team and focus on overall Company performance. These objectives are ratified by the Board.

The Chief Executive Officer proposes specific, measurable objectives for corporate performance and personal performance for each of the Executive Directors which are discussed, amended and approved by the Committee. The objectives are a mix of commercial, scientific and clinical milestones critical to the development of the Company. The Chairman of the Board in turn, sets objectives for the Chief Executive Officer which are also discussed, amended and approved by the Committee. For example the Chief Medical Officer’s objectives would include ongoing clinical trials recruited and reported on schedule and to budget. The Chief Financial Officer’s objectives would include monitoring, reporting and controlling expenditure in accordance with the Board approved restructuring plan and budget.

The achievement of performance conditions (i) and (ii) is assessed by the Chief Executive Officer who then presents and makes a recommendation to the Committee. An assessment of personal performance can proportionally increase or decrease the Executive Directors’ net bonus. The Chairman sets specific measurable objectives for the Chief Executive Officer, assesses performance against these and makes a recommendation to the Committee.

The Committee assesses the degree to which targets have been achieved and sets the bonus taking into account internal and external circumstances and Company financial capability. The bonuses disclosed in any given Annual Report refer to bonus payments for the achievement of targets in the fiscal year being reported.

The Committee considers that the performance metrics underpinning the STI are in line with shareholders’ expectations. The performance targets are reviewed annually to ensure they remain sufficiently challenging.

STI: application of the policy

2008–2009

The corporate and personal objectives set and agreed for the Executive Directors for 2008–2009 were met. Examples of the objectives achieved include:

• initiation and effective management of the first Juvista European Union Phase 3 trial;
• effective management of the Shire collaboration on Juvista;
• ongoing clinical trials recruited and reported on schedule e.g. Juvista Varicose Veins (0042), Juvidex (0082);
• implementation of a new project management process within Renovo;
• complete pilot toxicology for a new clinical development candidate;
• review external opportunities for companies or compounds to complement the internal pipeline; and
• publication and presentation of key clinical/scientific data.

In recognition of the current financial environment, the Company’s share price and the Company restructuring announced on 17 September 2009, the Executive Directors of Renovo voluntarily agreed to defer any 2009 cash bonus awarded under the current plan to the time of reporting of the first Juvista EU Phase 3 trial (on schedule for H1 2011) and additionally to make the payment of this bonus contingent on a positive outcome of that trial meeting its primary endpoint.

The Remuneration Committee determined that the Executive Directors’ personal performance for the year 2008–2009 had been above target. Dr Sharon O’Kane’s performance was also above target and the bonus payable to her was taken into account when determining her severance arrangements in advance of her resignation from the Board on 10 February 2010. The Remuneration Committee also wished to ensure the retention of the remaining Executive Directors, particularly in view of their decreased number (five to three), resulting in additional work and responsibilities, Company restructuring and the potential of the ongoing Juvista, Adaprev, Prevascar and Juvidex clinical development programmes to add significant value to Renovo in the next two years. They therefore decided that a cash bonus of 50% of salary should be paid to Dr John Hutchison (£125,000), 50% of salary pro-rated for the length of appointment since 1 February 2009 should be paid to Mr David Blain (£66,667) and 70% of salary to Professor Mark Ferguson (£242,550). These cash bonus payments are deferred to the time of reporting of the first Juvista EU Phase 3 trial (currently projected to be H1 2011) and additionally their payment is subject to a key additional performance condition namely that the trial meets its primary endpoint.

2009–2010

Corporate milestones for STI awards to be made in 2010 include:

• complete recruitment of 350 patients to the first Juvista EU Phase 3 trial (0091). Execute the trial to the highest quality standard and within the Board approved budgets;
• generate interest in Renovo from new and existing investors through investor/analyst/broker presentations and deliver a share price increase;
• execute at least one value adding licensing/partnership deal; and
• complete the announced Company restructuring, motivate the remaining staff to work efficiently and effectively within the new structure and budgets to identify and deliver key value drivers.                

Additionally, the Chief Executive Officer and all of the Executive Directors have been set specific, measurable, time bounded personal objectives.

By reference to the comparator company benchmarks, target bonus levels for 2010 will be set at 60% of base salary for the Chief Executive Officer and 40% for Executive Directors. A maximum bonus of 100% of base salary for the Chief Executive Officer and 60% of base salary for the other Executive Directors may be payable for the achievement of outstanding performance, at the discretion of the Committee.

Long-term Incentive Plan (LTIP)

Summary of the Renovo LTIP

The LTIP comprises an annual grant of performance shares to Executive Directors. Vesting of these awards is conditional upon meeting pre set strategic performance targets over a three-year performance period. These targets are therefore differentiated from those used to determine the annual incentive bonuses. The targets are reviewed annually to ensure they are sufficiently stretching and in line with the Group’s longer-term strategy. The maximum face value of grants is normally 150% of base salary. In accordance with ABI guidelines the equity dilution limit of a maximum of 5% of the issued share capital may be granted as options to Executive Directors during any ten-year period.

LTIP: application of the policy
2008–2009 award

As disclosed in last year’s Annual Report and approved by shareholders at the AGM, the terms of the 2009 LTIP option awards are as follows:

Having reviewed the ABI guidelines and not wishing to give the Executive Directors exceptional benefits from the current low share price of the Company, the Remuneration Committee considered previous years’ LTIP awards. The view of the Committee was that a share price of £1.83, which was used for the calculation of the number of LTIP share options awarded in 2007, should be applied as the basis for the 2009 award and calculated at 100% of base salary for the Chief Executive Officer and Executive Directors.

Calculating the 2009 LTIP option award in this way reduces the number of options granted to the Chief Executive Officer and Executive Directors to 1/7th of the number that would be granted by reference to the Company share price at 30 September 2008.

The key targets to be met for vesting of these grants in 2012 are:

1.   Progress of key strategic product

Reporting of the European Union Phase 3 trial for Juvista in 2011 and within the Board agreed budget. 50% of the awarded LTIPs shall vest if this objective is achieved.

2.   Achieved shareholder value

Relative share price performance of Renovo Group plc as measured against the FTSE All Share Index (comprising the constituents at date of grant) over a three-year period. An option will not normally vest if Renovo Group plc’s ordinary share price performance (as measured as a percentage over the three-year period from the date of grant) is below the median performance. 50% of this portion of the LTIPs will vest at median performance and there will only be full vesting if Renovo Group plc’s ordinary share performance is in the upper quartile. The extent to which an LTIP vests over and above 50% will be calculated pro rata between median and the upper quartile. The point of testing this performance condition is the third anniversary of the date of award of the LTIP. All share prices are averaged over the three months before the beginning and end of the performance period. Share prices will be taken as the closing mid points on a daily basis.

50% of the awarded LTIPs shall vest if this objective is achieved.

Details of options granted for Directors under the LTIP for 2009 are:

		Granted	Exercise price per share	Date from which exercisable	Expiry date
Mr David Blain¹		300,000	£Nil	1 February 2012	1 February 2019
Prof Mark Ferguson		189,344	£Nil	26 September 2012	26 September 2019
Dr Sharon O’Kane²		119,829	£Nil	26 September 2012	26 September 2019
Dr John Hutchison		136,612	£Nil	26 September 2012	26 September 2019
Mr David Blain³		109,289	£Nil	26 September 2012	26 September 2019

¹   This initial LTIP award was granted to Mr David Blain on his confirmation as Chief Financial Officer as part of his recruitment      package.

²   The dates from which options held by Dr Sharon O’Kane are exercisable will be amended and will vest on her departure from the      Company on 10 February 2010 and be exercisable for a period of one year from that date.

³   The annual grant for Mr David Blain has been calculated on the same basis as for the other Directors.

The Committee considers Renovo’s share price performance against the FTSE All Share Index a relevant comparison of share price performance as it represents a broad equity market index of which the Company is a constituent member.

Although these awards are detailed in the 2008 Annual Report and approved at the 2009 AGM nonetheless the Committee reviewed whether they should be granted. It considered that granting the previously approved LTIP award was still in the best interests of the shareholders and the Company to maximise the motivation of key employees essential for the success of the business.

LTIP vesting

During this year the Committee carefully considered the extent to which the performance conditions had been met for the vesting of a previously granted LTIP award and made a formal vesting recommendation. The vesting conditions for these LTIPs were by reference to a milestone table in the IPO prospectus. This table, together with the decision made by the Remuneration Committee in respect of each vesting condition, is reproduced in the following table.

Vesting conditions

Juvista	Three US/UK based Phase 2 efficacy trials to start in the skin in H1 2006	Milestone met
	US/UK based pivotal Phase 3 trials in the skin to start in 2007	Not met – due to additional requirements imposed by the EMEA/FDA to execute a broad Phase 2 programme and additional toxicology. Moreover a Board decision was taken not to initiate any further Juvista trials until the Juvista partnership was complete. The first European Union Phase 3 Juvista trial started in 2008
	US Regulatory filing in 2009	Not met for the same reasons as above
	If granted Fast Track status of the surgical revision of disfiguring scarring: rolling US regulatory filing 2007–2008	Not applicable as Fast Track status was not granted by the FDA
Juvidex	Clinical report expected in H2 2006	Milestone met
Prevascar	Clinical report expected H1 2007	Milestone met
Zesteem	Two pivotal trials anticipated for regulatory filing: the first in skin graft donor sites to commence H2 2006	Milestone met

In view of the above, and consistent with the 2008 decision, the Remuneration Committee agreed that only 75% of the LTIP awards granted should vest as detailed below:

Executive Director	LTIP share options originally granted Number	LTIP share options vested in 2009 Number
Prof Mark Ferguson	328,736	246,552
Dr Sharon O’Kane	268,966	201,725

With the exception of Mr Andrew Kay, who exercised all of his vested LTIP options during the year, no other LTIP options vested were exercised. All of these options are unapproved for UK tax purposes.

2010 awards

Having reviewed the ABI guidelines and letter, the FSA Draft Code and the guidelines of RiskMetrics, the Remuneration Committee did not wish to give the Executive Directors exceptional benefits from the current low share price of the Company. The Remuneration Committee does not believe that the current share price fairly reflects the intrinsic value of the Company and to calculate the LTIP awards using the current share price (approximately 25p at 30 September 2009) would result in potential windfall gains for the Executive Directors, which the Committee wishes to avoid.

Instead, the Committee reviewed the recommendations and price targets of the eight brokers who cover Renovo.

The minimum target share price was 32p, the maximum 95p, the median 68p and the mean 64p.

The Committee decided to proceed with an approximate median share price of 70p as the basis for the calculation of the number of LTIP share options to be awarded in 2010. Moreover, although the shareholder approved maximum LTIP award that the Committee can make is 150% of baseline salary, the Remuneration Committee decided for the 2010 award that the LTIP options should be calculated at 100% of base salary for the Chief Executive Officer and Executive Directors.

Calculating the 2010 LTIP option award in this way (share price of 70p and award at 100% of base salary) reduces the number of options granted to the Chief Executive Officer and Executive Directors to under one quarter of the number that could have been granted by reference to the Company’s current share price of 25p and a maximum award of 150% of base salary. The Remuneration Committee considers a reduction by three quarters of the maximum grant that could be made appropriate in view of the Company’s share price performance and the prevailing financial environment.

Proposed 2010 LTIP award

Subject to review of the individual and scheme limits at the date of the award, the proposed 2010 LTIP will be as follows:

Executive Director	Number of shares over which LTIP options granted
Prof Mark Ferguson	495,000
Dr John Hutchison	357,143
Mr David Blain	285,714

The targets required to be met for vesting of these LTIP option grants will be:

1.  Company progress

Successful progression/development of the Company by either a refinancing, major licensing deal, or M&A transaction. 50% of the awarded LTIPs shall vest if this objective is achieved.

2.  Achieved shareholder value

Relative share price performance of Renovo Group plc as measured against the FTSE All Share Index (comprising constituents at date of grant) over a three-year period. An option will not normally vest if Renovo Group plc’s ordinary share price performance (as measured as a percentage over the three-year period from the date of grant) is below the median performance. 50% of this portion of the LTIPs shall vest at median performance and there will only be full vesting if Renovo Group plc’s ordinary share performance is in the upper quartile. The extent to which an LTIP vests over and above 50% will be calculated pro-rata between the median and upper quartile. The point of testing this performance condition is the third anniversary of the date of award of the LTIP. All share prices are averaged over the three months before the beginning and end of the performance period. Share prices will be taken as the closing mid-points on a daily basis.

50% of the awarded LTIPs shall vest if this objective is achieved.

Executive Share Option Plan (ESOP)

The Committee has not, and does not currently intend to grant share options to Executive Directors under this plan or to make further grants to the senior management. This plan will be used predominantly to incentivise a group of managers and employees below the Executive Directors and senior management.

2009 share option grants to staff excluding Executive Director

Following the completion of the Company restructuring in December 2009 with the consequent reduction in employee numbers by approximately one third, the Remuneration Committee wished to ensure the retention and motivation of the remaining Renovo staff. It has granted share option awards to all staff except the Executive Directors on 15 December 2009.

For the tier of management immediately beneath the Executive Directors (nine staff), it granted LTIP awards each of between 24,000–50,000 share options totalling 324,000 options, with a vesting date of 14 December 2011 and a single performance condition, namely that the first EU Juvista Phase 3 trial (trial 0091) meets its primary endpoint.

For the remaining staff, grants ranging from 1,000–15,000 share options each, totalling 396,000 options, were made over shares in Renovo Group plc at the market price (the mean of the three closing midpoint share prices on 15 December 2009 and the two preceding days). The ESOP share options vest on 14 December 2011 and have a single performance condition, namely that the first EU Juvista Phase 3 trial (trial 0091) meets its primary endpoint.

Cash bonus to staff excluding Executive Directors

No cash bonus was paid to any Renovo staff in 2009.

As a mechanism to retain, incentivise and motivate the staff remaining in Renovo after the Company restructuring, and to ensure that those staff are treated fairly in comparison to the Executive Directors (who deferred their 2009 cash bonus to the time of reporting of the first Juvista EU Phase 3 trial and further made the bonus payment contingent on that trial meeting its primary endpoint), the Remuneration Committee agreed the following cash bonus scheme for all staff except Executive Directors. The cash bonus for 2010 would be paid (50% in March 2010 and 50% in October 2010) following an appraisal process of all staff. The Committee considers this is important to ensure that the new Company structure is working effectively. In 2011 if the first Juvista EU Phase 3 trial meets its primary endpoint, all permanent staff employed by Renovo as of December 2009, who remain employed in good standing at the time of the trial’s reporting will receive a supplemental cash award of twice their 2010 individual cash bonus. This scheme is designed to promote rapid and effective functioning of the new Company structure and retention of the key staff to what the Committee considers the most valuable and important upcoming corporate milestone.

Pension

The Executive Directors participate in a defined contribution pension arrangement. The retirement age for Executive Directors is 65. Bonus or other incentive awards are not pensionable. For the Chief Executive Officer, the Company contributes 25% of base salary to the plan and other Executive Directors are entitled to contributions of 15% of base salary.

Benefits

Executive Directors are entitled to private medical expense insurance, permanent health insurance and life assurance. No car allowance is provided to Executive Directors.

Service contracts

The service contracts are for a rolling period of one year from date of appointment, expiring on retirement and provide for notice periods to be no longer than twelve months.

If the Company terminates the service agreements of any of the Executive Directors other than in accordance with the service agreement, the Company shall make a payment of a sum equal to 75% of base salary, bonus and benefits calculated by reference to the remaining notice period as liquidated damages for termination. The service contracts of the current Executive Directors include the following terms:

Executive Directors	Effective date of contract	Notice period from Director (months)	Notice period from Company (months)
Prof Mark Ferguson	18 October 2000	12	12
Dr Sharon O’Kane	18 October 2000	6	6
Dr John Hutchison	22 August 2007	12	12
Mr David Blain	1 February 2009	12	12

Biographical details of all Directors can be found in the Board of Directors section.

It is currently envisaged that service contracts for future Executive Directors will incorporate similar provisions as stated above.

Other appointments

The Executive Directors are permitted to serve as Non-executive Directors of other companies provided their appointment is first approved by the Board. Directors are allowed to retain their fees for such appointments. No Executive Director currently serves as a Non-executive Director.

Non-executive Directors

The Non-executive Directors have service contracts on a rolling period of three years from the date of their appointment.

The fees of the Chairman and Non-executive Directors are benchmarked against comparable companies.

The fees of the Non-executive Directors are reviewed annually by the Chief Executive Officer and Chairman and recommendations by a Committee of the Executive Directors chaired by the Chief Executive Officer are brought to the Board. The Chairman is not involved in the determination of his own fee levels. The Non-executive Directors do not hold share options and are not eligible to participate in future annual incentive plans, LTIPs or pension arrangements.

Application of the policy

For the year commencing 1 October 2009, taking into account the prevailing financial environment and Company restructuring, the fees of the Chairman and Non-executive Directors have not been increased. This is the second consecutive year in which the fees of the Chairman and the Non-executive Directors have not been increased.

Aggregate Directors’ remuneration (audited)

The total amounts for Directors’ remuneration were as follows:

	2009 £	2008 £
Emoluments	1,257,663	1,836,418
Defined contribution pension contributions	184,844	213,284
Aggregate gain on exercised share options	35,889	1,602,837
	1,478,396	3,652,539

Directors’ emoluments (audited)

Details of individual Directors’ emoluments for the year are as follows:

Name of Director	Salary/ fees £	Bonus+ £	Benefits £	2009 Total emoluments £	2009 Pension £	2009 Total emoluments £	2008 Pension £
EXECUTIVE
Prof Mark Ferguson	346,500	—	1,153	347,653	86,625	495,974	86,625
Dr Sharon O’Kane	219,287	—	781	220,068	32,893	291,282	30,797
Mr Andrew Kay*	54,177	—	587	54,764	7,826	307,260	31,302
Dr John Hutchison	250,000	—	1,903	251,903	37,500	318,377	35,438
Mr David Blain	133,333	—	842	134,175	20,000	—	—
Mr Robin Cridland*	—	—	—	—	—	195,453	29,122
NON-EXECUTIVE
Mr Rodger Pannone	60,000	—	—	60,000	—	60,000	—
Dr Barrie Thorpe	40,000	—	—	40,000	—	40,000	—
Dr David Ebsworth	28,667	—	—	28,667	—	27,533	—
Dr David Feigal*	9,267	—	—	9,267	—	26,000	—
Mr John Goddard	31,333	—	—	31,333	—	18,539	—
Dr Arthur Rosenthal	30,000	—	—	30,000	—	30,000	—
Mrs Susan Taylor*	23,833	—	—	23,833	—	—	—
Lord Leslie Turnberg	26,000	—	—	26,000	—	26,000	—
Aggregate emoluments	1,252,397	—	5,266	1,257,663	184,844	1,836,418	213,284

* Mr Andrew Kay resigned on 31 December 2008 and Dr David Feigal resigned on 9 February 2009. Mrs Susan Taylor was appointed on 4 November 2008. Mr Robin Cridland resigned on 31 July 2008.
⁺ The bonuses payable to Executive Directors in respect of the current year totalling £434,217 are now contingent upon the successful outcome of the Juvista Phase 3 trial due to report in 2011.

In addition to the amounts above, during the year the Company paid PIR Interims Limited £64,677 (2008: £52,343) in total for the services of Mr David Blain.

Directors’ interests (audited)

The interests of the Directors in the shares of the Company at 30 September 2009, together with their interests at 1 October 2008 were as follows:

The Company – ordinary shares of 10 pence each	Number of ordinary shares
	30 September 2009	1 October 2008
Prof Mark Ferguson	10,010,772	10,010,772
Dr Sharon O’Kane	5,916,295	5,916,295
Dr John Hutchison	2,452	2,452
Mr David Blain	—	—
Mr Rodger Pannone	53,750	53,750
Dr Barrie Thorpe	79,385	79,385
Dr David Ebsworth	57,000	57,000
Mr John Goddard	37,000	37,000
Dr Arthur Rosenthal	70,400	70,400
Mrs Susan Taylor	—	—
Lord Leslie Turnberg	55,850	55,850

Mr Andrew Kay’s interest in Renovo’s ordinary shares at the time of his resignation was 1,053,646. Dr David Feigal’s interest at the time of his resignation was 35,200.

Directors’ share options (audited)

Aggregate emoluments disclosed do not include any amounts for the value of options to acquire ordinary shares in the Company granted to or held by the Directors. Details of options exercised during the year are as follows:

Name of Director	Option scheme	Number of shares over which option exercised	Aggregate exercise price paid £	Aggregate value of shares at exercise £*	Gain on exercises 2009	Gain on exercises 2008
Prof Mark Ferguson	EMI	—	—	—	—	678,962
Dr Sharon O’Kane	EMI	—	—	—	—	407,407
Mr Andrew Kay	LTIP	188,276	1	35,890	35,889	271,605
Mr Robin Cridland	EMI & LTIP	—	—	—	—	196,535
Dr Barrie Thorpe	Unapproved	—	—	—	—	12,082
Dr Arthur Rosenthal	Unapproved	—	—	—	—	24,164
Dr David Feigal	Unapproved	—	—	—	—	12,082
Total		188,276	1	35,890	35,889	1,602,837

* The mid market price on the day of exercise (16 December 2008) was 19.0625 pence.

Further details of the option schemes can be found in note 25 to these financial statements.

Details of options for Directors who served during the year are as follows:

Name	Scheme	1 October 2008	Granted	Exercised	Lapsed	30 September 2009	Exercise price	Date from which exercisable	Expiry date
Prof Mark Ferguson	LTIP	493,103	—	—	—	493,103	£Nil	12/04/08	12/04/16
	LTIP	328,736	—	—	82,184	246,552	£Nil	12/04/09	12/04/16
	LTIP	198,004	—	—	—	198,004	£Nil	30/07/10	30/07/17
	LTIP	1,797,406	—	—	—	1,797,406	£Nil	09/09/11	09/09/18
	LTIP	—	189,344	—	—	189,344	£Nil	26/09/12	26/09/19
Dr Sharon O’Kane1	LTIP	201,725	—	—	—	201,725	£Nil	12/04/08	12/04/16
	LTIP	268,966	—	—	67,241	201,725	£Nil	12/04/09	12/04/16
	LTIP	147,423	—	—	—	147,423	£Nil	30/07/10	30/07/17
	LTIP	887,520	—	—	—	887,520	£Nil	09/09/11	09/09/18
	LTIP	—	119,829	—	—	119,829	£Nil	26/09/12	26/09/19
Mr Andrew Kay2	LTIP	188,276	—	188,276	—	—	£Nil	12/04/08	12/04/16
	LTIP	251,034	—	—	251,034	—	£Nil	—	—
	LTIP	137,595	—	—	137,595	—	£Nil	—	—
	LTIP	971,470	—	—	971,470	—	£Nil	—	—
Dr John Hutchison	LTIP	268,256	—	—	—	268,256	£Nil	23/08/10	23/08/17
	LTIP	1,021,254	—	—	—	1,021,254	£Nil	09/09/11	09/09/18
	LTIP	—	136,612	—	—	136,612	£Nil	26/09/12	26/09/19
Mr David Blain	LTIP	—	300,000	—	—	300,000	£Nil	01/02/12	01/02/19
	LTIP	—	109,289	—	—	109,289	£Nil	26/09/12	26/09/19

¹ The dates from which the options held by Dr Sharon O’Kane are exercisable will be amended and will vest on her departure from the    Company on 10 February 2010 and be exercisable for a period of one year from that date.

² Mr Andrew Kay’s outstanding options lapsed following his resignation as a Director of the Company in December 2008.

The market price of the ordinary shares on the date of the LTIP grants on 26 September 2009 was 25.75 pence.

Except as detailed above, no other Directors had interests in shares or share options of the Company or any other Group Company at 30 September 2009. There have been no changes in the interests of the Directors in ordinary shares of the Company between 30 September 2009 and the date of this report.

Directors’ pension entitlements (audited)

Four Directors are members of defined contribution schemes. Contributions paid by the Company in respect of such Directors can be found in Directors' emoluments (audited).

Comparison of total shareholder return

The chart shows the value, at 30 September 2009, of £100 invested in Renovo Group plc at the offer price of the IPO for Renovo 10 pence ordinary shares of 87 pence, compared with the value of £100 invested in the FTSE All Share Index on the same date.

By 30 September 2009 Renovo’s total shareholder return had fallen by 70% compared to the offer price, underperforming the FTSE All Share Index, which fell by 14% over the period.

In the opinion of the Directors, the FTSE All Share Index is a reasonable index against which the total shareholder return of Renovo Group plc may be measured over a five-year term. This is because the FTSE All Share Index represents a broad based, objective measure of investment return across the whole of the market.

Approved by the Board of Directors on 15 December 2009 and signed on its behalf by:

DR ARTHUR ROSENTHAL

CHAIRMAN OF THE REMUNERATION COMMITTEE

Registered office: The Manchester Incubator Building, 48 Grafton Street, Manchester, M13 9XX
Registration number: 05427608 England and Wales

Site by design portfolio online services.