directors' report
Principal activity and business review
Renovo is a biopharmaceutical product company developing a portfolio of products which exploit different mechanisms of action to reduce scarring and stimulate tissue regeneration at multiple body sites.
The Company commenced operations in 2000 and was admitted to the Official List of the London Stock Exchange in April 2006.
Highlights during the year include the commencement of the first pivotal European Juvista Phase 3 trial. Further information on the Group’s operational and financial performance during the year are detailed in the Chief Executive Officer’s Review and Financial Review. The Group’s key performance indicators are primarily the level of cash held and the completion of milestones in the development of the Group’s product pipeline as described in the Chief Executive Officer’s Review.
The Directors have considered the extended Enhanced Business Review requirements of Section 417 of the Companies Act 2006. The main trends and factors likely to affect the future development, performance and position of the business are outlined in the Chairman’s Statement and the Chief Executive Officer’s Review.
The Board regularly reviews the key contractual and other arrangements which are essential to the Group. Details of the arrangement with Shire plc are included in the Chief Executive Officer’s Review and the Group’s contractual commitments are outlined in note 23 of the financial statements.
The potential risks and uncertainties to the Group and the policies and procedures to mitigate these are set out in the Corporate Governance Statement.
Dividends
Currently Renovo is seeking primarily to achieve capital growth for its shareholders and therefore intends to retain future distributable profits, if any, in order to develop its business. Renovo does not anticipate paying any dividends in the foreseeable future and does not recommend the payment of a dividend for 2009 (2008: £Nil).
Group research and development activities
During the year the Group incurred expenditure of £21.6 million on research and development (2008: £23.7 million), all of which was expensed to the income statement in line with the Group’s accounting policies.
Charitable and political donations
No contributions were made to charities or political organisations during the year (2008: £Nil).
Directors
The Directors of the Company at 30 September 2009, who had been Directors for the whole of the year then ended unless otherwise indicated, were:
Mr Rodger Pannone (Non-executive Chairman)
Prof Mark Ferguson (Chief Executive Officer)
Dr Sharon O’Kane (Executive Director, Chief Scientific Officer)
Dr John Hutchison (Executive Director, Chief Medical Officer)
Mr David Blain (Executive Director, Chief Financial Officer and Company Secretary)
Dr Barrie Thorpe (Senior Independent Non-executive Director)
Dr David Ebsworth (Non-executive Director)
Lord Leslie Turnberg (Non-executive Director)
Dr Arthur Rosenthal (Non-executive Director)
Mr John Goddard (Non-executive Director)
Mrs Susan Taylor (Non-executive Director) appointed 4 November 2008.
Mr Andrew Kay resigned as an Executive Director on 31 December 2008 and Dr David Feigal resigned as a Non-executive Director on 9 February 2009.
Dr Sharon O’Kane, Dr David Ebsworth and Dr Arthur Rosenthal will stand down from the Board at the conclusion of the forthcoming Annual General Meeting (AGM) on 10 February 2010.
In accordance with the Company’s Articles of Association, Mr Rodger Pannone, Prof Mark Ferguson and Lord Leslie Turnberg will be subject to re-election as Directors by the shareholders at the forthcoming AGM.
Biographical details of all the Directors, including those submitted for re-election, are given in the Board of Directors section.
The interests of the Directors at 30 September 2009 in the share capital of the Company are disclosed in the Directors’ Remuneration Report.
Employees, environmental matters and social and community issues
Further details on employees, health and safety, environmental matters and corporate social responsibility are contained in the Corporate Social Responsibility Statement. This statement incorporates the Group’s policies on these matters and compliance with them.
Directors’ responsibilities
The Directors are responsible for preparing the Annual Report, Directors’ Remuneration Report and the financial statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements for each financial year. The Directors are required by the IAS Regulation to prepare the Group financial statements under International Financial Reporting Standards (IFRSs) as adopted by the European Union and have also elected to prepare the Parent Company financial statements in accordance with IFRSs as adopted by the European Union.
Under Company law the Directors must not approve accounts unless they are satisfied that they give a true and fair view of the state of affairs of the Company for that period. In preparing the financial statements, International Accounting Standard 1 requires that the Directors:
- properly select and apply accounting policies;
- present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information;
- provide additional disclosures when compliance with the specific requirements in IFRSs is insufficient to enable users to understand the impact of particular transactions, other events and conditions on the entity’s financial position and financial performance; and
- make an assessment of the Company’s ability to continue as a going concern.
The Directors are responsible for keeping proper accounting records that disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company 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 Company’s website. Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
Directors’ responsibility statement
We confirm to the best of our knowledge:
- the financial statements, prepared in accordance with IFRSs as adopted by the European Union, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation taken as a whole; and
- the Management Report, which is incorporated into the Directors’ Report, includes a fair review of the development and performance of the business and the position of the Company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties they face.
Substantial shareholdings
In addition to the Directors’ interests as disclosed in the Directors’ Remuneration Report, as at 10 November 2009 the Company had been notified, or is aware, of the following shareholdings amounting to 3% or more of the ordinary share capital of the Company:
Institution |
Shares held |
% holding |
|---|---|---|
Gartmore Investment Management |
40,719,564 |
21.4% |
Goldman Sachs International |
19,577,564 |
10.3% |
Fidelity Investments |
13,612,434 |
7.2% |
Shire Pharmaceuticals Group |
12,378,689 |
6.5% |
Legal & General Investment Management |
8,082,637 |
4.3% |
JP Morgan Partners |
7,984,420 |
4.2% |
ORA Capital |
7,499,841 |
3.9% |
No other person has reported an interest in the ordinary shares of the Company required to be notified to the Company.
Creditor payment policy
The Company and its subsidiaries agree the terms of payment when agreeing the terms and conditions for their transactions with suppliers. Payment is made in compliance with those terms, subject to the terms and conditions of the relevant transaction having been met by the supplier. The Group’s average creditor payment period at 30 September 2009 was 60 days (2008: 53 days).
Going concern
Renovo Group plc is a research and development based business with no currently marketed products. It expects to incur further losses as it continues to develop its portfolio of candidate products and related technology and may require additional financing for the future operation of its business, including further equity funding as appropriate, before it reaches sustained profitability.
The Group is well funded with £65.3 million in cash and investments as at 30 September 2009 on which it relies to meet its pending commitments. Having considered reasonably possible variations to the Group’s forecasts the Directors confirm that they have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. For this reason, they have adopted the going concern basis in preparing the financial statements.
Information given to auditors
Each of the persons who is a Director at the date of approval of this Annual Report confirms that:
- so far as the Director is aware, there is no relevant audit information of which the Company’s auditors are unaware; and
- the Director has taken all the steps that he/she ought to have taken as a Director in order to make himself/herself aware of any relevant audit information and to establish that the Company’s auditors are aware of that information.
This confirmation is given and should be interpreted in accordance with the provisions of Section 418 of the Companies Act 2006.
Auditors
Deloitte LLP have expressed their willingness to continue in office as auditors. A resolution concerning their re-appointment will be proposed at the AGM.
By order of the Board
MR DAVID BLAIN
CHIEF FINANCIAL OFFICERAND COMPANY SECRETARY
15 DECEMBER 2009