Tissue Regenix : Annual Report and Financials for year ended 31 December 2021

Annual Report and Financials

for year ended 31 December 2021

Contents

Business overview	2
Strategic report	3
Chairman's Statement	3
Chief Executive Officer's Statement	5
Financial Review	9
Market Overview	12
Principal Risk and Uncertainties	12
Section 172 Statement	16
Governance	17
Management Team	17
Board of Directors	20
Corporate Governance Statement	21
Directors' Remuneration Report	25
Directors' Report	28
Directors' Responsibilities Statement	30
Financial Statements	31
Independent Auditor's Report	31
Consolidated Statement of Income	38
Consolidated Statement of Comprehensive Income	39
Consolidated Statement of Financial Position	40
Consolidated Statement of Changes in Equity	41
Consolidated Statement of Cash Flows	42
Notes to the Consolidated Financial Statements	43
Company Statement of Changes in Equity	69
Company Statement of Financial Position	70
Notes to the Company Financial Statements	71
Other	76
Notice of Annual General Meeting	76
Company and Adviser Information	80

Annual Report and Accounts 2021 1

Business 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 engineering 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 Surgery, 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 patient's 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 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 demonstrate 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 Group's main facility is in San Antonio, Texas, and is used for human tissue and processing dCELL® and BioRinse® products. 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 processing porcine tissue and OrthoPure® XT, as well as our controlled joint venture GBM-v in Rostock Germany for our human tissue in the EU.

2 Tissue Regenix Group plc

Chairman's Statement

Introduction

Despite the ongoing challenges posed by the COVID-19 pandemic, in 2021 we saw continued positive momentum 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 Group 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, operating 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 Group's strategy is the commercialisation 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 Group's ambitions and delivering shareholder value - The following are notable achievements in the period:

• Accelerated market penetration in the US, the largest healthcare market in the world:
  • The BioRinse® division performed strongly in 2021, aided by the completion of the first phase of the manufacturing expansion
  • The Group saw a strong comparative sales performance due to its diverse surgical specialties
• New partnership agreements:
  • 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 Group's sales portfolio further
  • The Group was successful in signing new strategic partners and expanded its customer base following the acquisition of three of the Group's existing strategic partners by larger organisations, where we benefit from greater market penetration
  • The Group also secured additional donor sourcing agreements in the US
• Phase 1 manufacturing facility expansion in San Antonio, Texas: • Completed on time and on budget
  • The completion of the manufacturing expansion increases the Group's revenue generation potential and processing efficiency as well as providing additional donor storage capacity
• Reorganisation of US dCELL® divisional operations:
  • 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
• Expansion of product portfolio and additional product line extensions:
  • During the year, the Group successfully launched product line extensions in its dCELL® division; DermaPure® Meshed, VNEW™ and MatrixND™

Annual Report and Accounts 2021 3

Chairman's Statement

continued

Board

With confirmation of my appointment as Non-Executive Chairman in February 2021 and other Board appointments 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 penetration.

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 in driving the Group's 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 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 growth 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 Group's cash position at year end supports our current 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 operational 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 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 partners and suppliers for their continued support throughout 2021, and we look forward with optimism for the year ahead.

Jonathan Glenn

Chairman

14 March 2022

4 Tissue Regenix Group plc