ANNUAL REPORT 2012 - TiGenix

11.5.2.23. Critical accounting judgements
and key sources of estimation
uncertainty
In the application of the Group’s accounting
policies, the directors are required to use
certain critical accounting estimates,
assumptions and judgment about the
carrying amounts of certain assets and
liabilities. The areas involving a high degree
of judgement or complexity or areas where
assumptions and estimates are significant to
the consolidated financial statements, are
the following :
Recognition and measurement
of intangible assets
has been carried out and the directors are
confident that the carrying amount of the
internally generated intangible assets will be
recovered.
Additionally, in 2012, the directors also
reconsidered the recoverability of the
Group´s externally acquired assets, which
are included in the consolidated statement
of financial position at December 31, 2012
at KEUR 37,287 (2011 : KEUR 39,861; 2010 :
KEUR 18,386). A detailed sensitivity analysis
has been carried out and the directors are
confident that the carrying amount of the
externally acquired assets will be recovered.
Going concern
The Company considers that the regulatory
and clinical risks inherent to the development
of its products preclude it in general
from capitalising development costs
until the moment of regulatory approval.
Nevertheless after the positive CHMP opinion
of ChondroCelect end of June 2009, the
Company has decided to capitalise the
development costs. In the consolidated
IFRS financial statements of the Group,
development costs of ChondroCelect have
been capitalized as intangible assets if all
conditions for capitalisation have been
satisfied as specified in IAS 38.
On December 31, 2012, the Company had a
cash position of EUR 11.1 million. Based on the
monthly net cash burn during 2012 in operating
activities (EUR 1,5 million), this cash position is
not sufficient to continue the operations for
the next twelve months (until the next ordinary
shareholders’ meeting of April 2014).
In order to generate sufficient additional
cash to continue the operations for the
next twelve months, the Board of Directors
developed an action plan, which is reflected
in the budget, based on the following key
assumptions :
In 2012, the directors reconsidered the
recoverability of the Group’s internally
generated intangible assets, which are
included in the consolidated statement
of financial position at December 31, 2012
at KEUR 1,918 (2011 : KEUR 2,166; 2010 : KEUR
2,297). The project continues to progress in a
very satisfactory manner, and management
has reconfirmed the directors’ previous
estimates of anticipated revenues from
the project. A detailed sensitivity analysis
- An increase of the projected commercial
revenues of ChondroCelect, expected to
continue the same trend in units sold as in
2012, based on the expected progressing
reimbursement activities in additional
countries;
- Additonal non-dilutive funding, such as
grants (EU 7 th FP) and soft loans already
granted (Innpacto, Madrid Network), and
others not yet granted;
120 TiGenix I annual report 2012