ANNUAL FINANCIAL REPORT 2010 2010 - TiGenix

The Company has started in 2010 the commercialising of itslead products ChondroCelect and Chondromimetic. Thereare no significant concentrations within trade receivablesand the Company does not expect this to occur in the future.Customer’s compliance with agreed credit terms is monitoredregularly and closely. The year-end balance of trade accountsreceivable was € 765k.Receivables related to research grants are recognized whenthere is a reasonable assurance that the Company will complywith the conditions attached to them and the grant will bereceived. The Company considers the overall recognitioncriteria being met when an award letter has been received, therelated project costs have been incurred, and grant specificmilestones have been achieved or are assumed to be reliablyachieved in the future;The credit risk on cash and cash equivalents of € 5,555k islimited given that the counterparties are banks with high creditscores attributed by international rating agencies.• Interest risk managementChanges in interest rates may cause variations in interestincome and expenses resulting from interest-bearing assets andliabilities.The Group is not subject to material interest risk. The financialloans are limited to € 520k and all leases have fixed interestrates.• Currency risk managementThe Group may be subject to limited currency risk. The Grouphas cash outflows in U.S. Dollars for the operations of its U.S.subsidiaries. The Company has no commercial revenuesdenominated in U.S. Dollars. The Group reports in Euro andhas tried to match foreign currency inflows with foreign cashoutflows. The Company has not engaged in hedging of theforeign currency risk via derivative instruments.As of December 31, 2010, the Group’s financial assets and financial liabilities were denominated in the following currencies:EUR USD GBP Other TotalsThousands of Euro (€) 2010 2009 2010 2009 2010 2009 2010 2009 2010 2009Financial assetsCash and cash equivalents 5,422 23,828 17 94 105 815 11 8 5,555 24,745Trade and other receivables 1,296 633 209 102 307 580 0 0 1,812 1,315Total Financial assets 6,718 24,461 226 196 412 1,395 11 8 7,367 26,059Financial liabilitiesTrade and other payables 2,280 1,320 23 57 254 665 0 4 2,557 2,045Loans and borrowings 792 1,031 0 0 0 0 0 0 792 1,031Total financial liabilities 3,072 2,351 23 57 254 665 0 4 3,349 3,076For compliance with the IFRS 7 rule, the Company discloses asensitivity analysis of an increase / decrease of exchange rate ofoperations in USD and GBP of 10%.The exposure of operations to the currency risk is limited tothe net amount of $1,292k, giving a potential loss or a potentialgain of €96k in case of an increase respectively a decrease ofthe $/€ exchange rate by 10% and £724k, giving a potential lossor a potential gain of €85k in case of an increase respectively adecrease of the £/€ exchange rate by 10%.173 •