ANNUAL FINANCIAL REPORT 2010 2010 - TiGenix

The €18,155,669.74 cash that would be invested in Cellerixprior to the Contribution pursuant to the Cellerix ShareholdersInvestment was valued on a euro for euro basis 4 . The CellerixShareholders Investment has been completed between April26, 2011 and the Contribution Date.A special report was prepared by the Board of Directors andthe statutory auditor in connection with the Contribution, inaccordance with Article 602 of the Companies Code, furtherdescribing the Contribution. These reports are available onthe Company’s website and can be obtained at no cost at theregistered office of the Company, Romeinse straat 12, box 2,3001 Leuven, Belgium.The conclusions of the statutory auditor’s report on thecontribution of the shares in Cellerix are as follows 5 :“In accordance with article 602 of the Belgian Company Law andthe applicable Standards and Guidelines as issued by the Institute ofcertified Auditors (Instituut der Bedrijfsrevisoren), we investigated theplanned contribution of maximum 15.226.054 Cellerix shares.Upon finalization of our audit work, we are of the opinion that:(a) The transaction has been reviewed in accordance with theStandards and Guidelines as issued by the Institute of certifiedAuditors (Instituut der Bedrijfsrevisoren) regarding contributionsin kind. It should be noted that the identification of thecontributors has been limited to reconciliation with Cellerix’shareholder’s register since we did not have the underlyingbylaws and ID-identifications of the contributors and/or theirlegal representatives.(b) The Board of Directors is responsible for the valuation of thecontribution in kind and the determination of the number ofshares to be issued in return for the contribution in kind.4 Within the framework of the Contribution Agreement, 100% of the Cellerixshares corresponding to 8,036,645 shares was valued at €40,000,000, ora €4.9772 price per Cellerix share. The Cellerix Shareholders’ Investmentby certain Cellerix shareholders and other Cellerix investors, consistingof a cash contribution in the amount of €18,155,669.74 in exchangefor 3,431,425 Cellerix shares, was made at a €5.2910 price per Cellerixshare (share premium included) in accordance with the shareholders’and investment agreements signed between Cellerix shareholders in2009, as amended from time to time, and certain related agreements. Inaddition, on the same date as the date on which the Cellerix Shareholders’Investment took place, 3,638,914 Cellerix shares were issued at an issueprice of €0.013 per Cellerix share in accordance with the shareholders’ andinvestment agreement signed between Cellerix shareholders in 2009, asamended from time to time, and certain related agreements.5 The statutory auditor’s report refers to “ETV Options”. Such options werestill outstanding at the time that the auditor issued its report. However, as isset out in section 9.1.5.25, such “ETV Options” are no longer outstanding onthe Contribution Date.(c) The description of the contribution agrees to the normalrequirements of accuracy and clarity.(d) The valuation of the Cellerix’ shares to be contributed is based onthe valuation of both the technology component and the cashcomponent present in the Cellerix company.(e) The valuation of the technology component, amounting to40.000.000 EUR, is determined on a conventional basis, butthat the valuation methods withheld by the Board of Directorsfor the assessment of this conventional value, have lead to anamount that justifies the conventional value. We are therefore ofthe opinion that the contribution of the technology componentis not overstated, provided that the transferred technology willlead to marketable products within a reasonable timeframe andthat the estimated future net free cash flows, as taken up in thebusiness plan, will be realized.(f) The valuation of the cash component amounting to18.155.669,74 EUR if no ETV Options are exercised before thedate of the closing of the contribution, and amounting to18.605.669,74 EUR if all ETV Options are exercised before the dateof the closing of the contribution, provided that the conditionalcontribution of this cash component, which is only contractualagreed upon at present, will actually be contributed in theCellerix company by some of its current shareholders, after theExtraordinary Assembly of shareholders to whom this auditreport is addressed.(g) Subject to what is described in the sections a) to f) above, wecan conclude that the value amounting to 58.155.699,74 EURif no ETV Options are exercised, and 58.605.699,74 EUR if allETV Options are exercised, as a result of the applied valuationmethods, at least agrees to the number of shares to be issuedand their par value and the related share premium, so that thecontribution in kind is not overstated. The share price per shareamounts to 1,2977 EUR (share premium included).Based on this share price and provided the rounding down ofdividing numbers of shares, a maximum of 45.161.184 new shares ofthe Company will be issued, if all ETV Options are exercised.We would like to draw your attention to the fact that theExtraordinary Assembly of shareholders to whom this audit reportis addressed, will be requested to give an approval for an additionalcapital increase in cash with preferential rights for existingshareholders, amounting to a maximum of 15,3 million EUR. If thecontribution is realized before the start of the subscription period ofthis capital increase in cash, the share price per share issued in thiscapital increase in cash will amount to 1 EUR.57 •