Final Results

Futura Medical PLC 21 March 2005 Press Release 21 March 2005 Futura Medical plc Final Results for the 12 months ended 31 December 2004 Futura Medical plc, the pharmaceutical drug and medical device group that develops innovative products for the sexual healthcare market, announces its Final Results for the 12 months ended 31 December 2004. Highlights - MED2002 - exclusive discussions entered into with a major global pharmaceutical group for a proposed agreement for the worldwide development and marketing of MED2002 - CSD500 - extensive stability work undertaken and production trials scheduled - FLD500 - encouraging safety and efficacy results from study completed in November 2004 - Pre-tax loss of £1.4 million for year ended 31 December 2004 (11 months ended 31 December 2003: £1.5 million) - Cash balances of £3.7 million at 31 December 2004 (31 December 2003: £2.4 million) Commenting on the results, James Barder, Chief Executive, said: 'We continue to make solid progress with our product development and completing the development of our lead products remains our absolute priority.' For further information: Futura Medical plc James Barder, Chief Executive Officer +44 (01483) 685670 james.barder@futuramedical.co.uk www.futuramedical.co.uk Media enquiries: Abchurch Peter Curtain Tel: +44 (0) 20 7398 7700 peter.curtain@abchurch-group.com www.abchurch-group.com Chairman and Chief Executive Joint Review We are pleased to provide shareholders with the following update for the year ended 31 December 2004 following another year of solid progress for Futura. Product Development MED2001/MED2002 - EroxonTM Treatment for erectile dysfunction We have continued to pursue our stated strategy of delivering the first ethical non-prescription 'over the counter' ('OTC') treatment for erectile dysfunction within the EU. In last year's statement, we mentioned concerns that had been raised about the potential risk of misuse and possible interaction of MED2001 when used in combination with PDE5 inhibitors, e.g. ViagraTM, CialisTM and LevitraTM. Over the past year, we have adjusted the formulation of MED2001 in order to maximise the localised effect of the drug when directly applied to the penis and to minimise the systemic uptake, thereby reducing the potential for any possible drug interaction. The new formulation, MED2002, has shown dramatically improved dermal absorption rates and our dose-ranging study programme is continuing prior to commencement of the Phase III study to confirm suitable dose levels and establish the pharmacokinetic profile. In addition to the reformulation work, we completed a study on 14 patients taking regular oral nitrates to treat their mild angina (heaviness or tightness in the centre of the chest caused when arteries supplying the heart become so narrow that not enough oxygen-containing blood can reach the heart muscle). The patients involved had a low cardiovascular risk and moderate to severe erectile dysfunction. The product was found to be safe and well tolerated with no clinically significant changes in blood pressure. It is currently estimated that between 5% and 10% of erectile dysfunction sufferers also experience angina. For safety reasons, medication normally used to treat angina prohibits this significant group of erectile dysfunction patients from using any current oral PDE5 inhibitors. This represents a major opportunity for us to provide a treatment for these patients with a currently unmet clinical need. Pending regulatory and ethical clearance, we would expect to include a group of angina patients suffering from erectile dysfunction within our Phase III study. We have also completed work on the design of the novel applicator for MED2002 and are pleased with the results following 'consumer acceptability' market research last August. It is intended that the applicator will be used within our Phase III trial. In the past few days, we have entered into exclusive discussions with a major global pharmaceutical group on a proposed agreement for the worldwide development and marketing of MED2002. This will allow time for discussions, joint co-operation and certain development work on MED2002 to be completed with a view to entering into a proposed agreement. Futura has undertaken not to execute any distribution or licensing agreement in respect of MED2002 with any third party other than this major global pharmaceutical group until 31 December 2005 when it is expected these discussions will be completed. In the meantime, under the terms of the signed exclusivity agreement between us, we are unable to provide shareholders with further information. It has always been Futura's strategy to secure the best distributor possible to maximise the commercial value for each of our products CSD500 - ZanifilTM Condom safety device During the past year, we have commented that stability studies on CSD500 have shown some loss of the active ingredient, glyceryl trinitrate, when the gel was added to the condom and that extensive studies were being undertaken to understand the complex chemistry of this system. Following further stability studies, we are now in a position to proceed to production trials, which are scheduled to commence shortly. Assuming a satisfactory outcome of these production trials and a final regulatory review, we would anticipate the submission of the medical dossier to regulatory authorities for an EU marketing authorisation. Over the next few months we will work in close collaboration with our distribution partner, SSL International plc ('SSL'), to coordinate the necessary activities for the launch of CSD500, pending product approval. FLD500 Female lubrication device In November 2004, we completed the extended clinical trial in healthy female volunteers at the internationally renowned Porterbrook Clinic in Sheffield, UK. Following the successful completion of this study we are conducting an assessment of all our FLD500 data in conjunction with regulatory authorities and SSL. It is anticipated that completion of this assessment will enable us to identify the remaining work necessary to complete the product development programme. We seek, through these activities, to enable SSL to have sufficient data to make a decision on the exercise of their option over the global marketing rights to FLD500 prior to the submission of the medical dossier to regulatory authorities for an EU marketing authorisation. Finance We have raised over £2.6 million gross during 2004 through share issues. Our overall loss after tax for the year ended 31 December 2004 was £1.2 million. The loss was in line with our expectations and our costs continue to be in line with our internal budgets. Cash at the end of December 2004 was £3.7 million. Corporate Governance We maintain a continued emphasis on good Corporate Governance. Considerable attention and effort has been made to ensure that we follow appropriate practice, mindful of our size and complexity, to safeguard the interests of our shareholders as a quoted company. Recent Transactions Futura's principal assets are our intellectual property rights and we will take all appropriate steps to protect these and prevent, resolve or prosecute any possible infringements thereon. In November 2003 we became aware of a possible infringement by CST Medical Limited ('CST'). Following discussions between the parties an agreement was entered into on 13 January 2004. In settlement of this matter, CST transferred certain intellectual property to Futura. Futura also received 10 per cent of the issued share capital of CST as at 13 January 2004 (which has now been diluted to 7.5%) and a royalty in respect of sales of the VielleTM stimulator up to 31 December 2008. The UK and Republic of Ireland part of this royalty was sold for £125,000 in July 2004. Outlook We believe that the sexual health market continues to evolve in favour of the products we have under development and the expertise we have assembled in this area. We see this favourable environment, our judicious approach to and close collaboration with the best possible international distribution partners and the nature and unique features of our products bearing fruit in terms of market uptake and ultimately in revenue generation. Nevertheless, we also continue to develop our business model by properly maintaining the appropriate high standards of ethical development of drugs and devices whilst always being mindful of constraining costs, remaining effective and efficient and minimising fixed overheads. We continue to be resolutely focused on the completion of development of our three products and our financial resources remain earmarked for this purpose. However, as our main products progress to a more advanced stage of their development we emphasise our interest in identifying and developing other pharmaceutical drugs and devices. These will be related to sexual health and wellbeing, be able to commercially justify their development costs and fit within our overall business model. Futura is currently evaluating two such potential opportunities and we will continue to update investors, as appropriate, of our future new product activities. Once more, we both would like to extend our thanks for all the hard work not only by the staff of Futura but also our small army of expert consultants and advisors to whom we are extremely grateful. Dr William D Potter James H Barder Non-Executive Chairman Chief Executive Consolidated Profit and Loss Account For the year ended 31 December 2004 Notes Year 11 months ended ended 31 December 31 December 2004 2003 £ £ Turnover 129,863 - Research and development costs (960,141) (626,746) AiM admission costs - (351,299) Other administrative costs (745,806) (530,238) Administrative expenses (1,705,947) (1,508,283) Operating loss 2 (1,576,084) (1,508,283) Other interest receivable and similar income 5 177,047 47,733 Interest payable and similar charges 6 - (584) Loss on ordinary activities before taxation (1,399,037) (1,461,134) Tax on loss on ordinary activities 7 170,086 100,771 Loss on ordinary activities after taxation and retained loss for 18 (1,228,951) (1,360,363) the year Basic and diluted loss per share (pence) 8 (2.6p) (3.2p) All amounts relate to continuing activities. There were no recognised gains and losses in the year, or in the prior period, other than those passing through the profit and loss account above and therefore no separate statement of total recognised gains and losses has been presented. The notes below form part of these financial statements Balance Sheets At 31 December 2004 Group Company Notes 31 December 2004 31 December 2003 31 December 2004 31 December 2003 £ £ £ £ Fixed Assets Tangible assets 9 28,120 21,901 - - Investments 10 - - 60,724 60,724 28,120 21,901 60,724 60,724 Current Assets Stock 11 14,812 17,279 - - Debtors - due within 12 258,211 148,192 18,094 10,760 one year Debtors - due after 12 - - 4,742,780 3,277,983 more than one year 273,023 165,471 4,760,874 3,288,743 Cash at bank and in 3,672,647 2,401,708 3,512,964 2,352,712 hand 3,945,670 2,567,179 8,273,838 5,641,455 Creditors: amounts 13 (225,275) (180,044) (26,584) (16,150) falling due within one year Net current assets 3,720,395 2,387,135 8,247,254 5,625,305 Total net assets 3,748,515 2,409,036 8,307,978 5,686,029 Capital and reserves Called up share 15 97,357 90,517 97,357 90,517 capital Share premium account 18 8,425,707 5,864,117 8,425,707 5,864,117 Other reserves 18 1,152,165 1,152,165 - - Profit and loss 18 (5,926,714) (4,697,763) (215,086) (268,605) account Equity shareholders' 19 3,748,515 2,409,036 8,307,978 5,686,029 funds The financial statements were approved by the Board on 18 March 2005 and were signed on its behalf by J H Barder, Director The notes below form part of these financial statements. Consolidated Cash Flow Statement For the year ended 31 December 2004 Year ended Year ended 11 months ended 11 months ended 31 December 31 December 31 December 31 December Notes 2004 2004 2003 2003 £ £ £ £ Net cash outflow from 1 (1,559,590) (1,533,281) operating activities Returns on investments and servicing of finance Interest received 175,141 48,157 Interest paid - (584) Net cash inflow from returns on 175,141 47,573 Investments and servicing of finance Corporation Tax Research and development tax 108,436 128,297 credit received 108,436 128,297 Capital expenditure Payments to acquire tangible fixed (21,648) (2,213) assets Proceeds on disposal of fixed assets 170 - Net cash outflow from capital (21,478) (2,213) expenditure Net cash outflow before use of (1,297,491) (1,359,624) liquid resources and financing Management of liquid resources Increase in short term (1,160,993) (841,025) deposits Financing Issue of ordinary shares 2,644,550 2,500,000 Expenses paid in connection (76,120) (249,987) with share issues Net cash inflow from financing 2,568,430 2,250,013 Increase in net cash 2 109,946 49,364 The notes below form part of this cash flow statement. Notes to the Consolidated Cash Flow Statement For the year ended 31 December 2004 1 Reconciliation of operating loss to net cash outflow from operating activities Year ended 11 months ended 31 December 2004 31 December 2003 £ £ Operating loss (1,576,084) (1,508,283) Depreciation 15,414 12,540 Loss on sale of fixed assets 3,897 - Decrease/(Increase) in stocks 2,467 (17,279) (Increase)/Decrease in debtors (46,463) 34,593 Increase/(Decrease) in creditors 41,179 (54,852) Net cash outflow from operating activities (1,559,590) (1,533,281) 2 Analysis of net cash At Cash At 1 January 2004 flow 31 December 2004 £ £ £ Cash at bank and in hand 54,788 109,946 164,734 Other liquid resources 2,346,920 1,160,993 3,507,913 2,401,708 1,270,939 3,627,647 3 Reconciliation of net cash flow to movement in net funds Year ended 11 months ended 31 December 2004 31 December 2003 £ £ Increase in cash in the year 109,946 49,364 Cash inflow from changes in liquid 1,160,993 841,025 resources Movement in net funds in the year 1,270,939 890,389 Net funds at start of year 2,401,708 1,511,319 Net funds at end of year 3,672,647 2,401,708 Notes to the Financial Statements For the year ended 31 December 2004 1 Accounting policies 1.1 Basis of preparation The financial statements have been prepared under the historical cost accounting rules and in accordance with applicable UK accounting Standards. The following principle accounting policies have been applied. In preparing these financial statements the Company has for the first time received revenue and an accounting policy is set out below in relation to this item. 1.2 Basis of consolidation The consolidated financial statements include the results of the Company and its subsidiary, Futura Medical Developments Limited, for the year ended 31 December 2004. Under the provisions of Financial Reporting Standard 6, Acquisitions and Mergers, these consolidated financial statements are prepared using merger accounting. The investment is recorded in the Company's balance sheet at the nominal value of the shares issued together with the fair value of any additional consideration paid. In the Group financial statements, merged subsidiary undertakings are treated as if they had always been a member of the Group. The results of such a subsidiary are included for the whole period in the year it joins the Group. The corresponding figures for the previous year include its results for that period, the assets and liabilities at the previous balance sheet date and the shares issued by the Company as consideration as if they had always been in issue. Any difference between the nominal value of the shares acquired by the Company and those issued by the Company to acquire them is taken to reserves. As permitted by Section 230 of the Companies Act 1985, the holding Company's profit and loss account has not been included in these financial statements. The Company made a profit after tax of £53,519 for the year (11 months ended 31 December 2003: loss after tax of £325,691). 1.3 Turnover Turnover comprises royalty fees and the sale of rights to future royalty fees and excludes value added tax. Royalty fees that are receivable are recognised as turnover in the year to which they relate. Sales of the rights to future royalty fees are recognised as turnover on the date on which they become receivable. 1.4 Research and development Research and development expenditure is charged to the profit and loss account in the year in which it is incurred. 1.5 Tangible fixed assets and depreciation Tangible fixed assets are stated at cost less depreciation. Depreciation is provided at rates calculated to write off the cost less estimated residual value of each asset over its expected useful life, as follows: Plant and machinery 25% Straight line Fixtures, fittings & equipment 25% Straight line 1.6 Deferred taxation Deferred tax balances are recognised in respect of all timing differences that have originated but not reversed by the balance sheet date, except that the recognition of deferred tax assets is limited to the extent that the Company anticipates making sufficient taxable profits in the future to absorb the reversal of the underlying timing differences. Deferred tax balances are not discounted. 1.7 Foreign currency translation Monetary assets and liabilities denominated in foreign currencies are translated into sterling at the rates of exchange ruling at the balance sheet date. Transactions in foreign currencies are recorded at the rate ruling at the date of the transaction. All differences are taken to profit and loss account. 1.8 Pension costs The Group provides retirement benefits to all employees and executive directors who wish to participate by defined contribution pension schemes. The assets of these schemes are held separately from those of the Group in independently administered funds. Contributions made by the Group are charged to the profit and loss account in the year in which they become payable. 1.9 Leased assets Operating lease rentals are charged to the profit and loss account on a straight line basis over the term of the lease. 1.10 Share based employee remuneration When shares and share options are granted to employees a charge is made to the Group profit and loss account and a reserve created in capital and reserves to record the fair value of the awards in accordance with UITF Abstract 17 ' Employee Share Schemes'. No charge has been made to date as the exercise price of all share options granted has been equal to the Company's share price at the date of award. Prior to becoming quoted on AiM, the Company's share price was considered to be the price of the placing preceding the particular grant of options. 1.11 National insurance on share options Where possible, all employee option holders enter into an Inland Revenue joint election to transfer the employers' national insurance contribution potential liability to the employee. To the extent that such an election has not been entered into and where the share price at the balance sheet date is greater than the exercise price on options granted after 19 May 2000, provision for any employers national insurance contribution has been made based on the prevailing rate of national insurance. However, under the terms of all option rules any liability which may arise is recoverable from each option holder and a corresponding debtor is also included. 1.12 Stocks Stocks are stated at the lower of cost and net realisable value using the FIFO method. Cost includes all direct expenditure in bringing the stock to its current location and condition. 1.13 Government grants Government grants relating to research and development expenditure are credited to the profit and loss account as the related expenditure is incurred. 1.14 Liquid resources For the purpose of the cash flow statement liquid resources are defined as short term money market deposits and notice accounts. 2 Operating loss Year ended 11 months ended 31 December 2004 31 December 2003 £ £ Operating loss is stated after charging: Depreciation of tangible assets 15,414 12,540 Loss on sale of fixed assets 3,897 - Hire of other assets - operating leases 70,752 64,462 Auditors' remuneration - Audit services 24,650 19,000 - Tax services 9,450 4,100 - Other services 2,500 2,000 Operating loss is stated after crediting: Government grants 54,587 9,163 The audit services relating to the Company for the year ended 31 December 2004 amount to £18,150 (31 December 2003: £14,000). 3 Wages and salaries The average monthly number of persons employed by the Group during the year which include Directors, and their aggregate emoluments are shown below: Year ended 11 months ended 31 December 2004 31 December 2003 No. No. Management and administration 9 8 The costs incurred in respect of those employed were: £ £ Wages and salaries 508,820 399,772 Social security costs 62,606 47,475 Other pension costs 31,535 24,773 602,961 472,020 4 Directors' emoluments Year ended 11 months ended 31 December 2004 31 December 2003 £ £ Directors Aggregate emoluments 405,536 338,065 Company pension contributions 21,869 18,723 Emoluments disclosed above include the following amounts paid to the highest Director: Year ended 11 months ended 31 December 2004 31 December 2003 £ £ Aggregate emoluments 134,668 116,153 Company pension contributions to money 12,078 10,347 purchase scheme During the year, one Director (11 months ended December 2003: one Director) participated in a private money purchase pension scheme and one Director (11 months ended December 2003: one Director) accrued a sum to be allocated to a private money purchase scheme once it has been established. 5 Other interest receivable and similar income Year ended 11 months ended 31 December 2004 31 December 2003 £ £ Bank interest receivable 177,047 47,733 6 Interest payable and similar charges Year ended 11 months ended 31 December 2004 31 December 2003 £ £ Bank interest and similar charges - 584 7 Taxation Year ended 11 months ended 31 December 2004 31 December 2003 £ £ Current tax UK corporation tax on loss for the year (162,421) (100,771) Underprovision in prior year (7,665) - Taxation on loss on ordinary activities (170,086) (100,771) The tax assessed for the year is different from the standard rate of corporation tax in the UK. The differences are explained below: Year ended 11 months ended 31 December 2004 31 December 2003 £ £ Loss on ordinary activities before tax (1,399,037) (1,461,134) Loss on ordinary activities at the standard rate (265,817) (277,615) of corporation tax in the UK of 19% (31 December 2003 - 19%) Expenses not deductible for tax purposes 2,480 68,432 Difference between depreciation and capital allowances 376 1,547 Other short-term timing differences 2,331 - Unutilised tax losses 137,409 147,804 Additional relief attaching to R&D tax claim (39,200) (40,939) Underprovision in current year (7,665) - Current tax charge for the year (170,086) (100,771) The Group has tax losses of approximately £3,950,000 (31 December 2003: £3,300,000) available for offset against future taxable profits. Deferred tax assets amounting to £755,282 (31 December 2003: £630,162) have not been recognised on the basis that their future economic benefit is not certain. The deferred tax asset comprises: Year ended 11 months ended 31 December 2004 31 December 2003 £ £ Accelerated capital allowances (943) (1,658) Other short term timing differences 6,331 2,835 Unutilised tax losses 749,894 628,985 755,282 630,162 8 Loss per ordinary share Basic loss per share has been calculated in accordance with FRS14. Basic loss per share has been calculated by dividing the loss on ordinary activities after taxation by the weighted average number of ordinary shares in issue during the year. The weighted average number of equity shares in issue was 48,069,839 (11 months ended 31 December 2003: 42,907,701 shares) and the loss for the year was £1,228,951 (11 months ended 31 December 2003: £1,360,363). The effect of all potential ordinary shares is antidilutive. 9 Tangible fixed assets Fixtures Plant and fittings, and machinery equipment Total £ £ £ Cost At 1 January 2004 24,763 32,913 57,676 Additions 18,194 7,506 25,700 Disposals (19,151) (1,133) (20,284) At 31 December 2004 23,806 39,286 63,092 Depreciation At 1 January 2004 14,899 20,876 35,775 Disposals (15,084) (1,133) (16,217) Charge for year 6,353 9,061 15,414 At 31 December 2004 6,168 28,804 34,972 Net book value At 31 December 2004 17,638 10,482 28,120 At 31 December 2003 9,864 12,037 21,901 All fixed assets of the Group are held in Futura Medical Developments Limited. 10 Fixed asset investments Shares in subsidiary undertakings £ Company Cost and net book value at 1 January 2004 and 60,724 31 December 2004 Interests in group undertakings Subsidiary undertaking Description of Proportion of shares held nominal value of issued shares held and voting rights Futura Medical Ordinary £1 shares 100% Developments Limited The above Company is incorporated in England and Wales, and is included in the consolidated financial statements. Futura Medical Developments Limited undertakes research, development, production and sale of pharmaceutical products. 11 Stock Group Company 31 December 31 December 31 December 31 December 2004 2003 2004 2003 £ £ £ £ Raw materials and 14,812 17,279 - - consumables There is no material difference between the replacement cost of stocks and the amounts stated above. 12 Debtors Group Company 31 December 31 December 31 December 31 December 2004 2003 2004 2003 £ £ £ £ Amounts receivable within one year: Corporation tax repayable 162,421 100,771 - - Other debtors 40,901 15,295 - - Prepayments and accrued 54,889 32,126 18,094 10,760 income 258,211 148,192 18,094 10,760 Amounts receivable after more than one year: Amounts owed by subsidiary - - 4,742,780 3,277,983 13 Creditors: amounts falling due within one year Group Company 31 December 31 December 31 December 31 December 2004 2003 2004 2003 £ £ £ £ Trade creditors 79,310 67,525 598 - Taxation and social 21,777 19,349 - - security Accruals and deferred 124,188 87,333 25,986 16,150 income Government grant - 5,837 - - 225,275 180,044 26,584 16,150 14 Financial Instruments The Group holds or issues financial instruments to finance its operations and to manage the interest rate risks arising from its operations and from its sources of finance. The Financial Review in the Annual Report sets out the Group's treasury and financial risk management policy. Trade creditors and trade debtors are the only other financial instruments that arise directly from the Group's operations. In the year, the Group's financial instruments comprised financial assets, held in sterling and in US dollars. Details of which are as follows: Financial assets The Group's financial assets at 31 December 2004 were cash at bank and in hand, made up as follows: 31 December 2004 31 December 2003 £ £ Currency Sterling 3,661,133 2,387,967 US Dollar 11,514 13,741 The Group's financial assets comprise money held in bank current accounts, which are instant access, and sterling cash deposits on the money market at monthly rates. Interest rates and currency of financial assets Fixed rate financial assets of £3,507,913 (31 December 2003: £2,346,920) were held in sterling cash deposits at the year end. The weighted average period to maturity for sterling cash deposits held at the year end is 32 days (31 December 2003: 45 days), with a weighted average interest rate of 4.75% per annum (31 December 2003: 3.56% per annum). Deposits are held with Butterfield Private Bank and Anglo Irish Bank. In addition, cash of £164,734 (31 December 2003: £54,788), including amounts held in a US dollar account of £11,514 (31 December 2003: £13,741), was held on current accounts at Butterfield Private Bank, earning nominal amounts of interest. This money is used to provide the necessary finance for the Group's operations. Currency exposures The Group enters into some contracts with suppliers which are paid in US Dollars, Euros, or Swiss Francs. To mitigate the risk of any exposure to foreign currency fluctuations where the supplier contract value is more than £100,000, once a price for a contract has been agreed, funds are transferred to the relevant foreign currency bank account immediately, and so are translated at the exchange rate at the date of agreement. The Group will therefore not be exposed to the risks of changing exchange rates, but they will also not benefit from any exchange rate gains. For contracts with smaller values the foreign currency risk is not considered sufficient by the Group to require the establishment of foreign currency bank accounts unless specific circumstances are identified which warrant this. Forward and option contracts are not used. Foreign exchange creditors at 31 December 2004 totalled £2,606 (31 December 2003: £nil). 15 Share capital Authorised 31 December 31 December 31 December 31 December 2004 2003 2004 2003 No No £ £ Ordinary shares of 0.2 500,000,000 500,000,000 1,000,000 1,000,000 pence each Allotted, called up and fully paid 31 December 31 December 31 December 31 December 2004 2003 2004 2003 No No £ £ Ordinary shares of 0.2 48,678,601 45,258,426 97,357 90,517 pence each In February 2004, the Company issued 1,125,175 ordinary shares of 0.2 pence each for the gross consideration of £800,000 pursuant to the exercise of the second call option. In March 2004, the Company completed a private placing and issued 2,200,000 ordinary shares of 0.2 pence each for the gross consideration of £1,804,000. In July 2004, the Company issued 85,000 ordinary shares of 0.2 pence each for total consideration of £37,250 pursuant to the exercise of share options and warrants. In November 2004, the Company issued 10,000 ordinary shares of 0.2 pence each for total consideration of £3,300 pursuant to the exercise of share options. 16 Share options At 31 December 2004, the number of ordinary shares of 0.2 pence each subject to options granted under the Share Option Schemes were: Exercisable from 1 August 2004 to 31 January 2006 Date of grant Exercise At 1 January Grants Options Options At 31 December price per 2004 exercised waived 2004 share 5 March 2002 33 pence 1,500,000 - - - 1,500,000 5 March 2002 53 pence 250,000 - - - 250,000 21 March 2002 33 pence 590,000 - (60,000) - 530,000 21 March 2002 53 pence 1,000,000 - - - 1,000,000 29 July 2002 50 pence 10,000 - - - 10,000 6 August 2002 50 pence 250,000 - - (250,000) - 25 October 2002 50 pence 120,000 - (10,000) - 110,000 3,720,000 - (70,000) (250,000) 3,400,000 The 60,000 options exercised with a grant date of 21 March 2002 and earliest exercise date of 1 August 2004 were approved by the Board for exercise on 21 July 2004 as a concession to a staff member and to a former director. These options were originally capable of exercise on 1 February 2004 and had only been adjusted as part of introducing to AiM in 2003. This change was of less than two weeks and 1 August 2004 itself fell within a closed period which did not expire until 27 September 2004. Exercisable from 1 August 2005 to 31 July 2007 Date of grant Exercise price At 1 January Grants Options Options At 31 December per share 2004 exercised waived 2004 8 July 2003 70 pence 410,000 - - - 410,000 Exercisable from 1 October 2006 to 30 September 2008 Date of grant Exercise price At 1 January Grants Options Options At 31 December per share 2004 exercised waived 2004 1 December 2004 70 pence - 150,000 - - 150,000 Totals for all exercise periods Date of grant Exercise price At 1 January Grants Options Options At 31 December per share 2004 exercised waived 2004 Totals for all exercise periods 4,130,000 150,000 (70,000) (250,000) 3,960,000 17 Warrants over shares Three warrant instruments have been established dated 22 July 2003, 28 November 2003 and 27 February 2004 over the ordinary shares of 0.2 pence each of the Company as follows: Date of issue Exercise price per At 1 January New Warrants Warrants At 31 share 2004 warrants exercised expired December 2004 22 July 2003 63 pence 250,000 - (25,000) (225,000) - 28 November 2003 64.89 pence 250,000 - - (250,000) - 27 February 2004 71.1 pence - 250,000 - - 250,000 500,000 250,000 (25,000) (475,000) 250,000 The warrants issued on 27 February 2004 expired on 28 February 2005. There are no arrangements outstanding to issue any further warrants. 18 Reserves Share premium Other reserves Profit and loss account account £ £ £ Group At 1 January 2004 5,864,117 1,152,165 (4,697,763) Retained loss for the year - - (1,228,951) Shares issued during the year 2,637,710 - - Cost of share issues (76,120) - - At 31 December 2004 8,425,707 1,152,165 (5,926,714) Company At 1 January 2004 5,864,117 - (268,605) Retained loss for the year - - 53,519 Shares issued during the year 2,637,710 - - Cost of share issues (76,120) - - At 31 December 2004 8,425,707 - (215,086) Other reserves represents the reserve arising on the acquisition of Futura Medical Developments Limited on 6 June 2001 via a share for share exchange accounted for as a Group reconstruction using merger accounting. 19 Reconciliation of movements in shareholders' funds Group Company 31 December 31 December 31 December 31 December 2004 2003 2004 2003 £ £ £ £ (Loss)/profit for the (1,228,951) (1,360,363) 53,519 (325,691) financial year Net proceeds from issue of 2,568,430 2,250,013 2,568,430 2,250,013 shares Net addition to 1,339,479 889,650 2,621,949 1,924,322 shareholders' funds Opening shareholders' funds 2,409,036 1,519,386 5,686,029 3,761,707 Closing shareholders' funds 3,748,515 2,409,036 8,307,978 5,686,029 20 Pension costs The Group provides retirement benefits to all employees and directors who wish to participate by defined contribution pension schemes. The assets of these schemes are held separately from those of the Group in independently administered funds. Contributions made by the Group are charged to the profit and loss account in the year in which they become payable. The pension charge represents contributions payable by the Group to independently administered funds and during the year amounted to £31,535 (11 months ended 31 December 2003: £24,773). Pension contributions payable but not yet paid at 31 December 2004 totalled £33,604 in respect of pension contribution entitlements where employees had not yet provided details of the funds to which the contributions should be made (31 December 2003: £21,816) and are included in creditors. 21 Related party transactions Dr W D Potter, a Director of the Company, provides consulting services to Futura Medical Developments Limited, the wholly owned subsidiary, through Stapleford Scientific Services Limited. Of the total fees and expenses invoiced during the year by Stapleford Scientific Services Limited of £41,953 plus VAT (11 months ended 31 December 2003: £42,019 plus VAT), the amount outstanding at 31 December 2004 to Stapleford Scientific Services Limited was £4,254 (31 December 2003: £4,057). During the year, the old computer system owned by Futura Medical Developments Limited, the wholly owned subsidiary, was replaced by a new computer system. The old computers, which were originally purchased in 2001, were offered to all staff and Directors at a residual value of £50 each. Four staff including two Directors, J H Barder and A L Clayden, acquired computers under this scheme. This information is provided by RNS The company news service from the London Stock Exchange

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