Preliminary Results
Futura Medical PLC
22 May 2006
For Immediate Release 22 May 2006
Futura Medical plc
Final Results for the year ended 31 December 2005
Futura Medical plc (AIM: FUM), the pharmaceutical drug and medical device group
that develops innovative products for sexual health, is pleased to announce its
final results for the year ended 31 December 2005.
Operational Highlights
• CSD500 - regulatory dossier submitted to the relevant Notified Body and
Competent Authority seeking marketing approval within the European Union
• FLD500 - Durex(TM) exercises its option for global distribution and
marketing rights
• MED2002 - in final stage of formal approval for worldwide development and
commercialisation with a major global pharmaceutical group
Financial Highlights
• Pre-tax loss of £2.2 million (2004: £1.4 million)
• Cash balances of £1.8 million (2004: £3.7 million)
James Barder, Futura's Chief Executive, said:
'2005 has been a year of solid progress and we look forward to an exciting and
productive 12 months ahead.'
For further information:
Futura Medical plc
James Barder, Chief Executive Tel: +44 (0) 1483 685 670
Anthony Clayden, Finance Director
Buchanan Communications
Mark Court / Rebecca Skye Dietrich Tel: +44 (0) 20 7466 5000
Chairman and Chief Executive Joint Review
All too often the announcements we make about achieving intermediate milestones
fail to convey the full impact of the progress we have made. It therefore gives
us enormous pleasure to advise our shareholders of some major milestones Futura
has achieved in the past year.
Product Development
CSD500 - Zanifil(TM)
Condom safety device
In April 2005, we announced that satisfactory pilot stability and compatibility
results had enabled SSL International plc ('SSL'), the consumer healthcare
brands company and manufacturer and distributor of Durex(TM) the world's
biggest-selling branded condom, to commence manufacturing trials and additional
stability studies to meet regulatory requirements.
In November 2005, SSL submitted the regulatory dossier for CSD500 to the
relevant Notified Body and Competent Authority seeking marketing authorisation
in the European Union. The initial response from the Notified Body and Competent
Authority has been positive and, in line with expectations, additional
information has been requested which is a normal part of the approval process.
We anticipate a further response from the Notified Body and Competent Authority
during the summer of 2006 and at that point will again update our shareholders.
The regulatory approval of CSD500 will be a major milestone achievement for
Futura which will lead to our generating revenues from the first of our three
key products.
CSD500 will be marketed by our global distribution partner, SSL. CSD500 contains
an active compound which will help healthy men maintain an erection during
sexual intercourse, thereby helping to reduce condom slippage. Both Futura and
SSL believe CSD500 could be an exciting leading product within the Durex(TM) range
that will help to improve the sex lives of Durex(TM)'s customers.
FLD500
Female lubrication device
We have also made significant progress with FLD500.
In July 2005, SSL exercised its option for the rights to market and distribute
FLD500 globally. FLD500 will be marketed as a Durex(TM) condom targeted at women,
who currently purchase 40% of condoms sold within the UK and are therefore an
important sector of the market.
In August 2005, we also concluded, following a complete review of all our
clinical trials, that we had sufficient clinical data to support a regulatory
dossier submission to a Notified Body and Competent Authority seeking marketing
authorisation in the European Union thereby avoiding the need of further
expensive and time consuming clinical trials.
Although there is considerable technical overlap with CSD500, FLD is based on
significantly different design resulting in many new technical and manufacturing
challenges. Significant progress has been made since the interim statement last
September and we expect to make a further announcement shortly to shareholders
on this development once the current technical evaluation studies have been
completed.
MED2002 - Eroxon(TM)
Treatment for erectile dysfunction
We have been in exclusive discussions with a major global pharmaceutical group
('MGPG') on a proposed agreement for the worldwide development and
commercialisation of MED2002 for well over 12 months.
During this period, considerable resources have been committed by both parties
to the joint development of MED2002. MGPG has conducted work to confirm the
optimum regulatory strategy for MED2002 in the key consumer markets and evaluate
the size of the market opportunity for MED2002.
In November 2005, we announced the results of our in vivo trials on healthy
subjects in respect of our revised formulation of MED2002. In the first of the
trials, we observed an excellent safety profile with a dose-related occurrence
of adverse events which allowed us to define the maximum tolerated dose. The
side effects were entirely predictable, being predominantly mild headaches which
resolved spontaneously and did not require treatment. No serious side effects
were recorded. Further, the absorption profile was consistent with the intended
use of the product in treating erectile dysfunction, suggesting a rapid onset of
action within a few minutes of product application.
The second of the trials also confirmed an excellent safety profile. In
addition, and despite the lack of sexual stimulation, subjects displayed
increases in blood flow into the penis which were consistent with those seen
during sexual arousal and are an encouraging indicator of the potential efficacy
of MED2002 in the treatment of erectile dysfunction.
With these studies completed the agreement of the commercial terms will
facilitate a full commitment by both parties to the joint development programme
for MED2002. As part of this, the exclusivity period with MGPG has been
extended and we are now advised that the formal approval process is in its final
stage within MGPG.
Futura expect MED2002 to become the world's first non-prescription
pharmaceutical treatment for men with ED. By being available from pharmacies
without the need for a doctor's prescription, MED2002 will be aimed at
satisfying a large unmet demand from men with ED.
Finance
Our overall loss after tax for the year ended 31 December 2005 was £1.9 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 2005 was £1.8 million.
Outlook
We believe we are close to having signed agreements for all three products with,
in our view, the best possible partners for the products in their respective
markets. Moreover we anticipate that no further clinical trials will be
required for either of the condom products prior to regulatory approvals.
Futura's management team has been seeking new product opportunities and we
expect to update shareholders on our progress following the conclusion of an
agreement for MED2002. Nevertheless, our efforts over the past year have been
committed to our three key products and will remain so.
Conclusion
The past twelve months have been pivotal for us and the momentum continues to
gain pace. Once more we want to thank our incredible small team of hard working
professionals who drive Futura forward and hope that our shareholders remain as
excited about the future as we are.
Dr W D Potter J H Barder
Executive Chairman Chief Executive
Financial Review
The Financial Review should be read in conjunction with the financial statements
and the notes to the financial statements.
Turnover
The Group's turnover for the year to 31 December 2005 was £1,660 (year ended 31
December 2004: £129,863). This derived from the settlement of an intellectual
property dispute in 2004 and the major part of this royalty stream was sold in
July 2004 for £125,000.
Losses
The Group retained loss for the year ended 31 December 2005 was £1.9 million
(year ended 31 December 2004: £1.2 million). The Group operating loss for the
year ended 31 December 2005 was £2.3 million (year ended 31 December 2004: £1.6
million) and the operating loss of the sole subsidiary, Futura Medical
Developments Limited, for the year ended 31 December 2005 was £2.2 million (year
ended 31 December 2004: £1.5 million).
Losses per share for the year ended 31 December 2005 were 3.9 pence (year ended
31 December 2004: 2.6 pence).
Group research and development costs
The Group continues to focus on balancing the most cost effective and ethical
research and development against the commercial applications of such research
and development and time to bring products to market.
Research and development costs for the year were £1,535,240 (year ended 31
December 2004: £960,141). The main focus of this expenditure related to
significant expansion of development work and clinical trials in respect of
MED2002 in anticipation of entering into an agreement with MGPG, and studies in
respect of CSD500 leading to regulatory dossier submission in November 2005.
Other administrative costs
The Group continues to maintain a focus on tight control of expenditure. Other
administrative costs for the year ended 31 December 2005 were £791,004 (year
ended 31 December 2004: £745,806). The principal reasons for the increase relate
to enhanced investor relations and other professional adviser and service costs
arising from our being quoted on AIM, the addition of one administrative staff
member and ongoing licence negotiations.
Taxation
A research and development tax credit of £286,973 (31 December 2004: £170,086)
in respect of research and development expenditure incurred is recognised in the
financial statements.
Capital structure and funding
At 31 December 2005, the Group had shareholders' funds of £2.0 million (31
December 2004: £3.7 million) including cash balances of £1.8 million (31
December 2004: £3.7 million). The Group did not have any bank borrowings at 31
December 2005 (31 December 2004: £nil).
The Group is principally funded by equity capital. However, it does continue to
receive research and development tax credits under the Inland Revenue scheme and
also received a final tranche from the research grant awarded in 2003 from the
DTI.
During the year ended 31 December 2005, in addition to turnover the Group's cash
inflows included net proceeds from the issue of shares (pursuant to the exercise
of share options) of £135,800 (year ended 31 December 2004: £2.6 million from
placings and the exercise of warrants), research and development tax credit
receipts of £167,858 (year ended 31 December 2004: £108,436) and the final
tranche of the research grant from the DTI totalling £11,250 (year ended 31
December 2004: £48,750).
Net cash outflow from operating activities during the year ended 31 December
2005 were £2.3 million (year ended 31 December 2004: £1.6 million).
Treasury and financial risk management policy
It is Group policy not to enter into speculative positions using complex
financial instruments. The Group's primary treasury objective is to minimise
exposure to potential capital losses whilst at the same time securing favourable
market rates of interest on Group cash deposits using money market deposits with
banks.
In respect of foreign exchange exposure, the Group primarily enters into
supplier contracts which are to be settled in sterling. However, some contracts
involve other major world currencies including the US Dollar and the Euro.
Where large supplier contracts of more than £100,000 total value are to be
settled in foreign currencies, it is operating policy for the sums to be paid
through conversion of sterling deposits to the appropriate foreign currency
holdings at the outset of the contract to minimise the risk of adverse currency
fluctuations. For contracts with smaller values the foreign currency risk is
not considered sufficient to require the establishment of foreign currency bank
accounts unless specific circumstances are identified which warrant this.
Forward and option contracts are not used.
During the year ended 31 December 2005, costs in respect of supplier contracts
settled in foreign currencies represented 0.3% of total administrative expenses
(year ended 31 December 2004: 2.8%). In addition, the Group was exposed to the
US Dollar as a result of holding residual dollar balances (of less than £13,000
throughout the year) and the US dollar account was closed during August 2005.
A L Clayden
Finance Director
Basis of preparation of this Final Results Announcement
The financial information set out in this announcement does not constitute the
Company's statutory accounts for the years ended 31 December 2005 or 31 December
2004.
The financial information for 2004 is derived from the statutory accounts for
the year ended 31 December 2004 which have been delivered to the Registrar of
Companies.
The financial information for 2005 is derived from the statutory accounts for
the year ended 31 December 2005. The auditor has reported on the statutory
accounts for the year ended 2005. Their report was unqualified and did not
contain any statement under section 237 (2) or (3) of the Companies Act 1985.
The statutory accounts for the year ended 31 December 2005 will be sent to the
Registrar of Companies and Shareholders in due course.
Consolidated Profit and Loss Account
For the year ended 31 December 2005
Notes Year ended Year ended
31 December 31 December
2005 2004
£ £
Turnover 1,660 129,863
Research and development costs (1,535,240) (960,141)
Other administrative costs (791,004) (745,806)
Administrative expenses (2,326,244) (1,705,947)
Operating loss 2 (2,324,584) (1,576,084)
Other interest receivable and
similar income 5 133,467 177,047
Loss on ordinary activities before
taxation (2,191,117) (1,399,037)
Tax on loss on ordinary activities 6 286,973 170,086
Loss on ordinary activities after
taxation and retained loss for the
year 16 (1,904,144) (1,228,951)
Basic and diluted loss per share
(pence) 7 (3.9p) (2.6p)
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 the financial statements from which this final
results announcement is derived.
Balance Sheets
At 31 December 2005
Group Company
Notes 31 December 31 December 31 December 31 December
2005 2004 2005 2004
£ £ £ £
Fixed Assets
Tangible assets 8 25,370 28,120 - -
Investments 9 - - 60,724 60,724
25,370 28,120 60,724 60,724
Current Assets
Stock 10 31,956 14,812 - -
Debtors - due within one
year 11 351,079 258,211 17,203 18,094
Debtors - due after more
than one year 11 - - 6,654,596 4,742,780
Total debtors 351,079 258,211 6,671,799 4,760,874
Cash at bank and in hand 1,808,913 3,672,647 1,732,998 3,512,964
2,191,948 3,945,670 8,404,797 8,273,838
Creditors: amounts falling
due within one year 12 (237,147) (225,275) (35,913) (26,584)
Net current assets 1,954,801 3,720,395 8,368,884 8,247,254
Total net assets 1,980,171 3,748,515 8,429,608 8,307,978
Capital and reserves
Called up share capital 14 97,877 97,357 97,877 97,357
Share premium account 16 8,560,987 8,425,707 8,560,987 8,425,707
Other reserves 16 1,152,165 1,152,165 - -
Profit and loss account 16 (7,830,858) (5,926,714) (229,256) (215,086)
Equity shareholders' funds 17 1,980,171 3,748,515 8,429,608 8,307,978
The financial statements from which this final results announcement is derived
were approved and authorised for issue by the Board on 19 May 2006 and were
signed on its behalf by JH Barder, Director.
The notes below form part of the financial statements from which this final
results announcement is derived.
Consolidated Cash Flow Statement
For the year ended 31 December 2005
Year ended Year ended Year ended Year ended
31 December 31 December 31 December 31 December
Notes 2005 2005 2004 2004
£ £ £ £
Net cash outflow from operating A (2,292,863) (1,559,590)
activities
Returns on investments and
servicing of finance
Interest received 139,306 175,141
___________ ___________
Net cash inflow from returns on 139,306 175,141
Investments and servicing of
finance
Corporation Tax
Research and development tax 167,858 108,436
credit received
___________ ___________
167,858 108,436
Capital expenditure
Payments to acquire tangible (13,835) (21,648)
fixed assets
Proceeds on disposal of fixed - 170
assets
___________ ___________
Net cash outflow from capital (13,835) (21,478)
expenditure
___________ ___________
Net cash outflow before use of
liquid resources and financing (1,999,534) (1,297,491)
Management of liquid resources
Decrease / (increase) in short 1,787,913 (1,160,993)
term deposits
Financing
Issue of ordinary shares 135,800 2,644,550
Expenses paid in - (76,120)
connection with share issues
___________ ___________
Net cash inflow from financing 135,800 2,568,430
___________ ___________
(Decrease) / Increase in B (75,821) 109,946
net cash
___________ ___________
The notes below form part of this cashflow statement.
Notes to the Consolidated Cash Flow Statement
For the year ended 31 December 2005
A Reconciliation of operating loss to net cash outflow from operating
activities
Year ended Year ended
31 December 2005 31 December 2004
£ £
Operating loss (2,324,584) (1,576,084)
Depreciation 13,203 15,414
Loss on sale of fixed assets - 3,897
(Increase) / Decrease in stocks (17,144) 2,467
Decrease / (Increase) in debtors 20,408 (46,463)
Increase in creditors 15,254 41,179
________________ ________________
Net cash outflow from operating (2,292,863) (1,559,590)
activities
________________ ________________
B Analysis of net cash
At Cash At
1 January 2005 flow 31 December 2005
£ £ £
Cash at bank and in hand 164,734 (75,821) 88,913
Other liquid resources 3,507,913 (1,787,913) 1,720,000
_________ _________ _________
3,672,647 (1,863,734) 1,808,913
_________ _________ _________
C Reconciliation of net cash flow to movement in net funds
Year ended Year ended
31 December 2005 31 December 2004
£ £
(Decrease) / Increase in cash in the year (75,821) 109,946
Cash (outflow) / inflow from changes in (1,787,913) 1,160,993
liquid resources
___________ __________
Movement in net funds in the year (1,863,734) 1,270,939
Net funds at start of year 3,672,647 2,401,708
___________ __________
Net funds at end of year 1,808,913 3,672,647
___________ __________
Notes to the Financial Statements
For the year ended 31 December 2005
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.
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
2005.
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 loss after tax of £14,170 for the year (year ended 31
December 2004: profit after tax of £53,519).
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 Year ended
31 December 2005 31 December 2004
£ £
Operating loss is stated after charging:
Depreciation of tangible assets 13,203 15,414
Loss on sale of fixed assets - 3,897
Hire of other assets - operating leases 70,752 70,752
Auditors' remuneration
- Audit services 28,620 24,650
- Tax services 10,700 9,450
- Other services 4,500 2,500
_______ _______
Operating loss is stated after crediting:
Government grants - 54,587
_______ _______
The audit services relating to the Company for the year ended 31 December 2005
amount to £23,120 (31 December 2004: £18,150).
3 Wages and salaries
The average monthly number of persons (including all Directors) employed by the
Group during the year and their aggregate emoluments are shown below:
Year ended Year ended
31 December 2005 31 December 2004
No No
Management and administration 11 9
_______ _______
The costs incurred in respect of those employed were:
£ £
Wages and salaries 615,557 508,820
Social security costs 76,363 62,606
Other pension and insurance benefits costs 47,841 40,394
_______ _______
739,761 611,820
_______ _______
4 Directors' emoluments
Year ended Year ended
31 December 2005 31 December 2004
£ £
Directors
Aggregate emoluments 432,789 405,536
_________ _________
Company pension contributions 20,858 21,869
_________ _________
Emoluments disclosed above include the following amounts paid to the highest
Director:
Year ended Year ended
31 December 2005 31 December 2004
£ £
Aggregate emoluments 143,148 134,668
_________ _________
Company pension contributions to money purchase
schemes 12,838 12,078
_________ _________
During the year, two Directors (year ended 31 December 2004: one Director)
participated in a private money purchase pension scheme and no Director (year
ended 31 December 2004: 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 Year ended
31 December 2005 31 December 2004
£ £
Bank interest receivable 133,467 177,047
_________ _________
6 Taxation
Year ended Year ended
31 December 2005 31 December 2004
£ £
Current tax
UK corporation tax on loss for the year (281,536) (162,421)
Underprovision in prior year (5,437) (7,665)
_________ _________
Taxation on loss on ordinary activities (286,973) (170,086)
_________ _________
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 Year ended
31 December 2005 31 December 2004
£ £
Loss on ordinary activities before tax (2,191,118) (1,399,037)
_________ _________
Loss on ordinary activities at the standard (416,312) (265,817)
rate of Corporation tax in the UK of 19% (31
December 2004: 19%)
Expenses not deductible for tax purposes 1,751 2,480
Difference between depreciation and capital 602 376
allowances
Other short-term timing differences (6,019) 2,331
Unutilised tax losses 220,604 137,409
Additional relief attaching to R&D tax claim (82,162) (39,200)
Underprovision in current year (5,437) (7,665)
_________ _________
Current tax charge for the year (286,973) (170,086)
_________ _________
The Group has tax losses of approximately £5,152,600 (31 December 2004:
£3,950,000) available for offset against future taxable profits.
Deferred tax assets amounting to £978,201 (31 December 2004: £755,282) have not
been recognised on the basis that their future economic benefit is not certain.
Assuming a prevailing tax rate of 19% when the timing difference reverse, the
deferred tax asset comprises:
Year ended Year ended
31 December 2005 31 December 2004
£ £
Accelerated capital allowances (1,202) (943)
Other short term timing differences 404 6,331
Unutilised tax losses 978,999 749,894
_________ _________
978,201 755,282
_________ _________
7 Loss per ordinary share
Basic loss per share has been calculated in accordance with FRS22. Basic loss
per share has been calculated by dividing the loss on continuing 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 48,686,327 (year ended 31 December 2004: 48,069,839 shares) and the loss for
the year was £1,904,144 (year ended 31 December 2004: £1,228,951). The effect
of all potential ordinary shares is antidilutive.
8 Tangible fixed asset
Plant and Fixtures fittings, and Total
machinery equipment
Cost £ £ £
At 1 January 2005 23,806 39,286 63,092
Additions 7,386 3,067 10,453
________ ________ ________
At 31 December 2005 31,192 42,353 73,545
________ ________ ________
Depreciation
At 1 January 2005 6,168 28,804 34,972
Charge for year 7,107 6,096 13,203
________ ________ ________
At 31 December 2005 13,275 34,900 48,175
________ ________ ________
Net book value
At 31 December 2005 17,917 7,453 25,370
________ ________ ________
At 31 December 2004 17,638 10,482 28,120
________ ________ ________
There were no disposals during the year ended 31 December 2005. All fixed
assets of the Group are held in Futura Medical Developments Limited.
9 Fixed asset investments
Shares in subsidiary
undertakings
Company £
Cost and net book value at 1 January 2005 and 31 December 2005 60,724
___________
Interests in group undertakings
Subsidiary undertaking Description of shares held Proportion of
nominal value of
issued shares held
and voting rights
Futura Medical Developments Limited Ordinary £1 shares 100%
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.
10 Stock
Group Company
31 December 31 December 31 December 31 December
2005 2004 2005 2004
£ £ £ £
Raw materials and consumables 31,956 14,812 - -
________ ________ _______ _______
There is no material difference between the replacement cost of stocks and the
amounts stated above.
11 Debtors
Group Company
31 December 31 December 31 December 31 December
2005 2004 2005 2004
£ £ £ £
Amounts receivable within one
year:
Corporation tax repayable 281,536 162,421 - -
Other debtors 27,847 40,901 - -
Prepayments and accrued 41,696 54,889 17,203 18,094
income
________ ________ _______ _______
351,079 258,211 17,203 18,094
________ ________ _______ _______
Amounts receivable after more
than one year:
Amounts owed by subsidiary - - 6,654,596 4,742,780
________ ________ _______ _______
12 Creditors: amounts falling due within one year
Group Company
31 December 31 December 31 December 31 December
2005 2004 2005 2004
£ £ £ £
Trade creditors 114,586 79,310 6,571 598
Taxation and social security 30,780 21,777 - -
Accruals and deferred income 91,781 124,188 29,342 25,986
________ ________ _______ _______
237,147 225,275 35,913 26,584
________ ________ _______ _______
13 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 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
details of which are as follows:
Financial assets
The Group's financial assets at 31 December 2005 were cash at bank and in hand,
made up as follows:
31 December 2005 31 December 2004
£ £
Currency
Sterling 1,720,000 3,661,133
US Dollar - 11,514
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 £1,720,000 (31 December 2004: £3,507,913) 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 34 days (31 December
2004: 32 days), with a weighted average interest rate of 4.51% per annum (31
December 2004: 4.75% per annum). Deposits are held with Butterfield Private Bank
and Anglo Irish Bank. In addition, cash of £88,913 (31 December 2004: £164,734)
was held on current accounts at Butterfield Private Bank, earning nominal
amounts of interest. The US dollar account was closed during the year (31
December 2004: £11,514)
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 established for the purpose, 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 2005 totalled £nil (31 December 2004:
£2,606).
14 Share capital
Authorised
31 December 31 December 31 December 31 December
2005 2004 2005 2004
No. No. £ £
Ordinary shares of 0.2 pence 500,000,000 500,000,000 1,000,000 1,000,000
each
___________ ___________ __________ __________
Allotted, called up and fully paid
31 December 31 December 31 December 31 December
2005 2004 2005 2004
No. No. £ £
Ordinary shares of 0.2 pence 48,938,601 48,678,601 97,877 97,357
each
___________ ___________ __________ __________
In November 2005, the Company issued 10,000 ordinary shares of 0.2 pence each
for the total consideration of £3,300 pursuant to the exercise of options.
In December 2005, the Company issued 250,000 ordinary shares of 0.2 pence each
for the total consideration of £132,500 pursuant to the exercise of share
options.
15 Share Options
At 31 December 2005, 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 (since extended to 31 January 2007)
Date of grant Exercise At Grants Options Options At
price per exercised waived
share 1 January 31 December
2005 2005
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 530,000 - (10,000) - 520,000
21 March 2002 53 pence 1,000,000 - (250,000) - 750,000
29 July 2002 50 pence 10,000 - - - 10,000
25 October 50 pence 110,000 - - - 110,000
2002
_________ _________ _________ _________ _________
3,400,000 - (260,000) - 3,140,000
_________ _________ _________ _________ _________
After due consideration by the Remuneration Committee and the Board in
consultation with our Nominated Advisor, the expiry date for the options
exercisable until 31 January 2006 was extended to 31 January 2007 in order to
enable the orderly exercise of the options outside of a close period. This was a
result of the company being in multiple, extended close periods for most of the
original exercise period (particularly as a result of the anonymity of MGPG
during discussions and the exclusivity period for negotiations).
Exercisable from 1 August 2005 to 31 July 2007
Date of grant Exercise At Grants Options Options At
price per exercised waived
share 1 January 31 December
2005 2005
8 July 2003 70 pence 410,000 - - - 410,000
_________ _________ _________ _________ _________
Exercisable from 1 October 2006 to 30 September 2008
Date of grant Exercise At Grants Options Options At
price per exercised waived
share 1 January 31 December
2005 2005
1 December 2004 70 pence 150,000 - - - 150,000
_________ _________ _________ _________ _________
Exercisable from 1 April 2007 to 31 March 2009
Date of grant Exercise At Grants Options Options At
price per exercised waived
share 1 January 31 December
2005 2005
22 March 2005 76 pence - 425,000 - - 425,000
_________ _________ _________ _________ _________
Totals for all exercise periods
At 1 January Grants Options Options At 31 December
2005 exercised waived 2005
Totals for all exercise 3,960,000 425,000 (260,000) - 4,125,000
periods
_________ _________ _________ _________ _________
16 Reserves
Share premium Other reserves Profit and loss
account account
£ £ £
Group
At 1 January 2005 8,425,707 1,152,165 (5,926,714)
Retained loss for the year - - (1,904,144)
Shares issued during the year 135,280 - -
Cost of share issues - - -
_________ _________ _________
At 31 December 2005 8,560,987 1,152,165 (7,830,858)
_________ _________ _________
Company
At 1 January 2005 8,425,707 - (215,086)
Retained profit for the year - - (14,170)
Shares issued during the year 135,280 - -
Cost of share issues - - -
_________ _________ _________
At 31 December 2005 8,560,987 - (229,256)
_________ _________ _________
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.
17 Reconciliation of movements in shareholders' funds
Group Company
31 December 31 December 31 December 31 December
2005 2004 2005 2004
£ £ £ £
(Loss)/profit for the financial (1,904,144) (1,228,951) (14,170) 53,519
year
Net proceeds from issue of 135,800 2,568,430 135,800 2,568,430
shares
_________ _________ _________ _________
Net (reduction) / addition to (1,768,344) 1,339,479 121,630 2,621,949
shareholders' funds
Opening shareholders' funds 3,748,515 2,409,036 8,307,978 5,686,029
_________ _________ _________ _________
Closing shareholders' funds 1,980,171 3,748,515 8,429,608 8,307,978
_________ _________ _________ _________
18 Pension costs
The pension charge represents contributions payable by the Group to
independently administered funds and during the year amounted to £35,647 (year
ended 31 December 2004: £31,535). Pension contributions payable but not yet
paid at 31 December 2005 totalled £nil 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 2004: £33,604) and are included in
creditors.
19 Related party transactions
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 £60,416 plus VAT (year ended
31 December 2004: £41,953 plus VAT), the amount outstanding at 31 December 2005
to Stapleford Scientific Services Limited was £7,826 (31 December 2004: £4,254).
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