Final Results
Phytopharm PLC
08 November 2006
8th November 2006
Preliminary Results for the year ended 31 August 2006
Phytopharm plc (PYM: London Stock Exchange) ('Phytopharm' or the 'Company', or
the 'Group') today announces its preliminary results for the year ended 31
August 2006.
Key Points - Pharmaceutical Products
• Good overall safety and tolerability demonstrated in 256 patient Phase
IIa clinical study for CoganeTM in mild to moderate Alzheimer's
disease patients.
• Demonstration of a trend for slower disease progression in patients
with more moderate Alzheimer's disease taking CoganeTM compared with
placebo.
• Detailed assessments and due diligence now in progress for CoganeTM
and MyoganeTM with suitable licensing partners.
Key Points - Functional Foods
• Successful completion of the first stage and progression into second
stage of the Joint Development Agreement with Unilever for our weight
management product, Hoodia gordonii extract. Clinical studies underway.
• Commitment by Unilever to pay up to £3.5 million (£0.66 million
already received) to support the second stage of the development
programme. The balance of this payment is expected during the next
financial period (FY 2007).
• Exclusive global marketing and distribution agreement for PhytopicaTM
with Schering-Plough Animal Health (Schering-Plough). Product
launched in UK and plans underway to launch in multiple European
territories.
Key Points - Financial
• Revenue of £1.88 million (2005 £7.38 million)
• Loss of £5.64 million (2005 £3.33 million)
• Cash balance of £6.00 million (2005 £11.64 million)
Key Points - Board
• Appointment of Mr Sandy Morrison and Dr Peter Blower as Non-Executive
Directors
• Retirement of Mr Gordon Stevens as Chairman and Dr Trevor Flanagan as
Non-Executive Director
• Appointment of Dr Paul Whitney as Chairman
Dr Richard Dixey, Chief Executive of Phytopharm, said:
'The highlights of the year were the successful progression of our functional
food products with our partners Unilever and Schering-Plough. The market launch
of PhytopicaTM is a real milestone for us. Our business strategy of combining
the development of functional foods with speciality pharmaceuticals is
consolidating rapidly, and we look forward to positive developments in both
sides of the business over the coming period.'
Enquiries:
Phytopharm plc Tel: 01480 437697
Dr Richard Dixey, Chief Executive Tel: 01480 437697
Dr Daryl Rees, Chief Operating Officer Mobile: 07710 479626
Financial Dynamics
David Yates / Ben Atwell Tel: 0207 831 3113
Operational Review
Phytopharm is a pharmaceutical development and functional food company whose
product leads are generated from medicinal plant extracts. The Company's
strategy is to develop these products through 'proof of principle' clinical
testing, and then secure partners for late stage development, sales and
marketing.
This business model generates a lean cash burn and all laboratory, manufacturing
and clinical work is outsourced to specialists while core competencies such as
strategy and management are kept in-house. This operational structure allows
access to advanced research techniques whilst maintaining low fixed overheads
and a lower development cost structure.
Pharmaceutical Products
The progress of our pharmaceutical products over the period, each at different
stages of development, is described below.
Alzheimer's disease
CoganeTM (coded PYM50028) is being developed as a potential disease modifying
agent for Alzheimer's and Parkinson's diseases. This novel synthetic chemical
is orally active and has neuroprotective and neurotrophic properties. CoganeTM
restores the learning and memory ability in Alzheimer's disease pre-clinical
models and thereby offers the potential to arrest or reverse the symptoms of
Alzheimer's disease.
In late November 2005 we announced the preliminary results obtained from the
Phase IIa clinical study of CoganeTM in mild and moderate Alzheimer's disease
patients. The Oxford Project to Investigate Memory and Ageing (OPTIMA) was the
lead clinical centre and 15 other sites in the UK participated in the study.
Two hundred and fifty-six subjects with Alzheimer's disease ranging in severity
from mild to moderate were randomly allocated to receive either 120 mg CoganeTM
(n = 127) or a placebo (n = 129), orally once daily for 12 weeks. The majority
of patients enrolled had mild disease. The baseline demography data confirmed
that the treatment groups were well balanced for factors such as age, gender and
severity of disease.
The overall safety data confirmed that CoganeTM administered orally once daily
for up to 12 weeks is well tolerated and has a good overall clinical safety
profile. There were no substantial differences in the adverse event and
laboratory safety data for each group.
The prospectively defined primary efficacy measures were cognitive assessments
measured using CANTAB-PAL and the Hopkins verbal learning test. The baseline
scores and changes over time were not significantly different between the
groups.
Although the Phase IIa clinical trial was not of a sufficient duration to
observe deterioration in cognitive function in the group of Alzheimer's patients
whose disease severity included both mild and moderate disease, a subset
analysis on the smaller number of patients with moderate Alzheimer's disease
showed a trend towards deterioration in the placebo group, with no significant
deterioration observed in the CoganeTM group.
This encouraging trend for slower disease progression in more moderate
Alzheimer's patients with CoganeTM coupled with its excellent tolerability,
confirms the need for longer term studies for efficacy determination. Further
work has now been initiated in preparation for further clinical studies and
discussions with potentially suitable licensees have progressed to detailed
evaluations and due diligence assessments of the full data set.
Motor neurone disease
MyoganeTM (coded PYM50018) is being developed for amyotrophic lateral sclerosis
(ALS; also known as Lou Gehrig's disease). ALS is the most common motor neurone
disease and results from progressive degeneration of both upper and lower motor
neurones. This condition has a high unmet medical need. Although the precise
molecular pathways that cause the death of motor neurones in ALS remain unknown,
possible mechanisms include mitochondrial alterations and glutamate mediated
excitotoxicity. In pre-clinical studies, the single chemical MyoganeTM protects
against neuronal damage, reverses the decrease of neuronal growth factors and
reverses neuronal degeneration observed in motor neurones. MyoganeTM also
increases neurite outgrowth, reverses oxidative damage and reverses neuronal
apoptosis in vitro. When administered orally to a transgenic preclinical model
of ALS, MyoganeTM delays the loss of muscle strength and extends survival time.
In 2004, we successfully completed a Phase Ia clinical study to evaluate the
safety, tolerability and pharmacokinetic profile of MyoganeTM. This residential
clinical study was conducted under an investigational new drug (IND) filed with
the United States Food and Drug Administration (FDA) and confirmed that the
product was well absorbed with an excellent safety profile. We also announced
that the FDA had granted Orphan Drug and Fast Track designation to MyoganeTM for
the treatment of ALS. Building on this success we have further developed a new
liquid formulation suitable for ALS patients and are completing safety studies
to support further clinical studies planned for calendar H1 2007. Initial
discussions with potentially suitable licensees have now led to detailed
assessments and due diligence evaluations of the full data set.
Parkinson's disease, niche and orphan neurodegenerative diseases
PYM50028 has potential utility as a treatment for Parkinson's disease as well as
niche and orphan neurodegenerative diseases. A consistent feature of Parkinson's
disease is the loss of dopamine-containing cells in the substantia nigra area of
the brain. Current drugs can mitigate many of the symptoms for a while but do
not alter the prognosis of steady decline. One important mechanism involved in
neuronal degeneration of the substantia nigra is the production of toxic free
radicals. Phytopharm has generated data demonstrating that PYM50028 reverses the
neurotoxicity in dopaminergic neurones and reverses the decrease of neuronal
growth factors and dopamine receptors in the brain. In a pre-clinical model of
Parkinson's disease, PYM50028 restores dopaminergic terminals in the striatum
and protects dopaminergic cell bodies in the substantia nigra, providing
encouraging evidence that PYM50028 has a disease modifying effect in this model
and as such is a promising novel treatment for Parkinson's disease.
The neuroprotective and neurotrophic actions of PYM50028 suggest potential
beneficial effects in niche and orphan neurodegenerative diseases including
diabetic and mitotic neuropathies, Friedrich's ataxia, progressive supranuclear
palsy, Huntington's disease and multiple system atrophy. In pre-clinical
models, PYM50028 protects against sensory and motor neuronal damage, increases
neurite outgrowth, reverses oxidative damage and reverses neuronal apoptosis in
vitro.
Asthma and other inflammatory disorders
Asthma is a chronic inflammatory disorder of the airways that causes recurrent
episodes of wheezing, breathlessness, chest tightness and coughing. In
addition, asthma is usually associated with widespread but variable airflow
obstruction. Inhibition of inflammation and opening of the airways are
therefore key components of asthma treatment. Steady progress has been made in
identifying novel synthetic molecules that can be developed as a pharmaceutical
medicine for the treatment of asthma and other inflammatory disorders.
Pre-clinical studies have demonstrated anti-inflammatory and anti-spasmodic
activity in several models of asthma and inflammation. We plan to conduct
further proof of concept studies in pre-clinical models of asthma during the
coming year.
Obesity and metabolic syndrome
Obesity leads to a cluster of metabolic alterations and as a result is a major
risk factor for insulin resistance, type 2 diabetes, coronary artery disease,
hypertension, stroke, osteoarthritis and certain forms of cancer. Weight is
gained when energy intake exceeds energy expenditure. The excess energy is
stored as fat, and if there is an extended period of positive energy balance,
obesity will result. The mechanism of action of the chemical series based on
the active components of our Hoodia gordonii extract (see below) is under
investigation. Proteomic research is helping to define novel targets and the
design of new molecules as pharmaceutical candidates for metabolic syndrome.
Functional Foods
The progress of our functional food products over the year is described below.
Obesity
Our obesity functional food product is based on an extract of the succulent
plant, Hoodia gordonii, which contains a novel appetite suppressant that reduces
caloric intake in overweight subjects, as demonstrated in our double-blind,
placebo-controlled clinical study announced in December 2001. Extracts of
Hoodia gordonii and the active molecules therein are the subject of a global
patenting programme, with major patents granted in the US, UK and Japan and
pending in Europe and all other major territories.
In December 2004, we announced that we had granted an exclusive global licence
for the Hoodia gordonii extract to Unilever plc. Under the terms of the
agreement, Phytopharm and Unilever are collaborating on a five-stage research
and development programme of safety and efficacy studies with a view to bringing
new weight management products to market.
In April 2006, we announced that we had successfully completed the first stage
of our Joint Development Agreement. We also announced that we are now
progressing through the second stage which includes clinical studies.
As part of the agreement, Unilever committed to initial payments of
approximately £6.5 million for the first stage and in April 2006 committed up to
£3.5 million for the second stage, out of a potential total of up to £21 million
in payments to Phytopharm. In addition, Phytopharm will receive an undisclosed
royalty on sales of all products containing the extract. Unilever is also
managing a separate agronomy programme and supporting the international patent
programme for the products.
Phytopharm and Unilever have also become aware of many companies that are
selling products over the Internet and in some stores claiming to contain Hoodia
and causing weight loss. Analysis of these products has demonstrated that the
great majority of them contain little or no Hoodia. Phytopharm and Unilever have
made contact with the relevant authorities concerning this development and are
satisfied with the progress being made in these key discussions.
Canine skin health
PhytopicaTM is a natural three plant product that provides a novel 3 in 1
approach to help maintain a normal healthy immune system, support normal white
cell function and provide anti-oxidant benefits. Following the success in 2004
of our European multi-centre study in canine atopic dermatitis, we launched
PhytopicaTM as a complementary pet food. Canine dermatological disorders are
well recognised by veterinarians to be a major problem in small animal practice,
with an estimated 15% of the UK dog population (around 900,000 dogs) affected by
skin conditions due to allergy (source: Animal Pharm). Maintenance of a healthy
skin and coat and alleviation of itching are of major importance to canine
general health and quality of life.
In January 2006, we announced that we had entered into an exclusive global
marketing and distribution agreement with Schering-Plough Animal Health for
PhytopicaTM. Under the terms of the agreement, Phytopharm is responsible for the
manufacture and sale of PhytopicaTM to Schering-Plough. Schering-Plough is
responsible for the global sales, marketing and distribution of PhytopicaTM. In
April 2006, we announced the UK launch by Schering-Plough of PhytopicaTM.
PhytopicaTM has been proven extensively in clinical trials and enjoys strong
support from veterinary dermatologists in the UK. Launched at the world's
largest companion animal congress, the British Small Animal Veterinary
Association (BSAVA) in Birmingham, 20-23 April 2006, PhytopicaTM has an
excellent safety profile and is recognised as suitable for all dogs whatever
size or breed. Following the UK launch, Schering-Plough will market and
distribute PhytopicaTM in multiple European territories during 2007 and plans to
market the product in the USA during 2008. With Schering-Plough's global
presence we look forward to strong growth from this product.
Canine joint health
In June 2004, we announced the launch of ZanthofenTM for the maintenance of
canine joint mobility. Pre-clinical studies have demonstrated that the
components of ZanthofenTM maintain normal white cell function and have
anti-oxidant properties that help maintain joint mobility. Income from this
product has been small and sales growth will require expansion into
international markets. The rights to the product are being assigned to its
Indian manufacturer and a proportion of any future revenue will be transferred
to Phytopharm.
Board Changes
In September, we announced that Gordon Stevens (non-executive Chairman) and
Trevor Flanagan (non-executive Director) retired from the Board and that Paul
Whitney (previously Deputy Chairman) stepped up to the role of non-executive
Chairman. This reorganisation followed the earlier appointments of two
non-executive Directors - Dr Peter Blower, former Director of New Neuroscience
products at SmithKline Beecham, and Sandy Morrison, former CEO of Lipton Ltd, a
Unilever subsidiary.
Outlook
Phytopharm is making good progress in developing a broad portfolio of products
with substantial potential value. We are progressing through the second stage of
our obesity programme with Unilever and Schering-Plough has launched PhytopicaTM
in the UK for canine skin health as a part of its global marketing deal.
Our functional food products are now generating revenue and we continue to
invest in the pharmaceutical development of the Company. Overall, with growing
revenues from our marketed product, PhytopicaTM, a major licensing partner in
place for Hoodia gordonii and licensing discussions underway for the
neurodegeneration products in our portfolio, Phytopharm is well placed to
continue its progress during the coming year.
Furthermore, the recent appointments to the Board bring significant benefits to
the Company, in particular the strengthening of our neuroscience pharmaceutical
development and functional food expertise. The Company is currently seeking to
appoint a Chief Financial Officer as a main board director to further strengthen
the management team.
Financial review
Phytopharm is a pharmaceutical development and functional food company which
continues to invest in the development of its product portfolio. This is
reflected in the financial performance of the Group for the twelve months to 31
August 2006.
These unaudited financial statements are the first annual results for which the
Group is required to adopt International Financial Reporting Standards (IFRS).
Previously, the Group has prepared its financial statements under UK Generally
Accepted Accounting Practice ('UK GAAP'). In accordance with IFRS1 the
comparative financial statements for the year ended 31 August 2005 have been
restated to comply with IFRS.
The most notable change for the Group is the adoption of IFRS2 'Share-based
Payment', which requires the fair value of equity based compensation to be
recognised in the income statement.
Income statement
Revenue of £1.66 million for the period was generated from Unilever for the
development of the Hoodia gordonii programme. This includes £0.66 million out of
a total of up to £3.5 million which has been committed by Unilever to support
the second stage of the development programme. The balance of this payment is
expected during the next financial period (FY 2007).
Further revenue of £0.22 million was generated from sales of PhytopicaTM as a
companion animal health product. This compares with product sales of £0.13
million in the corresponding period. PhytopicaTM was licensed to Schering-Plough
in January 2006 and formally launched in April 2006.
Losses are slightly greater and revenue lower than anticipated due to timing
variations on income arising from these contracts. Despite these timing issues
the development programme with Unilever remains on target as does the launch
programme with Schering-Plough. Revenue for the comparable period (twelve months
to 31 August 2005) included a final £4 million (£3.6 million net of Japanese
withholding tax) milestone payment by Yamanouchi Pharmaceutical Company Ltd
(Yamanouchi) following acknowledgement that the safety data in relation to the
first sixty patients treated with CoganeTM in the Phase IIa study had fulfilled
the criteria set out in the licensing agreement.
Following the successful fundraising in May 2005, expenditure on research and
development has continued as planned for the twelve months ended 31 August 2006.
A total of £6.54 million was spent during the period compared to £8.91 million
for the twelve months ended 31 August 2005. 53% of this expenditure has been
incurred on the Alzheimer's and motor neurone disease programmes. This includes
the completion of the CoganeTM Phase IIa study, safety studies for MyoganeTM and
pharmaceutical development work for both products. A further 27% of expenditure
has been incurred on the development of Hoodia gordonii extract which has now
progressed into the second stage of development. The remaining expenditure
includes pre-clinical work on the asthma and metabolic syndrome programmes.
Expenditure on administrative expenses for the twelve months ended 31 August
2006 decreased to £1.63 million (FY 2005 £2.01million). This is after a charge
of £0.30 million (FY 2005 £0.76 million) representing the non-cash cost for the
period of share options awarded to employees.
As a result of the successful fundraising in May 2005, interest receivable has
increased to £0.38 million (FY 2005 £0.34 million).
The income statement shows a taxation credit of £0.60 million (FY 2005 £0.67
million) relating to the research and development tax relief in respect of
qualifying expenditure.
Balance sheet
Current assets at 31 August 2006 amounted to £8.01 million and comprised
inventories of £0.84 million, amounts receivable of £1.17 million and cash and
cash equivalents of £6.00 million.
Inventories decreased in the twelve months to 31 August 2006 due to product
sales and provision for short-dated finished goods and raw materials. Trade and
other receivables continue to include an R & D tax credit receivable of £0.60
million (FY 2005 £0.67 million).
The decrease in cash resources of £5.64 million between 31 August 2005 and 31
August 2006 reflects the expenditure on developing the Group's product portfolio
offset by income generated from licensing activities and product sales. Cash
resources described as cash and cash equivalents are initially invested for a
period of 90 days or less.
Current liabilities of £1.74 million at 31 August 2006 comprise trade and other
creditors and include £0.46 million of deferred revenue (FY 2005 £0.29 million).
Cash flow
The net cash used in operating activities for the twelve months to 31 August
2006 was £5.85 million (FY 2005 £3.79 million). The net cash generated from
investing activities arises from interest received of £0.38 million and the sale
of fixed assets £0.61 million, offset by purchases of fixed assets of £0.24
million. In the twelve months ended 31 August 2005 additional cash was generated
of £0.61 million arising from the repayment by Unilever of advances to certain
suppliers made by the Group in 2004.
Financial outlook
Phytopharm will continue to invest in its pharmaceutical and functional food
products and work with its licensing partners to continue the development of the
Hoodia gordonii programme and to roll out the launch of Phytopica TM in
territories across Europe. The Group currently has cash resources in excess of
twelve months of operations. The Group's business development activities will
focus on the out-licence of products to partners who will share in the cost and
risk of product development thus contributing to cash flows in future years. The
Group also intends to pursue in-licensing opportunities to strengthen the
existing product portfolio but does not expect a significant increase in
administrative expenses to arise from in-licensing activities.
Unaudited consolidated income statement
For the year ended 31 August 2006
31 August 31 August
2006 2005
(restated)
note £ £
Revenue 1,882,501 7,378,110
Cost of sales (341,067) (399,842)
_____ _____
Gross profit 1,541,434 6,978,268
Research and development expenses (6,540,173) (8,910,005)
Selling, general and administrative expenses (1,624,779) (2,006,794)
_____ _____
Operating loss (6,623,518) (3,938,531)
Interest receivable and similar income 380,484 338,212
Interest payable and similar charges - (295)
_____ _____
Loss on ordinary activities before taxation (6,243,034) (3,600,614)
UK tax credit on loss/ on ordinary activities 2 604,421 674,341
Foreign tax charge 2 - (400,000)
_____ _____
Loss for the period (5,638,613) (3,326,273)
_____ _____
Basic and diluted loss per share (pence) 3 (11.0) (7.3)
All revenue and expenses shown above were generated from continuing operations.
Unaudited consolidated statement of changes in shareholders' equity
For the year ended 31 August 2006
Share Share premium Other Retained Total
capital reserves deficit
£ £ £ £ £
Balance at 1 September 2004 427,488 38,134,657 (204,211) (33,079,538) 5,278,396
Loss for the period - - - (3,326,273) (3,326,273)
Issue of equity share capital 84,321 9,022,051 - - 9,106,372
Equity share options charge - - - 755,230 755,230
_____ _____ _____ _____ ______
Balance at 31 August 2005 511,809 47,156,708 (204,211) (35,650,581) 11,813,725
Loss for the period - - - (5,638,613) (5,638,613)
Equity share options charge - - - 302,492 302,492
_____ _____ _____ _____ _____
Balance at 31 August 2006 511,809 47,156,708 (204,211) (40,986,702) 6,477,604
_____ _____ _____ _____ _____
Unaudited consolidated balance sheet
As at 31 August 2006
31 August 31 August
2006 2005
(restated)
note £ £
Non-current assets
Property, plant and equipment 201,521 146,002
_____ _____
Non-current assets
201,521 146,002
Current assets
Inventories 4 842,899 947,221
Trade and other receivables 5 1,173,303 1,339,430
Cash and cash equivalents 5,997,428 11,640,739
_____ _____
Current assets 8,013,630 13,927,390
_____ _____
Current liabilities
Trade and other payables 6 (1,737,547) (2,259,667)
_____ _____
Net current assets 6,276,083 11,667,723
_____ _____
Net assets 6,477,604 11,813,725
_____ _____
Share capital 511,809 511,809
Share premium 47,156,708 47,156,708
Other reserves (204,211) (204,211)
Retained deficit (40,986,702) (35,650,581)
_____ _____
Shareholders' funds
6,477,604 11,813,725
_____ _____
Unaudited consolidated cash flow statement
For the year ended 31 August 2006
31 August 31 August
2006 2005
(restated)
£ £
Cash flow from operating activities
Operating loss (6,623,518) (3,938,531)
Depreciation 108,259 89,605
Loss/(gain) on disposal of property, plant and equipment 10,068 (1,150)
Option charge 302,492 755,230
_____ _____
(6,202,699) (3,094,846)
Changes in working capital
Decrease/(increase) in trade and other receivables 96,207 (317,552)
Decrease in trade and other payables (520,725) (14,612)
Decrease/(increase) in inventories 104,325 (596,687)
_____ _____
Cash used in operations (6,522,892) (4,023,697)
Taxation received 674,341 630,300
Foreign taxation paid - (400,000)
Interest paid - (295)
_____ _____
Net cash used in operating activities (5,848,551) (3,793,692)
Cash flows from investing activities
Purchase of tangible fixed assets (234,596) (62,845)
Sale of tangible fixed 60,750
assets - 9,000
Repayment of advances to suppliers - 613,929
Interest received 380,484 338,212
_____ _____
Net cash generated from investing activities 206,638 898,296
Cash flows from financing activities
Issue of shares - 10,259,384
Share issue costs - (1,153,012)
Capital element of finance leases (1,398) (1,397)
_____ _____
Net cash (used in)/generated from financing activities (1,398) 9,104,975
_____ _____
Movements in cash and cash equivalents in the period (5,643,311) 6,209,579
Cash and cash equivalents at the beginning of the period 11,640,739 5,431,160
_____ _____
Cash and cash equivalents at end of period 5,997,428 11,640,739
_____ _____
Notes to the unaudited financial statements
For the year ended 31 August 2006
1 Basis of preparation
The preliminary announcement for the year ended 31 August 2006 is unaudited and
has been prepared in accordance with International Financial Reporting Standards
(IFRS) as adopted by the European Union as at 31 August 2006. On 8 May 2006,
along with its interim results, the Group reported on the impact of IFRS on its
results for the year ended 31 August 2005, and set out its principal accounting
policies under IFRS.
The financial information in this preliminary announcement does not constitute
the Group's statutory accounts for the year ended 31 August 2006 or the year
ended 31 August 2005, but is derived from those accounts.
The Group's statutory accounts for the year ended 31 August 2005, prepared under
UK GAAP have been delivered to the Registrar of Companies; the report of the
auditors on these accounts was unqualified and did not contain a statement under
section 237(2) or (3) of the Companies Act 1985.
2 Tax on loss on ordinary activities
31 August 31 August
2006 2005
£ £
United Kingdom
Corporation tax credit 604,421 674,341
Foreign taxation
Withholding tax suffered - (400,000)
_____ _____
604,421 274,341
_____ _____
Foreign tax relates to the 10% Japanese withholding tax suffered in the year
ended 31 August 2005 on the £4 million income from the Yamanouchi milestone.
There is no corporation tax charge because of the incidence of tax losses. The
Company has taken advantage of the Research and Development corporation tax
credits introduced in the Finance Act 2000 whereby a company may surrender
corporation tax losses incurred on research and development expenditure for a
corporation tax refund at the rate of 24 pence on the pound of actual
expenditure.
3 Loss per share
The loss per share is based on losses from continuing operations of £5,638,613
and 51,180,893 ordinary shares, being the weighted average number of shares in
issue during the period.
As the Group was loss-making in the year ended31 August 2006 and the year ended
31 August 2005, there were no dilutive potential ordinary shares.
4 Inventory
31 August 31 August
2006 2005
£ £
Raw materials and consumables 360,843 525,916
Work in progress 482,056 293,025
Finished goods and goods for resale - 128,280
_____ _____
842,899 947,221
_____ _____
5 Trade and other receivables
31 August 31 August
2006 2005
£ £
Trade receivables 324,396 226,076
& D tax credit 604,421 674,341
Other receivables 34,740 227,743
Prepayments and accrued income 209,746 211,270
_____ _____
1,173,303 1,339,430
_____ _____
6 Trade and other payables
31 August 31 August
2006 2005
£ £
Trade payables 522,222 589,922
Obligations under finance leases - 1,398
Other payables 73 18,494
Other taxation and social 61,598 58,998
security
Accruals and deferred income 1,153,654 1,590,855
_____ _____
1,737,547 2,259,667
_____ _____
7 Related party transactions
The Group was obliged during the financial year ended 31 August 2005, to pay the
Inland Revenue £157,731 arising in respect of personal tax on the exercise by
the Chief Executive Officer of 288,889 share options on 3 December 2004, near
the end of the exercise period. At 31 August 2005, Dr Dixey was accordingly
obliged to reimburse such amount to the Company including interest charges at
5%, being the Inland Revenue Approved Rate. Subsequent to 31 August 2005 the
Remuneration Committee agreed to waive the repayment of the amount due from Dr
Dixey, who will instead receive no bonus for the 2005 and 2006 financial years.
The Company has therefore recognised in the income statement for the year ended
31 August 2006 a charge of £314,170 in respect of this arrangement, being the
impairment of the receivable relating to the original tax on share option gains
and the additional tax liability on the benefit arising from the waiver. At 31
August 2006, there is no outstanding balance with a related party relating to
these arrangements.
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