Final Results
Futura Medical PLC
30 May 2007
For Immediate Release 30 May 2007
Futura Medical plc
('Futura' or 'the Group' or 'the Company')
Final Results for the year ended 31 December 2006
Futura Medical plc (AIM: FUM), the pharmaceutical group that develops innovative
products for consumer healthcare, is pleased to announce its final results for
the year ended 31 December 2006.
Operational Highlights
• Significant progress across our growing product and IP portfolio
• CSD500 - preparation for launch underway by Durex(R)-maker SSL
International plc ahead of regulatory approval for our condom product to help
healthy men maintain a firm erection
• MED2002 - partnering negotiations re-started following the return of
development rights for our topical gel for erectile dysfunction
• DermaSys(R) - launch of brand name for the Group's unique, topical
drug delivery technology
• TPR100 - exclusivity agreement signed with GlaxoSmithKline Consumer
Healthcare for the negotiation of global distribution rights for our pain
relief product
Financial Highlights
• Net loss of £1.8 million (2005: net loss of £1.9 million)
• Net cash at 31 December 2006 of £3.8 million (2005: £1.8 million)
James Barder, Futura's Chief Executive, said:
'The outlook remains positive for the remainder of the year: interest from
potential partners for MED2002 is encouraging, our portfolio of product
opportunities is broadening and we are on track to achieve the major milestone
of regulatory approval for our most advanced product, CSD500, putting us firmly
on course to becoming a business with a recurring royalty income stream.'
For any further information please contact:
Futura Medical plc
James Barder, Chief Executive Tel: +44 (0) 1483 685 670
Anthony Clayden, Finance Director
mail to: james.barder@futuramedical.co.uk http://www.futuramedical.co.uk/
Canaccord Adams
Mark Ashurst Tel: +44 (0) 20 7050 6500
Tyler Broda
For any media enquiries please contact:
Buchanan Communications
Mark Court / Rebecca Skye Dietrich Tel: +44 (0) 20 7466 5000
Chairman's and Chief Executive's Joint Review
We are pleased to announce Futura's results for the year ended 31 December 2006,
a period of significant progress for the Group. It was a period during which our
product development portfolio advanced and our corporate strategy evolved with
the broadening of our involvement in the OTC market to include the new
therapeutic area of pain relief. We have also sought to leverage our drug
delivery technology by launching a distinct brand, DermaSys(R), which we believe
has significant commercial potential.
The current financial year promises to be a highly significant year for Futura,
not least because we expect EU regulatory approval of our first product in the
fourth quarter, putting the Group firmly on track to becoming a business with a
recurring royalty income stream.
CSD500
Condom safety device
We have made tremendous progress with our condom product CSD500 with our partner
SSL International plc, the manufacturer of Durex(R) condoms, who continue to
prepare for the EU marketing launch in anticipation of regulatory approval being
received later this year. The launch of CSD500, a product that helps healthy
men maintain a full erection during intercourse whilst wearing a condom, will
mark a major milestone for Futura. As we move closer to product launch, we
expect to be able to provide further details including the brand name of the
product within the Durex(R) portfolio.
Futura continues to protect future revenue streams by aggressively patenting new
developments. To protect CSD500's revenues, Futura has secured patent
protection, or is proceeding to obtain patent protection, in 30 consumer
markets, including the principal territories within Europe as well as the USA
and Canada. Patent applications are on-going in 8 other territories.
Progress continues on CSD500's sister product, FLD500, and we look forward to
providing further information in due course.
MED2002
Treatment for erectile dysfunction
In July 2006, we announced a development agreement for MED2002 with
GlaxoSmithKline Consumer Healthcare (GSK) with a view to GSK developing and
marketing the product as the world's first OTC treatment for men with erectile
dysfunction. Post the period end, in May 2007, we announced that GSK had
returned the rights to the product to Futura owing to current priorities within
GSK which meant that they were unlikely in the near future to approve a
marketing agreement for the product.
Whilst GSK's decision was disappointing we have been encouraged by the level of
interest from other potential licensees. Progress in the development of MED2002
has been significant and we remain confident in our ability to secure new
commercial arrangements on favourable terms for the final stage of development
and marketing of the product. We look forward to updating shareholders in due
course on the progress in negotiations with other potential licensees.
Evaluation work on PET500, our product for the treatment of premature
ejaculation, is progressing and we expect to be in a position to update
shareholders on progress later in the year.
DermaSys(R)
Drug delivery technology
At the half year stage, we highlighted that the Group was carrying out a
strategic review to determine the best way of leveraging its intellectual
property assets, know-how and commercial expertise. This review focussed in part
on the versatile and proprietary drug delivery technology that the Group has
developed for the rapid and localised delivery of drugs through the skin. We had
originally developed this technology for MED2002 but have since been assessing
the technology against a wide range of generic drugs where improved topical
delivery might bring commercial opportunities.
This assessment reinforces our belief that the technology has a range of
applications in addition to MED2002. To increase the awareness and visibility of
this technology and its technical and commercial potential we branded it
DermaSys(R) and launched its brand name in February 2007.
DermaSys(R) can be adapted to suit specific compounds and the therapeutic
indication being targeted with the result that an optimised delivery profile can
be achieved in terms of dose, onset time and duration of effect. We intend to
continue to leverage the DermaSys(R) asset in opportunities - developed in-house
or through licensing arrangements - that offer clear commercial potential. We
believe that our DermaSys(R) technology, combined with our commercial knowledge
of routes to market, offers partnership opportunities with other technology
companies to co-develop products.
TPR100
Topical pain relief
Our assessment work on DermaSys(R) identified significant opportunities to
improve the effectiveness of topical pain relief products. As announced in
September 2006, we were able to show, through in vitro human skin permeation
studies, improved drug delivery rates in excess of eight times higher than the
world's current market leading non-prescription topical analgesic. These studies
were carried out by a world-renowned expert, Professor Mike Roberts at the
University of Queensland, Australia.
We recently announced an exclusivity agreement with GSK for the negotiation of
global distribution rights for the provision of pain relief using our DermaSys
(R) technology. As part of the agreement, GSK has paid an upfront fee which
will provide sufficient funding to cover the costs of the initial clinical work.
Topical pain relief marks a new therapeutic area for Futura, expanding our
initial focus on sexual healthcare into a broader involvement with the consumer
healthcare market. The worldwide market for pain relief is estimated at US$ 50
billion for 2005 and is expected to increase to US$ 75 billion by 20101. The
global market for OTC sales of topical analgesics is estimated at US$ 2.6
billion2.
This evolution of our business model, based on the common theme of our DermaSys
(R) drug delivery technology, will be continued into other therapeutic areas if
we are satisfied with the potential commercial returns and overall fit with our
strategy.
Whilst being very interested in new opportunities, we are determined to adhere
to our principle of using lower-risk chemical actives, where there is a history
of safe use in humans, rather than looking at new chemical entities, which carry
a significantly increased risk profile.
Finance
The Group reported a net loss after tax in the year ended 31 December 2006 of
£1.8 million (year ended 31 December 2005 as restated: £1.9 million). The Group
raised £3.7 million net of costs during the year ended 31 December 2006
following a placing of shares in July 2006 and various exercises of options
throughout the year. This provided us with a cash balance at 31 December 2006
of £3.8 million (year ended 31 December 2005: £1.8 million).
Outlook
As the Group moves towards revenue generation, we have updated the style and
content of our website and Annual Report to reflect our increasing confidence
and to appeal to a wider consumer audience as well as to our shareholders. We
will continue to develop our communication with our audiences to keep our
shareholders and other stakeholders informed of our strategy and progress.
The outlook remains positive for the remainder of the year: interest from
potential partners for MED2002 is encouraging, our portfolio of product
opportunities is broadening and we are on track to achieve the major milestone
of regulatory approval for our most advanced product, CSD500, putting us firmly
on course to becoming a business with a recurring royalty income stream.
Dr W D Potter, Executive Chairman J H Barder, Chief Executive
29 May 2007
Note
1 Pain Therapeutics - Drugs, Markets and Companies, October 2005
2 DB6 2007 database (MSP), Nicholas Hall & Company
Financial Review
The Group finished the year with a healthy cash position, costs firmly under
control and the prospects for revenue moving closer.
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 2006 was £301 (year ended 31
December 2005: £1,660). This represents residual revenue from the settlement of
an intellectual property dispute in 2004 and no further revenue is expected from
that source.
Losses
The Group's accumulated loss for the year ended 31 December 2006 was £1.8
million (year ended 31 December 2005 as restated: £1.9 million). The Group's
operating loss for the year ended 31 December 2006 was £2.1 million (year ended
31 December 2005 as restated: £2.4 million) and the operating loss of the sole
subsidiary, Futura Medical Developments Limited, for the year ended 31 December
2006 was £2.0 million (year ended 31 December 2005 as restated: £2.2 million).
Loss per share for the year ended 31 December 2006 was 3.4 pence (year ended 31
December 2005 as restated: 4.0 pence).
All the restated amounts for the year ended 31 December 2005 relate solely to
the first time adoption of FRS20 as explained in note 1.3 to the financial
statements.
Group research and development costs
The Group aims to achieve cost effective research and development and to bring
products to market as soon as practicable.
Group research and development costs vary year to year. This reflects both the
stage of development reached for the various products under development and the
impact of external factors. Such factors during the year ended 31 December 2006
included pending decisions of regulatory bodies and finalisation of joint
development arrangements.
The table below shows the trend in our historic research and development costs
and other administrative costs over the past five reporting periods (as restated
for the first time adoption of FRS20 as explained in note 1.3):
Year ended Year ended Year ended 11 months ended Year ended
31 December 31 December 31 December 31 December 31 January
2006 2005 2004 2003 2003
As restated As restated As restated
£ £ £ £ £
Research and
development costs 1,077,312 1,553,056 971,043 632,062 810,754
Other
administrative
costs 1,030,360 805,161 954,725 885,888 485,322
Total operating
expenses 2,107,672 2,358,217 1,725,768 1,517,950 1,296,076
R&D ratio 51% 66% 56% 42% 63%
The R&D ratio shown above is the percentage of research and development costs
relative to total operating expenses for each period. The Board is mindful to
keep a sensible balance as reflected in this R&D ratio. Clearly, higher research
and development spend would increase this R&D ratio. Conversely, a reduction in
the Group's research and development expenditure, such as through cost
efficiencies, would decrease this ratio.
Total research and development spend since original formation of the business in
1997 totals £6.2 million (55% of total operating costs). During the year, the
sole subsidiary Futura Medical Developments Limited has continued to incur this
research and development expenditure which has been written off as incurred.
The Board considers that this overall total research and development spend
relative to its pipeline of later stage products and emerging new products
distinguishes the Group's lower funding requirements and risk profile compared
with more typical businesses in the wider pharmaceutical industry. The Group's
strategy will continue to focus on medical drugs and devices that offer the
potential for a significant return on the costs of development. As well as
continuing its existing research and development programme, the Group continues
to seek new opportunities for potential products to add to its portfolio.
Research and development costs for the year ended 31 December 2006 fell compared
with the year ended 31 December 2005. This was mainly as a result of reduced
spend on MED2002 development whilst commercialisation arrangements were
negotiated. In addition, the cost of CSD500 development has fallen to
approximately half the level of 2005 following regulatory submission in November
2005. These reductions are partially offset by increased costs of new product
development in the areas of pain relief and premature ejaculation.
Other administrative costs
The Group continues to maintain a focus on tight control of all expenditure.
Other administrative costs for the year ended 31 December 2006 were £1,030,360
(year ended 31 December 2005 as restated: £805,161). These comprise all other
operating costs excluding those relating to product development and associated
intellectual property. The main constituents of other administrative costs and
their relative proportions were:
Year ended Year ended
31 December 31 December
2006 2005
Wages and salaries 52% 55%
Legal and professional advisers 23% 28%
Office costs and staff expenses 14% 13%
Licensing negotiations 11% 4%
100% 100%
The Group has expanded its internal team to support increased activity levels as
it moves towards revenue generation and seeks further product development
opportunities internally and externally. The principal reasons for the increase
in other administrative costs relate to wages and salaries, related increases in
staff expenses, and license negotiation costs (legal and advisory) in respect of
the development and licensing of MED2002.
Although wages and salaries within other administrative costs fell as a
proportion, the overall increase includes the impact of new marketing and
support staff recruited in 2005 and 2006. Two additional support staff have been
recruited in April 2007. This completes the current expansion of the central
administrative functions of the Group as the platform for the next phase of the
Group's growth strategy.
Taxation
A research and development tax credit of £196,133 (31 December 2005: £286,973)
in respect of research and development expenditure incurred has been recognised
in the financial statements. The reduction compared with the prior year
reflects the fluctuating research and development spending year to year.
Capital structure and funding
The Group remains funded primarily by equity capital. This reflects the
development status of its products. Cash held by the Group is shown below at
each period end:
31 December 31 December 31 December 31 December 31 January
2006 2005 2004 2003 2003
£M £M £M £M £M
Cash at bank and in
hand 3.8 1.8 3.7 2.4 1.5
The Group did not have any bank borrowings at 31 December 2006 (31 December
2005: £nil). The net cash outflow from operating activities during the year
ended 31 December 2006 was £2.1 million (year ended 31 December 2005: £2.3
million).
In July 2006, the Group raised £3.3 million net of costs following a private
placing at 78 pence and exercise of share options by directors and staff.
Exercise of options in January and February 2006, chiefly by former directors,
raised a further £0.4 million net of costs for the Group (for the year ended 31
December 2005 the total receipts from the issue of share options was £0.1
million). This brings the total cash raised by the Group from formation of the
business in 1997 until 31 December 2006 to £13.5 million net of costs.
Other significant sources of funding for the Group comprise research and
development tax credits from formation of the business in 1997 until 31 December
2006 of £1.0 million (of which it has received £0.8 million) and bank interest
received of £0.6 million.
A L Clayden, Finance Director
Consolidated Profit and Loss Account
For the year ended 31 December 2006
Notes Year ended Year ended
31 December 31 December
2006 2005
As restated
£ £
Turnover 301 1,660
Research and development costs (1,077,312) (1,553,056)
Other administrative costs (1,030,360) (805,161)
Administrative expenses (2,107,672) (2,358,217)
Operating loss 2 (2,107,371) (2,356,557)
Interest receivable 5 136,114 133,467
Loss on ordinary activities before taxation (1,971,257) (2,223,090)
Tax on loss on ordinary activities 6 196,133 286,973
Loss on ordinary activities after taxation and retained loss 16 (1,775,124) (1,936,117)
for the year
Basic and diluted loss per share (pence) 7 (3.4p) (4.0p)
All amounts relate to continuing activities.
The notes below form part of the financial statements from which this final
results announcement is derived.
Balance Sheet
At 31 December 2006
Group Company
Notes 31 December 31 December 31 December 31 December
2006 2005 2006 2005
As restated
£ £ £ £
Fixed assets
Tangible assets 8 20,109 25,370 - -
Investments 9 - - 60,724 60,724
20,109 25,370 60,724 60,724
Current assets
Stock 10 32,648 31,956 - -
Debtors - due within one year 11 352,027 351,079 28,168 17,203
Debtors - due after more than one 11 - - 8,455,808 6,716,404
year
Total debtors 352,027 351,079 8,483,976 6,733,607
Cash at bank and in hand 3,779,798 1,808,913 3,717,204 1,732,998
4,164,473 2,191,948 12,201,180 8,466,605
Creditors: amounts falling due 12 (233,143) (237,147) (6,221) (35,913)
within one year
Net current assets 3,931,330 1,954,801 12,194,959 8,430,692
Total net assets 3,951,439 1,980,171 12,255,683 8,491,416
Capital and reserves
Called up share capital 14 110,607 97,877 110,607 97,877
Share premium account 16 12,251,275 8,560,987 12,251,275 8,560,987
Other reserves 16 1,152,165 1,152,165 - -
Profit and loss account 16 (9,562,608) (7,830,858) (106,199) (167,448)
Equity shareholders' funds 17 3,951,439 1,980,171 12,255,683 8,491,416
The financial statements from which this final results announcement is derived
were approved and authorised for issue by the Board on 29 May 2007 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 2006
Year ended Year ended Year ended Year ended
31 December 31 December 31 December 31 December
Notes 2006 2006 2005 2005
As restated As restated
£ £ £ £
Net cash outflow from operating A (2,133,455) (2,292,863)
activities
Returns on investments and
servicing of finance
Interest received 124,730 139,306
Net cash inflow from returns on
investments and servicing of
finance 124,730 139,306
Corporation tax
Research and development tax
credit received 282,636 167,858
282,636 167,858
Capital expenditure
Payments to acquire tangible (6,088) (13,835)
fixed assets
Proceeds on disposal of fixed 44 -
assets
Net cash outflow from capital
expenditure (6,044) (13,835)
Net cash outflow before use of
liquid resources and financing (1,732,133) (1,999,534)
Management of liquid resources
(Increase) / decrease in short
term deposits (1,979,031) 1,787,913
Financing
Issue of ordinary shares 3,849,150 135,800
Expenses paid in
connection with share issues (146,132) -
Net cash inflow from financing 3,703,018 135,800
Decrease in cash B (8,146) (75,821)
Notes to the Consolidated Cash Flow Statement
For the year ended 31 December 2006
1. A Reconciliation of operating loss to net cash outflow from operating activities
Year ended Year ended
31 December 31 December
2006 2005
As restated
£ £
Operating loss (2,107,371) (2,356,557)
Depreciation 10,630 13,203
Loss on sale of fixed assets 6 -
Share-based payment charge 43,374 31,973
Increase in stocks (692) (17,144)
(Increase) / decrease in debtors (76,067) 20,408
(Decrease) / increase in creditors (3,335) 15,254
Net cash outflow from operating activities (2,133,455) (2,292,863)
2. B Analysis of net funds
At Cash flow At
1 January 2006 31 December 2006
£ £ £
Cash at bank and in hand 88,913 (8,146) 80,767
Other liquid resources 1,720,000 1,979,031 3,699,031
1,808,913 1,970,885 3,779,798
3. C Reconciliation of net cash flow to movement in net funds
Year ended Year ended
31 December 31 December
2006 2005
£ £
Decrease in cash in the year (8,146) (75,821)
Cash inflow / (outflow) from changes
in liquid resources 1,979,031 (1,787,913)
Movement in net funds in the year 1,970,885 1,863,734
Net funds at start of year 1,808,913 3,672,647
Net funds at end of year 3,779,798 1,808,913
Notes to the Financial Statements
For the year ended 31 December 2006
1 Accounting policies
1.1 Basis of preparation
The financial information set out in this announcement does not constitute the
Group's full statutory accounts for the year ended 31 December 2006 or for the
year ended 31 December 2005 for the purposes of section 240 of the Companies Act
1985, but is derived from those accounts.
Statutory accounts for 2005 have been delivered to the Registrar of Companies
and those for 2006 will be delivered in due course. The auditors have reported
on those accounts; their reports were unqualified and did not contain statements
under Section 237(2) or (3) of the Companies Act 1985.
The principle accounting policies of the Group are unchanged from the Group's
2005 annual report with the exception of the adoption of FRS20 (Share-based
Payment) as detailed in note 1.3. 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
2006.
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 consolidated 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 this final results
announcement. The Company made a profit after tax of £17,875 for the year (year
ended 31 December 2005: loss after tax of £14,170).
1.3 Change in accounting policy
The Group has applied the requirements of Financial Reporting Standard 20
(Share-based Payment) which it has adopted for the first time with effect from 1
January 2006 as its application is obligatory for accounting periods commencing
on or after that date. In accordance with the transitional provisions, Financial
Reporting Standard 20 has been applied to all grants of equity instruments after
7 November 2002 that were unvested at 1 January 2006.
The Group issues equity-settled share-based payments, i.e. share options, to
certain Directors, employees and consultants. Equity-settled share-based
payments are measured at fair value (excluding the effect of non-market-based
vesting conditions) at the date of grant using an appropriate valuation model.
The fair value determined at the grant date of the equity-settled share-based
payments is expensed to the profit and loss account on a straight-line basis
over the vesting period, based on the Group's estimate of shares that will
eventually vest and adjusted for the effect of non market-based vesting
conditions. At each balance sheet date the cumulative charge in respect of each
option plan is adjusted to reflect expected and actual levels of options
vesting. Prior to the adoption of Financial Reporting Standard 20,
equity-settled share-based payments were not expensed to the profit and loss
account.
The effect of this is to increase costs for the year ended 31 December 2006 by
£43,374. The prior year comparatives have been restated resulting in an increase
in cost for the year ended 31 December 2005 of £31,973. The cumulative effect
on the Group's opening reserves at 1 January 2005 is a charge of £29,835 and a
corresponding credit of £29,835 resulting in £nil net change. This has resulted
in an increase in loss per ordinary share for the year ended 31 December 2006 of
0.08 pence per share (year ended 31 December 2005: increase of 0.07 pence per
share). The cumulative effect on the Company's opening reserves at 1 January
2005 is a credit of £29,835 and a corresponding increase in the amounts owed by
the subsidiary.
1.4 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.
1.5 Research and development
Research and development expenditure is charged to the profit and loss account
in the year in which it is incurred.
1.6 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 and equipment 25% Straight line
1.7 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 Group
anticipates making sufficient taxable profits in the future to absorb the
reversal of the underlying timing differences. Deferred tax balances are not
discounted.
1.8 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 the profit and loss account.
1.9 Pension costs
The Group provides retirement benefits to all employees and Executive Directors
(except the Chairman) 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.
1.10 Leased assets
Operating lease rentals are charged to the profit and loss account on a straight
line basis over the term of the lease.
1.11 Share-based payments
Where share options are awarded to employees and others providing similar
services on or after 7 November 2002, the fair value of the options at the date
of grant is expensed to the profit and loss account over the vesting period.
Non-market vesting conditions are taken into account by adjusting the number of
equity instruments expected to vest at each balance sheet date so that,
ultimately, the cumulative amount recognised over the vesting period is based on
the number of options that eventually vest. Market vesting conditions are
factored into the fair value of the options granted. As long as all other
vesting conditions are satisfied, a charge is made irrespective of whether the
market vesting conditions are satisfied. The cumulative expense is not adjusted
for failure to achieve a market vesting condition.
Where the terms and conditions of options are modified before they vest, the
increase in the fair value of the options, measured immediately before and after
the modification, is also expensed to the profit and loss account over the
remaining vesting period.
Where equity instruments are granted to persons other than employees and others
providing similar services, the profit and loss account is charged with the fair
value of goods and services received.
1.12 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.
1.13 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.
1.14 Government grants
Government grants relating to research and development expenditure are credited
to the profit and loss account as the related expenditure is incurred.
1.15 Liquid resources
For the purpose of the cash flow statement liquid resources are defined as short
term money market deposits and notice accounts of up to six month's duration.
2 Operating loss
Year ended Year ended
31 December 2006 31 December 2005
£ £
Operating loss is stated after charging:
Depreciation of tangible assets 10,630 13,203
Loss on sale of fixed assets 6 -
Hire of other assets - operating leases 70,752 70,752
Auditors' remuneration
- Audit services 23,660 23,120
- Tax services 13,017 10,700
- Other services 5,720 10,000
The audit fee for Futura Medical plc and its sole subsidiary, Futura Medical
Developments Limited, is £29,380 (for the year ended 31 December 2005, the
actual total fee charged was £28,250). The audit fee relating to the audit of
the Company is £23,660 (for the year ended 31 December 2005, the actual fee
relating to the Company was £23,120).
Included in other services is the audit fee apportioned to Futura Medical
Developments Limited of £5,720 (for the year ended 31 December 2005 the actual
fee apportioned was £5,500).
The agreed corporation tax compliance fee for Futura Medical Developments
Limited, is £4,150 (for the year ended 31 December 2005, the actual corporation
tax compliance fee charged by the auditors was £4,025).
The loss before tax is £1,971,257 (for the year ended 31 December 2005 as
restated: £2,223,090) and total net assets are £3,951,439 (as at 31 December
2005: £1,980,171) and they are both derived from one class of business and one
geographical market.
Operating leases are cancellable on one month's notice.
5 Interest receivable
Year ended Year ended
31 December 2006 31 December 2005
£ £
Bank interest receivable 136,114 133,467
6 Taxation
Year ended Year ended
31 December 31 December
2006 2005
As restated
£ £
Current tax
UK corporation tax on loss for the year (195,033) (281,536)
Under-provision in prior year (1,100) (5,437)
Tax credit on loss on ordinary activities (196,133) (286,973)
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 2006 31 December 2005
As restated
£ £
Loss on ordinary activities before tax (1,971,257) (2,223,090)
Loss on ordinary activities at the standard rate of
corporation tax in the UK of 19% (31 December 2005: 19%) (374,539) (422,387)
Expenses not deductible for tax purposes 2,370 1,751
Difference between depreciation and capital allowances 2,264 602
Other short-term timing differences 8,626 56
Unutilised tax losses 400,704 220,604
Schedule 23 deduction for share options (176,501) -
Additional relief attaching to tax credit claims (57,957) (82,162)
Under-provision in prior year (1,100) (5,437)
Current tax credit for the year (196,133) (286,973)
The Group has tax losses of approximately £7,289,771 (31 December 2005:
£5,152,600) available for offset against future taxable profits.
Deferred tax assets amounting to £1,404,565 (31 December 2005 as restated:
£996,020) 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
differences reverse, the deferred tax asset comprises:
Year ended Year ended
31 December 2006 31 December 2005
As restated
£ £
Accelerated capital allowances 1,575 (1,202)
Other short term timing differences 20,774 18,223
Unutilised tax losses 1,382,216 978,999
1,404,565 996,020
7 Loss per 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 ordinary shares in issue
was 52,299,053 (year ended 31 December 2005: 48,686,327 shares) and the loss for
the year was £1,775,124 (year ended 31 December 2005 as restated: £1,936,117).
The effect of all potential ordinary shares is antidilutive.
8 Tangible fixed assets
Plant and Fixtures,
machinery fittings
Cost and equipment Total
£ £ £
At 1 January 2006 31,192 42,353 73,545
Additions 2,604 2,814 5,418
Disposals - (130) (130)
At 31 December 2006 33,796 45,037 78,833
Depreciation
At 1 January 2006 13,275 34,900 48,175
Disposals - (81) (81)
Charge for year 7,298 3,332 10,630
At 31 December 2006 20,573 38,151 58,724
Net book value
At 31 December 2006 13,223 6,886 20,109
At 31 December 2005 17,917 7,453 25,370
All fixed assets of the Group are held in Futura Medical Developments Limited.
9 Fixed asset investments
Shares in
subsidiary
undertaking
Company £
Cost and net book value at 1 January 2006 and 31 December 2006 60,724
Interests in group undertakings
Subsidiary undertaking Description of Proportion of
shares held nominal value
of issued
shares held
and voting rights
Futura Medical Developments Ordinary £1 shares 100%
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.
10 Stock
Group Company
31-December 31 December 31December 31 December
2006 2005 2006 2005
£ £ £ £
Raw materials and consumables 32,648 31,956 - -
There is no material difference between the replacement cost of stock and the
amounts stated above.
11 Debtors
Group Company
31 December 31 December 31 December 31 December
2006 2005 2006 2005
As restated
£ £ £ £
Amounts receivable within one
year:
Trade debtors 1,939 - - -
Corporation tax repayable 195,034 281,536 - -
Other debtors 32,880 27,847 - -
Prepayments and accrued income 122,174 41,696 28,168 17,203
352,027 351,079 28,168 17,203
Amounts receivable after more
than one year:
Amounts owed by subsidiary - - 8,455,808 6,716,404
12 Creditors: amounts falling due within one year
Group Company
31 December 31 December 31 December 31 December
2006 2005 2006 2005
£ £ £ £
Trade creditors 123,070 114,586 5,521 6,571
Taxation and social security 36685 30780 - -
Accruals and deferred income 73,388 91,781 700 29,342
233,143 237,147 6,221 35,913
14 Share capital
Authorised
31 December 31 December 31 December 31 December
2006 2005 2006 2005
No. No. £ £
Ordinary shares of 0.2 pence each 500,000,000 500,000,000 1,000,000 1,000,000
Allotted, called up and fully paid
31 December 31 December 31 December 31 December
2006 2005 2006 2005
No. No. £ £
Ordinary shares of 0.2 pence each 55,303,601 48,938,601 110,607 97,877
During the year ending 31 December 2006, the Company issued ordinary shares of
0.2 pence each as follows:
Month Purpose Gross Shares
consideration issued
£ No.
January 2006 Exercise of share options 165,500 350,000
February 2006 Exercise of share options 200,400 380,000
July 2006 Private placing at 78 pence per share 2,652,000 3,400,000
July 2006 Exercise of share options 831,250 2,235,000
3,849,150 6,365,000
16 Reserves
Share premium Other Profit and loss
account reserves account
£ £ £
Group
At 1 January 2006 8,560,987 1,152,165 (7,830,858)
Retained loss for the year - - (1,775,124)
Share-based payments - - 43,374
Shares issued during the year 3,836,420 - -
Cost of share issues (146,132) - -
At 31 December 2006 12,251,275 1,152,165 (9,562,608)
Company
At 1 January 2006 as previously stated 8,560,987 - (229,256)
Prior year adjustment (see note 1.3) - - 61,808
At 1 January 2006 (as restated) 8,560,987 - (167,448)
Retained profit for the year - - 17,875
Share-based payments - - 43,374
Shares issued during the year 3,836,420 - -
Cost of share issues (146,132) - -
At 31 December 2006 12,251,275 - (106,199)
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
2006 2005 2006 2005
As restated As restated
£ £ £ £
Profit / (loss) for the financial year (1,775,124) (1,936,117) 17,875 (14,170)
Share-based payments 43,374 31,973 43,374 31,973
Net proceeds from issue of shares 3,703,018 135,800 3,703,018 135,800
Net addition / (reduction) to
shareholders' funds 1,971,268 (1,768,344) 3,764,267 153,603
Opening shareholders' funds as
previously stated 1,980,171 3,748,515 8,429,608 8,307,978
Prior year adjustment (see note 1.3) - - 61,808 29,835
Opening shareholders' funds
as restated 1,980,171 3,748,515 8,491,416 8,337,813
Closing shareholders' funds 3,951,439 1,980,171 12,255,683 8,491,416
This information is provided by RNS
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