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Preliminary Results

22nd May 2006 07:01

Futura Medical PLC22 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 groupthat develops innovative products for sexual health, is pleased to announce itsfinal 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 andproductive 12 months ahead." For further information:Futura Medical plcJames Barder, Chief Executive Tel: +44 (0) 1483 685 670 Anthony Clayden, Finance DirectorBuchanan CommunicationsMark 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 milestonesfail to convey the full impact of the progress we have made. It therefore givesus enormous pleasure to advise our shareholders of some major milestones Futurahas achieved in the past year. Product Development CSD500 - Zanifil(TM) Condom safety device In April 2005, we announced that satisfactory pilot stability and compatibilityresults had enabled SSL International plc ("SSL"), the consumer healthcarebrands company and manufacturer and distributor of Durex(TM) the world'sbiggest-selling branded condom, to commence manufacturing trials and additionalstability studies to meet regulatory requirements. In November 2005, SSL submitted the regulatory dossier for CSD500 to therelevant Notified Body and Competent Authority seeking marketing authorisationin the European Union. The initial response from the Notified Body and CompetentAuthority has been positive and, in line with expectations, additionalinformation has been requested which is a normal part of the approval process.We anticipate a further response from the Notified Body and Competent Authorityduring the summer of 2006 and at that point will again update our shareholders.The regulatory approval of CSD500 will be a major milestone achievement forFutura which will lead to our generating revenues from the first of our threekey products. CSD500 will be marketed by our global distribution partner, SSL. CSD500 containsan active compound which will help healthy men maintain an erection duringsexual intercourse, thereby helping to reduce condom slippage. Both Futura andSSL believe CSD500 could be an exciting leading product within the Durex(TM) rangethat 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 distributeFLD500 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 animportant sector of the market. In August 2005, we also concluded, following a complete review of all ourclinical trials, that we had sufficient clinical data to support a regulatorydossier submission to a Notified Body and Competent Authority seeking marketingauthorisation in the European Union thereby avoiding the need of furtherexpensive and time consuming clinical trials. Although there is considerable technical overlap with CSD500, FLD is based onsignificantly different design resulting in many new technical and manufacturingchallenges. Significant progress has been made since the interim statement lastSeptember and we expect to make a further announcement shortly to shareholderson this development once the current technical evaluation studies have beencompleted. 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 andcommercialisation of MED2002 for well over 12 months. During this period, considerable resources have been committed by both partiesto the joint development of MED2002. MGPG has conducted work to confirm theoptimum regulatory strategy for MED2002 in the key consumer markets and evaluatethe size of the market opportunity for MED2002. In November 2005, we announced the results of our in vivo trials on healthysubjects in respect of our revised formulation of MED2002. In the first of thetrials, we observed an excellent safety profile with a dose-related occurrenceof adverse events which allowed us to define the maximum tolerated dose. Theside effects were entirely predictable, being predominantly mild headaches whichresolved spontaneously and did not require treatment. No serious side effectswere recorded. Further, the absorption profile was consistent with the intendeduse of the product in treating erectile dysfunction, suggesting a rapid onset ofaction within a few minutes of product application. The second of the trials also confirmed an excellent safety profile. Inaddition, and despite the lack of sexual stimulation, subjects displayedincreases in blood flow into the penis which were consistent with those seenduring sexual arousal and are an encouraging indicator of the potential efficacyof MED2002 in the treatment of erectile dysfunction. With these studies completed the agreement of the commercial terms willfacilitate a full commitment by both parties to the joint development programmefor MED2002. As part of this, the exclusivity period with MGPG has beenextended and we are now advised that the formal approval process is in its finalstage within MGPG. Futura expect MED2002 to become the world's first non-prescriptionpharmaceutical treatment for men with ED. By being available from pharmacieswithout the need for a doctor's prescription, MED2002 will be aimed atsatisfying 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 linewith 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 respectivemarkets. Moreover we anticipate that no further clinical trials will berequired for either of the condom products prior to regulatory approvals. Futura's management team has been seeking new product opportunities and weexpect to update shareholders on our progress following the conclusion of anagreement for MED2002. Nevertheless, our efforts over the past year have beencommitted to our three key products and will remain so. Conclusion The past twelve months have been pivotal for us and the momentum continues togain pace. Once more we want to thank our incredible small team of hard workingprofessionals who drive Futura forward and hope that our shareholders remain asexcited about the future as we are. Dr W D Potter J H BarderExecutive Chairman Chief Executive Financial Review The Financial Review should be read in conjunction with the financial statementsand the notes to the financial statements. Turnover The Group's turnover for the year to 31 December 2005 was £1,660 (year ended 31December 2004: £129,863). This derived from the settlement of an intellectualproperty dispute in 2004 and the major part of this royalty stream was sold inJuly 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 theyear ended 31 December 2005 was £2.3 million (year ended 31 December 2004: £1.6million) and the operating loss of the sole subsidiary, Futura MedicalDevelopments Limited, for the year ended 31 December 2005 was £2.2 million (yearended 31 December 2004: £1.5 million). Losses per share for the year ended 31 December 2005 were 3.9 pence (year ended31 December 2004: 2.6 pence). Group research and development costs The Group continues to focus on balancing the most cost effective and ethicalresearch and development against the commercial applications of such researchand development and time to bring products to market. Research and development costs for the year were £1,535,240 (year ended 31December 2004: £960,141). The main focus of this expenditure related tosignificant expansion of development work and clinical trials in respect ofMED2002 in anticipation of entering into an agreement with MGPG, and studies inrespect 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. Otheradministrative costs for the year ended 31 December 2005 were £791,004 (yearended 31 December 2004: £745,806). The principal reasons for the increase relateto enhanced investor relations and other professional adviser and service costsarising from our being quoted on AIM, the addition of one administrative staffmember 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 thefinancial statements. Capital structure and funding At 31 December 2005, the Group had shareholders' funds of £2.0 million (31December 2004: £3.7 million) including cash balances of £1.8 million (31December 2004: £3.7 million). The Group did not have any bank borrowings at 31December 2005 (31 December 2004: £nil). The Group is principally funded by equity capital. However, it does continue toreceive research and development tax credits under the Inland Revenue scheme andalso received a final tranche from the research grant awarded in 2003 from theDTI. During the year ended 31 December 2005, in addition to turnover the Group's cashinflows included net proceeds from the issue of shares (pursuant to the exerciseof share options) of £135,800 (year ended 31 December 2004: £2.6 million fromplacings and the exercise of warrants), research and development tax creditreceipts of £167,858 (year ended 31 December 2004: £108,436) and the finaltranche of the research grant from the DTI totalling £11,250 (year ended 31December 2004: £48,750). Net cash outflow from operating activities during the year ended 31 December2005 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 complexfinancial instruments. The Group's primary treasury objective is to minimiseexposure to potential capital losses whilst at the same time securing favourablemarket rates of interest on Group cash deposits using money market deposits withbanks. In respect of foreign exchange exposure, the Group primarily enters intosupplier contracts which are to be settled in sterling. However, some contractsinvolve other major world currencies including the US Dollar and the Euro.Where large supplier contracts of more than £100,000 total value are to besettled in foreign currencies, it is operating policy for the sums to be paidthrough conversion of sterling deposits to the appropriate foreign currencyholdings at the outset of the contract to minimise the risk of adverse currencyfluctuations. For contracts with smaller values the foreign currency risk isnot considered sufficient to require the establishment of foreign currency bankaccounts 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 contractssettled in foreign currencies represented 0.3% of total administrative expenses(year ended 31 December 2004: 2.8%). In addition, the Group was exposed to theUS Dollar as a result of holding residual dollar balances (of less than £13,000throughout the year) and the US dollar account was closed during August 2005. A L ClaydenFinance Director Basis of preparation of this Final Results Announcement The financial information set out in this announcement does not constitute theCompany's statutory accounts for the years ended 31 December 2005 or 31 December2004. The financial information for 2004 is derived from the statutory accounts forthe year ended 31 December 2004 which have been delivered to the Registrar ofCompanies. The financial information for 2005 is derived from the statutory accounts forthe year ended 31 December 2005. The auditor has reported on the statutoryaccounts for the year ended 2005. Their report was unqualified and did notcontain 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 theRegistrar of Companies and Shareholders in due course. Consolidated Profit and Loss AccountFor 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 andsimilar income 5 133,467 177,047 Loss on ordinary activities beforetaxation (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 theyear 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 thereforeno separate statement of total recognised gains and losses has been presented. The notes below form part of the financial statements from which this finalresults announcement is derived. Balance SheetsAt 31 December 2005 Group Company Notes 31 December 31 December 31 December 31 December 2005 2004 2005 2004 £ £ £ £ Fixed AssetsTangible assets 8 25,370 28,120 - -Investments 9 - - 60,724 60,724 25,370 28,120 60,724 60,724 Current AssetsStock 10 31,956 14,812 - - Debtors - due within oneyear 11 351,079 258,211 17,203 18,094Debtors - due after morethan one year 11 - - 6,654,596 4,742,780 Total debtors 351,079 258,211 6,671,799 4,760,874Cash 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 reservesCalled up share capital 14 97,877 97,357 97,877 97,357Share premium account 16 8,560,987 8,425,707 8,560,987 8,425,707Other 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 derivedwere approved and authorised for issue by the Board on 19 May 2006 and weresigned on its behalf by JH Barder, Director. The notes below form part of the financial statements from which this finalresults announcement is derived. Consolidated Cash Flow StatementFor 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 andservicing of financeInterest received 139,306 175,141 ___________ ___________ Net cash inflow from returns on 139,306 175,141Investments and servicing offinance Corporation TaxResearch and development tax 167,858 108,436credit received ___________ ___________ 167,858 108,436 Capital expenditurePayments to acquire tangible (13,835) (21,648)fixed assetsProceeds on disposal of fixed - 170assets ___________ ___________ Net cash outflow from capital (13,835) (21,478)expenditure ___________ ___________ Net cash outflow before use ofliquid resources and financing (1,999,534) (1,297,491) Management of liquid resourcesDecrease / (increase) in short 1,787,913 (1,160,993)term deposits FinancingIssue of ordinary shares 135,800 2,644,550Expenses paid in - (76,120)connection with share issues ___________ ___________ Net cash inflow from financing 135,800 2,568,430 ___________ ___________(Decrease) / Increase in B (75,821) 109,946net cash ___________ ___________ The notes below form part of this cashflow statement. Notes to the Consolidated Cash Flow StatementFor 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 15,414Loss on sale of fixed assets - 3,897(Increase) / Decrease in stocks (17,144) 2,467Decrease / (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) 88,913Other 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) 109,946Cash (outflow) / inflow from changes in (1,787,913) 1,160,993liquid resources ___________ __________Movement in net funds in the year (1,863,734) 1,270,939Net 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 StatementsFor the year ended 31 December 2005 1. Accounting Policies 1.1 Basis of preparation The financial statements have been prepared under the historical cost accountingrules and in accordance with applicable UK accounting standards. The followingprinciple accounting policies have been applied. 1.2 Basis of consolidation The consolidated financial statements include the results of the Company and itssubsidiary, Futura Medical Developments Limited, for the year ended 31 December2005. Under the provisions of Financial Reporting Standard 6, Acquisitions andMergers, these consolidated financial statements are prepared using mergeraccounting. The investment is recorded in the Company's balance sheet at the nominal valueof the shares issued together with the fair value of any additionalconsideration paid. In the Group financial statements, merged subsidiary undertakings are treated asif they had always been a member of the Group. The results of such a subsidiaryare included for the whole period in the year it joins the Group. Thecorresponding figures for the previous year include its results for that period,the assets and liabilities at the previous balance sheet date and the sharesissued by the Company as consideration as if they had always been in issue. Anydifference between the nominal value of the shares acquired by the Company andthose issued by the Company to acquire them is taken to reserves. As permitted by Section 230 of the Companies Act 1985, the holding Company'sprofit 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 31December 2004: profit after tax of £53,519). 1.3 Turnover Turnover comprises royalty fees and the sale of rights to future royalty feesand excludes value added tax. Royalty fees that are receivable are recognised as turnover in the year to whichthey relate. Sales of the rights to future royalty fees are recognised asturnover on the date on which they become receivable. 1.4 Research and development Research and development expenditure is charged to the profit and loss accountin the year in which it is incurred. 1.5 Tangible fixed assets and depreciation Tangible fixed assets are stated at cost less depreciation. Depreciation isprovided at rates calculated to write off the cost less estimated residual valueof each asset over its expected useful life, as follows: Plant and machinery 25% Straight lineFixtures, fittings & equipment 25% Straight line 1.6 Deferred taxation Deferred tax balances are recognised in respect of all timing differences thathave originated but not reversed by the balance sheet date, except that therecognition of deferred tax assets is limited to the extent that the Companyanticipates making sufficient taxable profits in the future to absorb thereversal of the underlying timing differences. Deferred tax balances are notdiscounted. 1.7 Foreign currency translation Monetary assets and liabilities denominated in foreign currencies are translatedinto sterling at the rates of exchange ruling at the balance sheet date.Transactions in foreign currencies are recorded at the rate ruling at the dateof 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 Directorswho wish to participate by defined contribution pension schemes. The assets ofthese schemes are held separately from those of the Group in independentlyadministered funds. Contributions made by the Group are charged to the profitand 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 straightline 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 theGroup profit and loss account and a reserve created in capital and reserves torecord 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 priceof all share options granted has been equal to the Company's share price at thedate of award. Prior to becoming quoted on AIM, the Company's share price wasconsidered to be the price of the placing preceding the particular grant ofoptions. 1.11 National insurance on share options Where possible, all employee option holders enter into an Inland Revenue jointelection to transfer the employers' national insurance contribution potentialliability to the employee. To the extent that such an election has not beenentered into and where the share price at the balance sheet date is greater thanthe exercise price on options granted after 19 May 2000, provision for anyemployers' national insurance contribution has been made based on the prevailingrate of national insurance. However, under the terms of all option rules anyliability which may arise is recoverable from each option holder and acorresponding debtor is also included. 1.12 Stocks Stocks are stated at the lower of cost and net realisable value using the FIFOmethod. Cost includes all direct expenditure in bringing the stock to itscurrent location and condition. 1.13 Government grants Government grants relating to research and development expenditure are creditedto 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 shortterm 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 15,414Loss on sale of fixed assets - 3,897Hire of other assets - operating leases 70,752 70,752Auditors' 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 2005amount to £23,120 (31 December 2004: £18,150). 3 Wages and salaries The average monthly number of persons (including all Directors) employed by theGroup during the year and their aggregate emoluments are shown below: Year ended Year ended 31 December 2005 31 December 2004 No NoManagement and administration 11 9 _______ _______ The costs incurred in respect of those employed were: £ £Wages and salaries 615,557 508,820Social security costs 76,363 62,606Other 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 £ £DirectorsAggregate 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 purchaseschemes 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 (yearended 31 December 2004: one Director) accrued a sum to be allocated to a privatemoney 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 taxUK 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 corporationtax 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% (31December 2004: 19%)Expenses not deductible for tax purposes 1,751 2,480Difference between depreciation and capital 602 376allowancesOther short-term timing differences (6,019) 2,331Unutilised tax losses 220,604 137,409Additional 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 notbeen recognised on the basis that their future economic benefit is not certain.Assuming a prevailing tax rate of 19% when the timing difference reverse, thedeferred 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 6,331Unutilised 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 lossper share has been calculated by dividing the loss on continuing ordinaryactivities after taxation by the weighted average number of ordinary shares inissue during the year. The weighted average number of equity shares in issuewas 48,686,327 (year ended 31 December 2004: 48,069,839 shares) and the loss forthe year was £1,904,144 (year ended 31 December 2004: £1,228,951). The effectof all potential ordinary shares is antidilutive. 8 Tangible fixed asset Plant and Fixtures fittings, and Total machinery equipmentCost £ £ £ At 1 January 2005 23,806 39,286 63,092Additions 7,386 3,067 10,453 ________ ________ ________ At 31 December 2005 31,192 42,353 73,545 ________ ________ ________ DepreciationAt 1 January 2005 6,168 28,804 34,972Charge for year 7,107 6,096 13,203 ________ ________ ________ At 31 December 2005 13,275 34,900 48,175 ________ ________ ________ Net book valueAt 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 fixedassets of the Group are held in Futura Medical Developments Limited. 9 Fixed asset investments Shares in subsidiary undertakingsCompany £ 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 theconsolidated financial statements. Futura Medical Developments Limitedundertakes research, development, production and sale of pharmaceuticalproducts. 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 theamounts stated above. 11 Debtors Group Company 31 December 31 December 31 December 31 December 2005 2004 2005 2004 £ £ £ £Amounts receivable within oneyear: Corporation tax repayable 281,536 162,421 - -Other debtors 27,847 40,901 - -Prepayments and accrued 41,696 54,889 17,203 18,094income ________ ________ _______ _______ 351,079 258,211 17,203 18,094 ________ ________ _______ _______ Amounts receivable after morethan 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 598Taxation 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 tomanage the interest rate risks arising from its operations and from its sourcesof finance. The Financial Review sets out the Group's treasury and financialrisk management policy. Trade creditors and trade debtors are the only otherfinancial instruments that arise directly from the Group's operations. In the year, the Group's financial instruments comprised financial assetsdetails 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 £ £CurrencySterling 1,720,000 3,661,133US Dollar - 11,514 The Group's financial assets comprise money held in bank current accounts, whichare instant access, and sterling cash deposits on the money market at monthlyrates. Interest rates and currency of financial assets Fixed rate financial assets of £1,720,000 (31 December 2004: £3,507,913) wereheld in sterling cash deposits at the year end. The weighted average period tomaturity for sterling cash deposits held at the year end is 34 days (31 December2004: 32 days), with a weighted average interest rate of 4.51% per annum (31December 2004: 4.75% per annum). Deposits are held with Butterfield Private Bankand Anglo Irish Bank. In addition, cash of £88,913 (31 December 2004: £164,734)was held on current accounts at Butterfield Private Bank, earning nominalamounts of interest. The US dollar account was closed during the year (31December 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 USDollars, Euros, or Swiss Francs. To mitigate the risk of any exposure to foreigncurrency fluctuations where the supplier contract value is more than £100,000,once a price for a contract has been agreed, funds are transferred to therelevant foreign currency bank account established for the purpose, and so aretranslated at the exchange rate at the date of agreement. The Group willtherefore not be exposed to the risks of changing exchange rates, but they willalso not benefit from any exchange rate gains. For contracts with smaller valuesthe foreign currency risk is not considered sufficient by the Group to requirethe establishment of foreign currency bank accounts unless specificcircumstances are identified which warrant this. Forward and option contractsare 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 1,000,000each ___________ ___________ __________ __________ 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 97,357each ___________ ___________ __________ __________ In November 2005, the Company issued 10,000 ordinary shares of 0.2 pence eachfor 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 eachfor the total consideration of £132,500 pursuant to the exercise of shareoptions. 15 Share Options At 31 December 2005, the number of ordinary shares of 0.2 pence each subject tooptions 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 - - - 1,500,0005 March 2002 53 pence 250,000 - - - 250,00021 March 2002 33 pence 530,000 - (10,000) - 520,00021 March 2002 53 pence 1,000,000 - (250,000) - 750,00029 July 2002 50 pence 10,000 - - - 10,00025 October 50 pence 110,000 - - - 110,0002002 _________ _________ _________ _________ _________ 3,400,000 - (260,000) - 3,140,000 _________ _________ _________ _________ _________ After due consideration by the Remuneration Committee and the Board inconsultation with our Nominated Advisor, the expiry date for the optionsexercisable until 31 January 2006 was extended to 31 January 2007 in order toenable the orderly exercise of the options outside of a close period. This was aresult of the company being in multiple, extended close periods for most of theoriginal exercise period (particularly as a result of the anonymity of MGPGduring 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) - 4,125,000periods _________ _________ _________ _________ _________ 16 Reserves Share premium Other reserves Profit and loss account account £ £ £ GroupAt 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) _________ _________ _________ CompanyAt 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 FuturaMedical Developments Limited on 6 June 2001 via a share for share exchangeaccounted 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) 53,519yearNet proceeds from issue of 135,800 2,568,430 135,800 2,568,430shares _________ _________ _________ _________ Net (reduction) / addition to (1,768,344) 1,339,479 121,630 2,621,949shareholders' fundsOpening 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 toindependently administered funds and during the year amounted to £35,647 (yearended 31 December 2004: £31,535). Pension contributions payable but not yetpaid at 31 December 2005 totalled £nil in respect of pension contributionentitlements where employees had not yet provided details of the funds to whichthe contributions should be made (31 December 2004: £33,604) and are included increditors. 19 Related party transactions W D Potter, a Director of the Company, provides consulting services to FuturaMedical Developments Limited, the wholly owned subsidiary, through StaplefordScientific Services Limited. Of the total fees and expenses invoiced during theyear by Stapleford Scientific Services Limited of £60,416 plus VAT (year ended31 December 2004: £41,953 plus VAT), the amount outstanding at 31 December 2005to Stapleford Scientific Services Limited was £7,826 (31 December 2004: £4,254). This information is provided by RNS The company news service from the London Stock Exchange

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Futura Medical
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