Futura Medical plc Annual Report 2015

FY2015 Annual Report · Futura Medical plc
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EXPERTS IN 
TRANSDERMAL 
DELIVERY

Futura Medical plc
Annual Report and Accounts 2015

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About Futura Medical

What we do
Futura’s innovation strategy applies advanced 
science to develop products with compelling 
commercial potential using our advanced proprietary 
transdermal technology.

Our key strengths

Technological strengths
We have strong IP on all products under development.  
Our expertise is in transdermal delivery.

Commercial strengths
We are focused on products for which there are substantial 
market opportunities. We currently have agreements with 
a number of key industry players. We specialise within the 
growing consumer healthcare sector.

Financial strengths
We maintain a high ratio of research and development 
spend relative to administrative costs and a ‘virtual’ 
organisational structure.

www.futuramedical.com

Contents

About Futura Medical
About Futura Medical
Our Strategy  
Highlights 
Our Business Model 
Our Brand Blue Diamond® 
Our Expertise 
Our Pipeline 

Governance
Chairman’s and Chief Executive’s Review 
Strategic Report 
Board of Directors  
Remuneration Report 
Corporate Governance 
Directors’ Report 
Independent Auditor’s Report 

Financial Statements
Consolidated Statement of Comprehensive Income 
Consolidated Statement of Changes in Equity 
Consolidated Statement of Financial Position 
Consolidated Statement of Cash Flows 
Notes to the Consolidated Financial Statements 
Parent Company Balance Sheet 
Parent Company Statement of Changes in Equity 
Notes to the Parent Company Financial Statements 
Company Information 

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www.futuramedical.com
Stock Code: FUM

 01

Our Strategy

Futura’s innovation strategy applies advanced science to develop products with 
compelling commercial potential and is driven by the following four criteria.

ADVANCED 
TRANSDERMAL
TECHNOLOGY

1

Offering innovative delivery 
of proven compounds 
through the skin to improve 
their performance or to 
address new indications

CONTROLLED 
DEVELOPMENT 
RISK

2

3

STRONG
INTELLECTUAL 
PROPERTY

Using only approved 
compounds to control the 
risk proﬁle

Developing products where 
the group can secure 
strong patent protection

COMMERCIALISATION

4

Out-licensing products 
to leading healthcare 
companies which offer 
the optimum potential 
ﬁnancial return

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INCORPORATING EXISTING 
CHEMICAL ENTITIES
 Reduces investment 

and risk
 Reduces 

development costs
 Increases chances 

of regulatory 
approval

N
N
N
SIO
SIO
SIO
U
U
U
F
DIF
DIF
DIF

THE ACTIVE STARTS 
THE ACTIVE STARTS 
THE ACTIVE STARTS 
WORKING RAPIDLY
WORKING RAPIDLY
WORKING RAPIDLY

TARGETED DELIVERY
TARGETED DELIVERY
TARGETED DELIVERY

SEXUAL HEALTH

CSD500

CSD500 
MED2002

 PAIN RELIEF
TPR100
TIB200
SPR300
SPR300

Licensing partners include 
Church & Dwight, Ansell, 
Kabey Pharmaceuticals,
RFSU and Kwang Dong 
Pharmaceutical. Launched in 
Holland and Belgium under 
blue diamond® brand.

INNOVATIVE DRUG 
DELIVERY PLATFORM
Highly efﬁcient and 
proprietary transdermal 
delivery technology

1
Application 
of gel with 
active

2
Seconds 
later*

3
Minutes 
later*

SKIN SURFACE
SKIN SURFACE
SKIN SURFACE

DERMIS
DERMIS
DERMIS

TARGET AREA
TARGET AREA
TARGET AREA

N
N
N
N
N
N

O
O
O
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A

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U

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A

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TECHNOLOGIES 
TECHNOLOGIES 
TECHNOLOGIES 
WITHIN DERMASYS® 
WITHIN DERMASYS 
WITHIN DERMASYS 
DRIVE  THE ACTIVE 
DRIVE  THE ACTIVE 
DRIVE  THE ACTIVE 
THROUGH THE SKIN
THROUGH THE SKIN
THROUGH THE SKIN

I
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G
G
G
G
G
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N
N
N
N
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N
N
N
N
O
O
O
O
O
O
T
T
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For more information on  
Our Delivery Technology go to page 5

* These are estimates and will vary according to the therapeutic indication

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02

Futura Medical plc
Annual Report and Accounts for the year ended 31 December 2015

Highlights

CSD500 (erectogenic condom)

 ● Modiﬁed manufacturing process achieves extended shelf life with continuing positive real-time data and 

regulatory submission made

 ● Commercial order received from a licensee partner signalling an H2 2016 launch

 ● Progress with own brand Blue Diamond® product via online and retail channels in the Netherlands and 

Belgium, providing customer insight and safety data to Futura and its licensee partners

Pain relief products TPR100 (diclofenac) and TIB200 (ibuprofen)

 ● Achieved primary endpoints in clinical study showing potential to be best-in-class based on improved drug 

delivery

 ● Received conﬁrmation from relevant EU regulator that in principle no further clinical efﬁcacy studies are 
expected to be required for TPR100 or TIB200 prior to the submission of regulatory dossiers in Europe, 
expected by the end of 2016

 ● Considerable interest in the two products from potential commercial partners and, subsequent to the year 

end, appointed advisers to manage the out-licensing process

MED2002 (treatment for erectile dysfunction) 

 ● Pivotal efﬁcacy study under way expected to report headline results by the end of H1 2016

 ● Made available as a ‘special’ or unlicensed medicine in the UK until it gains marketing authorisation

Organisational

 ● Strengthened the R&D department by establishing two separate teams, one focusing on clinical 

development and the other on chemistry, manufacturing and controls

Financial

 ● Net loss of £5.08 million (2014: net loss of £3.00 million), reﬂecting two clinical studies undertaken in 2015 

(2014: Nil)

 ● Cash resources of £4.19 million at 31 December 2015 (31 December 2014: £9.49 million); plus tax credit 

receivable of £1.00 million at 31 December 2015 (31 December 2014: £0.48 million)

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www.futuramedical.com
Stock Code: FUM

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Our Business Model

Develop

Protect

License

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Commercial potential
Our product development strategy 
is focused on creating products 
with a predicted high rate of return 
on investment and a low cost of 
development. We focus exclusively 
on topically applied pharmaceutical 
drugs and medical devices. We 
only incorporate existing well-
characterised chemical entities into 
our products. 

Robust patent protection
Strong IP underpins all our product 
development and commercialisation 
strategies. 

We develop and retain our 
intellectual property including 
manufacturing rights, patents, 
know-how and trademarks to 
protect the commercial position and 
competitiveness of our products 
and our partners.

Strong partners
Our products, once approved by 
the relevant regulatory authorities, 
will be brought to market through 
licensing agreements with partners 
that already have signiﬁcant 
distribution networks. In return 
we receive upfront payments, 
milestones and royalty payments 
based on the sales of our products 
via these distribution partners.

Licensing partnerships
CSD500 – Futura has an exclusive licensing agreement with Church & Dwight Co. Inc. (“Church & Dwight”) for the 
distribution rights to CSD500 in North America and in a number of key European territories. Church & Dwight’s 
condom brand Trojan® is the number one condom brand in North America and the world’s second biggest condom 
brand by product sales.

Futura has also licensed the rights to CSD500 to Kabey Pharmaceuticals, a Middle Eastern healthcare company 
for 15 countries in the Middle East and North Africa region (“MENA”), to Ansell Limited (“Ansell”) for China, to RFSU 
AB (“RFSU”) the market leader for condoms in the four countries in the Nordic region, to Bizzy Diamond BV for the 
Netherlands and Belgium and to Kwang Dong Pharmaceutical for South Korea.

In October 2014, CSD500 was launched in the Netherlands and Belgium with our distribution partner Bizzy Diamond 
BV under our own brand Blue Diamond®. This was followed by a retail launch in the Netherlands in June 2015.

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Futura Medical plc
Annual Report and Accounts for the year ended 31 December 2015

Our Brand Blue Diamond®

In 2014 Futura launched CSD500 under its own 
brand Blue Diamond® in the Netherlands  
and Belgium.

Blue Diamond® is now available in-store 
in some of the leading drug stores in the 
Netherlands. The retail launch of Blue 
Diamond® has been supported with a radio 
campaign on leading stations coupled with 
in-store/online activity and a sampling drive 
across the country. Blue Diamond® is also 
sold via a dedicated e-commerce website 
www.bluediamondcondom.nl as well as via 
all main online condom specialist retailers. 
Blue Diamond® is Futura’s own-brand of its 
CSD500 condom, which contains Futura’s 
erectogenic gel Zaniﬁl®. CSD500 beneﬁts from 
three marketing claims, which are unique, have 
been clinically proven and are approved by 
EU regulatory authorities: the maintenance of 
a ﬁrmer erection, maximised penile size and a 
longer lasting sexual experience for women.

Blue Diamond® condoms were launched in 
October 2014 initially as an online-only product 
by Bizzy Diamond BV, Futura’s distribution 
partner for the Benelux. The launch of the 
product attracted signiﬁcant local media 
coverage including national TV programmes and 
radio station interviews and reviews.

MED2002

Topical gel for the 

treatment of erectile 

dysfunction

TPR100

Topical diclofenac 

pain relief gel

TIB200  

Topical ibuprofen 

 pain relief gel

SPR300

Topical methyl salicylate

pain relief gel

1

Application 

of gel with 

active

2

Seconds 

later*

3

Minutes 

later*

SKIN SURFACE

SKIN SURFACE

DERMIS

DERMIS

TARGET AREA

TARGET AREA

N

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SIO

SIO

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DIF

DIF

TECHNOLOGIES 

TECHNOLOGIES 

WITHIN DERMASYS® 

WITHIN DERMASYS 

DRIVE  THE ACTIVE 

DRIVE  THE ACTIVE 

THROUGH THE SKIN

THROUGH THE SKIN

THE ACTIVE STARTS 

THE ACTIVE STARTS 

WORKING RAPIDLY

WORKING RAPIDLY

TARGETED DELIVERY

TARGETED DELIVERY

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www.futuramedical.com
Stock Code: FUM

 05

Our Expertise

DermaSys® is Futura’s advanced 
transdermal technology platform. 

Futura has developed a highly efﬁcient and proprietary transdermal delivery technology DermaSys®, for 
the absorption of active molecules through the skin. DermaSys® is a versatile technology that can be 
tailored to suit the speciﬁc active compound being used and the therapeutic indication. Such targeted 
delivery offers an optimised proﬁle in terms of dose, onset time and duration of effect, as well as an 
improved safety proﬁle through lower systemic uptake and the reduced risk of side effects.

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MED2002
Topical gel for the 
treatment of erectile 
dysfunction

TPR100
Topical diclofenac 
pain relief gel

TIB200  
Topical ibuprofen 
 pain relief gel

SPR300
Topical methyl salicylate
pain relief gel

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1
Application 
of gel with 
active
active
active

2
Seconds 
later*

3
Minutes 
later*

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SKIN SURFACE
SKIN SURFACE
SKIN SURFACE

DERMIS
DERMIS
DERMIS

TARGET AREA
TARGET AREA
TARGET AREA

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TECHNOLOGIES 
TECHNOLOGIES 
TECHNOLOGIES 
WITHIN DERMASYS® 
WITHIN DERMASYS 
WITHIN DERMASYS 
DRIVE  THE ACTIVE 
DRIVE  THE ACTIVE 
DRIVE  THE ACTIVE 
THROUGH THE SKIN
THROUGH THE SKIN
THROUGH THE SKIN

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SIO
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DIF
DIF
DIF

THE ACTIVE STARTS 
THE ACTIVE STARTS 
THE ACTIVE STARTS 
WORKING RAPIDLY
WORKING RAPIDLY
WORKING RAPIDLY

TARGETED DELIVERY
TARGETED DELIVERY
TARGETED DELIVERY

*These are estimates and will vary according to the therapeutic indication.

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06

Futura Medical plc
Annual Report and Accounts for the year ended 31 December 2015

Our Pipeline

Sexual Healthcare

Concept

Development

Commercialisation

CSD500 

Description: Condom containing an erectogenic gel

Status: Launched in Holland and Belgium with further launches expected

MED2002

Description: Topical gel for erectile dysfunction

Status: Pivotal efﬁcacy study under way with results due end of H1 2016

Development

Commercialisation

Pain Relief

Concept

TPR100

Description: Topical diclofenac pain relief gel

Status: Out-licensing discussions under way

TIB200 

Description: Topical ibuprofen pain relief gel

Status: Out-licensing discussions under way

SPR300

Description: Topical methyl salicylate pain relief gel

Status: Potential follow on product to TIB200/TPR100

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www.futuramedical.com
Stock Code: FUM

 07

Chairman’s and Chief Executive’s Review

2015 saw signiﬁcant progress across our portfolio of 
product opportunities, particularly in the advancement of 
our clinical programmes and in the extension of the shelf 
life of the novel condom CSD500 ahead of its licensee 
launch and international roll-out.

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The extended shelf life of CSD500 which has been achieved 
using a modiﬁed manufacturing process continues to show 
substantial improvement over the previously approved shelf 
life and it is expected to meet the launch requirements of our 
commercial partners. Regulatory submissions have been 
made in Europe for approval of the modiﬁed manufacturing 
process, which are expected to be granted mid-2016.

Our existing licensee partners cover a total of 31 countries 
worldwide and we recently received a commercial order from 
one of them indicating an H2 2016 launch. We believe the 
regained momentum behind CSD500 will continue to grow 
during 2016 and we anticipate further commercial orders in 
the months ahead. In addition, as the challenge of shelf life 
diminishes, we have turned our attention to signing further 
territorial agreements and expect to announce at least one 
new licensee agreement during the current year.

Blue Diamond®, our own brand of the CSD500 condom 
and exclusively available in the Netherlands and Belgium, 
continues to provide customer feedback and pharmaco-

vigilance (drug safety) data, which we are able to share with 
our licensee partners. We now have two stock keeping units 
(SKUs) in the Netherlands: a six condom pack and a three 
condom pack which have replaced the initial four condom 
pack, giving choice to customers and greater presence on 
retail shelves. We are currently working on further SKUs, 
including different condom types, to further expand this range 
and provide our distributors and licensees alike with the 
potential of more facings and therefore retail shelf presence.

Our two non-steroidal, anti-inﬂammatory (NSAID) pain relief 
products both showed statistically signiﬁcant pain relief in 
a pivotal clinical study completed in 2015. We have since 
been advised by the relevant European regulator that no 
further clinical efﬁcacy work is expected to be required for 
either of the products ahead of submission of regulatory 
dossiers, which we aim to submit by the end of 2016. There 
is considerable interest in the two products from potential 
commercial partners and we have recently appointed 
advisers to manage the out-licensing process.

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08

Futura Medical plc
Annual Report and Accounts for the year ended 31 December 2015

Chairman’s and Chief Executive’s Review (continued)

Our out-licensing strategy for CSD500 is on a territorial basis 
and in addition to Bizzy Diamond BV, our Futura distributor 
for Holland and Belgium, to date we have licensed exclusive 
rights to CSD500 as follows:

CSD500 Licensee

Territorial Licensing Rights

Church & Dwight 

Kabey Pharmaceuticals

RFSU 

Ansell

Kwang Dong 
Pharmaceutical

North America and certain 
European countries

Key countries in the Middle 
East and North Africa

The Nordic region

China

South Korea

Discussions in connection with further geographic regions are 
ongoing and, as stated above, we expect to sign at least one 
further licensee agreement during 2016.

Regulatory approval has been granted for all 28 EU countries 
and we have now started to receive regulatory approvals 
from non-EU countries, such as Saudi Arabia.

CSD500 will be launched either under commercial partners’ 
own brand names or under Futura’s brand name, Blue 
Diamond®. Bizzy Diamond BV launched Blue Diamond® 
in the Netherlands and Belgium in 2014 and continues to 
market the product in those countries. Our licensees however 
have been waiting for the extended shelf life product, which 
we are now close to achieving.

In June 2015, we started a pivotal efﬁcacy study of 
MED2002, our topical gel for the treatment of erectile 
dysfunction. Recruitment of patients for the study is 
proceeding well and headline data from the study is 
expected by the end of H1 2016. In October 2015, we 
signed an agreement with Quantum Pharma Plc under 
which it has made MED2002 available as an unlicensed 
medicine, or special, in the UK. MED2002 meets the UK 
regulatory criteria for a special owing to the estimated 7.5% 
of erectile dysfunction sufferers who cannot be prescribed 
PDE5 inhibitors because of contraindications with other 
medications taken by them.

The R&D team within the Company was strengthened 
during the year by establishing two separate teams, one 
focusing on clinical development and the other on chemistry, 
manufacturing and controls. This structure is working well 
and is providing additional resource for progressing our 
current pipeline and for the development of new product 
opportunities.

Our balance sheet remains strong, with cash resources of 
£4.2 million as at 31 December 2015. We expect our costs to 
be signiﬁcantly lower in the current year compared with 2015, 
which was a year of intense clinical activity. R&D expenditure 
in 2015 was £4.8 million (2014: £2.4 million) but £2.4 million 
of the 2015 spend was in respect of the MED2002 and pain 
relief studies which will not be repeated in 2016.

Portfolio updates – Sexual healthcare
CSD500: Condom containing the erectogenic Zanifil® gel
CSD500 beneﬁts from three clinically proven claims: the 
maintenance of a ﬁrmer erection, maximised penile size and 
a longer lasting sexual experience for women. CSD500, 
which gained CE marking in 2013, represents real innovation 
in an industry where there has been limited new product 
development. Futura’s unique intellectual property position for 
CSD500 has been protected throughout the world. We are 
continuing to progress a further patent application worldwide 
based on our extended shelf life manufacturing process, 
which we anticipate will extend patent protection for CSD500 
through to 2033.

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Stock Code: FUM

 09

Much of the focus during 2015 was on optimising the 
manufacturing of CSD500 to achieve a longer shelf life 
to meet the requirements of the condom supply chain. 
Following a study of all aspects of CSD500’s manufacture 
and a modiﬁcation to the manufacturing process, we 
announced in December 2015 that we had achieved a 
signiﬁcantly extended shelf life beyond the currently approved 
shelf life of one year. A regulatory submission has been 
made in Europe, and it is the role of the regulator to specify 
the duration of the new shelf life. The Company is currently 
awaiting the decision of the regulator for the approval of the 
changes in manufacture to extend the shelf life of CSD500 
in Europe. In addition we are also awaiting approval of an 
alternative manufacturing facility in Asia. These approvals are 
expected during the coming months.

MED2002: Treatment for erectile dysfunction
MED2002, which uses our DermaSys® drug delivery system, 
is the development name for our topical gel for the treatment 
of men with erectile dysfunction (ED). We hold worldwide 
rights to the product, which shares the same active ingredient 
as CSD500. We anticipate that MED2002 is likely to be a 
prescription-only product. In Europe, MED2002 has patent 
protection until 2025 and in the USA it has patent protection 
until 2028.

In June 2015, we began a pivotal study of MED2002 with 
the primary endpoint being the product’s efﬁcacy in male 
subjects self-diagnosed with ED using the erectile function 
domain of the International Index of Erectile Function (IIEF). 
The IIEF is a well validated measure of erectile function 
and was used for the approval of PDE5 inhibitors, such as 
Viagra®. Secondary endpoints in the trial include the speed of 
onset, which we believe is an important claim for the product 
and a substantial differentiator to products, such as Viagra®, 
that require planning by sexual partners owing to the delay of 
onset after the treatment is taken.

A total of 192 patients are expected to complete the study, 
which remains on track to deliver headline results by the 
end of H1 2016. Recruitment of patients for the study is 

proceeding well, with 250 patients having been consented 
into the study to date. Based on current estimates, we have 
a requirement for 310 consented patients to ensure that 
192 patients complete the study as all studies over recruit to 
compensate for patient drop out.

No serious adverse events have been recorded to date 
among the patients who have participated in the study, which 
is of a randomised, placebo-controlled, double blind, home 
use, crossover design. As the study is blinded, efﬁcacy data 
will not be available until the end of the study. The current 
MED2002 study is expected to be one of two pivotal studies 
required for the regulatory ﬁling of the product. The ﬁnal 
commercialisation strategy, including design of the second 
efﬁcacy study, will be decided following the results of the 
current study.

Whilst the clinical work is under way, we have advanced 
MED2002 as an unlicensed medicine, or “special”. Specials 
are medicines that have not yet been authorised and which 
are requested and prescribed for treatment on a named 
patient basis only by appropriately qualiﬁed doctors under 
their own authority. Such requests can only be made subject 
to a number of conditions being met including the absence of 
licensed alternatives.

In October 2015, we signed an agreement with Quantum 
Pharma Plc under the terms of which it has made MED2002 
available for prescription as a special. MED2002 meets the 
criteria required within the UK for an unlicensed medicine 
because of the estimated 7.5% of ED sufferers who cannot 
be prescribed PDE5 inhibitors due to contraindications 
with other medications taken by them. It is intended that 
MED2002 will remain available as a special until it gains 
marketing authorisation.

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Futura Medical plc
Annual Report and Accounts for the year ended 31 December 2015

Chairman’s and Chief Executive’s Review (continued)

of these products prior to the submission of regulatory 
dossiers in Europe. Filing of these dossiers in Europe is 
expected by the end of 2016.

The US also represents a very signiﬁcant opportunity for 
TPR100 and we are preparing for a meeting with the US 
Food and Drug Administration in the near future to clarify the 
remaining requirements for US regulatory approval.

We have appointed advisers to manage the out-licensing of 
the two products, which have already attracted considerable 
interest from potential commercial partners.

People
At year end Futura had 14 employees compared with 12 a 
year earlier. It is not anticipated that staff numbers will grow 
signiﬁcantly during the current year.

We were delighted to announce on 7 March that Ken James 
will join our Board as a Non-Executive Director. Ken, the 
former head of consumer healthcare R&D at GlaxoSmithKline 
plc, has a proven track record of bringing innovative 
consumer healthcare products to market across multiple 
geographies. We look forward to his input to the Board.

Lisa Arnold, who has served as a Non-Executive Director 
since 2008, has decided to step down from the end of 
March. We are immensely grateful to Lisa for her wise 
counsel during the past eight years and we wish her all the 
best in her career.

Portfolio updates – Pain relief management
Topical pain relief
The rapid skin permeation rates offered by Futura’s 
transdermal delivery system, DermaSys®, have created a 
major opportunity in topical pain relief. Rapid skin permeation 
offers potential beneﬁts in pain management including: 
improved onset of action, duration and degree of pain relief.

Futura made major progress in its pain relief portfolio during 
2015, speciﬁcally in achieving statistically signiﬁcant results 
from its two NSAID programmes, TPR100 (2% diclofenac gel) 
and TIB200 (10% ibuprofen gel), in a pivotal clinical study. 
A third product, the methyl salicylate and menthol product 
SPR300, failed to achieve its primary endpoint and no further 
work on the compound is currently being carried out.

The clinical study of a total of 60 subjects compared Futura’s 
products against a placebo. It also compared them against 
currently marketed products to show equivalence, which 
is a strategy frequently used in the consumer healthcare 
industry as it gives the potential for strong marketing claims, 
such as superior delivery of drug (through the skin) whilst 
reducing the clinical requirements for regulatory approval. No 
comparator product, topical or oral outperformed our two 
NSAID products.

Our objective is for our products to be best in class. The 
rationale for this is that the National Institute for Health and 
Care Excellence (NICE) gives clear guidance to physicians 
to prescribe topical NSAIDs in the ﬁrst instance for joint pain 
associated with osteoarthritis, in preference to oral NSAIDs, 
owing to concerns on the long-term use of oral NSAIDs. This 
means that the best-in-class topical treatment should be 
the ﬁrst choice for doctors in the initial treatment of pain and 
therefore represents a substantial opportunity in a market 
with global sales estimated at US$2.9 billion.

As announced in November 2015, we have been advised by 
the relevant European regulator that in principle no further 
clinical efﬁcacy studies are expected to be required for either 

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We offer our sincere thanks to all our staff, external 
consultants, scientiﬁc advisers and commercial partners 
for their contribution to the development of the Company 
throughout the year. We also extend our sincere thanks to 
our shareholders for their patience and support.

Outlook
2015 was a period of intense clinical activity for Futura, 
following which we expect our R&D expenditure to be 
signiﬁcantly lower in the current year when there will be 
more of a focus on commercial development. We have 
made important progress with the shelf life extension of our 
novel condom CSD500 and we look forward to the start of 
licensee launches in 2016 and beyond. Futura has also made 
signiﬁcant advances in its clinical programmes in erectile 
dysfunction and pain relief. In 2016 we expect to build on 
that progress and look forward to providing further updates 
during the course of the year across the wider portfolio.

John Clarke  
Chairman 

James Barder 
Chief Executive

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Futura Medical plc
Annual Report and Accounts for the year ended 31 December 2015

Strategic Report

Our strategy is to develop innovative products with 
compelling commercial potential in the consumer 
healthcare market, leveraging our core skills in 
transdermal drug delivery.

The Strategic Report should be read in conjunction with the 
Chairman’s and Chief Executive’s Review on pages 7 to 11, 
the consolidated ﬁnancial statements and the Notes to the 
Consolidated Financial Statements set out on pages 31 to 
53.

Group strategy
The Group strategy is to focus on developing innovative 
products primarily for the consumer healthcare market. This 
strategy is aligned with the well-publicised demographic 
change of an ageing population, increasing prosperity, 
Government initiatives to increase self-medication, pressures 
on payers and healthcare systems, rapid growth of over the 
counter (“OTC”) in developing countries, the natural desire for 
improved quality of life and the Directors’ expectations that 
consumer healthcare spending will increase as a result. The 
objective is to develop products such that each on its own 
has the potential to generate signiﬁcant annual revenues.

The Group’s innovation strategy applies advanced science to 
develop products with compelling commercial potential and 
is driven by the following four criteria:

•	 Advanced transdermal technology: offering innovative 
delivery of proven compounds through the skin to 
improve their performance or to address new indications.

•	 Controlled development risk: using only approved 

compounds to control the risk proﬁle.

•	 Strong intellectual property: developing products where 

the Group can secure strong patent protection.

•	 Commercialisation: out-licensing products to leading 

healthcare companies which offer the optimum potential 
ﬁnancial returns.

Our focus is on sexual healthcare and pain relief. Our 
expertise is in transdermal delivery with our unique proprietary 
delivery technology DermaSys®.

Long lead times for product development characterise the 
pharmaceutical industry. However, the Board seeks to drive 
the business through to revenue generation as soon as is 
practicable with due regard to regulatory standards and an 
appropriate commercial approach. This is achieved through 
swift decision-making, highly capable staff, the involvement of 
external expertise and a focus on compounds with a known 
safety proﬁle.

At the same time, the Board remains committed to 
keeping regular or ﬁxed costs restricted to an appropriate 
level through the continued and judicious use of external 
consultants and professional advisers. Clearly, the lower 
the Group’s regular and ﬁxed costs, the earlier that ongoing 
revenue generation would lead to a key future ﬁnancial 
milestone of monthly break-even and proﬁtability.

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The consumer healthcare market and competitive 
environment
The Group develops products that address the needs of the 
consumer healthcare market. The Group considers there to 
be two distinct categories in which it operates.

The ﬁrst category is the global transdermal delivery market, 
valued at US$21.5 billion in 2010¹. Although the Group 
develops transdermal products for prescription and OTC 
use, its focus is on developing non-prescription drugs. These 
comprise the sexual healthcare product MED2002 and the 
pain relief products: TPR100 and TIB200. The global topical 
OTC analgesics market was estimated at US$2.9 billion 
in 20152 and the market leader for topical OTC analgesics 
has annual sales of US$632 million3. As MED2002 could 
form a new category within the OTC market, no published 
data is available on the OTC sexual healthcare market to 
substantiate market size estimates. The prescription market 
for erectile dysfunction treatments was estimated to be in 
excess of US$4.2 billion4 in 2014.

The second category is the global consumer medical devices 
market. The consumer medical device being developed by 
the Group is the condom product CSD500 which addresses 
the global condom market, estimated to be worth US$3.5 
billion5.

These consumer healthcare markets are dominated by 
global pharmaceutical and consumer healthcare groups with 
established distribution networks. Smaller R&D companies, 
such as Futura, seek to out-license their innovative products 
to these larger entities.

Futura offers its licensing partners its ability to identify 
commercially attractive consumer healthcare product 
opportunities coupled with a lower cost, expert and fast 
development model, backed by strong patent protection. 
In return for this, Futura seeks signiﬁcant royalties from 
future sales of these products through its partners and their 
established distribution networks.

Financial Review
The Group ended the year with costs under control and with 
a more advanced and diverse development portfolio.

Revenue
Group revenue for the year ended 31 December 2015 was 
£29k (2014: £44k).

Losses
The Group continues to maintain a focus on tight control 
of all expenditure. The Group’s operating loss for the year 
ended 31 December 2015 was £6.12 million (2014: £3.53 
million). The Group’s loss after taxation for the year ended 
31 December 2015 was £5.08 million (2014: £3.00 million). 
Loss per share for the year ended 31 December 2015 was 
5.13 pence (2014: 3.35 pence).

No dividends were paid and none are proposed by the Board 
of Directors (“the Board”) (2014: £nil).

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Notes
¹ Transdermal Medicine Review and Outlook 2011, Pharmalive
2 2015 IMS Health estimate
3 Get Report 2014 Global Sales
4 Futura estimate based on erectile dysfunction product sales data from 2014 Annual Reports for Pﬁzer, Lilly and Bayer 
5 Source: “Condoms: A Global Strategic Business Report”, Oct. 2012, Global Industry Analysts, Inc.

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Futura Medical plc
Annual Report and Accounts for the year ended 31 December 2015

Strategic Report (continued)

Group research and development costs
Group R&D costs each year reﬂect the number of products being developed, the stage of development reached for each and 
the impact on their progress of external factors.

R&D costs of £4,778,039 were higher (2014: £2,365,678) as we undertook two clinical trials for four products and continued 
the development of CSD500.

The table shows the trend in R&D costs and other administrative costs over the past ﬁve years ended 31 December:

 2015
£

 2014
£

 2013
£

 2012
£

 2011
£

R&D costs

4,778,039

2,365,678

1,976,322

1,435,731

1,480,774

Other administrative costs

1,368,240

1,205,078

926,123

1,095,197

776,154

Total operating costs

R&D ratio

6,146,279

3,570,756

2,902,445

2,530,928

2,256,928

78%

66%

68%

57%

66%

The R&D ratio is the percentage of R&D costs relative to total operating costs. The Board monitors this ratio closely. Total 
R&D spend since the formation of the business totals £22.8 million (62% of total cumulative operating costs). During the year 
a subsidiary, Futura Medical Developments Limited, continued to incur this R&D expenditure which has been written off as 
incurred for all reporting periods prior to and including the year ended 31 December 2015.

The Board considers that this overall total R&D spend relative to its pipeline of later stage products and emerging new 
products distinguishes the Group’s lower funding requirements and risk proﬁle from more typical businesses in the wider 
pharmaceutical industry. The Group’s strategy is to focus on medical devices and pharmaceutical drugs that offer the potential 
for a signiﬁcant return on the costs of development. As well as progressing its existing R&D programme, the Group continues 
to seek new opportunities for potential products to add to its portfolio.

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Other administrative costs
Other administrative costs for the year ended 31 December 2015 were £1,368,240 (2014: £1,205,078). These comprised 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:

Wages and salaries

Legal and professional advisers

Office costs and staff expenses

Commercial and marketing support

Year ended
31 December
2015

Year ended
31 December
2014

47%

14%

6%

33%

49%

13%

7%

31%

100%

100%

Taxation
A tax credit of £997,036 (2014: £480,689) in respect of R&D expenditure incurred has been recognised in the consolidated 
ﬁnancial statements.

Capital structure and funding
The Group remains funded primarily by equity share capital. Equity funding (net of expenses) received since the formation of 
the business until 31 December 2015 totalled £34.40 million.

On 31 December 2015 the Group raised £24,750 following the issue of 69,718 shares at 35.50 pence per share under the 
Non-Executive Directors’ remuneration policy.

Cash held by the Group at 31 December 2015 totalled £4.19 million comprising cash and cash equivalents (31 December 
2014: £9.49 million).

The Group had no bank borrowings at 31 December 2015 (2014: £nil). Other signiﬁcant sources of funding received for the 
Group since formation of the business until 31 December 2015 comprised: R&D tax credits £3.05 million, interest £1.00 
million and grants £0.28 million.

As a result of this, the Directors have a reasonable expectation that the consolidated Group and the Company have adequate 
resources to continue in operational existence for the foreseeable future. For these reasons the Directors continue to adopt 
the going concern basis in preparing the ﬁnancial statements.

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Futura Medical plc
Annual Report and Accounts for the year ended 31 December 2015

Strategic Report (continued)

Key performance indicators
The Directors consider the successful achievement of 
development, licensing and commercialisation milestones 
and the number of products under development (beyond 
the evaluation stage) to be the major drivers of value 
creation for the Group. These are measures of the progress 
of the business towards its revenue generation goal and 
are considered by the Directors to be the key non-ﬁnancial 
performance indicators used to determine achievement of 
Group strategy. The Group’s performance with regard to 
such milestones is discussed in the Chairman’s and Chief 
Executive’s Review on pages 7 to 11.

The Directors consider Group cash and the absolute values 
of, and the ratio between, R&D costs and other administrative 
overhead costs as being the Group’s key ﬁnancial 
performance indicators. The cost related indicators assist in 
monitoring ﬁnancial control to reduce the hurdle to achieving 
a key future ﬁnancial milestone of monthly break-even and 
proﬁtability. The monitoring of cash gives due consideration 
to anticipated future spend required to prioritise development 
opportunities and to plan the resources required to achieve 
the goals of the business.

Principal risks and uncertainties
The development of pharmaceutical drugs and medical 
devices requires the necessary safety, stability and efﬁcacy 
to be demonstrated in clinical programmes in order to meet 
the requirements of the appropriate regulatory bodies. These 
clinical programmes may not achieve their endpoints. The 
Directors consider that the key risks of the Group are:

Clinical development and regulatory risk
There can be no guarantee that any of the Group’s products 
will be able to obtain or maintain the necessary regulatory 
approvals in any or all of the territories in respect of which 
applications for such approvals are made. Where regulatory 
approvals are obtained, there can be no guarantee that the 
conditions attached to such approvals will not be considered 
too onerous by the Group or its distribution partners in order 
to be able to market its products effectively. The Group seeks 
to reduce this risk by developing products using safe, well-

characterised active compounds, by seeking advice from 
regulatory advisers, consultations with regulatory approval 
bodies and by working with experienced distribution partners.

Commercial risk
There can be no guarantee that the Group will succeed 
in establishing and maintaining the necessary contractual 
relationships with licensing partners for the Group’s products 
under development. Even if the Group’s products are 
successfully developed and approved by the appropriate 
regulatory bodies, they may not be successfully launched 
by the Group’s licensing partners or enjoy commercial 
acceptance. The Group is reliant on commercial partners 
to carry out their contractual obligations and the degree to 
which these can be enforced by the Group is limited. The 
Group seeks to reduce this risk by selecting experienced 
licensing partners, maintaining and developing these 
relationships and seeking to develop new products of 
commercial interest to these and other partners.

Funding risk
The Group continues to incur substantial operating expenses. 
Until the Group generates positive net cash inﬂows from 
the commercialisation of its products it remains dependent 
upon additional funding through the injection of equity capital 
from share issues. The Group may not be able to generate 
positive net cash inﬂows in the future or to attract such 
additional required funding at all, or on suitable terms. In 
such circumstances the development programmes may be 
delayed or cancelled and business operations cut back.

The Group seeks to reduce this risk by keeping a tight 
control on expenditure, avoiding long-term supplier contracts 
(other than clinical trials), prioritising development spend on 
products closest to potential revenue generation, obtaining 
government grants (where applicable), maintaining a focused 
portfolio of products under development and keeping 
shareholders informed of progress.

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technology and monitoring technological developments and 
the registration of patents by other parties.

The commercial success of the Group also depends 
upon not infringing patents granted, now or in the future, 
to third parties who may have ﬁled applications or who 
have obtained, or may obtain, patents relating to business 
processes which might inhibit the Group’s ability to develop 
and exploit its own products.

The Strategic Report was approved by order of the Board on 
14 March 2016.

Derek Martin 
Secretary

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Treasury and financial risk
Treasury and ﬁnancial risk management policy is concerned 
with ﬁnancial instruments and management of interest 
rate risk and foreign exchange rate risk. Financial risks 
are quantiﬁed in note 2 of the Notes to the Consolidated 
Financial Statements and were not considered signiﬁcant at 
the Consolidated Statement of Financial Position date. The 
ﬁnancial instruments held by the Group are disclosed in note 
12 of the Notes to the Consolidated Financial Statements. 
The Group policy on exposure to ﬁnancial risk is disclosed in 
note 2 of the Notes to the Consolidated Financial Statements.

Competition risk
The Group’s current and future potential competitors include, 
amongst others, major multinational pharmaceutical and 
healthcare companies with substantially greater resources 
than those of the Group. There can be no assurance that 
competitors will not succeed in developing systems and 
products that are more effective or economic than any of 
those developed by the Group, with its distribution partners, 
or which would render the Group’s products obsolete or 
otherwise non-competitive.

The Group seeks to reduce this risk by securing patent 
registration protection for its products, maintaining 
conﬁdentiality agreements regarding Group know-how and 
technology, monitoring technological developments and 
by selecting leading businesses in their respective ﬁelds 
as licensing partners capable of addressing signiﬁcant 
competition, should it arise.

Intellectual property risk
The commercial success of the Group and its ability to 
compete effectively with other companies depend, amongst 
other things, on its ability to obtain and maintain patents 
sufﬁciently broad in scope to provide protection for the 
Group’s intellectual property rights against third parties and to 
exploit its pharmaceutical products. The absence of any such 
patents may have a material adverse effect on the Group’s 
ability to develop its business. The Group seeks to reduce 
this risk by only developing products where legal advice 
indicates patent protection would be available, seeking 
patent protection for the Group’s products, maintaining 
conﬁdentiality agreements regarding Group know-how and 

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Futura Medical plc
Annual Report and Accounts for the year ended 31 December 2015

Board of Directors

The Board of Directors has overall responsibility  
for the Group.

The Board of Directors (“the Board”) comprises the Non-Executive Chairman, the Chief Executive, the Finance Director and 
two independent Non-Executive Directors. The Board retains full control of the Group with day-to-day operational control 
delegated to the Executive Directors. The full Board meets bi-monthly and on any other occasions it considers necessary. 
The Board is responsible for approving interim and annual ﬁnancial statements, formulating and monitoring Group strategy, 
approving ﬁnancial plans and reviewing performance, as well as complying with legal, regulatory and corporate governance 
matters.

The Chairman provides strategic and operational guidance bringing to bear his extensive experience of the healthcare sector. 
He also oversees the duties performed by the Chief Executive and ensures that they are in line with Board expectations with a 
particular emphasis on monitoring product development. The Chief Executive manages the day-to-day running and strategic 
direction of the Group in line with policy decisions given by the Board and shareholder expectations with particular emphasis 
on the commercial direction of the Group.

John Clarke
Non-Executive Chairman

James Barder
Chief Executive

Current roles
John Clarke became Chairman of Futura Medical plc in February 2012. 
He is a member of the Nominations Committee and the Remuneration 
Committee. He is also the Non–Executive Chairman of Science in Sport 
plc, Quantum Pharma Plc, Kind Consumer Holdings Limited and a senior 
adviser to Helios Investment Partners LLP.

Past roles
Appointed President of GSK Consumer Healthcare in 2006, a position 
from which he stepped down in October 2011. Under his leadership, GSK 
Consumer Healthcare became one of the fastest-growing companies in its 
industry. 

Current roles
James Barder joined the Group as Chief Executive in June 2001. He 
assists the Remuneration Committee and the Nominations Committee 
(but is not a member of and does not vote on either). He has overall 
responsibility for all activities of the Group, is a principal contact for 
shareholder and investor relations matters and leads licensing and 
distribution negotiations. He ﬁrst became involved with the Group in 1997.

Past roles
Managing Director of Aon Capital Markets Limited and Non-Executive 
Director of Lorega Limited. He has predominantly worked in the ﬁeld of 
insurance and ﬁnance including ﬁrms he founded.

Brings to the Board
Extensive experience of the healthcare sector, having worked at GSK for 
more than 35 years.

Brings to the Board
Over 25 years of experience in setting up, managing and running 
companies.

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Derek Martin, BSc 
(Hons), ACA
Finance Director and 
Company Secretary

Jonathan Freeman, 
BA (Hons), MBA
Senior Independent Non-
Executive Director and 
Chairman of Remuneration 
Committee and Audit 
Committee

Current roles
Derek Martin joined the Board in September 2008. He oversees the 
Group’s ﬁnance function, its compliance procedures and is a principal 
contact for shareholder and investor relations matters.

Past roles
Senior ﬁnancial roles in a diverse range of industries including retail, 
software, telecoms and advertising, media and sales promotion.

Brings to the Board
Over 25 years of experience in ﬁnance.

Current roles
Jonathan Freeman joined the Board in July 2003 and was appointed 
Senior Independent Non-Executive Director in November 2003. He 
chairs the Audit Committee and the Remuneration Committee and is 
also a member of the Nominations Committee. He is also a Director of 
PhotonStar LED Group plc and Braveheart Investment Group plc.

Past roles
Director of Beeson Gregory, Chief Executive Ofﬁcer of Syndicate Asset 
Management plc and a Director of Hume Securities plc.

Brings to the Board
Over 25 years of experience in the ﬁnancial services sector, guidance on 
City regulatory matters, corporate ﬁnance and investor relations.

Lisa Arnold
Independent Non-Executive 
Director and Chair of 
Nominations Committee

Current roles
Lisa Arnold joined the Board in March 2008 and is resigning on 31 March 
2016. She chairs the Nominations Committee and is also a member of 
the Remuneration Committee and the Audit Committee. She also has a 
number of appointments on the boards of pension funds and is a Non-
Executive Director of PIMCO Europe Limited.

Past roles
Senior investment banking analyst positions at NatWest Markets, UBS and 
Commerzbank. She has also worked in consultancy and Non-Executive 
roles in the pensions, healthcare and technology sectors and was most 
recently a Non-Executive Director of the UK’s Medicines and Healthcare 
products Regulatory Agency (“MHRA”) for nine years where she also 
chaired the Risk & Audit Committee.

Brings to the Board
Over 20 years of experience of ﬁnancial markets and healthcare sectors 
and associated governance frameworks.

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Futura Medical plc
Annual Report and Accounts for the year ended 31 December 2015

Remuneration Report

Remuneration Committee: composition and terms of 
reference
During the period under review the Remuneration Committee 
comprised the three independent Non-Executive Directors 
and was chaired by Jonathan Freeman.

The purpose of the Remuneration Committee is to ensure 
that the Executive Directors and other employees are fairly 
rewarded for their individual contribution to the overall 
performance of the Group. The Committee considers and 
recommends to the Board the remuneration of the Executive 
Directors and is kept informed of the remuneration packages 
of senior staff and invited to comment on these. There were 
three Remuneration Committee meetings during 2015.

The Board retains responsibility for overall remuneration 
policy. The terms of reference of the Remuneration 
Committee are set out in the Governance pages of the 
Investors section on the Group’s website at  
www.futuramedical.com.

Policy on Executive Directors’ remuneration
Executive remuneration packages are designed to attract 
and retain executives of the necessary skill and calibre 
to run the Group. Direct benchmarking of remuneration 
is difﬁcult given the specialised nature and size of the 
Group. The Remuneration Committee recommends to the 
Board remuneration packages by reference to individual 
performance and uses the knowledge and experience of 
the Committee members, published surveys relating to AIM 
companies, the pharmaceutical industry and market changes 
generally. The Remuneration Committee has responsibility for 
recommending any long-term incentive schemes.

The Board determines whether or not Executive Directors 
are permitted to serve in roles with other companies. Such 
permission is only granted where a role is on a strictly limited 
basis, where there are no conﬂicts of interest or competing 
activities and providing there is not an adverse impact on 
the commitments required to the Group. Earnings from such 
roles are not disclosed to the Group.

There are four main elements of the remuneration package 
for Executive Directors and staff:

Basic salaries and benefits in kind
Basic salaries are recommended to the Board by the 
Remuneration Committee, taking into account the 
performance of the individual and the rates for similar 
positions in comparable companies. Beneﬁts in kind 
comprising death in service cover and private medical 
insurance are available to all staff and Executive Directors. 
Beneﬁts in kind are non-pensionable.

Share options and other share-based incentives
The Group operates approved and unapproved share option 
schemes for the Executive Directors and other employees 
to motivate those individuals through equity participation. 
Unapproved share options are occasionally granted to key 
consultants. Exercise of share options under the schemes is 
subject to speciﬁed exercise periods and compliance with the 
AIM Rules. 

The schemes are overseen by the Remuneration Committee 
which recommends to the Board all grants of share options 
based on the Remuneration Committee’s assessment of 
personal performance and specifying the terms under which 
eligible individuals may be invited to participate.

The UK Corporate Governance Code (“the Code”) refers 
to the requirement for the performance related elements 
of remuneration to form a signiﬁcant proportion of the 
total remuneration package of Executive Directors and 
should be designed to align their interests with those of 
the shareholders. In the development phase of the Group 
and during the early stages of revenue generation, the 
Remuneration Committee currently considers that the best 
alignment of these interests is through the continued use 
of incentives for performance through the award of share 
options or other share-based arrangements.

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The Board encourages the ownership of Futura shares by 
Executive and Non-Executive Directors alike and in normal 
circumstances does not expect Directors to undertake 
dealings of a short-term nature.

The Non-Executive Directors receive a proportion of their 
remuneration in the form of shares. The quantum of shares 
is determined at the start of each calendar year based on 
the average closing mid-price of the last ten trading days 
prior to the year end. The award for 2015 was settled on 
31 December 2015 by the issue of 69,718 shares at 35.50 
pence per share. The 2016 award has been determined at 
28.45 pence per share and the Non-Executive Directors 
accrue these shares over 2016 and will receive them on 
31 December 2016 or such lower number as have accrued if 
they leave the Group earlier.

The Board considers ownership of Futura shares by Non-
Executive Directors as a positive alignment of their interest 
with shareholders. The Board will periodically review the 
shareholdings of the Non-Executive Directors and will seek 
guidance from its advisers if, at any time, it is concerned 
that a shareholding may, or could appear to, conﬂict with 
their duties as an independent Non-Executive Director of the 
Group.

The Group operates a long-term incentive plan (“LTIP”). The 
quantum of any awards receivable by the staff and Executive 
Directors will depend on achieving set Group performance 
milestones and the share price at the time relative to targets 
set in advance. As a guide, if all of the approved milestones 
are achieved at the share price targets over the next 48 
months and if the Group exercised its discretion to settle the 
awards in equity then the additional shares issued in after tax 
settlement would be equivalent to approximately 6.38% of 
the issued share capital.

Bonus scheme
The Group has a discretionary bonus scheme for staff and 
Executive Directors.

Pension contributions
The Group pays a deﬁned contribution to the pension 
scheme of Executive Directors and other employees. The 
individual pension schemes are private and their assets are 
held separately from those of the Group.

Salaries and beneﬁts are reviewed in December to cover the 
following calendar year. The timing of the review enables the 
Group’s performance over the preceding ﬁnancial year and 
the strategy for the forthcoming year to be considered.

Service contracts
The Executive Directors are employed under service 
contracts requiring six months’ notice by either party. Non-
Executive Directors and the Chairman receive payments 
under appointment letters which are terminable by three 
months’ notice by either party. The service contracts of the 
Non-Executive Directors are made available for inspection at 
the AGM.

Policy on Non-Executive Directors’ remuneration
The Non-Executive Directors and the Chairman each receive 
a fee for their services as a director, which is approved by the 
Board, mindful of the time commitment and responsibilities 
of their roles and of current market rates for comparable 
organisations and appointments. Non-Executive Directors 
and the Chairman are reimbursed for travelling and other 
incidental expenses incurred on Group business.

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Futura Medical plc
Annual Report and Accounts for the year ended 31 December 2015

Remuneration Report (continued)

Directors’ emoluments
The emoluments of the Directors in 2015, who represent the key management personnel, were as follows:

Year ended 31 December 2015

 Salary &
Directors’
 Fees
 £

Bonus 
£

Share
 Awards
 £

Benefits
In Kind
 £

 Pension
 £

Total
 £

 Year ended
 31 December
 2014 
Total
 £

225,244

25,881

130,561

16,388

 –

 –

5,885

4,403

 –

257,010

252,570

13,099

164,451

160,569

50,390

29,380

29,380

 –

 –

 –

25,195

8,394

8,394

 –

 –

 –

 –

 –

 –

75,585

37,774

37,774

74,100

37,029

37,029

464,955

42,269

41,983

10,288

13,099

572,594

561,297

Executive Directors 

James Barder

Derek Martin 

Non-Executive Directors

John Clarke

Jonathan Freeman

Lisa Arnold 

Totals

The above fees and emoluments exclude reimbursed expenditure incurred in the conduct of Group business.

There were no cash bonuses or settlements under the LTIP in 2015 (2014: £nil). 

Directors’ interests in shares

John Clarke

James Barder

Derek Martin

Jonathan Freeman

Lisa Arnold

Totals

31 December 2015

31 December 2014

Beneficial 
Interests 

Non-beneficial 
Interests

Beneficial 
Interests

Non-beneficial 
Interests

119,551

 –

76,968

 –

591,330

867,500

616,330

392,500

280,000

35,803

40,713

 –

 –

 –

280,000

22,382

26,999

 –

 –

 –

1,067,397

867,500

1,022,679

392,500

Other than as shown in the table no Director had any interest in the shares of the Company at 31 December 2015 or at  
31 December 2014.

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Directors’ interests in share options
The Board uses share options to align Directors’ and employees’ interests with those of shareholders in order to provide 
incentives and reward them based on improvements in Group performance.

James Barder

Derek Martin

Totals

 31 December 2015

 31 December 2014

Options 
 Held

Share-based 
Payment 
Expense

Options 
Held

Share-based 
Payment 
Expense

1,500,000

33,018

1,250,000

869,279

17,516

719,279

2,369,279

50,534

1,969,279

48,384

23,774

72,158

All share options were granted with an exercise price at or above market value on the date of grant. The main vesting 
condition of the share options is that the Director remain employed with the Group as at the date of exercise or continues 
to provide consultancy services as at the date of exercise. The share options of the Directors under the Futura Medical plc 
Enterprise Management Incentive Scheme (included in totals on page 51) are set out below:

Grant Date

Number  
Awarded

Exercise  
Price/Share

Earliest 
Exercise Date

Expiry Date

James Barder

6 July 2010

176,543

40.50 pence

1 August  2012

31 July 2017

James Barder

14 September 2012

250,000

61.50 pence

1 October 2014 30 September 2019

James Barder

23 September 2013

Derek Martin

28 September 2011

34,615

73,894

71.50 pence

1 October 2015 30 September 2020

56.50 pence

1 October 2013 30 September 2018

Derek Martin

14 September 2012

100,000

61.50 pence

1 October 2014 30 September 2019

Derek Martin

23 September 2013

130,000

71.50 pence

1 October 2015 30 September 2020

Derek Martin

11 September 2014

103,961

51.75 pence

1 October 2016 30 September 2021

Totals

869,013

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Futura Medical plc
Annual Report and Accounts for the year ended 31 December 2015

Remuneration Report (continued)

Directors’ interests in long-term incentive plan
Assuming that each remaining Group performance milestone is met, at the target share price and before the next target 
date ends, and if the awards were to be equity-settled then the number of shares that could be awarded before tax to the 
participants are:

James Barder

Derek Martin

Other employees

2016

2017

2018

2019

208,125

219,375

219,375

219,375

208,125

219,375

219,375

219,375

624,375

658,125

658,125

658,125

At discretion of Remuneration Committee

346,875

365,625

365,625

365,625

Totals

1,387,500

1,462,500

1,462,500

1,462,500

The Directors consider that until a milestone has been met it is not appropriate to recognise any share-based remuneration 
charge in the Consolidated Statement of Comprehensive Income in respect of the LTIP.

Jonathan Freeman 
Chairman of the Remuneration Committee

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Corporate Governance

Directors’ statement on corporate governance
The Board of Directors is accountable to shareholders for 
the good corporate governance of the Group. Under the AIM 
rules compliance with the UK Corporate Governance Code 
(‘the Code’) is voluntary. Although the Board has not formally 
adopted the Code, the Board is aware of the best practice 
deﬁned by the Code and will seek to adopt procedures 
to institute good governance insofar as is practical and 
appropriate for a group of its size while retaining its primary 
focus on the success of the business. This statement sets 
out how certain principles of the Code are met through the 
Group’s application of best practice.

Board of Directors
The Board comprises a Non-Executive Chairman 
(“Chairman”), a Chief Executive, a Finance Director and two 
independent Non-Executive Directors. The Chairman and the 
Non-Executive Directors receive part of their remuneration 
in the form of shares but this does not constitute a material 
business relationship with the Group and is not considered to 
impair the independence of the Non-Executive Directors. The 
Board is satisﬁed that it has an appropriate mix of experience 
in its Non-Executive Directors. The roles of Chairman and 
Chief Executive are intended to remain separate.

The Board retains full control of the Group with day-to-day 
operational control delegated to the Executive Directors. The 
full Board meets bi-monthly and on any other occasions it 
considers necessary. During 2015, there were eight meetings 
of the full Board, three of the Remuneration Committee, three 
of the Audit Committee and two meetings of the Nominations 
Committee. All meetings were fully attended by their 
constituent Directors.

Board responsibility
The Board is responsible for approving interim and 
annual ﬁnancial statements, formulating and monitoring 
Group strategy, approving ﬁnancial plans and reviewing 
performance, as well as complying with legal, regulatory 
and corporate governance matters. There is a schedule of 
matters reserved for the Board.

There have been no material changes to our corporate 
governance processes following our annual review.

The Board considers that the remuneration of Executive 
Directors should include a performance related element 
which is almost entirely based on the award of share options 
or other share-based incentives as recommended by the 
Remuneration Committee and set out in the Remuneration 
Report.

Audit Committee
During the period under review the Audit Committee 
comprised the Non-Executive Directors, Jonathan Freeman 
and Lisa Arnold, and was chaired by Jonathan Freeman as 
Senior Independent Non-Executive Director. It met to review 
the Interim Report, the Annual Report and to consider the 
suitability and monitor the effectiveness of the internal control 
processes. There were three Audit Committee meetings 
during 2015. The Audit Committee reviews the ﬁndings of 
the external auditors and reviews accounting policies and 
material accounting judgements.

The independence and effectiveness of the external auditor 
is reviewed annually and audit partners are rotated every ﬁve 
years. The possibility of undertaking an audit tender process 
is considered on a regular basis. The Audit Committee meets 
at least once per calendar year with the auditors to discuss 
their independence and objectivity, the Annual Report, any 
audit issues arising, internal control processes, appointment 
and fee levels and any other appropriate matters. As well as 
providing audit related services, the auditors also provide 
taxation advice. The fees in respect of audit and tax services 
are disclosed in Note 4 of the Notes to the Consolidated 
Financial Statements. Fees for non-audit services paid to 
the auditors are not deemed to be of such signiﬁcance to 
them as to impair their independence and therefore the Audit 
Committee considers that the objectivity and independence 
of the auditors is safeguarded.

The terms of reference of the Audit Committee are set out in 
the Investors/Corporate Governance section on the Group’s 
website at www.futuramedical.com.

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Futura Medical plc
Annual Report and Accounts for the year ended 31 December 2015

Corporate Governance (continued)

Internal control
The Board is responsible for establishing and maintaining 
the Group’s system of internal control and for reviewing its 
effectiveness. The system of internal control is designed 
to manage, rather than eliminate, the risk of failure of the 
achievement of business objectives and can only provide 
reasonable but not absolute assurance against material 
misstatement or loss.

The Audit Committee continues to monitor and review the 
effectiveness of the system of internal control and report to 
the Board when appropriate with recommendations.

The annual review of internal control and ﬁnancial reporting 
procedures did not highlight any issues warranting the 
introduction of an internal audit function. It was concluded, 
given the current size and transparency of the operations of 
the Group, that an internal audit function was not required.

The main features of the internal control system are outlined 
below:

•	 A control environment exists through the close 

management of the business by the Executive Directors. 
The Group has a deﬁned organisational structure with 
delineated approval limits. Controls are implemented and 
monitored by the Executive Directors.

•	 The Board has a schedule of matters expressly 

reserved for its consideration and this schedule includes 
acquisitions and disposals, major capital projects, 
treasury and risk management policies and approval of 
budgets.

•	 The Group utilises a detailed budgeting and forecasting 
system. Detailed budgets are prepared annually by the 
Executive Directors before submission to the Board for 
approval. Forecasts are updated at least quarterly to 
reﬂect changes in the business and are monitored by 
the Board including future cash ﬂow projections. Actual 
results are monitored against annual budgets in detail on 
a monthly basis, with variances highlighted to the Board.

•	 Financial risks are identiﬁed and evaluated for each major 
transaction for consideration by the Board and senior 
management.

•	 Standard ﬁnancial control procedures are operated 

throughout the Group to ensure that the assets of the 
Group are safeguarded and that proper accounting 
records are maintained.

•	 A business planning process is in operation whereby the 
Chief Executive and Finance Director present a report to 
the Board each year on the key business risks.

Going concern
As disclosed in the Strategic Report the consolidated 
ﬁnancial statements have been prepared on the going 
concern basis as the Directors have a reasonable expectation 
that the Group has adequate resources to continue in 
operational existence for the foreseeable future.

Nominations Committee
During the period under review the Nominations Committee 
comprised the two independent Non-Executive Directors and 
the Chairman and was chaired by Lisa Arnold.

The Nominations Committee monitors the requirements of 
the Group in respect of Board composition as the Group 
evolves and with regard to succession planning. There 
were two meetings during 2015. The terms of reference of 
the Nominations Committee are set out in the Investors/ 
Corporate Governance section on the Group’s website at 
www.futuramedical.com.

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Employees
At 31 December 2015, the Group’s employees (excluding 
Non-Executive Directors) comprised: two Executive Directors 
and eight full-time and one part-time members of staff, all 
of whom are employed by Futura Medical Developments 
Limited.

The Executive Directors keep staff informed of the progress 
and development of the Group regularly through formal and 
informal meetings and employee feedback is encouraged. 
The Group has a policy of offering share options or other 
share-based incentives to all eligible employees with due 
consideration to the level of dilution to shareholders.

The Group does not discriminate between employees 
and prospective employees on the grounds of age, race, 
disability, religion or gender.

The Board recognises its obligation towards its employees 
to provide a safe and healthy working environment. The 
Group complies with health and safety legislation including 
conducting regular inspections and risk assessments.

Environmental, social and community matters
As a consequence of the size and nature of our operations, 
the impact of the Group’s operations on the local community 
and the environment is not considered to be signiﬁcant. 
Recycling of ofﬁce supplies is undertaken where possible. 
The Group operates in a highly regulated industry and 
clinical trials are conducted in compliance with regulatory 
requirements. The Group undertakes regular reviews of 
corporate social responsibility matters with policy updates 
and implements improvements to its operations where 
identiﬁed.

Relationship with shareholders
The Directors seek to build a mutual understanding of 
objectives between the Group and its shareholders. The 
Group reports formally to shareholders in its Interim Report 
and Annual Report setting out details of its activities. In 
addition, the Group keeps shareholders informed of events 
and progress through the issue of regulatory news in 
accordance with the AIM Rules for Companies (“AIM Rules”) 
of the London Stock Exchange. The Chief Executive and 
Finance Director meet with institutional shareholders following 
interim and ﬁnal results. The Group also maintains investor 
relations pages and other information regarding the business, 
its products and activities on its website at  
www.futuramedical.com.

The Annual Report is made available to shareholders at least 
20 working days before the Annual General Meeting (“AGM”) 
along with notice of the AGM. Directors are required to attend 
the AGM, unless unable to do so for personal reasons or due 
to pressing commercial commitments, and shareholders are 
given the opportunity to vote on each separate resolution 
proposed at the AGM. The Group counts all proxy votes and 
will indicate the level of proxies lodged for each resolution, 
after it has ﬁrst been dealt with by a show of hands.

Derek Martin 
Secretary

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Futura Medical plc
Annual Report and Accounts for the year ended 31 December 2015

Directors’ Report

Directors
The Directors during the year were:

John Clarke 
James Barder 
Derek Martin 
Jonathan Freeman 
Lisa Arnold – resigning 31 March 2016

Dividends
No dividends were paid and none are proposed (2014: £nil).

Group research and development costs
The main area of R&D continues to be in the ﬁeld of 
innovative pharmaceutical drugs and medical devices for the 
consumer healthcare market with the focus being on sexual 
healthcare and pain relief management.

Financial instruments
Information about the Group’s management of ﬁnancial risk 
can be found in note 2 to the ﬁnancial statements.

Future developments
The Group aims to achieve cost-effective research and 
development (“R&D”) and to bring products to market 
through licensing partners as soon as is practicable.

Directors’ qualifying third party indemnity provisions
The Group has made qualifying third party indemnity 
provisions in favour of the Directors against liability in respect 
of proceedings brought by third parties and these remain in 
force at the date of this Directors’ Report.

Adequacy of information supplied to auditors
Each Director has taken all reasonable steps to make 
themself aware of any information needed by the Group’s 
auditors for the purpose of their audit and to establish that 
the auditors are aware of that information. The Directors 
are not aware of any relevant audit information of which the 
auditors are unaware.

Statement of Directors’ responsibilities
The Directors are responsible for preparing the Annual Report 
and the ﬁnancial statements in accordance with applicable 
law and regulations.

Company law requires the Directors to prepare ﬁnancial 
statements for each ﬁnancial year. Under that law the 
Directors have elected to prepare the Group ﬁnancial 
statements in accordance with International Financial 
Reporting Standards (“IFRSs”) as adopted by the European 
Union and have elected to prepare the Company ﬁnancial 
statements under United Kingdom Generally Accepted 
Accounting Practice, including Financial Reporting Standard 
101 ‘Reduced Disclosure Framework’. Under company law 
the Directors must not approve the ﬁnancial statements 
unless they are satisﬁed that they give a true and fair view 
of the state of affairs of the Group and Company and of the 
proﬁt or loss of the Group for that period. The Directors are 
also required to prepare ﬁnancial statements in accordance 
with the rules of the London Stock Exchange for companies 
trading securities on the Alternative Investment Market.

In preparing these ﬁnancial statements, the Directors are 
required to:

•	 select suitable accounting policies and then apply them 

consistently;

•	 make judgements and accounting estimates that are 

reasonable and prudent;

•	 state whether they have been prepared in accordance 
with IFRSs as adopted by the European Union, subject 
to any material departures disclosed and explained in the 
ﬁnancial statements;

•	 prepare the ﬁnancial statements on the going concern 
basis unless it is inappropriate to presume that the 
Company will continue in business.

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The Directors are responsible for keeping adequate 
accounting records that are sufﬁcient to show and explain 
the Company’s transactions and disclose with reasonable 
accuracy at any time the ﬁnancial position of the Company 
and enable them to ensure that the ﬁnancial statements 
comply with the Companies Act 2006. They are also 
responsible for safeguarding the assets of the Company and 
hence for taking reasonable steps for the prevention and 
detection of fraud and other irregularities.

Website publication
The Directors are responsible for the maintenance and 
integrity of the corporate and ﬁnancial information included 
on the Company’s website. Legislation in the United Kingdom 
governing the preparation and dissemination of ﬁnancial 
statements may differ from legislation in other jurisdictions.

By order of the Board

Derek Martin 
Secretary 
14 March 2016

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Futura Medical plc
Annual Report and Accounts for the year ended 31 December 2015

Independent Auditor’s Report

Independent auditor’s report to the members of Futura 
Medical plc
We have audited the financial statements of Futura 
Medical plc for the year ended 31 December 2015, which 
comprise the Consolidated Statement of Comprehensive 
Income, the Consolidated Statement of Changes in Equity, 
the Consolidated Statement of Financial Position, the 
Consolidated Statement of Cash Flows, the Parent Company 
Balance Sheet, the Parent Company Statement of Changes 
in Equity and the related notes. The financial reporting 
framework that has been applied in the preparation of the 
Group financial statements is applicable law and International 
Financial Reporting Standards (“IFRSs”) as adopted by the 
European Union. The financial reporting framework that has 
been applied in preparation of the parent company financial 
statements is applicable law and United Kingdom Accounting 
Standards (United Kingdom Generally Accepted Accounting 
Practice), including Financial Reporting Standard 101 
‘Reduced Disclosure Framework’.

This report is made solely to the Company’s members, 
as a body, in accordance with Chapter 3 of Part 16 of the 
Companies Act 2006. Our audit work has been undertaken 
so that we might state to the Company’s members those 
matters we are required to state to them in an auditor’s report 
and for no other purpose. To the fullest extent permitted by 
law, we do not accept or assume responsibility to anyone 
other than the Company and the Company’s members as a 
body, for our audit work, for this report, or for the opinions we 
have formed.

Respective responsibilities of Directors and auditors
As explained more fully in the Statement of Directors’ 
Responsibilities, the Directors are responsible for the 
preparation of the financial statements and for being satisfied 
that they give a true and fair view. Our responsibility is to 
audit and express an opinion on the financial statements in 
accordance with applicable law and International Standards 
on Auditing (UK and Ireland). Those standards require us 
to comply with the Financial Reporting Council’s (“FRC’s”) 
Ethical Standards for Auditors.

Scope of the audit of the financial statements
A description of the scope of an audit of financial  
statements is provided on the FRC’s website at  
www.frc.org.uk/auditscopeukprivate.

Opinion on financial statements
In our opinion:

•	

•	

•	

•	

the financial statements give a true and fair view of the 
state of the Group’s and the parent company’s affairs as 
at 31 December 2015 and of the Group’s loss for the year 
then ended;

the consolidated financial statements have been properly 
prepared in accordance with IFRSs as adopted by the 
European Union;

the parent company financial statements have been 
properly prepared in accordance with United Kingdom 
Generally Accepted Accounting Practice; and

the financial statements have been prepared in 
accordance with the requirements of the Companies Act 
2006.

Opinion on other matters prescribed by the Companies 
Act 2006
In our opinion the information given in the Strategic Report 
and the Directors’ Report for the financial year for which 
the financial statements are prepared is consistent with the 
financial statements.

Matters on which we are required to report by exception
We have nothing to report in respect of the following matters 
where the Companies Act 2006 requires us to report to you 
if, in our opinion:

•	 adequate accounting records have not been kept by the 
parent company, or returns adequate for our audit have 
not been received from branches not visited by us; or

•	

the parent company financial statements are not in 
agreement with the accounting records and returns; or

•	 certain disclosures of Directors’ remuneration specified by 

law are not made; or

•	 we have not received all the information and explanations 

we require for our audit.

Christopher Pooles (senior statutory auditor) 
For and on behalf of BDO LLP, statutory auditor 
Reading 
United Kingdom 
14 March 2016

BDO LLP is a limited liability partnership registered in England 
and Wales (with registered number OC305127).

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 31

Consolidated Statement of Comprehensive Income
For the year ended 31 December 2015

Revenue

Research and development costs

Administrative costs

Operating loss

Finance income

Loss before tax

Taxation

Total comprehensive loss for the year attributable to
owners of the parent company

Year ended
31 December
 2015
 £

Year ended
31 December
 2014
 £

29,476

43,929

(4,778,039)

(2,365,678)

(1,368,240)

(1,205,078)

(6,116,803)

(3,526,827)

38,325

48,257

(6,078,478)

(3,478,570)

997,036

480,689

Notes

1.5

4

7

8

(5,081,442)

(2,997,881)

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Basic and diluted loss per share (pence)

9

(5.13 pence)

(3.35 pence)

All amounts relate to continuing activities.

The notes on pages 35 to 53 form part of these consolidated financial statements.

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32

Futura Medical plc
Annual Report and Accounts for the year ended 31 December 2015

Consolidated Statement of Changes in Equity
For the year ended 31 December 2015

Share
 Capital
 £

Share
 Premium
 £

Merger
 Reserve
 £

 Retained
Losses
 £

 Total
 Equity
 £

Notes

At 1 January 2014

 155,619

 21,516,284

 1,152,165  (21,836,296)

 987,772

Total comprehensive loss for the year 

Share-based payment

Shares issued during the year

Cost of share issues

At 31 December 2014

Total comprehensive loss for the year 

Share-based payment

Shares issued during the year

17

16

17

16

 –

  –

–

 –

 42,426

 12,050,622

  –

 (538,171)

–

  –

  –

  –

 (2,997,881)

 (2,997,881)

 177,043

 177,043

  –

  –

 12,093,048

 (538,171)

 198,045

 33,028,735

 1,152,165  (24,657,134)

 9,721,811

– 

  –

–

  –

 140

 24,610

–

  –

  –

 (5,081,442)

 (5,081,442)

 121,112

 121,112

  –

 24,750

At 31 December 2015

 198,185

 33,053,345

 1,152,165

 (29,617,464)

 4,786,231

Share premium represents amounts subscribed for share capital in excess of nominal value, less the related costs of share 
issues.

Merger reserve represents the reserve arising on the acquisition of Futura Medical Developments Limited in 2001 via a share 
for share exchange accounted for as a group reconstruction using merger accounting under UK GAAP.

Retained losses represent cumulative net losses recognised in the Consolidated Statement of Comprehensive Income. The 
total comprehensive loss for the year represents the total recognised income and expense for the year.

The notes on pages 35 to 53 form part of these consolidated financial statements.

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Consolidated Statement of Financial Position
As at 31 December 2015

Assets

Non-current assets

Plant and equipment

Total non-current assets 

Current assets

Inventories 

Trade and other receivables

Taxation

Cash and cash equivalents

Total current assets

Liabilities

Current liabilities

Trade and other payables

Total liabilities

Total net assets

Capital and reserves attributable to owners of the parent company

Share capital

Share premium

Merger reserve

Retained losses

Total equity 

As at
31 December
 2015
 £

At at 
31 December
 2014
 £

Notes

10

11

13

 8

14

20,115

20,115

11,115

11,115

163,767

146,137

997,036

141,517

204,600

480,689

4,188,294

9,491,776

5,495,234

10,318,582

15

(729,118)

(607,886)

(729,118)

(607,886)

4,786,231

9,721,811

16

198,185

198,045

33,053,345

33,028,735

1,152,165

1,152,165

(29,617,464)

(24,657,134)

4,786,231

9,721,811

The consolidated financial statements were approved and authorised for issue by the Board on 14 March 2016.

The notes on pages 35 to 53 form part of these consolidated financial statements.

By order of the Board

James Barder 
Chief Executive

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34

Futura Medical plc
Annual Report and Accounts for the year ended 31 December 2015

Consolidated Statement of Cash Flows
For the year ended 31 December 2015

Cash flows from operating activities

Loss before tax

Adjustments for:

Depreciation

Finance income

Share-based payment charge

Year ended
31 December
 2015
 £

Year ended
31 December
 2014
 £

Notes

 (6,078,478)

 (3,478,570)

 10

 7

 17

 6,958 

 4,527 

 (38,325)

 (48,257)

 121,112

 177,043

Cash flows from operating activities before changes in working capital

 (5,988,733)

 (3,345,257)

Increase in inventories

Decrease/(increase) in trade and other receivables

Increase in trade and other payables

Cash used in operations

Income tax received

Net cash used in operating activities

Cash flows from investing activities

Purchase of plant and equipment

Interest received

Cash generated by investing activities

Cash flows from financing activities

Issue of ordinary shares

Expenses paid in connection with share issues

Cash generated by financing activities

(Decrease)/increase in cash and cash equivalents

Cash and cash equivalents at beginning of year

 11

 (22,250) 

 (106,510) 

 45,212 

 (58,524) 

 15

 121,232 

 129,888 

 (5,844,539)

 (3,380,403)

 480,689

 313,677

 (5,363,850)

 (3,066,726)

 10

 (15,958)

 (7,793)

 51,576 

 20,851 

 35,618

 13,058

 16

 24,750

 12,093,048

  –

(538,171)

 24,750

 11,554,877

 (5,303,482)

 8,501,209

 9,491,776

 990,567

Cash and cash equivalents at end of year

14

 4,188,294 

 9,491,776 

The notes on pages 35 to 53 form part of these consolidated financial statements.

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Notes to the Consolidated Financial Statements
For the year ended 31 December 2015

1. 

Accounting policies

1.1 Basis of preparation
The consolidated financial statements have been prepared and approved by the Directors in accordance with 
International Financial Reporting Standards (“IFRSs”) as adopted by the European Union.

The accounting policies set out below have been applied to all periods presented in these consolidated financial 
statements and are in accordance with IFRSs as adopted by the European Union and International Financial Reporting 
Interpretations Committee (“IFRIC”) interpretations that were applicable for the year ended 31 December 2015.

1.2 Going concern
The Group had cash balances of £4.19 million at 31 December 2015, with a net cash outflow of £5.30 million in the 
year.

The consolidated financial statements have been prepared on the going concern basis which assumes that the Group 
will continue in operational existence for the foreseeable future. The rate of expenditure in 2015 reflected the two 
clinical studies undertaken in the year and that rate of expenditure will not be sustained in 2016. In assessing whether 
the going concern assumption is appropriate the Directors have taken into account all relevant available information 
about the future trading including profit forecasts, cash forecasts and funding. It is therefore considered appropriate to 
adopt the going concern basis of accounting in the preparation of the annual financial statements. 

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1.3 Accounting developments
The following amendments have been adopted in the year however the Directors do not expect them to have a 
material effect on the Group financial statements:

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•	 Deﬁned Beneﬁt Plans: Employee Contributions: Amendments to IAS 19

The following new standards, amendments and interpretations, which are not yet effective and have not been adopted 
early in these financial statements, will or may have an effect on the Group’s future financial statements:

•	 Amendments to IAS 16 and IAS 38: Clariﬁcation of Acceptable Methods of Depreciation and Amortisation (effective 

1 January 2016)

•	

IFRS 15 Revenue from Contracts with Customers (effective 1 January 2018)

•	

IFRS 9 Financial Instruments (effective 1 January 2018)

•	

IFRS 16 Leases (effective 1 January 2019)

•	 Disclosure Initiative: Amendments to IAS 1 Presentation of Financial Statements (effective 1 January 2016)

1.4 Basis of consolidation
Where the Company has the power, either directly or indirectly, to govern the financial and operating policies of another 
entity or business, so as to obtain benefits from its activities, it is classified as a subsidiary. The consolidated financial 
statements present the results of the Company and its subsidiaries Futura Medical Developments Limited and Futura 
Consumer Healthcare Limited as if they formed a single entity (the “Group”). Intra-group transactions and balances are 
eliminated in preparing the consolidated financial statements.

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36

Futura Medical plc
Annual Report and Accounts for the year ended 31 December 2015

Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2015

1. 

Accounting policies (continued)

1.5 Revenue
Revenue comprises the fair value received or receivable for: exclusivity arrangements, consultancy fees, milestone 
income or royalties, net of value added tax.

The accounting policies for the principal revenue streams of the Group are as follows:

(i)  Exclusivity arrangements and similar agreements are recognised as revenue in the accounting period in which the 
related services, or required activities, are performed or speciﬁed conditions are fulﬁlled in accordance with the 
terms of completion of the speciﬁc transaction.

(ii)  Consultancy fees are recognised as revenue in the accounting period in which the revenue becomes receivable.

(iii)  Non-refundable milestone income is recognised as revenue in the accounting period in which the milestones 

are achieved. If any milestone income is creditable against royalty payments then it is deferred and released to 
the Consolidated Statement of Comprehensive Income over the accounting periods in which the royalties would 
otherwise be receivable.

(iv)  Royalty income relating to the sale by a licensee of licensed product is recognised on an accruals basis in 

accordance with the substance of the relevant agreement and based on the receipt from the licensee of the 
relevant information to enable calculation of the royalty due.

1.6 Leased assets
Leases, which contain terms whereby the Group does not assume substantially all the risks and rewards incidental 
to ownership of the leased item are classified as operating leases. Operating lease rentals are charged to the 
Consolidated Statement of Comprehensive Income on a straight-line basis over the lease term. The Group does not 
hold any assets under finance leases. 

1.7 Intangible assets
Research and development (“R&D”)
Expenditure incurred on the development of internally generated products is capitalised if it can be demonstrated that:

•	

it is technically feasible to develop the product for it to be sold;

•	 adequate resources are available to complete the development;

•	

there is an intention to complete and sell the product;

•	

the Group is able to out-license or sell the product;

•	 sale of the product will generate future economic beneﬁts; and

•	 expenditure on the project can be measured reliably.

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1. 

Accounting policies (continued)

Capitalised development costs are amortised over the periods in which the Group expects to benefit from selling the 
products developed but not exceeding five years. The amortisation expense is included in R&D costs recognised in 
the Consolidated Statement of Comprehensive Income. The useful life and the value of the capitalised development 
cost are assessed for impairment at least annually. The value is written down immediately if impairment has occurred 
and the unimpaired cost amortised over the reduced useful life. The Directors consider that the criteria to capitalise 
development expenditure are not met for a product prior to that product being commercially launched in at least one 
country.

Development expenditure, not satisfying the above criteria, and expenditure on the research phase of internal projects 
are included in R&D costs recognised in the Consolidated Statement of Comprehensive Income as incurred.

Patents and trademarks
The costs incurred in establishing patents and trademarks are either expensed or capitalised in accordance with the 
corresponding treatment of the development expenditure for the product to which they relate.

1.8 Plant and equipment
Plant and equipment is initially recognised at cost, and subsequently at cost less accumulated depreciation and any 
accumulated impairment losses. Cost includes expenditure that is directly attributable to the acquisition of the items. 
Depreciation is charged to the Consolidated Statement of Comprehensive Income at rates calculated to write off the 
cost, less estimated residual value, of each asset on a straight-line basis over their estimated useful lives.

The assets’ residual values and useful lives are determined by the Directors and reviewed and adjusted if appropriate 
at each Consolidated Statement of Financial Position date.

1.9 Impairment of non-financial assets
Assets that are subject to depreciation are reviewed for impairment on a half-yearly basis and when events or 
circumstances suggest that the carrying amount may not be recoverable. For the purpose of assessing impairment, 
assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash generating units). An 
impairment loss is recognised immediately in the Consolidated Statement of Comprehensive Income for the amount by 
which the asset’s carrying amount exceeds its recoverable amount.

Recoverable amount is the higher of fair value, less disposal costs, and value in use. In assessing value in use, the 
estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current 
market assessments of the time value of money and the risks specific to the asset.

Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate 
of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that 
would have been determined had no impairment loss been recognised for the asset in prior periods. A reversal of an 
impairment loss is recognised immediately in the Consolidated Statement of Comprehensive Income.

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38

Futura Medical plc
Annual Report and Accounts for the year ended 31 December 2015

Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2015

1. 

Accounting policies (continued)

1.10 Inventories
Inventories are initially recognised at cost, and subsequently at the lower of cost and net realisable value. Cost 
includes materials, related contract manufacturing costs and other direct costs. Cost is calculated using the first in, 
first out method. Net realisable value is based on estimated selling price, less further costs expected to be incurred to 
completion and disposal.

A provision is recognised immediately in the Consolidated Statement of Comprehensive Income in respect of obsolete, 
slow-moving or defective items, where appropriate.

1.11 Financial instruments
Financial assets
The Group classifies its financial assets in the category of loans and receivables, comprising ‘trade and other 
receivables’ and ‘cash and cash equivalents’. They are recognised initially at fair value and subsequently at amortised 
cost using the effective interest rate method.

Trade and other receivables are recognised initially at fair value and are subsequently measured at amortised cost using 
the effective interest rate method, less an estimate made for impairment based on a review of all past due amounts at 
the year end. A provision for impairment of trade and other receivables is established when there is objective evidence 
that the Group will not be able to collect all amounts due. If an impairment loss is required the carrying amount of the 
trade or other receivable is reduced through the use of an allowance account and the amount of the loss recognised 
immediately in the Consolidated Statement of Comprehensive Income in administrative costs.

Medium-term deposits, comprising sterling fixed rate deposits, with original maturities of more than twelve months are 
included in trade and other receivables.

Cash and cash equivalents are financial assets and comprise cash in hand and sterling fixed rate short-term deposits 
with original maturities of twelve months or less which are held by the Group so as to be available to meet short-term 
cash commitments.

The Group assesses at each Consolidated Statement of Financial Position date whether there is objective evidence 
that a financial asset is impaired.

Financial liabilities
The Group’s financial liabilities comprise ‘trade and other payables’ recognised initially at fair value and subsequently at 
amortised cost using the effective interest rate method.

1.12 Taxation
Income tax is recognised or provided at amounts expected to be recovered or to be paid using the tax rates and tax 
laws that have been enacted or substantively enacted at the Consolidated Statement of Financial Position date. R&D 
tax credits are recognised on an accruals basis and are included as an income tax credit under current assets.

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1. 

Accounting policies (continued)

Deferred tax assets and liabilities are recognised where the carrying amount of an asset or liability on the Consolidated 
Statement of Financial Position date differs from its tax base, except for differences arising on:

•	

•	

the initial recognition of an asset or liability in a transaction which is not a business combination and which at the 
time of the transaction affects neither accounting proﬁt nor taxable proﬁt; and

investments in subsidiaries and jointly controlled entities where the Group is able to control the timing of the 
reversal of the difference and it is probable that the difference will not reverse in the foreseeable future.

Recognition of deferred tax assets is restricted to those instances where it is probable that taxable profits will be 
available against which the difference can be utilised.

The amount of the asset or liability is determined using tax rates that have been enacted or substantively enacted 
by the Consolidated Statement of Financial Position date and are expected to apply when the deferred tax liabilities/
(assets) are settled/(recovered). Deferred tax balances are not discounted.

Deferred tax assets and liabilities are offset when the Group has a legally enforceable right to offset current tax assets 
and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority on either:

•	

the same taxable group company; or

•	 different group entities which intend to settle current tax assets and liabilities on a net basis, or to realise the assets 
and settle the liabilities simultaneously, on each future period in which signiﬁcant amounts of deferred tax assets or 
liabilities are expected to be settled or recovered.

1.13 Foreign currency translation
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the 
dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and 
from the translation at period end exchange rates of monetary assets and liabilities denominated in foreign currencies 
are recognised in the Consolidated Statement of Comprehensive Income in the period in which they arise.

1.14 Employee benefits
(i) Defined contribution plans
The Group provides retirement benefits to all employees who wish to participate in 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 Consolidated Statement of Comprehensive Income in the 
period in which they become payable.

(ii) Accrued holiday pay
Provision is made at each Consolidated Statement of Financial Position date for holidays accrued but not taken, 
at applicable rates of salary. The expected cost of compensated short-term absence (holidays) is charged to the 
Consolidated Statement of Comprehensive Income on an accruals basis.

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40

Futura Medical plc
Annual Report and Accounts for the year ended 31 December 2015

Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2015

1. 

Accounting policies (continued)

(iii) Share-based payment transactions
The Group operates an equity-settled share-based compensation plan. For all share options awarded to employees, 
and others providing similar services, the fair value of the share options at the date of grant is charged to the 
Consolidated Statement of Comprehensive Income over the vesting period. Non-market vesting conditions are taken 
into account by adjusting the number of equity instruments expected to vest at each Consolidated Statement of 
Financial Position date so that, ultimately, the cumulative amount recognised over the vesting period is based on the 
number of share options that eventually vest. There are no market vesting conditions. If the terms and conditions of 
share options are modified before they vest, the change in the fair value of the share options, measured immediately 
before and after the modification, is also charged to the Consolidated Statement of Comprehensive Income over the 
remaining vesting period. The proceeds received when share options are exercised, net of any directly attributable 
transaction costs, are credited to share capital (nominal value) and the remaining balance to share premium. All 
employee share option holders enter into an HM Revenue & Customs joint election to transfer the employers’ national 
insurance contribution potential liability to the employee, therefore no Group asset or liability arises.

(iv) Long-term incentive plan
The Group operates a long-term incentive plan for staff and Executive Directors. The quantum of any awards 
receivable will depend on the Group achieving set milestones and the share price at the time relative to targets set in 
advance. The Group can exercise discretion in settling any award in equity or in cash.

1.15 Finance income
Interest income is recognised on a time-proportion basis using the effective interest rate method.

1.16 Critical accounting estimates and judgements
Critical accounting estimates, assumptions and judgements are continually evaluated by the Directors based on 
available information and experience. As the use of estimates is inherent in financial reporting, actual results could differ 
from these estimates.

Judgements
(i) Revenue recognition
Fees invoiced in respect of non-refundable milestones have been recognised as revenue in the Consolidated 
Statement of Comprehensive Income in the period when all criteria for revenue recognition have been met.

(ii) Intangible asset recognition
The Directors consider that the criteria to capitalise development expenditure are not met for a product prior to that 
product being commercially launched in at least one country.

(iii) Deferred tax recognition
The Directors consider that, given the current stage of development of the business, deferred tax assets should not be 
recognised before the Group is generating sufficient recurring royalty revenue.

Estimates and assumptions
(iv) Fair value of financial instruments
The Group determines the fair value of financial instruments using valuation techniques which can be significantly 
affected by the assumptions used, including interest and discount rates and estimates of future cash flows.

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1. 

Accounting policies (continued)

(v) Inventories
The Group reviews the net realisable value of its inventories on a half-yearly basis to provide assurance that recorded 
inventories are stated at the lower of cost or net realisable value. Factors that could impact realisable value include: the 
timing and success of future technological innovations in relation to product R&D, competitor and Government actions, 
supplier prices and economic trends.

(vi) Share-based payments
The Group operates an equity-settled share-based compensation plan as detailed in note 17 for employee (and 
consultant) services to be received and the corresponding increases in equity are measured by reference to the fair 
value of the equity instruments as at the date of grant.

2. 

Financial risk management

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2.1 Financial risk factors
The Group’s activities expose it to a variety of financial risks: market risk (including foreign exchange rate risk, cash flow 
interest rate risk and fair value interest rate risk); credit risk and liquidity risk.

It is Group policy not to enter into speculative positions using complex financial instruments. The Group’s primary 
treasury objective is to minimise exposure to potential capital losses whilst at the same time securing favourable 
market rates of interest on Group cash deposits using money market deposits with banks. Cash balances used to 
settle the liabilities from operating activities are also maintained in current accounts which earn interest at variable 
rates.

(i) Market risk
Foreign exchange rate risk
The Group primarily enters into supplier contracts which are to be settled in sterling. However, some contracts involve 
other currencies including the US dollar and the euro. Where supplier contracts of more than £100,000 total value are 
to be settled in foreign currencies consideration is given to settling the sums to be paid through conversion of sterling 
deposits to the appropriate foreign currency holdings at the outset of the contract to minimise the risk of adverse 
currency fluctuations.

For contracts with smaller values the foreign exchange rate risk is not considered sufficient to require the establishment 
of foreign currency accounts unless specific circumstances are identified which warrant this.

At 31 December 2015 the Group had trade payables of £27,014 denominated in a foreign currency (31 December 
2014: £55,809).

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42

Futura Medical plc
Annual Report and Accounts for the year ended 31 December 2015

Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2015

2. 

Financial risk management (continued)

Cash flow interest rate risk and fair value interest rate risk
The Group’s interest rate risk arises from short-term money market deposits. Deposits which earn variable rates of 
interest are exposed to cash flow interest rate risk. Deposits at fixed rates expose the Group to fair value interest rate 
risk. The Group analyses its interest rate exposure on a dynamic basis.

The impact in the year ended 2015, of a defined interest rate shift of a 1% higher rate of interest earned per annum 
applied to the term deposits over the period of the deposit, on the post-tax loss for the year and net assets would have 
been £124,350 reduction/increase (2014: £110,629 reduction/increase).

The impact in the year ended 2015, of a defined interest rate shift of a 1% lower (or to zero) rate of interest earned per 
annum applied to the term deposits over the period of the deposit, on the post-tax loss for the year and net assets 
would have been £51,545 increase/reduction (2014: £20,775 increase/reduction).

(ii) Credit risk
Credit risk arises from cash and cash equivalents and deposits with banks and financial institutions as well as credit 
exposure in relation to outstanding receivables. The Group policy is to spread deposits over at least two institutions 
with investment grade A1 or better (Standard & Poor’s credit rating) and deposits are made in sterling only. The Group 
does not expect any losses from non-performance by these institutions.

(iii) Liquidity risk
Liquidity risk arises from the Group’s management of working capital. It is the risk that the Group will encounter 
difficulty in meeting its financial obligations as they fall due. Prudent liquidity risk management involves maintaining 
sufficient cash and cash equivalents and the monitoring of rolling forecasts of the Group’s liquidity reserve on the basis 
of expected cash flow.

The Group had trade and other payables at the Consolidated Statement of Financial Position date of £729,118 (2014: 
£607,886) which fall due within one year.

2.2 Capital risk management
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern 
in order to provide returns for equity holders of the Company and benefits for other stakeholders and to maintain an 
optimal capital structure to minimise the cost of capital.

2.3 Fair value estimation
The Group uses amortised cost, using the effective interest rate method, to determine subsequent fair value, after initial 
recognition, for its financial instruments.

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3. 

Segment reporting

The Group is organised and operates as one business segment. The main area of R&D continues to be in the field of 
innovative products for consumer healthcare using the Group’s advanced proprietary transdermal technology.

The Group manages any overseas R&D from the UK, the primary business segment. Segment revenue is based on 
the geographical location of the Group’s customers. Since there is currently only one business segment and one 
geographical segment, no separate segment reporting has been prepared.

4. 

Operating loss

Operating loss is stated after charging

Depreciation of plant and equipment (note 10)

Inventories consumed in R&D

Wages and salaries (note 5)

Operating lease costs: property

Loss on foreign exchange

The fees of the Group’s auditor, BDO LLP, for services provided are analysed below:

Audit services

Parent company

Subsidiaries

Tax compliance services

Parent company

Subsidiaries

Total fees

 Year ended
 31 December
 2015
£

 Year ended
 31 December
 2014
£

 6,958

4,527

 60,647

 41,317

 1,653,345

1,339,981

 70,992

  4,066

 69,603

1,314

 Year ended
 31 December
 2015
£

 Year ended
 31 December
 2014
£

27,500

7,500

1,000

5,000

27,500

7,500

1,000

5,000

41,000

41,000

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44

Futura Medical plc
Annual Report and Accounts for the year ended 31 December 2015

Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2015

5.  Wages and salaries

The average monthly number of persons (including all Directors) employed by the Group during the year was 14  
(by category: R&D 8, administration 6), (2014: 10, by category: R&D 4, administration 6) and their aggregate 
emoluments were:

Wages and salaries

Social security costs

Other pension and insurance benefits costs

Total cash-settled emoluments

Accrued/(prepaid) holiday pay

Share-based payment remuneration charge 

Total emoluments

All employees of the Group are employed by Futura Medical Developments Limited.

6. 

Directors’ emoluments

Aggregate emoluments

Employer pension contributions

Subtotal per remuneration report 

Share-based payment remuneration charge

Employer’s national insurance charge

Total emoluments

 Year ended
 31 December
 2015
£

 Year ended
 31 December
 2014
£

 1,273,543

 953,830

 159,715

 120,064

 108,784

 115,050

 1,542,042

 1,188,944

 650

 (5,544)

 110,653

 156,581

 1,653,345 

 1,339,981

 Year ended
 31 December
 2015
£

 Year ended
 31 December
 2014
£

559,495

710,384

13,099

45,497

572,594

755,881

50,534

76,746

110,866

97,265

699,874

964,012

There were no share options exercised by the Directors during the current or preceding year. In 2015 one Director 
(2014: three Directors) participated in a private money purchase defined contribution pension scheme. Emoluments for 
individual Directors are disclosed within the Remuneration Report.

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6. 

Directors’ emoluments (continued)

Emoluments on page 44 include the following amounts in respect of the highest paid Director:

Aggregate emoluments

Employer pension contributions

Subtotal per remuneration report 

Share-based payment remuneration charge

Employer’s national insurance charge

Total emoluments

 Year ended
 31 December
 2015
£

 Year ended
 31 December
 2014
£

257,010

243,161

 –

9,409

257,010

252,570

33,018

35,155

48,384

30,418

325,183

331,372

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7. 

Finance income

Interest receivable in 2015 on fixed rate short-term deposits was £38,325 (2014: £48,257).

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Taxation

Current tax

UK corporation tax credit reported in the 
Consolidated Statement of Comprehensive Income

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 31 December
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£

 Year ended
 31 December
 2014
£

997,036

480,689

The tax assessed for the year is different from the standard rate of corporation tax in the UK.

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46

Futura Medical plc
Annual Report and Accounts for the year ended 31 December 2015

Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2015

8. 

Taxation (continued)

The differences are explained below:

Loss on ordinary activities before tax

Loss on ordinary activities at an average standard rate of  
corporation tax in the UK of 20% (2014: 20%)

Expenses not deductible for tax purposes

Difference between depreciation and capital allowances

Other short-term timing differences

Unutilised tax losses

Tax relief on share options exercised

Additional relief attaching to R&D tax credit claims

UK corporation tax credit reported in the 
Consolidated Statement of Comprehensive Income

 Year ended
 31 December
 2015
£

 Year ended
 31 December
 2014
£

 6,078,478

 3,478,570

 1,215,696

 695,714

 (674)

 1,800

 (481)

 653

 (24,321)

 (36,795)

 (615,640)

 (354,615)

  –

 2,100

 420,175 

 174,113 

 997,036 

 480,689

The Group has tax losses of £20,360,259 (2014: £17,272,460) available for offset against future taxable profits.

Deferred tax
Deferred tax assets amounting to £3,676,244 (2014: £3,475,177) have not been recognised on the basis that their 
future economic benefit is not certain. Assuming a prevailing tax rate of 18% (2014: 20%) when the timing differences 
reverse, the unrecognised deferred tax asset comprises:

Depreciation in excess of capital allowances

Tax relief on unexercised share options

Other short-term timing differences

Unutilised tax losses

 Year ended
 31 December
 2015
£

 Year ended
 31 December
 2014
£

 7,444

 2,121

 1,832

 10,071

 6,757

 3,857

 3,664,847

 3,454,492

 3,676,244

 3,475,177

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9. 

Loss per share (pence)

The calculation of the loss per share is based on a loss of £5,081,442 (2014: loss of £2,997,881) and on a weighted 
average number of shares in issue of 99,022,600 (2014: 89,452,302).

The loss attributable to equity holders of the Company for the purpose of calculating the fully diluted loss per share 
is identical to that used for calculating the basic loss per share. The exercise of share options, disclosed in note 17, 
or the issue of shares under the long-term incentive plan, would have the effect of reducing the loss per share and is 
therefore anti-dilutive under the terms of IAS 33 ‘Earnings per Share’.

10. 

Plant and equipment

Cost

At 1 January 2015

Additions

At 31 December 2015

Depreciation

At 1 January 2015

Charge for year

At 31 December 2015

Net book value

At 31 December 2015

At 31 December 2014

Computer 
Equipment 
£

Furniture
 and Fittings
£

Total
£

 33,939 

 53,101

 87,040

 10,815 

 5,143 

 15,958 

 44,754

 58,244

 102,998

 24,995

 50,930

 75,925

 5,849

 1,109

 6,958

 30,844

 52,039

 82,883

 13,910

 8,944

 6,205

 2,171

 20,115

 11,115

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48

Futura Medical plc
Annual Report and Accounts for the year ended 31 December 2015

Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2015

10. 

Plant and equipment (continued)

Cost

At 1 January 2014

Additions

Disposals

At 31 December 2014

Depreciation

At 1 January 2014

Charge for year

Disposals

At 31 December 2014

Net book value

At 31 December 2014

At 31 December 2013

Computer 
Equipment 
£

Furniture
 and Fittings
£

Total
£

 59,958

 52,146

 112,104

 5,719

 2,074

 7,793

 (31,738)

 (1,119)

 (32,857)

 33,939 

 53,101

 87,040

 52,500

 51,755

 104,255

 4,233

 294

 4,527

 (31,738)

 (1,119)

 (32,857)

 24,995

 50,930

 75,925

 8,944

 7,458

 2,171

 391

 11,115

 7,849

All fixed assets of the Group are held in Futura Medical Developments Limited.

11. 

Inventories

Raw materials and consumables

 31 December
 2015
£

 31 December
 2014
£

163,767

141,517

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12. 

Financial instruments by category

The accounting policies for financial instruments have been applied to the line items below:

Assets as per Consolidated Statement of Financial Position

Notes

 31 December
 2015
£

 31 December
 2014
£

Loans and receivables

Trade and other receivables

Cash and cash equivalents

Total loans and receivables

Liabilities as per Consolidated Statement of Financial Position

Trade and other payables 

Accrued expenses

Total financial liabilities

13. 

Trade and other receivables

Amounts receivable within one year:

Other receivables

Prepayments and accrued income

13

14

15

15

146,137

204,600

4,188,294

9,491,776

4,334,431

9,696,376

 31 December
 2015
£

 31 December
 2014
£

529,355

435,832

199,763

172,054

729,118

607,886

 31 December
 2015
£

 31 December
 2014
£

49,578

96,559

111,350

93,250

146,137

204,600

Trade and other receivables do not contain any impaired assets. The Group does not hold any collateral as security 
and the maximum exposure to credit risk at the Consolidated Statement of Financial Position date is the fair value of 
each class of receivable.

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50

Futura Medical plc
Annual Report and Accounts for the year ended 31 December 2015

Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2015

14.  Cash and cash equivalents

Cash at bank and in hand

Sterling fixed rate short-term deposits 

15. 

Trade and other payables

Trade payables

Social security and other taxes

Accrued expenses and deferred income

 31 December
 2015
£

 31 December
 2014
£

44,110

176,914

4,144,184

9,314,862

4,188,294

9,491,776

 31 December
 2015
£

 31 December
 2014
£

461,451

395,645

67,904

40,187

199,763

172,054

729,118

607,886

16. 

Share capital

Authorised

 31 December
 2015
Number

 31 December
 2014
Number

 31 December
 2015
£

 31 December
 2014
£

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
 2015
Number

 31 December
 2014
Number

 31 December
 2015
£

 31 December
 2014
£

Ordinary shares of 0.2 pence each

99,092,318

99,022,600

198,185

198,045

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16. 

Share capital (continued)

The number of issued ordinary shares as at 1 January 2014 was 77,809,576. During the year ended 31 December 
2014, the Company issued shares of 0.2 pence each as follows:

Month

Reason for issue

Gross 
Consideration
£

 Shares  
Issued
Number

January 2014

Share option exercise at 56.25 pence per share

67,500

120,000

March 2014

Share placing at 57.00 pence per share

12,000,000

21,052,632

December 2014

Non-Executive Director award at 63.25 pence per share

 25,548

 40,392

12,093,048

21,213,024

The number of issued ordinary shares as at 1 January 2015 was 99,022,600. During the year ended 31 December 
2015, the Company issued shares of 0.2 pence each as follows:

Month

Reason for issue

Gross 
Consideration
£

 Shares  
Issued
Number

December 2015

Non-Executive Director award at 35.50 pence per share

24,750

69,718

17. 

Share options

At 31 December 2015, the number of ordinary shares of 0.2 pence each subject to share options granted under the 
Company’s Approved and Unapproved Share Option Schemes were:

Exercise Period 

1 August 2011 - 31 July 2016

1 August 2012 - 31 July 2017

Exercise  
Price per  
Share
 Pence

 24.25

 40.50

At  
1 January  
2015
Number

314,279

662,962

1 October 2013 - 30 September 2018

 56.50

827,500

1 October 2014 - 30 September 2019

 61.50

860,000

1 October 2015 - 30 September 2020

 71.50

950,000

1 October 2016 - 30 September 2021

 51.75

1,240,000

 Grants
 During
 Year
 Number

Options 
Lapsed
 Number

At  
31 December 
2015
 Number

  –

  –

  –

  –

  –

  –

  –

314,279

 (180,000)

482,962

 (200,000)

627,500

 (200,000)

660,000

 (200,000)

750,000

 (200,000)

1,040,000

1 October 2017 - 30 September 2022

 30.00

 –

 1,110,000

  –

1,110,000

4,854,741

 1,110,000

 (980,000)

4,984,741

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52

Futura Medical plc
Annual Report and Accounts for the year ended 31 December 2015

Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2015

17. 

Share options (continued)

On 9 September 2015 share options over 1,110,000 new ordinary shares were granted to employees (including 
Executive Directors) and a consultant.

The share options outstanding at 31 December 2015 represented 5.03% of the issued share capital as at that date 
(2014: 4.9%) and would generate additional funds of £2,439,700 (2014: £2,662,100) if fully exercised. The weighted 
average remaining life of the share options was 62 months (2014: 57 months), with a weighted average remaining 
exercise price of 48.94 pence (2014: 54.84 pence).

The share options exercisable at 31 December 2015 totalled 2,834,741 (2014: 2,664,741) with an average exercise 
price of 55.33 pence (2014: 50.33 pence) and would have generated additional funds of £1,568,500 
(2014: £1,341,150) if fully exercised.

The Group’s share option scheme rules apply to 4,229,741 of the share options outstanding at 31 December 2015 
(31 December 2014: 4,199,741) and include a rule regarding forfeiture of unexercised share options upon the 
cessation of employment/provision of consultancy services (except in specific circumstances).

There were no market vesting conditions within the terms of the grant of the share options.

The Black–Scholes formula is the option pricing model applied to the grants of all share options made in respect of 
calculating the fair value of the share options.

Inputs to share option pricing model

Grant date

Number of shares under option

Share price as at date of grant

Option exercise price

 31 December
 2015

 31 December
 2014

 9 September 12 September

 1,110,000

 1,240,000

 30.00 pence

 51.75 pence

 30.00 pence

 51.75 pence

Expected life of options: based on previous exercise history

 3 years

 3 years

Expected volatility: based on 50 day median fluctuations over 3 years

 42.68%

 42.96%

Dividend yield: no dividends assumed

 0%

 0%

Risk-free rate: yield on 3 year treasury stock as at date of grant

 0.82% p.a.

 1.24% p.a.

Outputs generated from share option pricing model

Fair value per share under option

Total expected charge over the vesting period

 31 December
 2015

 31 December
 2014

 8.27 pence

 15.71 pence

 £91,750

 £194,804

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17. 

Share options (continued)

Recognised in Consolidated Statement of Comprehensive Income

The share-based remuneration charge comprises:

Share-based payments – employees

Share-based payments – consultants

Share-based payments

18. 

Pension costs

 31 December
 2015
£

 31 December
 2014
£

 110,653

 156,581

 10,459

 20,462

 121,112

 177,043

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The pension charge represents contributions payable by the Group to independently administered funds which during 
the year ended 31 December 2015 amounted to £80,923 (2014: £93,993). Pension contributions payable in arrears 
at 31 December 2015 included in accrued expenses at the relevant Consolidated Statement of Financial Position date 
totalled £5,470 (2014: £4,139).

19.  Commitments

At 31 December 2015 the Group had operating lease commitments in respect of property leases cancellable on one 
month’s notice of £5,945 (2014: £5,829).

20. 

Related party transactions

Related parties, as defined by IAS 24 ‘Related Party Disclosures’, are the wholly owned subsidiary companies, Futura 
Medical Developments Limited, Futura Consumer Healthcare Limited and the Board. Transactions between the 
Company and the wholly owned subsidiary companies have been eliminated on consolidation and are not disclosed. In 
October 2015 the Company signed an agreement with Quantum Pharma Plc, for whom John Clarke is Non-Executive 
Chairman, for the manufacture and supply of MED2002 as an unlicensed medicine. At the year end the sum due from 
Quantum Pharma Plc in respect of shared development costs was £10,923 (2014: £Nil).

Key management compensation
The Directors represent the key management personnel. Details of their compensation and share options are given in 
note 6 and within the Remuneration Report.

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54

Futura Medical plc
Annual Report and Accounts for the year ended 31 December 2015

Parent Company Balance Sheet
For the year ended 31 December 2015

Company No. 04206001

Fixed assets

Investment

Current assets

Debtors – due within one year

Debtors – due after more than one year

Total debtors

Cash at bank and in hand

Total current assets

 As at
 31 December
 2015
 £

 As at
 31 December
 2014
 £

Notes

2

1,066,132

945,020

3

3

17,869

9,117

29,030,995

23,776,856

29,048,864

23,785,973

4,080,777

9,314,862

33,129,641

33,100,835

Creditors: amounts falling due within one year

4

(37,379)

(13,307)

Net current assets

Total net assets

Capital and reserves

Called up share capital

Share premium account

Profit and loss account

Equity shareholders’ funds

33,092,262

33,087,528

34,158,394

34,032,548

5

198,185

198,045

33,053,345

33,028,735

906,864

805,768

34,158,394

34,032,548

The parent company financial statements were approved and authorised for issue by the Board on 14 March 2016.

The notes on pages 56 to 59 form part of these parent company financial statements.

By order of the Board

James Barder 
Chief Executive

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Parent Company Statement of Changes in Equity
For the year ended 31 December 2015

Share
Capital
£

Share
Premium
£

Note

Profit and
Loss
Account
£

Total
Equity
£

At 1 January 2014

155,619

 21,516,284

 634,759

 22,306,662

Total comprehensive loss for the year

Share-based payment

 -

 -

 -

 -

 (6,034)

 (6,034)

 177,043

 177,043

Shares issued during the year

5

 42,426

 12,050,622

Cost of share issues

At 31 December 2014

Total comprehensive loss for the year 

Share-based payment

 -

 (538,171)

 -

 -

 12,093,048

 (538,171)

 198,045

 33,028,735

 805,768

 34,032,548

 -

 -

 -

 -

 (20,016)

 (20,016)

 121,112

 121,112

Shares issued during the year

5

 140

 24,610

 -

 24,750

At 31 December 2015

 198,185

 33,053,345

 906,864

 34,158,394

Share premium represents amounts subscribed for share capital in excess of nominal value, less the related costs of share 
issues.

Profit and loss account represents the cumulative net profit recognised. The total comprehensive loss for the year represents 
the total recognised income and expense for the year.

The notes on pages 56 to 59 form part of these parent company financial statements. 

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Futura Medical plc
Annual Report and Accounts for the year ended 31 December 2015

Notes to the Parent Company Financial Statements
For the year ended 31 December 2015

1. 

Accounting policies

The parent company financial statements have been prepared in accordance with FRS 100 ‘Application of Financial 
Reporting Requirements’ and FRS 101 ‘Reduced Disclosure Framework’.

The principal accounting policies adopted in the preparation of the financial statements are set out below and have 
been consistently applied to all the years presented, unless otherwise stated. The financial statements have been 
prepared on a historical cost basis. The presentation currency used is sterling and amounts have been presented in 
round pounds (“£”).

The accounts are prepared on the going concern basis. In assessing whether the going concern assumption is 
appropriate, the Directors have taken into account all relevant available information about the future trading including 
profit forecasts, cash forecasts and funding. It is therefore considered appropriate to adopt the going concern basis of 
accounting in the preparation of the annual financial statements.

As a consolidated statement of comprehensive income is published, no separate statement of comprehensive 
income for the parent company has been included in these financial statements, as permitted by section 408 of the 
Companies Act 2006. The loss in respect of the Company for the year was £26,050 (2014: £6,034).The remuneration 
of the Directors of the Company is disclosed in note 6 to the consolidated financial statements. Auditor’s remuneration 
is disclosed in note 4 to the consolidated financial statements.

Disclosure exemptions adopted
In preparing these financial statements the Company has taken advantage of all disclosure exemptions conferred by 
FRS 101. Therefore these financial statements do not include:

•	 certain comparative information as otherwise required by EU endorsed IFRS;

•	 ﬁnancial instrument disclosures;

•	 certain disclosures regarding the Company’s capital;

•	 a statement of cash ﬂows;

•	

the effect of future accounting standards not yet adopted;

•	

the disclosure of the remuneration of key management personnel; and

•	 disclosure of related party transactions with other wholly owned members of the Group. 

Investment
The investment represents 100% of the issued ordinary shares in the subsidiary undertaking Futura Medical 
Developments Limited and is stated at cost plus capital contribution to the subsidiary in respect of share-based 
payment charge, less any provision for impairment.

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1. 

Accounting policies (continued)

Financial assets
The Company does not have any financial assets which it would classify as fair value through profit or loss, held for 
trading or held to maturity. Therefore all financial assets are classed as below:

Loans and receivables
These assets are non-derivative financial assets with fixed or determinable payments that are not quoted in an active 
market. They arise principally through the provision of goods and services to customers, but also incorporate other 
types of contractual monetary asset. They are initially recognised at fair value plus transaction costs that are directly 
attributable to their acquisition or issue, and are subsequently carried at amortised cost using the effective interest rate 
method, less provision for impairment.

Loans to Group companies are initially recognised at fair value and are subsequently carried at amortised cost using 
the effective interest method. An impairment provision is recognised immediately in the Company Statement of 
Comprehensive Income for the amount by which the inter-group loan receivable exceeds its recoverable amount. 
Recoverable amount is calculated by value in use. In assessing value in use, the estimated future cash flows are 
discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time 
value of money and the risks specific to the asset.

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Cash and cash equivalents
Cash and cash equivalents include cash in hand and deposits held at call with banks.

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Financial liabilities and equity
The Company does not have any financial liabilities that would be classified as fair value through the profit or loss. 
Therefore these financial liabilities are classified as financial liabilities at amortised cost, as defined below. Financial 
liabilities include trade and other short-term monetary liabilities, which are initially recognised at fair value and are 
subsequently carried at amortised cost using the effective interest method.

Share-based employee remuneration
The Company has no employees but does issue shares to satisfy share option awards made by its subsidiary 
company. The Company has applied Financial Reporting Standard 20 ‘Share-based Payment’ to all share options 
granted to employees of the subsidiary. The Company’s investment in the subsidiary is increased by the capital 
contribution equivalent to the fair value of the share-based payment charge incurred by the subsidiary.

Taxation
Current tax, including UK corporation tax is provided at amounts expected to be paid (or recovered) using the tax rates 
and laws that have been enacted or substantively enacted by the balance sheet date.

There are no unutilised tax losses in 2015 (2014: £nil). A deferred tax asset in respect of unutilised tax losses has not 
been recognised on the basis that the future economic benefit was not certain.

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58

Futura Medical plc
Annual Report and Accounts for the year ended 31 December 2015

Notes to the Parent Company Financial Statements (continued)

2. 

 Investment in subsidiary

The principal activity of the subsidiary is the research and development of pharmaceutical drugs and medical devices 
and their commercial exploitation. The results of the subsidiary are included in the consolidated financial statements.

Cost

The movement in the year represents the share-based payment charge.

3. 

Debtors

Amounts receivable within one year: prepayments

Amounts receivable after more than one year: 
Amounts owed by subsidiary

4. 

Creditors: amounts falling due within one year

Trade creditors

Accruals and deferred income

5. 

Called up share capital

Authorised

 31 December
 2015
£

 31 December
 2014
£

1,066,132

945,020

 31 December
 2015
£

 31 December
 2014
£

17,869

9,117

 29,030,995

23,776,856

 31 December
 2015
£

 31 December
 2014
£

2,779

34,600

37,379

7,500

5,807

13,307

 31 December
 2015
Number

 31 December
 2014
Number

 31 December
 2015
£

31 December
 2014
£

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
 2015
Number

 31 December
 2014
Number

 31 December
 2015
£

31 December
 2014
£

Ordinary shares of 0.2 pence each

99,092,318

99,022,600

198,185

198,045

Details of shares issued by the Company in the year and details of share options outstanding are given in notes 16 and 
17 to the consolidated financial statements.

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6. 

Related party transactions

Details are given in note 20 to the consolidated financial statements.

7. 

First time adoption of FRS 101 ‘Reduced Disclosure Framework’

This is the first time that the Company has adopted FRS 101 having previously applied UK GAAP. The date of transition 
to FRS 101 was 1 January 2014. In applying FRS 101 for the first time the Company has elected to retain the cost of 
investment in subsidiary undertakings at their carrying value under applicable UK accounting standards.

Other than the adoption of the reduced disclosures there was no material effect of applying FRS 101 for the first time. 
The disclosure exemptions are included in note 1 to the parent company financial statements.

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60

Futura Medical plc
Annual Report and Accounts for the year ended 31 December 2015

Company Information

Company number
04206001

Directors

John Clarke 
James Barder
Derek Martin 
Jonathan Freeman 
Lisa Arnold 

Audit committee
Jonathan Freeman 
Lisa Arnold

Secretary and registered office
Derek Martin 
Futura Medical plc 
Surrey Technology Centre 
40 Occam Road 
Guildford 
Surrey 
GU2 7YG

Nominated adviser and broker
N+1 Singer 
1 Bartholomew Lane 
London 
EC2N 2AX

Non-Executive Chairman 
Chief Executive
Finance Director
Non-Executive Director
Non-Executive Director

Remuneration committee
Jonathan Freeman 
Lisa Arnold 
John Clarke

Auditors
BDO LLP 
Kings Wharf 
20-30 Kings Road 
Reading 
Berkshire 
RG1 3EX

Patent attorneys
Withers & Rogers LLP 
4 More London Riverside 
London 
SE1 2AU

Principal solicitors
Memery Crystal LLP 
44 Southampton Buildings 
London 
WC2A 1AP

Principal bankers
HSBC Bank 
12A North Street 
Guildford 
GU1 4AF

Nominations committee
Lisa Arnold 
Jonathan Freeman 
John Clarke

Registrars
Capita Registrars 
The Registry 
34 Beckenham Road 
Beckenham 
Kent 
BR3 4TU

Public relations advisers
Buchanan Communications Limited 
107 Cheapside 
London 
EC2V 6DN

Investment managers
Royal London Asset Management 
Limited 
55 Gracechurch Street 
London 
EC3V 0RL

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Surrey Technology Centre

40 Occam Road, Guildford,

Surrey, GU2 7YG

Telephone: +44 (0) 1483 685 670

Fax: +44 (0) 1483 685 671

Email: info@futuramedical.com

Website: www.futuramedical.com

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