EXPERTS IN
TRANSDERMAL
DELIVERY
Futura Medical plc
Annual Report and Accounts 2016
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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 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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Stock Code: FUM
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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
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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
SEXUAL HEALTH
CSD
500
MED2002
CSD500
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
the blue diamond brand and
in Saudi Arabia under
the Manex ® brand
®
TPR100
Licensing agreement with
Thornton & Ross (STADA)
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
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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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For more information on
Our Delivery Technology go to page 04
* These are estimates and will vary according to the therapeutic indication
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Futura Medical plc
Annual Report and Accounts for the year ended 31 December 2016
Highlights
MED2002: Eroxon® - Treatment for erectile dysfunction (“ED”)
● Breakthrough results in clinical study showing efficacy, safety and speed of onset, with the potential to be the world’s
fastest-acting treatment for ED
● Advisers appointed to assist in securing out-licensing partners
CSD500: Erectogenic condom
● Achieved extended shelf life via modified manufacturing process
● Second manufacturer approved by regulator
● Two new licensing agreements signed for CSD500 with a further agreement announced in March 2017, bringing
network of international partners to a total of eight
● First licensee launch and first non-EU regulatory approval granted
Pain relief products TPR100 (diclofenac) and TIB200 (ibuprofen)
● First out-licensing agreement signed in January 2017 for TPR100 in the UK
● US Food and Drug Administration regulatory feedback received for TPR100 which confirmed the Company’s regulatory
strategy for the US
● Ongoing potential licensing discussions with prospective partners for TIB200 and TPR100 (outside of the UK)
Organisational
● Strengthened operations with appointment of Ken James to Executive Director and Head of R&D
Financial
● Net loss of £3.70 million (2015: net loss of £5.08 million), reflecting lower R&D spend on clinical trials during the year
● Fundraising in November 2016 via placing of shares raised £12.00 million (before expenses), with proceeds being
applied to clinical development of MED2002 and the pain relief portfolio and to working capital
● Cash resources of £12.35 million at 31 December 2016 (31 December 2015: £4.19 million)
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Stock Code: FUM
03
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 eight distribution licensing agreements with two signed in 2016 and the most recent signed in
March 2017.
Licensee
Church & Dwight
Kabey Pharmaceuticals
RFSU
Ansell
Kwang Dong Pharmaceutical
Milsing
TTK Protective Devices Limited
F Lima SA
Licensing Rights
North America and certain European countries
Key countries in the Middle East and North Africa
The Nordic region
China
South Korea
Key countries in Southeast Europe
India
Portugal
TPR100 - Licensing agreement signed in January 2017 with Thornton & Ross Ltd, the UK subsidiary of international
healthcare company STADA Arzneimittel AG, for commercialisation in the UK.
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Futura Medical plc
Annual Report and Accounts for the year ended 31 December 2016
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.
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
SKIN SURFACE
SKIN
DERMIS
DERMIS
DERMIS
TARGET
TARGET AREA
TARGET AREA
N
N
N
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N
N
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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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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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Stock Code: FUM
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Our Pipeline
Sexual Healthcare
Concept
Development
Commercialisation
CSD500
Description: Condom containing an erectogenic gel
Status: Launched in Saudia Arabia. Further launches due in 2017
MED2002
Description: Topical gel for erectile dysfunction
Status: Final Phase III programme and out-licensing discussions under way
Pain Relief
Concept
TPR100
Development
Commercialisation
Description: Topical diclofenac pain relief gel
Status: First licensing agreement signed. Further 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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Futura Medical plc
Annual Report and Accounts for the year ended 31 December 2016
Chairman’s and Chief Executive’s Review
2016 was a year of great progress for Futura with
the major highlight being the announcement on
7 September of breakthrough results for our
product MED2002 in a clinical study.
MED2002 is our topical gel for erectile dysfunction (“ED”). We
are well advanced in our plans for the further development of
the product and we have been very encouraged by the high
level of commercial interest from potential licensing partners.
MED2002 has the potential to be a highly disruptive product
with significant prescription sales, a possible patent life
extension to 2038 and the prospect of an over-the-counter
(“OTC”) switch in the future.
During the year we signed a further two distribution
agreements for CSD500, our novel erectogenic condom
product. These agreements were with Milsing, for seven
countries in Southeast Europe, and with TTK Protective
Devices Limited (“TTK”), the Indian company with whom
we also signed a manufacturing agreement in June 2016.
In addition earlier this week, we signed a further distribution
agreement for CSD500 with F Lima SA for Portugal. With
these new distribution agreements in place we have
succeeded in out-licensing CSD500 to distribution partners in
the majority of key countries worldwide as part of our strategy
for delivering global sales.
We made substantial progress during 2016 with CSD500
particularly in modifying the manufacturing process to extend
the product’s shelf life to meet the requirements of our
licensing partners. TTK has received regulatory approval from
the relevant EU Notified Body to manufacture the extended
shelf life product.
The first international licensee launch has already taken place,
as announced in early January 2017, in Saudi Arabia by
Kabey Pharmaceuticals (“Kabey”), our distribution partner for
key countries in the Middle East and North Africa (“MENA”).
Church & Dwight, our CSD500 distribution partner for North
America and key countries in Europe, is currently working to
enable launch in selected markets.
Our key focus during 2016 with our two pain relief products
was on the out-licensing of the products, which both showed
statistically significant pain relief in an earlier clinical study. Our
out-licensing negotiations resulted in the announcement in
January 2017 of our first commercialisation agreement for our
pain relief portfolio. This agreement is with Thornton & Ross,
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a UK subsidiary of STADA Arzneimittel AG (“STADA”), for
the UK commercialisation of TPR100, our diclofenac gel
for topical pain relief. Futura continues in discussions in
connection with the licensing of TPR100 in other countries
and also with the licensing of TIB200, our ibuprofen gel.
The fundraising in November 2016 raised £12.0 million
(before expenses), strengthening the Company’s balance
sheet and providing the financial capability to drive forward
Futura’s clinical and commercial development activities.
These activities include a placebo-controlled Phase III clinical
study of MED2002, to commence later this year, in 700 or
more patients.
We were delighted that Ken James, the former head of
consumer healthcare R&D at GlaxoSmithKline, agreed
to become Head of R&D in November 2016 to lead our
development programmes. Ken joined Futura in April 2016,
initially as a Non-Executive Director.
Our balance sheet is strong, with cash resources of £12.4
million as at 31 December 2016 (31 December 2015:
£4.2 million). We will continue to use these cash resources
prudently.
Portfolio updates - Sexual healthcare
MED2002: Eroxon® 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 ED. We hold worldwide patents to the product
in a market worth US$4.8 billion1 for currently available
treatments and have registered the brand name Eroxon®.
Major clinical progress was made with MED2002 during
2016, led by the breakthrough clinical results announced in
September 2016. The clinical study, which began in June
2015, met its primary endpoint and showed efficacy, safety
and speed of onset. MED2002’s rapid onset of action means
that it has the potential to be the world’s fastest-acting
treatment for ED.
The clinical study comprised a total of 232 randomised males
and measured, as its primary endpoint, improvement in the
erectile function (“EF”) domain score of the International Index
of Erectile Function (“IIEF”), the scoring system used for the
approval of PDE5 inhibitors, the class of products including
Viagra® and Cialis®. The placebo-controlled study used one
dosage, 0.2% w/w glyceryl trinitrate (“GTN”) gel, and included
mild, moderate and severe ED patients.
The study achieved its primary endpoint in demonstrating
a statistically significant improvement in erectile function in
the EF domain score, averaged across the entire patient set,
when using MED2002 compared with placebo.
The speed of onset of action of MED2002 was rapid, partly
reflecting the method of application with the gel being applied
directly to the penis, with an average speed of onset of action
of fewer than 5 minutes in the responder group.
No major safety concerns were identified. No serious adverse
events or serious adverse reactions were recorded and
there were no drop-outs from the study owing to side-effect
issues. Patients reported fewer than 2% mild side-effects
of a headache, in over 1,000 intercourse attempts, which is
considered a very low percentage in pharmaceutical terms.
We have been refining our strategy for the further
development of the product following these breakthrough
trial results. It is our intention to begin a Phase III placebo-
controlled parallel group multi-centre clinical study of 700 or
more patients in Q4 2017 using two dosage forms, the 0.2%
w/w GTN gel used in the earlier study and a higher strength
dose form of 0.4% w/w GTN gel. We will also conduct
a separate 30 patient pharmacokinetic safety study to
compare GTN blood plasma levels of MED2002 with existing
cardiovascular GTN drugs. Both studies are expected to
complete in Q4 2018 with regulatory submissions expected
in Q2 2019. We are currently consulting with the UK and US
regulatory authorities to enable us to finalise the design and
timing of these studies.
We have had substantial interest in MED2002 from potential
licensing partners following the breakthrough results of the
clinical study and we intend to commence the Phase III
clinical trial whilst licensing negotiations are ongoing.
Note 1 Top 10 markets, IMS Health Data (2015) Manufacturers’ Selling Prices
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Futura Medical plc
Annual Report and Accounts for the year ended 31 December 2016
Chairman’s and Chief Executive’s Review (continued)
MED2002 in key countries worldwide of more than US$650
million. Importantly, Ipsos forecasts that 73% of these
potential OTC sales would be incremental to the prescription
category.
The Ipsos valuation was based on the outcomes from
primary market research carried out amongst 400 men, with
ED or suspected ED, in the USA. The respondents were
shown a concept about MED2002 as part of the market
research but they did not use the product as it is currently
in clinical development. The key findings of the market
research showed that the respondents believed that the
product, once approved, would be highly differentiated from
existing products and that its claims would meet their needs.
MED2002’s rapid onset of action was the key feature that
attracted respondents to the product.
MED2002’s patent protection runs until August 2028 in the
USA and August 2025 in Europe. An additional patent filing
announced earlier this month could extend patent protection
through to 2038.
MED2002, as a topically applied gel with a very rapid speed
of onset, has the potential to be a significant product with
combined peak sales of more than US$1 billion in a market
currently dominated by Viagra® and Cialis®, which are taken
orally and do not take effect for at least 30 minutes, and
typically one hour or more2.
As part of earlier market research into the potential of
MED2002 as a prescription product Decision Resources
Group (“DRG”) conducted a survey in the US involving 200
physicians and 400 ED patients. The survey found that the
top three characteristics that patients and physicians desired
in a new ED treatment were: fast onset, safety, and the
ability to be used by all ED patients. As a topical treatment
MED2002 has been developed to meet these requirements
by offering a safe and effective treatment with a rapid speed
of onset and no contraindications for ED sufferers.
Currently approximately 7.5% of ED sufferers are unable
to be prescribed PDE5 inhibitors due to contraindications
with nitrate medicines taken by them for cardiovascular
conditions. These patients also represent an additional
potential market for MED2002 as its active ingredient, GTN,
is unlikely to be contraindicated.
Market research conducted by DRG into the potential of
MED2002, following approval as a prescription medicine,
forecast peak annual sales of up to US$560 million in key
countries worldwide with no price premium, at DRG’s
forecast price of $5. Both the DRG research work and the
recently announced Ipsos research indicated that consumers
may be willing to pay a price premium for MED2002,
compared with the existing available products, potentially
enhancing the prescription market value of the product.
MED2002 has substantial potential, as the fastest-acting
compound with a favourable safety profile, in the prescription
market where it will be marketed first. These characteristics
also give MED2002 the potential to become one of the
largest OTC products in the global OTC market place later
in its product life cycle. As announced on 6 March 2017,
the market research firm Ipsos used its validated healthcare
forecasting model to forecast peak OTC annual sales for
Note 2 US patient information leaflets for Viagra® and Cialis®
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example in all 28 EU countries. TTK has received regulatory
approval from the relevant EU Notified Body to manufacture
the extended shelf life product. We are currently awaiting
approval from the same EU Notified Body of the extended
shelf life product for our European based manufacturer.
In January 2017, CSD500 was launched in Saudi Arabia
by our distributor Kabey and further launches in MENA are
expected during the course of 2017. Kabey is using the
brand name Futura Max Manex Super and its promotion
is based on direct retail marketing rather than an online
campaign, which reflects local marketing practices. We have
been advised by Kabey that the launch in Saudi Arabia has
received positive feedback and in March 2017 Kabey placed
a further order for the Saudi Arabia market.
In addition to the Kabey launch in Saudi Arabia, CSD500
continues to be test marketed in the Netherlands and
Belgium by Bizzy Diamond BV under Futura’s brand, Blue
Diamond®. The sales achieved in the Netherlands continue
to provide useful consumer feedback for our post-market
clinical follow-up (“PMCF”) study required for CE Marking
and the PMCF study will also assist with other regulatory
approvals.
As highlighted above, Church & Dwight, our CSD500
distribution partner for North America and key countries in
Europe, is currently working to enable launch in selected
markets.
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
is CE Marked, represents real innovation in an industry where
there has been limited new product development. Futura’s
unique intellectual property for CSD500 has been protected
throughout the world through the filing and granting of a
range of patents.
To date CSD500 has been out-licensed to a total of 41
countries including major commercial markets in North
America and Europe. During 2016, we signed a licensing
agreement with Milsing for the marketing and distribution
of CSD500 in seven countries in Southeast Europe and we
also signed a licensing agreement with TTK for marketing
and distribution within India. TTK owns the fastest growing
condom brand in India, SKORE®, and it is intended that
CSD500 will be part of the SKORE® brand. In March 2017
we signed a licensing agreement with F Lima SA for the
marketing and distribution of CSD500 in Portugal. We
continue in discussions with potential licensing partners
for countries where we have not yet licensed the product
and are pleased to report that we have succeeded in out-
licensing CSD500 to distribution partners in the majority of
key countries worldwide as part of our strategy for delivering
global sales.
During 2016 we made major progress in preparing for
the international roll-out of the product by our distribution
partners. We successfully modified the manufacturing
process to achieve an extended shelf life to meet the
requirements of our distribution partners. Both of our
manufacturing partners - TTK in India and our European
manufacturer - have the required approvals to ship CSD500
to any country in which the product is approved, for
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Futura Medical plc
Annual Report and Accounts for the year ended 31 December 2016
Chairman’s and Chief Executive’s Review (continued)
Portfolio updates - 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.
DermaSys® also allows the potential to have a twice a day
dosing regimen which provides a compelling commercial
proposition for ibuprofen which is currently dosed three
to four times per day. Futura has previously demonstrated
statistically significant results from its two non-steroidal
anti-inflammatory drug (“NSAID”) programmes, TPR100 (2%
diclofenac gel) and TIB200 (10% ibuprofen gel), in a clinical
study.
During 2016 the Company was focused on the out-
licensing of the pain relief portfolio and, on 10 January 2017,
announced a licensing agreement with Thornton & Ross
Ltd, the UK subsidiary of international healthcare company
STADA Arzneimittel AG, for the commercialisation in the UK
of TPR100, the Company’s novel diclofenac gel for pain relief.
Under the terms of the agreement, Thornton & Ross Ltd will
conduct the manufacturing scale-up of TPR100 and hold
rights to manufacture, market and distribute the product
in the UK for the lifetime of the product’s patents, which
run to at least 2028 in the UK. Futura received an upfront
payment and will receive a further milestone payment upon
the product receiving UK regulatory marketing authorisation
along with royalties on product sales.
It is not expected that any further clinical work will be
required ahead of a regulatory submission for UK marketing
authorisation to be made by Thornton & Ross Ltd, which we
anticipate in the second half of 2017.
We received a written response from the US Food and Drug
Administration (“FDA”) in December 2016 which confirms our
US regulatory strategy for TPR100. The main requirement
being to conduct a 700 patient placebo-controlled efficacy
study of TPR100 in treating osteoarthritis of the knee, with an
open label extension of 100 patients for six months and 50
of those patients for a year, to demonstrate patient tolerability
and safety. We will not, however, progress this study without
a clear indication of interest from a potential commercial
partner for the US market. Futura continues in commercial
discussions in connection with the licensing of TPR100
outside of the UK.
Our ibuprofen based product TIB200 has attracted significant
interest, especially if we are able to deliver a twice-a-day
dosing regimen (morning and evening). This product requires
further clinical work which, again, we will not progress without
a clear indication of interest from a potential commercial
partner. We continue in commercial discussions in connection
with the licensing of TIB200.
Our objective is for our pain relief 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 over 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 billion3.
Note 3 2015 IMS Health estimate MSP
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People
At the year end, Futura had 12 employees, (excluding Non-
Executive Directors), (2015: 12) however two additional
staff have been recruited in the current year to support the
regulatory function as we move forward from a UK-centric to
a more internationally focused regulatory environment.
Board changes comprised the appointment of Ken James
as a Non-Executive Director in April 2016 at which time Lisa
Arnold, who had served as a Non-Executive Director since
2008, stepped down. We are immensely grateful to Lisa
for her contribution to the Company during her tenure. In
November 2016, we were pleased to appoint Ken James
to an executive Board role, as Head of R&D, and it is our
intention to appoint a further Non-Executive Director in due
course to maintain the depth, balance and independence of
the Board.
We are highly appreciative of our staff and of our external
consultants and partners who continue to support our virtual
business model.
Outlook
Futura continues to make good progress, both commercially
and clinically, across its portfolio of product opportunities and
we look forward to the year ahead with confidence. 2017 has
started well with the launch in the Middle East of CSD500,
our novel erectogenic condom, and the signing of a licensing
deal for TPR100, our diclofenac pain relief gel. We have the
balance sheet strength to drive forward our exciting clinical
plans for MED2002, our breakthrough erectile dysfunction
gel, with potential for significant prescription sales, once
approved, and the prospect of an over-the-counter switch in
the future to enable additional sales.
John Clarke
Chairman
James Barder
Chief Executive
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Futura Medical plc
Annual Report and Accounts for the year ended 31 December 2016
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 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 for
which 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 recurring 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.
The Strategic Report should be read in conjunction with the
Chairman’s and Chief Executive’s Review on pages 6 to 11,
the consolidated financial statements and the Notes to the
Consolidated Financial Statements set out on pages 31 to
52.
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
changes of ageing populations, increasing prosperity,
government initiatives to increase self-medication, pressures
on payers and healthcare systems, the rapid growth of OTC
opportunities in developing countries, the natural desire for
an 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.
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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 companies, such
as Futura, engaging in research and product development,
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 a strong balance sheet and
with a more advanced and diverse development portfolio.
Revenue
Group revenue for the year ended 31 December 2016 was
£170k (2015: £29k).
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 on-going
revenue generation would lead to a key future financial
milestone of monthly break-even and profitability.
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.
The Group develops transdermal products for prescription
and OTC use. 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 billion1 in 2015 and the market leader for topical
OTC analgesics has annual sales of US$632 million2. The
prescription market for existing approved erectile dysfunction
treatments was estimated at US$4.8 billion3 in 2015. Market
research conducted by DRG into the potential of MED2002,
following approval as a prescription medicine, forecast
peak annual sales of up to US$560 million in key countries
worldwide with no price premium, at DRG’s forecast price.
With an OTC switch later in its product life cycle MED2002
would form a new category within the OTC market. Market
research conducted by Ipsos into the potential of MED2002
as an OTC product, using their validated healthcare
forecasting model, forecast peak OTC annual sales for
MED2002 in key countries worldwide in excess of US$650
million4.
Notes
1 2015 IMS Health estimate
2 Get Report 2014 Global Sales
3 Top 10 markets, IMS Health Data (2015) Manufacturers’ Selling Price
4 2017 Ipsos, Top 10 markets Retailers’ Selling Price
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 2016
Strategic Report (continued)
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 2016 was £4.55 million (2015: £6.12 million). The Group’s loss after taxation for the year ended 31 December
2016 was £3.70 million (2015: £5.08 million). Loss per share for the year ended 31 December 2016 was 3.65 pence
(2015: 5.13 pence).
No dividends were paid and none are proposed by the Board of Directors (“the Board”) (2015: £nil).
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 £3,509,680 (2015: £4,778,039) were lower in the year as we completed the clinical trial begun in 2015 for
MED2002 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:
2016
£
2015
£
2014
£
2013
£
2012
£
R&D costs
3,509,680
4,778,039
2,365,678
1,976,322
1,435,731
Other administrative costs
1,214,755
1,368,240
1,205,078
926,123
1,095,197
Total operating costs
4,724,435
6,146,279
3,570,756
2,902,445
2,530,928
R&D ratio
74%
78%
66%
68%
57%
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 £26.3 million (63% of total cumulative operating costs). A subsidiary, Futura
Medical Developments Limited, continued to incur all of the Group’s R&D expenditure which has been written off as incurred
for all reporting periods prior to and including the year ended 31 December 2016.
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 programmes, 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 2016 were £1,214,755 (2015: £1,368,240). 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
2016
Year ended
31 December
2015
54%
13%
9%
24%
47%
14%
6%
33%
100%
100%
Taxation
A tax credit of £842,246 (2015: £997,036) 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 2016 totalled £45.84 million.
On 22 November 2016 the Group raised £12.00 million (before expenses) following the issue of 21,052,632 shares at 57.00
pence per share via a placing with new and existing investors.
Cash held by the Group at 31 December 2016 totalled £12.35 million comprising cash and cash equivalents (31 December
2015: £4.19 million).
The Group had no bank borrowings as at 31 December 2016 (2015: £nil). Other significant sources of funding received for
the Group since formation of the business until 31 December 2016 comprised: R&D tax credits £4.05 million, interest £1.03
million and grants £0.28 million.
On 12 January 2017 the Group raised £155,100 following the issue of 382,962 shares at 40.50 pence per share pursuant to
the exercise of share options by employees (including Directors).
On 13 January 2017 the Group raised £28,669 following the deferred issue of 100,770 shares at 28.45 pence per share in
respect of the 2016 Non-Executive Directors’ remuneration.
As a result of the above, 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 2016
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.
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 countries 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.
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.
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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
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.
Impact of Brexit
Following the outcome of the EU referendum, the Medicines
and Healthcare products Regulatory Agency is working
closely with the UK Government to analyse the best options
and opportunities available for the safe and effective
regulation of medicines and medical devices in the UK. The
impact of the decision to leave the EU is not yet known and
the future relationship with bodies such as the European
Medicines Agency and the European Patent Office will be
closely monitored.
The Strategic Report was approved by order of the Board on
22 March 2017.
Derek Martin
Secretary
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Futura Medical plc
Annual Report and Accounts for the year ended 31 December 2016
Board of Directors
The Board of Directors has overall responsibility
for the Group.
The Board of Directors (“the Board”) currently comprises the Non-Executive Chairman, the Chief Executive, the Finance
Director, the Head of R&D and one independent Non-Executive Director. 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 taken by the Board with particular emphasis on the commercial direction of
the Group.
John Clarke
Non-Executive Chairman
Chairman of
Nominations Committee
James Barder
Chief Executive
Current roles
John Clarke became Chairman of Futura Medical plc in 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, Kind
Consumer Holdings Limited and is a senior adviser to Helios Investment
Partners LLP.
Current roles
James Barder joined the Group as Chief Executive in 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 and leads commercial negotiations. He first became involved with
the Group in 1997.
Past roles
President of GSK Consumer Healthcare. Non–Executive Chairman of
Quantum Pharma Plc.
Brings to the Board
Extensive experience of the healthcare sector, having worked at a senior
level at GSK for more than 35 years.
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
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 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 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 Capital 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.
Ken James
Executive Director and
Head of R&D
Current roles
Ken James joined the Board in April 2016. In November 2016 he was
appointed Head of R&D. He oversees the development, regulatory and
manufacturing strategies for the company’s existing pipeline and the
evaluation of early stage pipeline opportunities. He is a member of the
Nominations Committee, the Remuneration Committee and the Audit
Committee.
Past roles
Senior Vice President of Research and Development for GlaxoSmithKline
Worldwide Consumer Healthcare, having worked in the UK and the United
States.
Brings to the Board
Over 40 years of experience in the research, development and
commercialisation of consumer healthcare products.
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Futura Medical plc
Annual Report and Accounts for the year ended 31 December 2016
Remuneration Report
Remuneration Committee: composition and terms of
reference
During the period under review the Remuneration Committee
comprised the 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 2016.
The Board retains responsibility for overall remuneration
policy. The terms of reference of the Remuneration
Committee are set out in the Investor Centre/Corporate
Governance 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 plans.
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 also sometimes 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 Remuneration Committee considers that the best
alignment of employee interests with those of its shareholders
is through the continued use of incentives for performance
through the award of share options or other share-based
arrangements.
The Group operates a long-term incentive plan (“LTIP”).
The quantum of any awards receivable by the staff and
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 would
be equivalent to approximately 3.71% of the issued share
capital.
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Stock Code: FUM
21
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 2016 was settled on 10 January
2017 by the issue of 100,770 shares at 28.45 pence per
share. The 2017 award has been determined at 57.50 pence
per share and the Non-Executive Directors will accrue these
shares over 2017 and receive them, or such lower number as
have accrued if they leave the Group earlier, in January 2018.
The Board considers ownership of Futura shares by Non-
Executive Directors as a positive alignment of their interest
with shareholders. The Board periodically reviews 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.
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. The Non-
Executive Directors and the Chairman are also included
under the long-term incentive plan.
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Futura Medical plc
Annual Report and Accounts for the year ended 31 December 2016
Remuneration Report (continued)
Directors’ emoluments
The emoluments of the Directors, who represent the key management personnel, in 2016 were as follows:
Year ended 31 December 2016
Salary &
Directors’
Fees
£
Bonus
£
Share
Awards
£
Benefits
In Kind
£
Pension
£
Total
£
Year ended
31 December
2015
Total
£
Executive Directors
James Barder
Derek Martin
Ken James1
Non-Executive Directors
John Clarke
Jonathan Freeman
Lisa Arnold2
Totals
225,244
75,892
106,180
20,406
44,888
57,890
33,130
7,345
–
–
–
–
–
–
6,296
25,195
8,394
8,396
5,430
3,923
–
306,566
257,010
53,265
183,774
164,451
–
–
–
–
–
–
–
–
51,184
–
83,085
41,524
15,741
75,585
37,774
37,774
474,677
96,298
48,281
9,353
53,265
681,874
572,594
1 The share awards element was earned whilst serving as a Non-Executive Director
2 Resigned 31 March 2016
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 2016 (2015: £nil).
Directors’ interests in shares
John Clarke
James Barder
Derek Martin
Jonathan Freeman
Ken James
Totals
31 December 2016
31 December 2015
Beneficial
Interests
Non-beneficial
Interests
Beneficial
Interests
Non-beneficial
Interests
119,551
–
119,551
–
621,330
867,500
591,330
867,500
280,000
35,803
–
–
–
–
280,000
35,803
–
–
–
–
1,056,684
867,500
1,026,684
867,500
Other than as shown in the table no Director had any interest in the shares of the Company at 31 December 2016 or at
31 December 2015.
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Stock Code: FUM
23
Directors’ interests in share options
The Board uses share options to align Executive Directors’ and employees’ interests with those of shareholders in order to
provide incentives and reward them based on improvements in Group performance.
Options granted to the Executive Directors were as follows:
James Barder
Derek Martin
Ken James
Totals
31 December 2016
31 December 2015
Options
Held
Share-based
Payment
Expense
Options
Held
Share-based
Payment
Expense
1,500,000
11,864
1,500,000
760,000
6,969
869,279
–
–
–
33,018
17,516
–
2,260,000
18,833
2,369,279
50,534
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 50) 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 2016
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
Ken James
John Clarke
Jonathan Freeman
Other employees
2017
2018
2019
2020
116,542
116,542
116,542
116,542
116,542
116,542
116,542
116,542
50,000
50,000
50,000
50,000
50,000
50,000
50,000
50,000
50,000
50,000
50,000
50,000
544,627
544,627
544,627
544,627
At discretion of Remuneration Committee
185,976
185,976
185,976
185,976
Totals
1,113,687
1,113,687
1,113,687
1,113,687
The Directors consider that until a milestone has been met it is not appropriate to recognise a 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 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.
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Board of Directors
The Board comprises a Non-Executive Chairman
(“Chairman”), the Chief Executive, the Finance Director, the
Head of R&D and an independent Non-Executive Director.
The Chairman and the Non-Executive Director 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 roles of Chairman and Chief
Executive are intended to remain separate.
The Board is currently recruiting an additional Non-
Executive Director with experience of the sector following
the appointment of Ken James in November 2016 to an
executive role.
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 2016, there were seven
meetings of the full Board, three of the Remuneration
Committee, three of the Audit Committee and two of the
Nominations Committee. All meetings were fully attended by
their constituent Directors.
Audit Committee
During the period under review the Audit Committee
comprised the Non-Executive Directors, Jonathan Freeman
and Lisa Arnold (replaced by Ken James) 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 2016. The Audit
Committee reviews the findings of the external auditors
and reviews accounting policies and material accounting
judgements.
The Audit Committee advised the Board on the appointment
of KPMG replacing BDO as the external auditor in the year.
The independence and effectiveness of the external auditor
is reviewed annually and audit partners are rotated every
five years. 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, auditor appointment and fee levels
and any other appropriate matters. 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.
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Futura Medical plc
Annual Report and Accounts for the year ended 31 December 2016
Corporate Governance (continued)
Audit Committee (continued)
The terms of reference of the Audit Committee are set out
in the Investor Centre/Corporate Governance section on the
Group’s website at www.futuramedical.com.
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 is 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.
• 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.
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
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 2016. The terms of reference of the
Nominations Committee are set out in the Investor Centre/
Corporate Governance section on the Group’s website
at www.futuramedical.com.
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Stock Code: FUM
27
Employees
At 31 December 2016, the Group’s employees (excluding
Non-Executive Directors) comprised: three Executive
Directors and eight full-time and one part-time member
of staff, all of whom are employed by Futura Medical
Developments Limited.
The Executive Directors regularly keep staff informed of the
progress and development of the Group through formal and
informal meetings and employee feedback is encouraged.
The Group has a policy of offering share options and 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 periodic 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. 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 the 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 report at the AGM 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 2016
Directors’ Report
Directors
The Directors during the year were:
John Clarke
James Barder
Derek Martin
Jonathan Freeman
Ken James – appointed 1 April 2016
Lisa Arnold – resigned 31 March 2016
Dividends
No dividends were paid and none are proposed (2015: £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.
Statement of Directors’ responsibilities in respect of the
Annual Report and the financial statements
The Directors are responsible for preparing the Annual Report
and the group and parent company financial statements in
accordance with applicable law and regulations.
Company law requires the Directors to prepare group and
parent company financial statements for each financial
year. Under that law they have elected to prepare the group
financial statements in accordance with applicable law
and International Financial Reporting Standards (IFRSs) as
adopted by the EU and have elected to prepare the parent
company financial statements in accordance with applicable
law and UK Accounting Standards (UK Generally Accepted
Accounting Practice), including FRS 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
parent company and of their profit or loss 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 each of the group and parent company financial
statements, the Directors are required to:
• select suitable accounting policies and then apply them
consistently;
• make judgements and estimates that are reasonable and
Adequacy of information supplied to auditor
Each Director has taken all reasonable steps to make himself
aware of any information needed by the Group’s auditor for
the purpose of the audit and to establish that the auditor is
aware of that information. The Directors are not aware of any
relevant audit information of which the auditor is unaware.
•
•
prudent;
for the group financial statements, state whether they
have been prepared in accordance with IFRSs as
adopted by the EU;
for the parent company financial statements, state
whether applicable UK Accounting Standards have been
followed, subject to any material departures disclosed
and explained in the financial statements; and
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Stock Code: FUM
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• prepare the financial statements on the going concern
basis unless it is inappropriate to presume that the group
and the parent company will continue in business.
The Directors are responsible for keeping adequate
accounting records that are sufficient to show and explain
the parent company’s transactions and disclose with
reasonable accuracy at any time the financial position of the
parent company and enable them to ensure that its financial
statements comply with the Companies Act 2006. They have
general responsibility for taking such steps as are reasonably
open to them to safeguard the assets of the group and to
prevent and detect 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
22 March 2017
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Futura Medical plc
Annual Report and Accounts for the year ended 31 December 2016
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 2016 set out on pages 31 to
58. 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 EU. The financial reporting framework that has
been applied in the preparation of the parent company financial
statements is applicable law and UK Accounting Standards
(UK Generally Accepted Accounting Practice), including FRS
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 auditor
As explained more fully in the Directors’ Responsibilities
Statement set out on page 28, 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 Auditing Practices
Board’s Ethical Standards for Auditors.
•
the parent company financial statements have been
properly prepared in accordance with UK Generally
Accepted Accounting Practice;
•
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 is consistent
with the financial statements.
Based solely on the work required to be undertaken in the
course of the audit of the financial statements and from
reading the Strategic Report and the Directors’ Report:
• we have not identified material misstatements in those
reports; and
•
in our opinion, those reports have been prepared in
accordance with the Companies Act 2006.
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
Scope of the audit of the financial statements
A description of the scope of an audit of financial statements
is provided on the Financial Reporting Council’s website at
www.frc.org.uk/auditscopeukprivate.
• 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.
Opinion on financial statements
In our opinion:
•
the financial statements give a true and fair view of the
state of the group’s and of the parent company’s affairs
as at 31 December 2016 and of the group’s loss for the
year then ended;
•
the group financial statements have been properly
prepared in accordance with IFRSs as adopted by the EU;
Derek McAllan (Senior Statutory Auditor)
For and on behalf of KPMG LLP, Statutory Auditor
Chartered Accountants
KPMG LLP
Arlington Business Park
Theale
Reading
Berkshire
RG7 4SD
22 March 2017
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Stock Code: FUM
31
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2016
Revenue
Research and development costs
Administrative costs
Operating loss
Finance income
Loss before tax
Taxation
Loss for the year being total comprehensive loss attributable to
owners of the parent company
Year ended
31 December
2016
£
Year ended
31 December
2015
£
Notes
1.5
170,362
29,476
(3,509,680)
(4,778,039)
(1,214,755)
(1,368,240)
(4,554,073)
(6,116,803)
14,714
38,325
(4,539,359)
(6,078,478)
842,246
997,036
4
7
8
(3,697,113)
(5,081,442)
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Basic and diluted loss per share (pence)
9
(3.65 pence)
(5.13 pence)
All amounts relate to continuing activities.
The notes on pages 35 to 52 form part of these consolidated financial statements.
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Futura Medical plc
Annual Report and Accounts for the year ended 31 December 2016
Consolidated Statement of Changes in Equity
For the year ended 31 December 2016
Share
Capital
£
Share
Premium
£
Merger
Reserve
£
Retained
Losses
£
Total
Equity
£
Notes
At 1 January 2015
198,045
33,028,735
1,152,165 (24,657,134)
9,721,811
Total comprehensive loss for the year
Share-based payment
Shares issued during the year
At 31 December 2015
Total comprehensive loss for the year
Share-based payment
Shares issued during the year
Cost of share issue
At 31 December 2016
17
16
17
16
–
–
–
–
140
24,610
–
–
–
(5,081,442)
(5,081,442)
121,112
121,112
–
24,750
198,185
33,053,345
1,152,165 (29,617,464)
4,786,231
–
–
–
–
42,105
11,957,895
–
(559,495)
–
–
–
–
(3,697,113)
(3,697,113)
54,405
54,405
–
–
12,000,000
(559,495)
240,290
44,451,745
1,152,165 (33,260,172)
12,584,028
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 all other net gains and losses not recognised elsewhere.
The notes on pages 35 to 52 form part of these consolidated financial statements.
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Stock Code: FUM
33
Consolidated Statement of Financial Position
As at 31 December 2016
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
2016
£
As at
31 December
2015
£
Notes
10
11
13
8
14
21,351
21,351
20,115
20,115
83,641
163,767
138,989
146,137
842,246
997,036
12,352,978
4,188,294
13,417,854
5,495,234
15
(855,177)
(729,118)
(855,177)
(729,118)
12,584,028
4,786,231
16
240,290
198,185
44,451,745
33,053,345
1,152,165
1,152,165
(33,260,172)
(29,617,464)
12,584,028
4,786,231
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The consolidated financial statements were approved and authorised for issue by the Board on 22 March 2017.
The notes on pages 35 to 52 form part of these consolidated financial statements.
By order of the Board
James Barder
Chief Executive
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Futura Medical plc
Annual Report and Accounts for the year ended 31 December 2016
Consolidated Statement of Cash Flows
For the year ended 31 December 2016
Cash flows from operating activities
Loss before tax
Adjustments for:
Depreciation
Finance income
Share-based payment charge
Year ended
31 December
2016
£
Year ended
31 December
2015
£
Notes
(4,539,359)
(6,078,478)
10
7
17
6,247
6,958
(14,714)
(38,325)
54,405
121,112
Cash flows from operating activities before changes in working capital
(4,493,421)
(5,988,733)
Decrease / (increase) in inventories
Decrease 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 issue
Cash generated by financing activities
Increase / (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
11
80,126
(22,250)
16,981
45,212
15
101,284
121,232
(4,295,030)
(5,844,539)
997,036
480,689
(3,297,994)
(5,363,850)
10
(7,483)
(15,958)
29,656
51,576
22,173
35,618
16
12,000,000
24,750
(559,495)
–
11,440,505
24,750
8,164,684
(5,303,482)
4,188,294
9,491,776
Cash and cash equivalents at end of year
14
12,352,978
4,188,294
The notes on pages 35 to 52 form part of these consolidated financial statements.
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Stock Code: FUM
35
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
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 2016.
1.2 Going concern
The Group had an operating loss of £4.55 million for the 2016 financial year (2015: £6.12 million), but had a positive
net asset value of £12.58 million at 31 December 2016 (31 December 2015: £4.79 million).
The increase in the net asset value of the Group is mainly attributable to the £12 million funding received from the
equity placing in November 2016. The Directors consider this to represent sufficient funds for the foreseeable future,
taking into account the Group’s current development plans.
In assessing the Group’s going concern ability the Directors have considered all relevant available information about the
future trading activities of the Group, including profit forecasts, cash forecasts and funding. Based on this assessment,
the consolidated financial statements have been prepared on a going concern basis and the Directors have no reason
to believe that the Group will not operate as a going concern for the foreseeable future.
1.3 Accounting developments
The following amendments have been adopted in the year and do not have a material effect on the Group financial
statements:
• Amendments to IAS 16 and IAS 38: Clarification of Acceptable Methods of Depreciation and Amortisation
• Disclosure Initiative: Amendments to IAS 1 Presentation of Financial Statements
The following new standards, amendments and interpretations, which are not yet effective and have not been adopted
early in these financial statements do not currently have a material impact, but the future impact will be considered on
an ongoing basis:
•
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)
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Futura Medical plc
Annual Report and Accounts for the year ended 31 December 2016
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2016
1.
Accounting policies (continued)
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.
1.5 Revenue
Revenue comprises the fair value received or receivable for milestone income and royalties, net of value added tax.
The accounting policies for the principal revenue streams of the Group are as follows:
(i) 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.
(ii) 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, including patents and trademarks, 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 yet met for CSD500 prior to the
extended shelf life product being commercially launched in at least one major market and also that further testing and
development is required before the capitalisation criteria are met.
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.
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.
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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.
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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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Futura Medical plc
Annual Report and Accounts for the year ended 31 December 2016
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2016
1.
Accounting policies (continued)
1.10 Inventories
Inventories are consumable materials to be used in development and 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
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.
Cash and cash equivalents are financial assets and comprise cash in hand and sterling short-term money market
funds 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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Futura Medical plc
Annual Report and Accounts for the year ended 31 December 2016
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2016
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 all staff and 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, assumptions 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.
Estimates and assumptions
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. The fair value determination is based on the principles of the
Black-Scholes Model, the inputs of which require the use of estimation.
Judgements
Deferred tax recognition
The determination of probable future profits, against which the Group’s deferred tax profits can be offset, requires
judgement.
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2.
Financial risk management
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 market rates of
interest on Group cash deposits using money market funds. Cash balances used to settle the liabilities from operating
activities are maintained in current accounts.
(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 2016 the
Group had no trade payables denominated in a foreign currency (31 December 2015: £27,014).
Cash flow interest rate risk and fair value interest rate risk
The Group’s interest rate risk arises from short-term money market deposits.
(ii) Credit risk
Credit risk arises from cash and cash equivalents and money market deposits as well as credit exposure in relation to
outstanding receivables.
(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 £855,177 (2015: £729,118) 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.
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Futura Medical plc
Annual Report and Accounts for the year ended 31 December 2016
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2016
3.
Segment reporting
The Group is organised and operates as one segment. The Group’s revenue analysed by geographical location of the
Group’s customers is:
Middle East / ROW
United States of America
Europe
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
Year ended
31 December
2016
£
Year ended
31 December
2015
£
118,192
35,473
16,697
170,362
–
3,237
26,239
29,476
Year ended
31 December
2016
£
Year ended
31 December
2015
£
6,247
6,958
122,565
60,647
1,662,299
1,653,345
76,394
70,992
4,823
4,066
The fees of the Group’s auditor, KPMG LLP (2015: BDO LLP), for services provided are analysed below:
Audit services
Parent company
Subsidiaries
Tax services
Parent company
Subsidiaries
Total fees
Year ended
31 December
2016
£
Year ended
31 December
2015
£
26,000
7,500
1,000
10,000
44,500
27,500
7,500
1,000
5,000
41,000
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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), (2015:14, by category: R&D 8, administration 6) and their aggregate
emoluments were:
Wages and salaries
Social security costs
Other pension and insurance benefits costs
Total cash-settled emoluments
Accrued 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
2016
£
Year ended
31 December
2015
£
1,288,330
1,273,543
161,481
159,715
156,656
108,784
1,606,467
1,542,042
6,224
650
49,608
110,653
1,662,299
1,653,345
Year ended
31 December
2016
£
Year ended
31 December
2015
£
628,609
559,495
53,265
13,099
681,874
572,594
18,833
86,284
50,534
76,746
786,991
699,874
There were no share options exercised by the Directors during the current or preceding year. In 2016 one Director
(2015: one Director) participated in a private money purchase defined contribution pension scheme. Emoluments for
individual Directors are disclosed within the Remuneration Report.
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Futura Medical plc
Annual Report and Accounts for the year ended 31 December 2016
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2016
6.
Directors’ emoluments (continued)
Emoluments on the previous page 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
2016
£
Year ended
31 December
2015
£
306,566
257,010
–
–
306,566
257,010
11,864
41,998
33,018
35,155
360,428
325,183
7.
Finance income
Interest receivable in 2016 on fixed rate short-term deposits was £14,714 (2015: £38,325).
8.
Taxation
Current tax
UK corporation tax credit reported in the
Consolidated Statement of Comprehensive Income
Year ended
31 December
2016
£
Year ended
31 December
2015
£
842,246
997,036
The tax assessed for the year is different from the standard rate of corporation tax in the UK.
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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% (2015: 20%)
Expenses not deductible for tax purposes
Unrecognised deferred tax
Unutilised tax losses
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
2016
£
Year ended
31 December
2015
£
4,539,359
6,078,478
907,872
1,215,696
(125)
(674)
(12,154)
(22,521)
(396,701)
(615,640)
343,354
420,175
842,246
997,036
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The Group has tax losses of £22,332,102 (2015: £20,360,259) available for offset against future taxable profits.
Deferred tax
Deferred tax assets amounting to £3,859,456 (2015: £3,676,244) have not been recognised due to it not being
probable that taxable profits will be available, against which these deductible temporary differences can be utilised.
A reduction in the UK corporation tax rate from 21% to 20% (effective from 1 April 2015) was substantively enacted
on 2 July 2013. Further reductions to 19% (effective from 1 April 2017) and to 18% (effective from 1 April 2020) were
substantively enacted on 26 October 2015, and an additional reduction to 17% (effective from 1 April 2020) was
substantively enacted on 6 September 2016. The unrecognised deferred tax asset at 31 December 2016 has been
calculated assuming a prevailing tax rate when the timing differences reverse of 17% (2015: 18%) and comprises:
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Depreciation in excess of capital allowances
Tax relief on unexercised share options
Other short-term timing differences
Unutilised tax losses
Year ended
31 December
2016
£
Year ended
31 December
2015
£
6,820
53,156
3,022
7,444
2,121
1,832
3,796,458
3,664,847
3,859,456
3,676,244
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46
Futura Medical plc
Annual Report and Accounts for the year ended 31 December 2016
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2016
9.
Loss per share (pence)
The calculation of the loss per share is based on a loss of £3,697,113 (2015: loss of £5,081,442) and on a weighted
average number of shares in issue of 101,350,836 (2015: 99,022,600).
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 2016
Additions
At 31 December 2016
Depreciation
At 1 January 2016
Charge for year
At 31 December 2016
Net book value
At 31 December 2016
At 31 December 2015
Computer
Equipment
£
Furniture and
Fittings
£
Total
£
44,754
58,244
102,998
4,940
2,543
7,483
49,694
60,787
110,481
30,844
52,039
82,883
5,126
1,121
6,247
35,970
53,160
89,130
13,724
13,910
7,627
6,205
21,351
20,115
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47
10.
Plant and equipment (continued)
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
All fixed assets of the Group are held in Futura Medical Developments Limited.
11.
Inventories
Consumable materials used for development
31 December
2016
£
31 December
2015
£
83,641
163,767
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48
Futura Medical plc
Annual Report and Accounts for the year ended 31 December 2016
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2016
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
2016
£
31 December
2015
£
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
Total financial liabilities
13.
Trade and other receivables
Amounts receivable within one year:
Trade receivables
Other receivables
Financial assets
Prepayments and accrued income
13
14
34,986
49,578
12,352,978
4,188,294
12,387,964
4,237,872
31 December
2016
£
31 December
2015
£
15
286,135
461,451
286,135
461,451
31 December
2016
£
31 December
2015
£
Note
12
20,364
14,622
34,986
104,003
–
49,578
49,578
96,559
138,989
146,137
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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14. Cash and cash equivalents
Cash at bank and in hand
Sterling short-term money market deposits
15.
Trade and other payables
Trade payables
Financial liabilities
Social security and other taxes
Accrued expenses and deferred income
31 December
2016
£
31 December
2015
£
147,200
44,110
12,205,778
4,144,184
12,352,978
4,188,294
31 December
2016
£
31 December
2015
£
Note
286,135
461,451
12
286,135
461,451
42,923
67,904
526,119
199,763
855,177
729,118
16.
Share capital
Authorised
31 December
2016
Number
31 December
2015
Number
31 December
2016
£
31 December
2015
£
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
2016
Number
31 December
2015
Number
31 December
2016
£
31 December
2015
£
Ordinary shares of 0.2 pence each
120,144,950
99,092,318
240,290
198,185
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50
Futura Medical plc
Annual Report and Accounts for the year ended 31 December 2016
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2016
16.
Share capital (continued)
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
£
December 2015
Non-Executive Director award at 35.50 pence per share
24,750
Shares
Issued
Number
69,718
The number of issued ordinary shares as at 1 January 2016 was 99,092,318. During the year ended 31 December
2016, the Company issued shares of 0.2 pence each as follows:
Month
Reason for issue
Gross
Consideration
£
Shares
Issued
Number
November 2016
Share placing at 57.00 pence per share
12,000,000
21,052,632
17.
Share options
At 31 December 2016, 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
1 October 2013 - 30 September 2018
1 October 2014 - 30 September 2019
1 October 2015 - 30 September 2020
Exercise Price
per Share
Pence
At
1 January
2016
Number
Options
Lapsed
Number
At
31 December
2016
Number
24.25
40.50
56.50
61.50
71.50
314,279
(314,279)
–
482,962
627,500
660,000
750,000
–
–
–
–
482,962
627,500
660,000
750,000
1 October 2016 - 30 September 2021
51.75
1,040,000
(300,000)
740,000
1 October 2017 - 30 September 2022
30.00
1,110,000
(50,000)
1,060,000
4,984,741
(664,279)
4,320,462
There were no share options awarded in 2016.
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51
17.
Share options (continued)
On 13 January 2017 share options over 1,260,000 new ordinary shares were granted to employees (including Executive
Directors) at a price of 57.50p. The exercise period for these options is 1 October 2018 to 30 September 2023.
The share options outstanding at 31 December 2016 represented 3.60% of the issued share capital as at that date
(2015: 5.03%) and would generate additional funds of £2,193,237 (2015: £2,439,700) if fully exercised. The weighted
average remaining life of the share options outstanding at 31 December 2016 was 56 months (2015: 62 months) with
a weighted average remaining exercise price of 50.76 pence (2015: 48.94 pence).
The share options exercisable at 31 December 2016 totalled 3,260,462 (2015: 2,834,741) with an average exercise
price of 57.51 pence (2015: 55.33 pence) and would have generated additional funds of £1,875,237 (2015:
£1,568,500) if fully exercised.
The Group’s share option scheme rules apply to 3,740,462 of the share options outstanding at 31 December 2016
(31 December 2015: 4,229,741) and include a rule regarding forfeiture of unexercised share options upon the
cessation of employment (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
Expected life of options: based on previous exercise history
Expected volatility: based on 50 day median fluctuations over 3 years
Dividend yield: no dividends assumed
Risk-free rate: yield on 3 year treasury stock as at date of grant
31 December
2016
31 December
2015
–
–
–
–
–
–
–
–
9 September
1,110,000
30.00 pence
30.00 pence
3 years
42.68%
0%
0.82% p.a.
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52
Futura Medical plc
Annual Report and Accounts for the year ended 31 December 2016
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2016
17.
Share options (continued)
Outputs generated from share option pricing model
Fair value per share under option
Total expected charge over the vesting period
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
2016
31 December
2015
–
–
8.27 pence
£91,750
31 December
2016
£
31 December
2015
£
49,608
110,653
4,797
10,459
54,405
121,112
The pension charge represents contributions payable by the Group to independently administered funds which during
the year ended 31 December 2016 amounted to £131,181 (2015: £80,923). Pension contributions payable in arrears
at 31 December 2016, included in accrued expenses at the relevant Consolidated Statement of Financial Position
date, totalled £6,846 (2015: £5,470).
19. Commitments
At 31 December 2016 the Group had operating lease commitments in respect of property leases cancellable on one
month’s notice of £9,575 (2015: £5,945).
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.
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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Parent Company Balance Sheet
For the year ended 31 December 2016
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
www.futuramedical.com
Stock Code: FUM
53
As at
31 December
2016
£
As at
31 December
2015
£
Notes
2
1,120,537
1,066,132
3
3
3,107
17,869
32,332,884
29,030,995
32,335,991
29,048,864
12,210,946
4,080,777
44,546,937
33,129,641
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Creditors: amounts falling due within one year
4
(64,211)
(37,379)
Net current assets
Net assets
Capital and reserves
Called up share capital
Share premium account
Profit and loss account
Shareholders’ funds
44,482,726
33,092,262
45,603,263
34,158,394
5
240,290
198,185
44,451,745
33,053,345
911,228
906,864
45,603,263
34,158,394
The parent company financial statements were approved and authorised for issue by the Board on 22 March 2017.
The notes on pages 55 to 58 form part of these parent company financial statements.
By order of the Board
James Barder
Chief Executive
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Futura Medical plc
Annual Report and Accounts for the year ended 31 December 2016
Parent Company Statement of Changes in Equity
For the year ended 31 December 2016
At 1 January 2015
198,045
33,028,735
805,768
34,032,548
Share
Capital
£
Share
Premium
£
Profit and
Loss Account
£
Total
Equity
£
Note
Total comprehensive loss for the year
Share-based payment
Issue of shares
At 31 December 2015
Total comprehensive loss for the year
Share-based payment
Issue of shares
Cost of share issue
At 31 December 2016
–
–
–
–
(20,016)
(20,016)
121,112
121,112
5
140
24,610
–
24,750
198,185
33,053,345
906,864
34,158,394
–
–
–
–
(50,041)
(50,041)
54,405
54,405
5
42,105
11,957,895
–
(559,495)
–
–
12,000,000
(559,495)
240,290
44,451,745
911,228
45,603,263
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 55 to 58 form part of these parent company financial statements.
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Stock Code: FUM
55
Notes to the Parent Company Financial Statements
For the year ended 31 December 2016
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. The financial statements have been prepared on a historical cost
basis.
The accounts are prepared on a going concern basis. In assessing whether a 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 a 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 £50,041 (2015: £20,016).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.
Non-derivative financial instruments
Non-derivative financial instruments comprise investments in equity, trade and other debtors, cash and cash
equivalents and trade and other creditors.
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Futura Medical plc
Annual Report and Accounts for the year ended 31 December 2016
Notes to the Parent Company Financial Statements (continued)
For the year ended 31 December 2016
1.
Accounting policies (continued)
Trade and other debtors
Trade and other debtors are recognised initially at fair value. Subsequent to initial recognition they are measured at
amortised cost using the effective interest method, less any impairment losses.
Trade and other creditors
Trade and other creditors are recognised initially at fair value. Subsequent to initial recognition they are measured at
amortised cost using the effective interest method.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call deposits.
Share-based employee remuneration
The Company has no employees but does issue shares to satisfy share option awards made by its subsidiary
company Futura Medical Developments Limited.
The grant date fair value of share-based payments awards granted to employees is recognised as an increase in the
investment, with a corresponding increase in equity, over the period in which the employees become unconditionally
entitled to the awards. The fair value of the awards granted is measured using the Black-Scholes model, taking into
account the terms and conditions upon which the awards are granted.
Taxation
Tax on the profit or loss for the year comprises current and deferred tax. Tax is recognised in the profit and loss
account except to the extent that it relates to items recognised directly in equity or other comprehensive income, in
which case it is recognised directly in equity or other comprehensive income.
Current tax is the expected tax payable or receivable on the taxable profit or loss for the year, using tax rates enacted
or substantively enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years.
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available
against which the temporary difference can be utilised.
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57
2.
Investment in subsidiary
The investment represents 100% of the issued ordinary £1 shares in the subsidiary undertaking Futura Medical
Developments Limited whose registered address is: 40 Occam Road, Guildford, Surrey GU2 7YG. The principal activity
of the company is the research and development of pharmaceutical drugs and medical devices and their commercial
exploitation. The investment is stated at cost plus capital contribution by the subsidiary in respect of share-based
payment charge. The results of the subsidiary are included in the consolidated financial statements.
Cost
31 December
2016
£
31 December
2015
£
1,120,537
1,066,132
Futura Medical Developments Limited owns 100% of the issued ordinary £1 shares of Futura Consumer Healthcare
Limited whose registered address is: 40 Occam Road, Guildford, Surrey GU2 7YG. The principal activity of Futura
Consumer Healthcare Limited is the commercial exploitation and branding of pharmaceutical drugs and medical
devices developed by Futura Medical Developments Limited. The results of Futura Consumer Healthcare Limited are
included in the consolidated financial statements.
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3.
Debtors
Amounts receivable within one year: prepayments
Amounts receivable after more than one year:
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31 December
2016
£
31 December
2015
£
3,107
17,869
Amounts owed by subsidiary
32,332,884
29,030,995
4.
Creditors: amounts falling due within one year
Trade creditors
Accruals and deferred income
31 December
2016
£
31 December
2015
£
10,797
53,414
64,211
2,779
34,600
37,379
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Futura Medical plc
Annual Report and Accounts for the year ended 31 December 2016
Notes to the Parent Company Financial Statements (continued)
For the year ended 31 December 2016
5.
Called up share capital
Authorised
31 December
2016
Number
31 December
2015
Number
31 December
2016
£
31 December
2015
£
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
2016
Number
31 December
2015
Number
31 December
2016
£
31 December
2015
£
Ordinary shares of 0.2 pence each
120,144,950
99,092,318
240,290
198,185
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.
6.
Related party transactions
Details are given in note 20 to the consolidated financial statements.
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www.futuramedical.com
Stock Code: FUM
59
Company Information
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Non-Executive Chairman
Chief Executive
Finance Director
Non-Executive Director
Executive Director
Company number
04206001
Directors
John Clarke
James Barder
Derek Martin
Jonathan Freeman
Ken James
Audit committee
Jonathan Freeman
Ken James
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
Principal solicitor
Memery Crystal LLP
44 Southampton Buildings
London
WC2A 1AP
Remuneration committee
Jonathan Freeman
Ken James
John Clarke
Auditor
KPMG LLP
Arlington Business Park
Theale
Reading
Berkshire
RG7 4SD
Patent attorneys
Withers & Rogers LLP
4 More London Riverside
London
SE1 2AU
Principal banker
HSBC Bank
12A North Street
Guildford
GU1 4AF
Nominations committee
John Clarke
Jonathan Freeman
Ken James
Registrar
Capita Registrars
The Registry
34 Beckenham Road
Beckenham
Kent
BR3 4TU
Public relations adviser
Buchanan Communications Limited
107 Cheapside
London
EC2V 6DN
Investment manager
Royal London Asset Management
Limited
Po Box 9035
Chelmsford
CM99 2XB
Futura Medical AR2016.indd 59
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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
Futura Medical AR2016.indd 1
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