UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 20-F
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REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF
1934
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— OR —
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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for the fiscal year ended March 31, 2008
— OR —
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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for the transition period from
to
— OR —
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SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Date of event requiring this shell company report
Commission File Number: 0
00-51463
PROTHERICS PLC
(Exact name of Registrant as specified in its charter)
Not Applicable
(Translation of Registrant’s name into English)
England and Wales
(Jurisdiction of incorporation or organization)
The Heath Business & Technical Park, Runcorn, Cheshire, WA7 4QX England
(Address of principal executive office)
Mr. Rolf Soderstrom, Group Finance Director,
Protherics PLC, The Heath Business & Technical Park, Runcorn, Cheshire, WA7 4QX, England.
Tel: +44 1928 518000, Fax: +44 1928 518002
(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)
Securities registered or to be registered pursuant to Section 12(b) of the Act:
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Title of Each Class
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Name of Each Exchange On Which Registered
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Ordinary Shares of 2 Pence Each
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The NASDAQ Stock Market, LLC
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American Depositary Shares, as
evidenced by American Depositary
Receipts, each representing ten
(10) Ordinary Shares
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Securities registered or to be registered pursuant to Section 12(g) of the Act:
None
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:
None
Indicate the number of outstanding shares of each of the Registrant’s classes of capital or common stock
as of the close of the period covered by this Annual Report:
340,319,609 ordinary shares of 2p each as of March 31, 2008
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule
405 of the Securities Act:
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Yes
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No
If this report is an annual or transition report, indicate by check mark if the registrant is
not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934:
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Yes
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No
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the Registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days:
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Yes
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No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or
a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act (Check one):
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Large accelerated filer
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Accelerated filer
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Non-accelerated filer
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Indicate by check mark which basis of accounting the Registrant has used to prepare the
financial statements included in this filing:
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U.S. GAAP
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International Financial Reporting Standards as issued
by the International Accounting Standards Board
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Other
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If “other” has been checked in response to the previous question, indicate by check mark which
financial statement item the Registrant has elected to follow:
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Item 17
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Item 18
If this is an annual report, indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Exchange Act).
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Yes
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No
CAUTIONARY STATEMENTS CONCERNING FORWARD-LOOKING STATEMENTS
Certain statements contained in this report may not be based on historical facts and are
“forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended. In particular,
certain statements included herein under “Item 3. Key Information” and “Item 5. Operating and
Financial Review and Prospects,” including without limitation, those concerning the Company’s
strategy and competitive strengths, the Company’s expectations and plans, the Company’s
collaborative revenues, research and development and general and administrative expenses, contain
certain forward-looking statements concerning the Company’s operations, performance and financial
condition. Such statements may generally, but not always, be identified by their use of words such
as “anticipates,” “expects,” or “believes.” Although the Company believes that the expectations
reflected in such forward-looking statements are reasonable, no assurance can be given that such
expectations will prove in hindsight correct. Many important factors could cause actual results to
differ materially from such expectations including, among others, those set forth in “Item 3. Key
Information—Risk Factors” and “Item 4. Information on the Company—Government Regulation”
(collectively, the “Risk Factors”). All subsequent written and oral forward-looking statements
attributable to the Company or persons acting on its behalf are expressly qualified by the Risk
Factors. Other relevant risks may be detailed from time to time in the Company’s press releases
and filings with the Securities and Exchange Commission. We undertake no obligation to update
these forward-looking statements to reflect events or circumstances that occur after the date of
this report.
1
GLOSSARY OF SCIENTIFIC AND TECHNICAL TERMS
The discussion herein regarding the Company’s product candidates and technologies includes
certain scientific and technical terms and abbreviations. These terms include:
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adjuvant
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a pharmacological agent added to a drug to increase or aid its effect
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angiotensin
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the term used to describe a family of peptide hormones that are
involved in the control of blood pressure and body fluid levels
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antibody
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substance produced by cells of the immune system which bind to parts
of other substances in a highly specific way to neutralize their
effect
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antiserum(a)
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serum from an animal which has been injected with an immunogen
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assay
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a quantitative or qualitative process used to measure or detect a
particular substance
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ATV
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angiotensin therapeutic vaccine
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B-cell
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A type of lymphocyte (white blood cell)
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B-Cell Chronic Lymphocytic Leukemia or
(B-CLL)
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A type of cancer in which B-cells over-accumulate
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BLA
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U.S. Biological License Application
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bovine spongiform encephalopathy
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the abnormal prion protein disease of the brain in cattle
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CHMP
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European Committee for Medicinal Products for Human Use
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clinical development
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the stage of pharmaceutical research and development in which
potential drugs are studied in human clinical trials (or in the
target species for animal health drugs)
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CMSs
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the Concerned Member States, nominated by the applicant, to whom the
approval decision for marketing approval is circulated by the RMS
under the MRP
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CP
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the centralized procedure for registering pharmaceutical products in
order to obtain marketing authorization, for which there is a single
application, evaluation and authorization within the E.U.
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cytokine
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a cellular messenger, typically of the immune system
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cytotoxic
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a molecule or drug that is toxic to cells
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diagnostic test
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an assay used for the diagnosis of disease typically carried out on
body fluids or tissues
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Digoxin
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a widely prescribed drug for the treatment of cardiac conditions
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Digoxin Immune Fab
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a polyclonal antibody fragment for the treatment of digoxin toxicity
or overdose
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2
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DP
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the decentralized procedure method of registering pharmaceutical
products in order to obtain marketing authorization, intended for
products that have not yet received authorization in any E.U.
country
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EMEA
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European Medicines Evaluation Agency, formerly the European Agency
for the Evaluation of Medicinal Products
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encephalopathies
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diseases of the brain which interfere with its normal functioning
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enzymes
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proteins that promote changes in other molecules (e.g., in other
proteins, sugars or fatty substances)
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epitope
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the part or parts of the target molecule which react with an antibody
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fab fragment
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the fragment produced by cleavage of an antibody with a proteolytic
enzyme that binds to the antibody target molecule (antigen)
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FDA
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U.S. Food and Drug Administration
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fragment
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part of an antibody molecule which can be split from the whole
molecule and which still retains biological activity
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glioblastoma multiforme (“GBM”)
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the most common malignant primary brain tumor
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good manufacturing practice or GMP
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measures needed to ensure that drug substance will be consistently
produced and controlled to appropriate quality standards as required
by any marketing authorisation
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high blood pressure or hypertension
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blood pressure that is above medically defined limits and which is
associated with increased risks of stroke and heart disease
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immune system
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the cells and structures in the body that are capable of producing
antibodies and other components of the immune response
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immunogen
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any substance which can elicit the formation of specific antibodies
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immunotherapeutics
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medicines that act on or through the immune system (e.g., vaccines)
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in vitro
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experimental biological processes made to occur in isolation from
the whole organism
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MAA
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Marketing Authorisation Application
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MHRA
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Medicines and Healthcare Products Regulatory Agency
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MRP
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the mutual recognition procedure for registering pharmaceutical
products in order to obtain marketing authorization, which involves
submission of a marketing authorization application to one national
regulatory authority, with secondary approval from other E.U. member
states subsequent to the approval of the first application
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named patient basis
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this refers to a form of limited regulatory approval for certain
drugs used in the treatment of human injuries or conditions for
which no satisfactory therapies exist, or for which other drugs are
unavailable, cause adverse effects or are in short supply
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NCI
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National Cancer Institute
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NICE
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National Institute for Clinical Effectiveness
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oncology
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the study of cancer
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orphan drug status
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status granted by the FDA which provides certain development,
registration and marketing incentives, for development of treatments
of small (fewer than 200,000 per annum in the United States)
incidence conditions
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PCT
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Patent Cooperation Treaty (Washington, 1970), as amended, and the
regulations and administrative instructions thereunder
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phase 1 clinical study/trial
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the initial clinical assessment of the safety of a biologically
active substance or assessment of the safety and pharmacokinetics of
a drug candidate in human subjects
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phase 1/2 clinical study/trial
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a phase 1 clinical study conducted in patients
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phase 2 clinical study/trial
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the assessment in patients of a drug to determine dose range and
preliminary efficacy. A phase 2a study is to examine the
pharmacological effect of the drug and a phase 2b is to evaluate the
appropriate dose for phase 3
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phase 3 clinical study/trial
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the assessment of the efficacy and safety of a drug, usually in
comparison with a marketed product or a placebo, in the patient
population for which it is intended
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polyclonal antibody
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a population of antibodies directed to multiple epitopes on the
target molecule
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pre-clinical development
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the research and development stage immediately prior to clinical
trials, which usually lasts 12-18 months
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pre-eclampsia
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hypertension which arises in pregnancy in association with
significant protein in the urine and can lead to seizures and death
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prion protein
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the protein that assumes an abnormal structure in bovine spongiform
encephalopathy and related diseases and which is believed to be
capable of transmitting bovine spongiform encephalopathy and related
diseases
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prodrug
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an inert chemical which can be activated within the body to an
active drug
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proof of concept and optimization studies
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studies in animals to demonstrate the (expected) action of the drug
and to define the most effective form of the drug
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purification of polyclonal antibodies
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the process of removal of extraneous foreign proteins, viruses and
other biological materials associated with manufacturing of product
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®
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means a trademark has been registered in the United States Patent
and Trademark Office
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RMS
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the Reference Member State to whom the initial application for
marketing authorization is submitted under the MRP
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scrapie
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a fatal, degenerative disease that affects the nervous systems of
sheep and goats.
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4
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sepsis
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the name given to a spectrum of disorders caused by the body’s
exaggerated response to infection or injury. The defining
characteristics are inflammation, abnormal vital signs and failure
of one or more major organ systems. The condition may progress to
multiple organ failure
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serum
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the component of blood excluding the red and white blood cells and
fibrinogen
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specificity
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the degree to which an antibody binds to antigens other than that to
which it is primarily directed
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therapeutic
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pharmaceutical product targeted to treat a specific disease
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™
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means that a trademark is being registered or an application for a
trademark is being made in one or more countries
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TNF
a
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tumor necrosis factor alpha, a cytokine, involved in the body’s
inflammatory process
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transmissible spongiform encephalopathy
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a degenerative condition of the nervous system believed to be caused
by the accumulation of an abnormal form of the prion protein
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vaccine
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a formulation used to stimulate an immune response
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5
PART I
ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
Not applicable.
ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE
Not applicable.
ITEM 3. KEY INFORMATION
Selected Financial Data
The 2008, 2007, 2006 and 2005 selected consolidated financial data presented below is in
accordance with International Financial Reporting Standards as issued by the International
Accounting Standards Board and International Financial Reporting Standards as adopted by the
European Union (collectively and subsequently referred to throughout this document as “IFRS”) and
has been derived from our audited consolidated financial statements, including the related Notes,
included in “Item 17. Financial Statements” of this report.
IFRS Financial Record
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Year ended March 31,
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2008
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2007
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2006
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2005
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£’000
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£’000
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£’000
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£’000
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Consolidated Income Statement Information:
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Revenue
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26,067
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31,119
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17,709
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18,839
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Operating (loss)
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(19,218
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(4,354
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(9,533
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(1,658
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Net (loss)
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(16,742
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(3,357
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(9,488
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(1,781
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Net (loss) per ordinary share (basic and fully diluted)
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(4.9p
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(1.2p
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(3.8p
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(0.8p
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Net (loss) per ADS
(1)
(basic and fully diluted)
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(49.3p
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(11.8p
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(38.4p
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(7.9p
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Consolidated Balance Sheet Data:
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Total assets (fixed assets plus current assets)
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94,816
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107,265
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60,136
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41,352
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Net assets
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61,552
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76,471
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26,352
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25,969
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Non-current liabilities
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12,494
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15,390
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16,988
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5,896
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Total equity
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61,552
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76,471
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26,352
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25,969
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Number of equity shares outstanding (in thousands of
shares)
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340,320
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339,129
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259,287
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242,204
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IAS 32 and IAS 39 were adopted on April 1, 2005.
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(1)
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Each American Depositary Share represents ten ordinary shares.
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No dividends have been paid by the Company in the periods illustrated above.
Currencies And Exchange Rates
The Company publishes its consolidated financial statements in sterling. In this Annual
Report, references to “sterling” or “£” are to U.K. currency and references to “U.S. dollars” or
“$” are to U.S. currency. Solely for informational purposes, this Annual Report contains
translations of certain sterling amounts into or from U.S. dollars at a specified rate. These
translations should not be construed as representations that the sterling amounts actually
represent such U.S. dollar amounts or could be converted into or from U.S. dollars at the rate indicated or at any other rate. Unless
otherwise stated
6
herein, the translations of sterling into or from U.S. dollars have been made at £1.00 to $1.9855, the Noon Buying Rate on March 31, 2008.
The following tables set forth, for the periods and dates indicated, certain information
concerning the Noon Buying Rate for sterling expressed in U.S. dollars per £1.00. The period
average data set forth below is the average of the Noon Buying Rate on the last day of each full
month during the period. On June 30, 2008, the Noon Buying Rate was £1.00 to $1.9906.
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2008 Month Ended
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High
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Low
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January 31
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$
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1.9895
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$
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1.9515
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February 29
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1.9923
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1.9405
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March 31
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2.0311
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1.9823
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April 30
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1.9994
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1.9627
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May 31
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1.9818
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1.9451
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June 30
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1.9938
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1.9467
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Year ended March 31,
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Average
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2004
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$
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1.6926
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2005
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1.8459
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2006
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1.7863
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2007
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1.8932
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2008
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2.0079
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Risk Factors
In addition to the other information contained in this Annual Report, the following factors
should be carefully considered in evaluating the Company and its business. If any of the following
risks actually occur, the Company’s business, financial condition or results of future operations
could be materially adversely affected. The information contained in the following risk factors
concerning the Company’s financial results of operations is based on and assumes presentation in
accordance with IFRS for the years ended March 31, 2008, 2007 and 2006.
Our revenues are largely dependent on sales of CroFab
®
and DigiFab
®
and
payments received under third party collaboration agreements may vary from year to year.
Sales of CroFab
®
and DigiFab
®
accounted for 87% of our total product
sales and 79% of our total revenues in fiscal year 2008. Our revenues will continue to be largely
dependent on sales of CroFab
®
and DigiFab
®
. Any unexpected negative
development with respect to such products (for example, manufacturing or supply delays, sudden loss
of inventory, an unexpected safety or efficacy concern or competition from more effective or less
costly new alternative therapies) that affects sales of CroFab
®
or DigiFab
®
would have a material adverse effect on our financial condition and results of operations.
Much of the potential revenue from our existing and future collaborations will consist of
contingent payments, such as payments for achieving development milestones and royalties payable on
sales of products developed using our technologies or capabilities. The milestone and royalty
revenues that we may receive under these collaborations will depend on the parties’ ability to
successfully develop, market and sell new products. Milestone payments under our collaboration
agreement with AstraZeneca relating to CytoFab
®
accounted for a significant portion of
our cash receipts for fiscal years 2006 and 2008, and we anticipate that AstraZeneca milestone
payments will provide significant revenues in future years. Milestone payments may not be payable
under the licensing agreement in each fiscal year, however, if at all. The timing and amount of
future milestone payments are dictated by the AstraZeneca licensing agreement and are subject to
the ability of AstraZeneca and the Company to achieve certain development targets, regulatory goals and other objectives set forth in the agreement or to
modifications to the development plan or the agreement as may be mutually agreed by Protherics and
AstraZeneca.
7
If the Company is unable to generate sufficient revenues from operations, it will require
additional financing. This financing may not be available at all or, if available, may be on terms
that dilute shareholders’ interests.
The Company will require significant revenue from product sales, collaborative and licensing
arrangements and strategic alliances to fund its ongoing operations. If the Company is
unsuccessful in generating this revenue or this revenue is insufficient to fund proposed projects,
then the Company will require additional financing. Additional financing may not be available to
the Company on favorable terms or at all. If the Company has insufficient funds or is unable to
raise additional funds, it may be required to delay, reduce or cease certain of its programs and
may be unable to continue its operations at its current level, if at all.
Future financings may result in the substantial dilution of shareholders’ interests and may
result in future investors being granted rights superior to those of existing shareholders. For a
discussion of the Company’s liquidity, see “Item 5. Operating and Financial Review and Prospects.”
If the Company fails to obtain adequate intellectual property rights for its products and product
candidates, competitors may be able to take advantage of the Company’s research and development
efforts. The Company may also be subject to claims of intellectual property infringement by third
parties.
The Company’s success will depend, in large part, on its ability to obtain and maintain patent
or other proprietary protection for its technologies, products and processes. If the Company is
not able to obtain patent protection for certain of its products or to secure patents that are
sufficiently broad in their scope, competitors may be able to take advantage of the Company’s
research and development efforts. Legal standards relating to the validity of patents covering
pharmaceutical or biotechnological inventions and the scope of claims made under such patents are
still developing. There is no consistent policy regarding the breadth of claims allowed in
biotechnology patents. The patent position of a biotechnology company is highly uncertain and
involves complex legal and factual questions.
There can be no assurance that competitors will not develop substantially equivalent
techniques or otherwise gain access to the Company’s technologies. The Company may have to
initiate litigation to enforce its patent and license rights. If the Company’s competitors file
patent applications that claim technology also claimed by it, the Company may have to participate
in interference or opposition proceedings to determine the priority of invention. An adverse
outcome could subject the Company to significant liabilities to third parties and require it to
cease using technology owned by, or to license disputed rights from, third parties.
The Company’s success also depends on its ability to operate without infringing the
proprietary rights of third parties with respect to products that facilitate the Company’s ability
to develop and exploit its own products. If infringement occurs, the Company may have to develop
an alternative technology or reach an agreement for the license of the necessary rights from the
third party. Should this be necessary, the Company cannot assure that it can obtain or develop
those technologies or obtain those licenses, and as a result, may be unable to develop and market
its product candidate.
The cost to the Company of any litigation or proceeding relating to intellectual property
rights, even if resolved in the Company’s favor, could be substantial. Some of the Company’s
competitors may be able to sustain the costs of litigation more effectively than the Company
because of their substantially greater resources.
Products in the Company’s development pipeline may fail to generate sufficient revenues to fund
operations.
The Company’s product launches have not generated sufficient revenues to cover all of the
Company’s costs and may not do so in the future. In addition to the products launched, the Company
has a variety of product candidates in various stages of development and will need to undertake
substantial
8
additional research and development and pre-clinical and clinical testing of the Company’s product candidates. These efforts may not result in the development of any further
commercially successful products, in which case the Company may not be able to generate sufficient
revenues to fund operations as currently budgeted, or may be required to scale back operations or
specific projects.
The Company may fail to successfully develop a product candidate for many reasons, including:
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a product candidate fails in pre-clinical studies;
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a potential product is not shown to be safe and effective in clinical trials;
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the Company fails to obtain regulatory approval for the product;
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•
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the Company fails to produce a product in commercial quantities at an acceptable
cost; or
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a product does not gain market acceptance.
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Exchange rate fluctuations may adversely affect the Company’s results of operations and financial
position.
Approximately 82% of the Company’s revenues for the year ended March 31, 2008 were derived
from U.S. customers and are denominated in U.S. dollars, although this proportion has been
substantially higher in previous years. Since the majority of the Company’s expenses are
denominated in British pounds sterling and Australian dollars, the results of operations and
financial condition, as reported in pounds sterling, will be affected by fluctuations in exchange
rates.
The Company enters into hedging agreements to protect against currency exchange risk. However,
this policy may not in all cases be able to manage all the currency transaction risks, particularly
given the volatility of exchange rates and the continued weakness of the U.S. dollar.
The Company has a history of operating losses and may not be profitable on a sustainable basis.
For the fiscal years ended March 31, 2008, 2007 and 2006, the Company had IFRS losses for the
year of £16,742,000, £3,357,000 and £9,488,000, respectively. The underlying losses resulted
principally from costs associated with the manufacture of pharmaceutical products, and the
research, development and clinical testing activities of product candidates. Profitability will
depend on the Company’s ability to generate sufficient revenues from existing product sales,
product candidates that are currently under development and entering into new partnerships for the
licensing of its product candidates, while maintaining existing partnerships. In future years, the
Company anticipates increasing its expenditures relating to the establishment of a sales force,
fulfilling its obligations to AstraZeneca with respect to its CytoFab
®
program, other
manufacturing based projects, and increasing levels of research and development expenditure on its
other products. See “Item 5. Operating and Financial Review and Prospects — C. Research and
Development, Patents and Licenses, etc.”
If the Company is unable to maintain existing or enter into new collaborative arrangements, its
ability to develop and market product candidates will suffer and it may be unable to sustain its
business.
One of the Company’s primary focuses is on the research and development of new pharmaceutical
products, and, therefore, it will be dependent on its existing alliances and new alliances with
third parties to provide development, manufacturing, marketing and sales capabilities. The
Company’s ability to obtain new agreements will depend, in part, on the success of its clinical
trials. Collaborators and licensees have significant discretion over the resources they devote to
these efforts. The Company’s success, therefore, will depend on whether these third parties
perform their
9
responsibilities and devote sufficient resources to collaborations with the Company.
The Company cannot guarantee that:
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it will be able to establish additional collaborative arrangements or license
agreements;
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any collaborative arrangement or agreement will be on favorable terms;
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any existing or future collaborative arrangement or agreement will result in a
successful product and/or generate sufficient revenue; or
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the Company’s collaborative partners will satisfactorily perform their obligations
under the collaborative arrangements.
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In addition, there can be no assurance that the Company’s current or potential collaborators
and licensees will not pursue alternative technologies either on their own or in collaboration with
others, including the Company’s competitors.
If the livestock from which the Company obtains antisera or the reptiles from which the Company
obtains venom develop diseases, the Company may be unable to meet its current or future production
requirements.
The Company currently supplies all of the antisera required for the production of its
polyclonal antibody products from its own flocks of sheep in South Australia. The Company takes
stringent precautions to minimize the risk of animal diseases, including scrapie and other
blood-borne pathogens, which could affect its sheep or the safety of its products. All of the
sheep used by the Company to produce its antisera are located in Australia, where the office of the
Australian Chief Veterinary Officer has acknowledged Australian flocks to be free from scrapie and
certain other transmissible diseases. However, in the event animal diseases affect the Company’s
flocks, the Company may be unable to produce the antisera necessary to manufacture its antibody
products.
The Company currently sources, in part, two of the four venoms used in the production of its
treatment for rattlesnake bites (CroFab
®
) from specimens in captive colonies maintained
by third parties in Kentucky and Florida in the United States. The fourth venom is obtained from
the Company’s own captive colony in Utah. The Company takes stringent precautions by quarantine,
by testing and by veterinary clinical care to maintain captive specimens free of reptile diseases
as certified by consulting veterinarians. However, reptile diseases could adversely affect captive
specimens and the ability to obtain timely supplies of venom.
If the Company is not able to obtain adequate quantities of raw materials from its existing
suppliers or services from external contractors, the Company may not be able to access alternative
sources of supply or services within a reasonable amount of time or at commercially reasonable
rates.
The Company requires supplies of certain raw materials, such as crotalid snake venom, digoxin
and TNF
a
, for use in the development and manufacture of its products and product candidates.
Disruptions in supplies, including delays due to the inability of the Company’s suppliers, or the
Company, to procure raw materials would have a material adverse effect on the Company’s business.
The Company also relies on third party contractors to provide critical services such as the filling
and freeze-drying of product into vials. Problems at contractors’ facilities in the past have
caused delays and disruptions in supplies of the Company’s marketed products and there can be no
assurance the Company will not experience similar delays in the future.
Regulatory requirements for pharmaceutical products tend to make the substitution of suppliers
and contractors costly and time-consuming. The unavailability of adequate commercial quantities,
the inability to develop alternative sources, a reduction or interruption in supply of contracted
services, or a
10
significant increase in the price of materials or services could have a material adverse effect on the Company’s ability to manufacture and market its products or to fill orders
from its distributors, which in turn would have an adverse impact on the Company’s cash flows.
If the Company is unable to comply with stringent regulatory quality controls, there may be delays
in the production and manufacture of the Company’s products.
Production of the Company’s products involves a highly complex manufacturing process. The
Company, in conjunction with the U.S. Food and Drug Administration (“FDA”) and other regulatory
authorities, such as the European Medicines Evaluation Agency (“EMEA”) or the Medicines and
Healthcare Products Regulatory Agency (“MHRA”), applies very stringent quality controls to this
manufacturing process. If any step in the production and manufacturing process fails the quality
control tests, there could be delays in sales of the Company’s products, resulting in a material
adverse effect on the Company’s business.
Regulation by government agencies imposes significant costs and restrictions on the Company’s
business activities.
The production and sale of pharmaceutical products is highly regulated. The Company’s ability
and the ability of its partners to secure regulatory approval for the Company’s products and to
continue to satisfy regulatory requirements will determine its future success. The Company may not
receive required regulatory approvals for its products or receive approvals in a timely manner. In
particular, the FDA and comparable agencies in foreign countries, including the EMEA and the MHRA
in the U.K., must approve human immunotherapeutic and preventive products before they are marketed.
This approval process typically involves lengthy and detailed laboratory and clinical testing,
sampling activities and other costly and time-consuming procedures. While the time required to
obtain approval varies, it can take several years. During the approval process, regulators may
require the submission of additional information or data, which could necessitate further clinical
testing or analysis, or changes to the manufacturing process or facilities, all of which could make
the approval process lengthier and more costly than initially estimated, or even result in
abandonment of an application for approval. Delays in obtaining or the failure to obtain regulatory
approvals or the restriction, suspension or revocation of regulatory approvals could adversely
affect the marketing of products and the Company’s ability to receive product revenues or
royalties. The Company cannot guarantee that it will be able to obtain the necessary marketing
approvals for any products that it may develop.
The Company is currently seeking marketing approval from the FDA and the EMEA for its
Voraxaze
®
product. Applications were submitted to both agencies and subsequently
withdrawn following requests for additional manufacturing data and data regarding the interaction
of Voraxaze
®
with leucovorin. The Company is currently undertaking the work necessary
to generate the additional data needed prior to resubmitting its application to the FDA as a
rolling submission, starting in the second half of 2008. Following feedback from the EMEA, the
Company is investigating the availability of a suitable non-clinical model to support the benefit
of Voraxaze
®
in order that extra data can be generated to support the resubmission of
the MAA in Europe. If either the FDA or EMEA does not accept the Company’s resubmitted
applications, the Company could be required to conduct further clinical trials or modify its
manufacturing processes, which could significantly delay marketing approvals for the product and
require substantial additional expense which the Company may not be able to finance easily, if at
all. See “Item 4. Information on the Company — Products.”
The Company is also subject to ongoing regulatory review. Discovery of previously unknown
problems with a product, manufacturer or facility or other violations of regulatory requirements
may result in suspensions of regulatory approvals, product recalls, fines and criminal prosecution.
For further discussion of regulations and potential penalties, see “Item 4. Information on the
Company—Government Regulation.”
11
Announcements, developments and/or regulatory changes in the biotechnology sector may cause the
Company’s share price to fluctuate.
The market price of the Company’s ordinary shares may be affected by announcements from or
about other companies in the biotechnology sector. Factors that could cause the Company’s stock
price to fluctuate in the future may include:
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announcements by other biotechnology companies of clinical trial results and other
product developments;
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adverse developments in the protection of intellectual property or other legal
matters;
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announcements in the scientific and research community;
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changes in treatment recommendations or guidelines by private health organizations
or science foundations;
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regulatory changes that affect the Company’s products; and
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changes in third-party reimbursement policies or in medical practices.
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Bills are currently pending in both houses of the United States Congress to provide for a
regulatory pathway for FDA approval of so-called “follow-on biologics.” Follow-on biologics refer
to alternative formulations of innovator biologic drugs. Proponents of the legislation argue that
these alternative drugs will promote cost-savings and more choices for patients (similar to the use
of generic versions of small-molecule drugs today). Biotechnology companies caution that any such
legislation must include measures to ensure patient safety and demonstrated effectiveness, and must
instruct the FDA to issue guidance for labeling and interchangeability of products. If new
legislation is ultimately adopted authorizing the FDA to approve follow-on biologics, innovator
biotechnology companies such as the Company could face increased competition from lower cost
products targeted to similar health indications and patient populations as the innovator’s
products.
The Company’s competitors may have greater resources for developing product, and, as a result, may
be able to develop products that are superior to, or less costly to manufacture than, the Company’s
products or product candidates or launch competing products before it does.
The pharmaceutical industry is highly competitive. The Company competes with pharmaceutical
companies in the United States, the United Kingdom, Europe and elsewhere for both its existing
products and those currently under development. Many of these companies have research,
development, marketing, financial and personnel resources greater than the Company’s. Competitors
may develop and receive regulatory approval for a marketable product before the Company does.
Competitors may also develop a product that is more effective or less costly to manufacture than
the Company’s products or product candidates, rendering the Company’s products or product
candidates obsolete. The Company anticipates that it will face increased competition in the future
as new companies enter its markets and alternative drugs and technologies become available.
Third-party reimbursement and health care cost containment initiatives may constrain the Company’s
future revenues.
The Company’s ability to market successfully any product it may develop will depend in part on
the level of reimbursement that government health administration authorities, private health
coverage insurers and other organizations provide for the cost of the Company’s products and related
treatments. The Company may not be able to sell the Company’s products profitably if reimbursement
is unavailable or limited in scope. Increasingly, third-party payers, including governmental
agencies, are attempting to
12
contain health care costs in ways that are likely to impact the Company’s development of products, including:
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challenging the prices charged for health care products;
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limiting both coverage and the amount of reimbursement for new therapeutic products;
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denying or limiting coverage for products that are approved by the regulatory
agencies but are considered experimental or investigational by third-party payors; and
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refusing to provide coverage when an approved product is used in a way that has not
received regulatory marketing approval.
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The Company faces product liability and other operational risks and may not be able to obtain
adequate insurance.
The testing, marketing and sale of the Company’s products involve significant product
liability risks. The Company may be held liable for damages for product failures or adverse
reactions resulting from the use of the Company’s products. Although the Company maintains product
liability coverage, this insurance may not provide adequate coverage against all product liability
claims. Furthermore, in the future, the Company may not be able to obtain insurance on acceptable
terms against product liability and other operational risks such as property damage and business
interruption, and any insurance the Company does obtain may not provide adequate coverage against
any asserted claims or other losses.
ITEM 4. INFORMATION ON THE COMPANY
History and Development of the Company
Protherics PLC (the “Company”), a company incorporated under the laws of England and Wales, is
a biopharmaceutical company engaged in the development, manufacture and sale of pharmaceutical
products largely for the treatment of human diseases. The Company is the result of the September
1999 merger of Proteus International PLC and Therapeutic Antibodies Inc. Therapeutic Antibodies
Inc. was incorporated in Delaware in 1984 with its headquarters in Nashville, Tennessee. Proteus
International PLC was originally founded in 1987 and was incorporated in England and Wales under
the Companies Act 1985 on January 12, 1990. The Company’s ordinary shares are listed on the London
Stock Exchange (LSE:PTI.L) and its American Depositary Shares are listed on the NASDAQ Stock Market
(NASDAQ:PTIL).
In June 2003, the Company acquired Enact Pharma PLC, which provided the Company with both a
potential high margin late stage product and earlier stage research projects. Several of the
non-core research projects were subsequently out-licensed.
In January 2007, the Company acquired MacroMed, Inc., a Utah corporation based in Salt Lake
City, Utah, in order to access its lead product candidate OncoGel
®
which was undertaking
clinical trials and studies in the treatment of esophageal cancer and pre-clinical studies in the
treatment of brain cancer.
The Company’s registered office is The Heath Business & Technical Park, Runcorn, Cheshire, WA7
4QX England. Its telephone number is 011-44-1928-518-000. The Company’s address in the U.S. is
5214 Maryland Way, Suite 405, Brentwood, Tennessee 37027. Its U.S. telephone number is (615)
327-1027.
Business Overview
The Company’s core technology is focused on immunotherapeutics and oncology.
Immunotherapeutics encompasses the use of antibodies to combat the effects of disease or poisoning.
13
This can be done either actively through vaccines or passively by administration of pre-formed
antibodies.
Therapeutic vaccines are an example of active immunotherapy. Unlike traditional vaccines,
which stimulate the body’s immune system to produce antibodies against a potential external
infection, therapeutic vaccines involve immunizing a patient so as to cause the immune system to
produce antibodies against an internal disease-causing substance, thereby treating the patient’s
existing condition. In comparison to other therapeutic approaches, this potentially has
significant benefits, such as specificity of action, avoidance of side effects and long duration of
action between booster doses.
Passive immunotherapeutics include the immediate use of previously produced antibodies in the
treatment of acute-poisoning situations, such as envenomation or drug overdose. There are two
general classes of antibodies for use as immunotherapeutic agents. The first is polyclonal
antibodies, which contain a variety of antibodies directed to different sites, known as epitopes,
on the target molecule. The second type, monoclonal antibodies, consists of a population of
identical antibodies all directed to a single epitope. Protherics’ technology is based on the
former, which may have advantages over monoclonal antibodies in acute-poisoning situations.
The acquisition of Enact Pharma in June 2003 provided the Company with a broader research and
development pipeline and technology platforms, particularly in the area of oncology, with one
product (Voraxaze
®
) being prepared for filing with the regulatory authorities and
currently generating revenues on a named-patient basis and through cost recovery under a Treatment
Protocol in the U.S., and another product (Prolarix™) currently in clinical trials. These products
are treatments for patients with cancer. Voraxaze
®
can reduce some of the toxic effects
of a drug (methotrexate) widely used in cancer therapy, while Prolarix™ is a potential targeted
treatment for solid tumors.
In December 2005, the Company entered into an agreement with AstraZeneca UK Limited for the
development and commercialization of CytoFab
®
as a treatment for the initial indication
of severe sepsis. Under the agreement, the Company received an initial payment of £16.3 million.
In addition, AstraZeneca made a £7.5 million equity investment in Protherics’ ordinary shares at
68.24p per share, a 30% premium to the average mid-market closing price over the three months prior
to the agreement, representing 4.3% of the Company’s issued share capital following the
transaction.
The Company has subsequently received a further £10 million in milestone payments from
AstraZeneca and could receive up to £161 million on the achievement of further milestones and will
also receive royalties on global product sales of 20% of net sales for a minimum of 10 years in
each country in which CytoFab
®
is sold, along with payments in return for the commercial
supply of bulk drug substance and drug product. AstraZeneca is responsible for clinical
development and sales and marketing of CytoFab
®
. The Company is primarily responsible
for drug product manufacturing, including clinical trial material.
The Company has four products generating revenues from sales, one outlicensed technology
generating a royalty revenue stream, the licensing agreement with AstraZeneca outlined above, and
several product candidates in various stages of development.
Operations
The Company has GMP compliant manufacturing facilities in Wales, Australia and Salt Lake City,
Utah. The Company also has administrative, clinical development, commercial and regulatory affairs
facilities in Runcorn, Cheshire in the U.K. and in Nashville, Tennessee, U.S.A. The Company
maintains a corporate office in London.
14
Corporate Partnerships, Collaborations and Joint Ventures
Historically, the Company has entered into licensing and collaborative agreements with
pharmaceutical companies and other entities with established distribution capabilities to market
and develop its products. See “Item 10. Additional Information — Material Contracts.”
Products
The following table lists the Company’s products currently commercially available or under
development:
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Distribution
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Next Significant
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Product
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Principal uses
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Status
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Partner / Licensee
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Milestone
(1)
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Products Commercially Available
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CroFab
®
Crotalidae
Polyvalent Immune
Fab (Ovine)
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Minimal to moderate
North American
crotalid (pit
viper) envenomation
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Launched (U.S.)
Sold on named
patient basis
within E.U.
Sold in Canada
under Special
Access Programme
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Nycomed (acquired
Altana) (U.S.)
Swedish Orphan
(Scandinavia and
Baltic countries)
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—
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DigiFab
®
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Treatment of
life-threatening
digoxin toxicity or
overdose
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Launched (U.S.)
U.K. marketing
authorization
application
submitted August
2004
Sold on named
patient basis where
there is no
approved therapy
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Nycomed (acquired
Altana) (U.S.)
Beacon
Pharmaceuticals
(Europe excluding
Scandinavia and
Germany)
Mayne Pharma
(Australia/SE Asia)
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Outcome of U.K.
marketing application
expected
2008
(2)
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Voraxaze
®
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Adjunctive
treatment for
patients at risk of
methotrexate
toxicity
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Orphan Drug
designation in E.U.
and U.S.
Sold on named
patient basis
within Europe and
supplied under a
Treatment Protocol
in the U.S. with
cost recovery and
in Canada under a
Special Access
Programme
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IDIS (European
named patient
sales)
Swedish Orphan
(Nordic region
named patient
sales)
AAIPharma Inc.
(U.S. treatment
protocol
distribution)
McKesson (Canada)
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Re-submission of
marketing application
to the FDA planned on a
rolling basis starting
2008 and, should
Priority Review be
granted, approval could
be received in
2010.
(3)
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ViperaTAb™
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Vipera berus
(common adder
snake) envenomation
—Northern Europe
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Sold on a named
patient basis
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Swedish Orphan
(Nordic region)
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—
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Enfer TSE Kit
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Detection of Bovine
Spongiform
Encephalopathy
(BSE) in carcasses
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Out-licensed and
generating revenues
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Licensed to Enfer
Scientific Limited
and Abbott
Laboratories, via
Enfer
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—
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15
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Distribution
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Next Significant
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Product
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Principal uses
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Status
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Partner / Licensee
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Milestone
(1)
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Products in Development
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CytoFab
®
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Treatment of severe
sepsis
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Process scale-up to
provide product for
phase 2 and 3
studies now
completed.
First study in
expanded phase 2
program, being
performed by
partner, ongoing
in U.S.
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AstraZeneca
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Results from first
study in expanded
phase 2 program
expected at end of
2008/early 2009.
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Prolarix™ (formerly
NQO2)
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Cancer therapy
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Phase 1 study
sponsored by Cancer
Research UK (CRUK)
in the U.K.
clinically complete
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—
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Phase 2a study in
primary liver
cancer due to
commence 2008 and
report 2009
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Angiotensin
Therapeutic Vaccine
(ATV)
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Hypertension
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Manufacture of
adjuvant and
vaccine for phase
2a clinical study
now complete
Phase 2a clinical
trial ongoing in
U.K.
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Initial results
from Phase 2a
clinical trial
expected in first
half of 2009
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Digoxin Immune Fab
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Pre-eclampsia
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Phase 2b study in
severe
pre-eclampsia in
the U.S. reported
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Licensed from
Glenveigh
Pharmaceuticals LLC
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Outcome of
evaluation by GSK
under Research
Agreement
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OncoGel
®
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Esophageal and
primary brain
cancers
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Phase 2b study in
esophageal cancer
ongoing in U.S.,
E.U. and India
Initial cohort
enrolled into Phase
1/2 study in brain
cancer ongoing in
the U.S.
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Diatos S.A. has
exclusive rights
outside North
America, excluding
Korea
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Initial results
from phase 2b study
in esophageal
cancer expected in
2010.
Dose escalation in
phase 1/2 study in
primary brain
cancer expected in
first half of 2009.
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Acadra™
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B-cell chronic
lymphocytic
leukemia (B-CLL)
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Phase 1/2 study
ongoing in Belgium,
France and Spain
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Co-development with
Advancell
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Part 1 of study
expected to be
completed 2009
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(1)
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Each of the dates of next significant milestones represents the Board of Protherics’
expectations based on progress to date. There can be no assurance, however, that any of these
dates or milestones will be achieved.
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(2)
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See discussion of
DigiFab
®
marketing approvals below.
|
|
|
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(3)
|
|
See discussion of Voraxaze
®
marketing approvals below.
|
Products Commercially Available
CroFab
®
(Crotalidae Polyvalent Immune Fab (Ovine)) is a polyclonal antibody
fragment for the management of minimal to moderate envenomations from North American crotalids (pit
vipers, which includes rattlesnakes, Copperheads and Water Moccasins). It is intended for the
treatment of bites early in the course of poisoning to prevent them from developing into more
severe cases. CroFab
®
was approved by the U.S. Food and Drug Administration (“FDA”) in
2000 and was launched in the U.S. in 2001. It is currently distributed by Fougera, a division of
Nycomed, and is the only product marketed for
16
pit viper bites in the U.S. A Mexico-based company is developing a F(ab)2 product derived
from horse serum targeted to crotalinae envenomation and has recently begun recruiting patients
into a U.S. phase 3 clinical trial, including a comparative study with CroFab
®
. This
product would compete with CroFab
®
in the future if it obtains regulatory approval in
the U.S.
The Company is modifying the manufacturing process which, subject to FDA approval, anticipated
in 2010, is anticipated to improve yields from this product.
DigiFab
®
(Digoxin Immune Fab (Ovine)) is a polyclonal antibody fragment for the
treatment of life-threatening digoxin toxicity or overdose. Digoxin is a widely prescribed drug
for the treatment of cardiac conditions but its effective dose is close to its toxic dose (i.e., it
has a narrow therapeutic window). DigiFab
®
was approved by the FDA in 2001 and launched
in the U.S. in 2002; it is distributed by Fougera, a division of Nycomed. There is one similar
product on the U.S. market, Digibind
®
(GlaxoSmithKline).
A U.K. marketing authorization application was submitted in August 2004 and discussions have
taken place with the MHRA to resolve outstanding issues regarding the basis for approval and the
final response is expected to be submitted in 2008. Assuming the additional information that is
provided is considered satisfactory, approval is anticipated in the second half of 2008 with
subsequent approvals in Europe over the following six to twelve months. In January 2007, the
Company submitted a New Drug Submission to the Health Products and Food Branch of Health Canada for
DigiFab
®
. Marketing approval in Canada is expected in late 2008 or early 2009.
DigiFab
®
is currently being sold on a named patient basis in certain European and other
countries following the transfer of the marketing rights for Roche’s Digitalis Antidot
®
in
November 2006.
ViperaTAb™
is a polyclonal antibody fragment sold on a named patient basis for the treatment
of envenomations from the European common adder
(Vipera berus)
. It is currently distributed in
Sweden, Norway, Finland, Denmark and the Baltic countries by Swedish Orphan AB. The Company has
also supplied ViperaTAb
™
to the U.S. Department of Defense.
Voraxaze
®
(glucarpidase, previously known as carboxypeptidase G2 or CPG2) has been
developed as an adjunctive treatment for patients experiencing or at risk of toxicity following
administration of high doses (> 1 g/m
2
) of methotrexate. Methotrexate is an
established drug in cancer therapy which can cause serious and sometimes life-threatening toxicity
if its elimination from the body is delayed. Voraxaze
®
is an enzyme which rapidly
breaks down methotrexate thereby reducing the time that the patient is exposed to potentially toxic
concentrations. The Company is not aware of any other drug therapies available that can achieve
this. Voraxaze
®
was granted orphan drug status in the E.U. in February 2003 and the U.S.
in August 2003.
In September 2006, the Company submitted a Biological License Application (“BLA”) for
Voraxaze
®
to the FDA in the U.S. This application was withdrawn in November 2006
following a request for additional manufacturing-related information. Following discussions with
the FDA, the Company agreed to perform the additional manufacturing and analytical work required
and three consecutive consistency batches will be manufactured in the second half of 2008 by our
manufacturing partners, Eurogentec (drug substance) and Cangene (drug product).
Discussions were also held with the FDA regarding the interaction of Voraxaze
®
with
leucovorin, the standard supportive therapy given with high dose methotrexate therapy. The Company
is undertaking a small clinical study to further characterize a drug-drug interaction between
Voraxaze
®
and leucovorin.
The FDA has granted Voraxaze
®
a Fast Track Designation for the rapid and sustained
reduction in toxic methotrexate levels in patients with impaired renal function. The FDA has also
agreed to the Company resubmitting its application as a rolling submission. This will enable the
FDA to review sections of the application while the Company collects the additional manufacturing
and clinical data
although it is not obligated to do so. The Company plans to begin submitting a rolling BLA in
the second
17
half of 2008, leading to a potential marketing approval in the U.S. in the first half of
2010 if Priority Review is granted by the FDA.
In May 2007, the FDA granted the Company permission to supply Voraxaze
®
in the U.S.
under a Treatment Protocol, prior to marketing authorization being granted, and to charge for its
supply, providing for recovery of some of the costs associated with the development and supply of
Voraxaze
®
. Revenues from this cost recovery program are anticipated to continue until
the approval of the BLA in the U.S. AAIPharma Inc. is the Company’s distributor for Voraxaze
®
in the U.S. Voraxaze
®
was previously available for use in the U.S. under a
protocol sponsored by the National Cancer Institute (“NCI”).
Named patient sales of Voraxaze
®
commenced in Europe and elsewhere outside the U.S.
in January 2004 and are distributed principally by IDIS, although alternative distributors cover
certain territories.
A Marketing Authorisation Application (“MAA”) for the use of Voraxaze
®
as an
intervention treatment, for patients experiencing or at risk of methotrexate toxicity from delayed
elimination, was submitted in the E.U. in July 2005. The EMEA requested additional manufacturing
data, similar to that requested by the FDA, and further data regarding the interaction between
Voraxaze
®
and leucovorin. As these data could not be provided within the timeframe
available under the Centralized Procedure, the MAA was withdrawn in May 2007. Following feedback
from the EMEA, the Company is investigating the availability of a suitable non-clinical model to
support the clinical benefit of Voraxaze
®
in order that extra data can be generated to
support the resubmission of the MAA in Europe.
Protherics will continue to supply Voraxaze
®
in the E.U. on a named patient basis
for intervention use in patients at risk of severe or life-threatening methotrexate toxicity due to
delayed elimination of methotrexate following high dose methotrexate therapy.
The company has initiated two small investigator-led clinical studies to investigate the
safety and efficacy of Voraxaze
®
when it is used in a planned way with successive cycles
of high dose methotrexate therapy; in previous studies, Voraxaze
®
has been given with
only a single cycle of methotrexate. If these studies are successful, the data from them will be
used to develop a clinical program to expand the indications for Voraxaze
®
into the
potentially much larger repeated planned use market.
Enfer TSE Assay (BSE Diagnostic Test)
. There is a significant public concern in Europe and
North America with respect to bovine spongiform encephalopathy (“BSE”), colloquially known as “mad
cow disease.” The Company licensed its intellectual property in transmissible spongiform
encephalopathy (“TSE”) diagnosis in animals to Enfer Scientific Limited in 1997 and Enfer developed
a post-mortem kit to test carcasses for BSE. The test received approval in the E.U. in 2001.
Enfer uses the kit itself to test carcasses in Ireland and also sells it to third parties. In 2001
Enfer entered into an agreement with Abbott Laboratories to market the test in other territories
and in April 2004 Abbott received approval from the U.S. Department of Agriculture (“USDA”) to sell
the test kit in the U.S., although the USDA does not, as yet, require routine testing of cattle.
In February 2005, Enfer received approval in the E.U. for an improved version of its test kit.
Enfer’s test kit is now one of at least 12 rapid tests approved in the E.U. for monitoring of BSE
in bovine animals and one of at least eight approved for the monitoring of ovine and caprine
animals.
Products in Development or Research
CytoFab
®
is based on the same polyclonal antibody technology as CroFab
®
and
DigiFab
®
and binds TNF
a
, a cytokine involved in inflammation. It has been developed
to treat sepsis, a disease that affects about 750,000 people per year in the U.S. and which has a
mortality rate in excess of 30%. There is only one product approved for the treatment of sepsis,
Eli Lilly’s Xigris
®
, but, because of its safety profile, its use is restricted to a
subset of sepsis patients.
18
A phase 2b study with CytoFab
®
has been completed by the Company with significant
reductions observed in the time patients spent in the intensive care unit and on mechanical
ventilation relative to placebo, with a trend to improved survival. Protherics has held two
end-of-phase 2 meetings with the FDA, one in September 2003 to discuss the phase 3 program and the
other, in October 2003, to discuss the manufacture of the product.
In December 2005, the Company announced the signing of a licensing agreement with AstraZeneca
for the global development and commercialization of CytoFab
®
. Under the terms of the
agreement, AstraZeneca will undertake all clinical development work for the product and Protherics
will be primarily responsible for bulk drug manufacturing, including the supply of clinical trial
material. On signing, AstraZeneca made an initial payment of £16.3 million to Protherics along
with a £7.5 million equity investment in Protherics. The Company has subsequently successfully
scaled up the CytoFab
®
manufacture to a 600 liter batch size and shown batch to batch
consistency, which triggered a £10.0 million milestone in March 2007. The process has now been
scaled up to 3,000 liters. The agreement with AstraZeneca has a potential total value to
Protherics, based on up-front and milestone payments alone, of approximately £186 million.
Protherics will also receive royalties on global product sales of 20% of net sales, during the
period of the license, in addition to payments in return for the commercial supply of bulk drug
substance and drug product.
In November 2006, following consultations with regulators in the U.S. and E.U., AstraZeneca
announced its intention to expand the clinical development plan for CytoFab
®
in severe
sepsis, with the addition of a phase 2 program which will consist of two separate studies in
patients with severe sepsis. The first study, which is underway, is designed to assess the safety,
tolerability, pharmacokinetics and pharmadynamics of CytoFab
®
produced by the new
manufacturing process. It will enroll up to 70 patients across multiple sites in the U.S. and is
expected to report towards the end of the year or early in 2009. Following the successful
completion of this study, AstraZeneca intends to begin a second study to assess both the safety and
efficacy of CytoFab
®
in a much larger patient group. The Company will receive its next
milestone payment of £10 million from AstraZeneca upon the start of a phase 3 study which is
anticipated in 2010.
Prolarix
TM
(formerly NQO2) was also acquired by the Company when it acquired Enact
Pharma. It is a small molecule-based chemotherapy involving the coadministration of a prodrug,
tretazicar (formerly CB 1954) with a cosubstrate, caricotamide (formerly EP-0152R). The enzyme NQO2
has elevated activity in certain tumors, in particular primary liver cancer (hepatocellular
carcinoma or HCC), offering a potentially selective therapeutic effect. HCC is a devastating cancer
which kills around 500,000 patients each year globally and, despite recent approvals of Sorafenib
(Nexavar
®
, Onyx/Bayer), life expectancy for HCC patients remains less than twelve months
from diagnosis. Prolarix
TM
may also have a role in the treatment of other solid tumors,
such as ovarian cancer and melanoma, providing a wider potential market opportunity for the drug.
A phase 1 study in patients with solid tumors, designed to identify the doses of both
tretazicar and caricotamide to take forward into phase 2 based on safety and pharmacokinetics, has
been completed in the U.K. under the auspices of Cancer Research UK and the Company is awaiting the
final study report. The dose of caricotamide was fixed early in the study and the Company
announced in July 2007 that the maximum tolerated dose tretazicar has been reached. The
anticipated reductions in the levels of tretazicar in the blood have been observed in the presence,
but not the absence, of caricotamide, providing some evidence that it is being converted to the
active cytotoxic agent by NQO2.
The Company plans to start a phase 2 program shortly to investigate tumor responses in the
lead indication of HCC. This phase 2 program will comprise an open-label run-in phase 2a study to a
larger controlled study in which Prolarix
TM
will be added to Sorafenib and compared to
Sorafenib alone. The open-label study should provide an early indication of potential efficacy in
HCC patients and results are expected from this study in early 2009.
19
Angiotensin Therapeutic Vaccine (“ATV”)
is being developed by the Company for the treatment of
high blood pressure (hypertension). Although hypertension can be treated with oral therapies,
because people with mild to moderate hypertension generally feel well, compliance with such
treatments is very poor. It is estimated that 70% of patients fail to take their medication as
prescribed. As hypertension is a major factor in stroke and heart disease, failure to control
blood pressure can have serious consequences. The Company is developing a vaccine designed to
maintain control of blood pressure with only periodic injections. The vaccine produces antibodies
to angiotensin, one of the hormones involved in the regulation of blood pressure.
ATV has been evaluated in a series of studies and effects on the renin-angiotensin system, but
not blood pressure, have been observed in patients with hypertension. In order to stimulate the
immune system to produce more antibodies to angiotensin, which is expected to result in a reduction
in blood pressure, several different formulations of the vaccine, containing novel adjuvants, have
been investigated.
One of the formulations, containing a proprietary adjuvant developed by CoVaccine BV,
increased the antibody response in animals by about 10-fold relative to the formulation used in the
previous clinical study which contained alhydrogel as adjuvant. In June 2006, the Company acquired
the adjuvant from CoVaccine BV. The Company has completed the non-clinical safety testing and
manufacturing scale up of the CoVaccine HT™ adjuvant required to support a phase 2 clinical study.
The Company began a phase 2a study in June 2008 with the new formulation of ATV with CoVaccine
HT. The goal of this study is to confirm that the new formulation increases levels of
anti-angiotensin antibody response sufficiently to cause a reduction in blood pressure in
hypertensive patients. With proof of concept data at the end of this phase 2a study, the Company
intends to out-license the program to a pharmaceutical company with a franchise in the global
anti-hypertensive market, currently estimated at more than $30 billion annually. Additionally, the
adjuvant is attracting interest from several possible partners for other programs.
One other company (Cytos Biotechnology AG, Switzerland) is known to be developing a vaccine
for hypertension that would compete directly with the Company’s ATV and reported recently that its
angiotensin vaccine, CYT006-AngQb, caused a statistically significant reduction in blood pressure
and was well tolerated when three injections were administered. Cytos is now evaluating the safety
of five injections in an additional clinical study.
OncoGel
®
is a novel, locally administered, sustained-release injectable formulation
of paclitaxel, an established chemotherapeutic for the treatment of solid tumors. It is designed
for local administration to a tumor, where it is able to deliver high concentrations of paclitaxel
for up to six weeks. OncoGel
®
is being investigated in two lead indications, esophageal
and primary brain cancers.
A major goal of current therapy in esophageal cancer is to control loco-regional disease as
such control has been shown to improve overall survival of patients who subsequently undergo a
potentially curative surgery. Patients currently receive pre-operative chemo-radiotherapy to help
control spread of the tumor but, despite this, there remains a large unmet need for a more
effective therapy.
A phase 2a study in inoperable esophageal cancer in which OncoGel
®
was given with
external beam radiation for the treatment of dysphagia has been completed in Europe and the U.S.
In this study, OncoGel
®
was injected directly into the primary tumor; it reduced tumor
bulk in the majority of patients. In future studies this may allow more patients to become
candidates for surgical resection, in addition to improving the management of the cancer. In
January 2008, the Company initiated a randomized multinational phase 2b study to evaluate
OncoGel
®
administered in combination with pre-operative chemo-radiotherapy compared to
pre-operative chemo-radiotherapy alone in 124 patients with esophageal cancer. The primary endpoint
of the study is a blinded assessment of tumor response, with overall
20
survival a secondary endpoint. The Company expects to have data available from the phase 2b
study in 2010.
Treating brain cancer is extremely challenging due to the inability of most chemotherapeutic
agents to cross the blood-brain barrier. Where feasible, the primary therapy for patients with
primary brain tumors is surgical debulking. OncoGel
®
is being developed for the
treatment of primary brain cancers, such as glioblastoma multiforme (“GBM”).
OncoGel
®
has demonstrated encouraging dose-dependent activity in non-clinical
models of brain cancer. A phase 1/2 study of OncoGel
®
in recurrent GBM is ongoing. The
aim of the study is to investigate the safety and tolerability of OncoGel
®
when
administered into the cavity produced after a tumor is surgically removed. Data from this study
will determine the dose to be used in future studies of patients with GBM. Following observations
of fluid accumulation in the three patients dosed in the first cohort to be treated, patients
treated in the next cohort in the study will receive a lower dose volume and will have a drain
surgically inserted to allow the easy removal of any fluid that accumulates in the brain. The FDA
has requested additional non-clinical safety data prior to further dose escalation in the study.
These data are expected to be available in the first half of 2009.
Acadra
TM
(formerly Acadesine) is a nucleoside analogue that could be a promising
new therapy for the treatment of B-cell chronic lymphocytic leukemia (B-CLL), a hematological
cancer where B-cells accumulate due to their increased survival. Unlike existing chemotherapies for
B-CLL, Acadra
TM
has been shown ex-vivo to selectively kill B-cells, while having only
minimal toxicity to T-cells. This selectivity for B-cells means that Acadra
TM
has the
potential to reduce the risk of serious infection and other side effects seen with current
chemotherapies.
B-CLL is the most frequently occurring type of leukemia in the western world and accounts for
about 40% of all leukemias in those over 65 years of age. It is very rare in those below the age of
30 years and it follows an extremely variable course with overall survival times ranging from
months to decades. B-CLL is considered incurable but temporary remission can be achieved with
chemotherapies such as chlorambucil (Leukeran
®
, GSK), fludarabine (Fludara
®
,
Bayer) or cladrabine (Leustatin
®
, Ortho Biotech) and the monoclonal antibodies,
alemtuzumab (Campath
®
, Genzyme and MabCampath
®
, Bayer) or rituximab
(MabThera
®
, Roche), either given alone or in combination.
Acadra
TM
was well tolerated when previously studied in 2,000 patients for an
unrelated indication. The Company and its co-development partner, Advancell, have initiated a phase
1/2 study of Acadra
TM
in patients with recurrent or refactory B-CLL. The study is being
undertaken in Belgium, France and Spain and will enroll up to 30 B-CLL patients. Part 1 of the
study is an open-label assessment of the safety and tolerability of escalating single doses of
Acadra
TM
followed, in part 2, by an assessment of up to five repeated doses. Part 1 of
the study is expected to be completed in 2009, with the intention of providing initial evidence of
a potential selective effect.
Pre-eclampsia Indication/Digoxin Immune Fabs
, such as the Company’s DigiFab
®
and
GlaxoSmithKline’s Digibind
®
, may have potential in the treatment of pre-eclampsia.
Pre-eclampsia is a life-threatening complication that occurs in about 5-8% of pregnancies in the
U.S. Pre-eclampsia is generally characterized by high blood pressure and if left unmanaged, can
lead to renal failure, eclampsia and death of the mother. It can also result in early delivery of
the baby, resulting in development abnormalities or death of the baby. It is a major cause of
admissions to neonatal intensive care units. There are no approved therapies available and few
products in development to specifically treat pre-eclampsia.
The cause of pre-eclampsia has not been conclusively identified. However, several vasoactive
substances called endogenous digoxin-like factors (EDLFs) have been found in the blood and placenta
of women with pre-eclampsia. These EDLFs rapidly disappear following the delivery of the baby,
coincident with the disappearance of the symptoms of pre-eclampsia. Digoxin Immune Fabs have been
21
found to bind to known EDLFs in vitro and may therefore have potential application in the
treatment of pre-eclampsia through their neutralization and removal from the body.
In April 2008, the Company reported the headline results from the phase 2b (“DEEP”) study
which investigated the use of Digibind
®
in 51 patients with severe pre-eclampsia. In
this small study, one of the two primary endpoints was met when the deterioration in kidney
function during the 24-48 hours period of treatment was found to be significantly less (p<0.05)
in patients receiving Digibind
®
than in patients receiving placebo. However, there was
no significant difference for the other primary endpoint, the use of anti-hypertensive drugs, in
this study.
The clear effect on kidney function seen in the DEEP study provides support for
Digibind
®
having a pharmacological effect in a serious condition for which there is no
approved therapy. The Company is in discussion with the other stakeholders in the program,
including GlaxoSmithKline, to decide the potential next steps.
Principal Markets
The Company operates in the United Kingdom, the United States and Australia, and its revenues
are largely attributable to its core technology of immunotherapeutics and Voraxaze
®
named patient sales and Cost Recovery revenues. In fiscal year ended March 31, 2008, revenue
of £2,075,000 (2007: £2,213,000, 2006: £701,000) was recognized, under the Company’s revenue
recognition policy, from the initial £16,300,000 payment received from the license agreement with
AstraZeneca. In fiscal year ended March 31, 2007 a £10,000,000 development milestone was also
recognized in relation to this contract. The table below shows a breakdown of revenues, under
IFRS, by geographical market for each of the last three fiscal years.
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2008
|
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2007
|
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2006
|
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£’000
|
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£’000
|
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£’000
|
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United Kingdom
|
|
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2,126
|
|
|
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1,983
|
|
|
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1,202
|
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Rest of Europe
|
|
|
1,097
|
|
|
|
277
|
|
|
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554
|
|
|
North America
|
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22,749
|
|
|
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28,809
|
|
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15,893
|
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Rest of the World
|
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95
|
|
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|
50
|
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60
|
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26,067
|
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31,119
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17,709
|
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Competition
The pharmaceutical industry is highly competitive, as evidenced by the range of existing drug
therapies. The Company competes with established pharmaceutical companies as well as
biopharmaceutical companies acting independently or in collaboration with established
pharmaceutical companies. In addition, public and private academic and research institutions and
certain governmental agencies also compete with the Company in the research and development of
therapeutic products and in recruiting qualified scientific personnel.
Competition among products will be determined by, among other things, efficacy, safety,
convenience, reliability, price, geographical location and patent position. Competing products or
product candidates and their manufacturers are discussed in respect to each of the Company’s
principal products under “Item 4. Information on the Company — Products.”
Seasonality
Demand for the Company’s CroFab
®
rattlesnake antivenin product is subject to
seasonal fluctuations. In the U.S., demand for snakebite antivenins peaks during the spring and
summer months. Hospitals and clinics typically place orders in the first 3 months of the year in
anticipation of the “biting
22
season” and for the following 6 months which constitute the season. Orders for
CroFab
®
rattlesnake antivenin product are usually highest during these months.
Sources and Availability of Supplies, Consumables and Raw Materials
The Company currently supplies all of the antisera used in the manufacture of its products
from its own flocks of sheep. In addition, the Company relies on certain outside suppliers of key
raw materials and consumables. Specifically, the Company purchases a significant proportion of
crotalid snake venom for use in the manufacture of its CroFab
®
product, Digoxin for the
manufacture of its DigiFab
®
product and purification columns used in the manufacture of
both CroFab
®
and DigiFab
®
. Certain supplies, consumables and raw materials
are purchased from single sources. See “Item 3. Key Information — Risk Factors.”
Intellectual Property, Patents and Trademarks
The Company’s policy is to protect and defend the intellectual property associated with its
technology and products, principally through patent protection. Internally, the Company has
implemented measures to protect its proprietary technology and trade secrets, such as requiring all
employees, consultants and third party collaborators to execute confidentiality agreements and,
where appropriate, assignments of rights to proprietary inventions arising out of the employment or
consulting relationship.
The Company has optimized the production and purification of polyclonal antibodies and has
developed extensive proprietary knowledge in this area, combining scientific, veterinary and
large-volume processing skills. The Company has been granted patents, and has applied for
additional patents, in the United States, Europe and other relevant jurisdictions covering several
aspects of its process techniques.
The Company holds or licenses the rights to a number of U.S. and foreign patents and patent
applications, the most material being:
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•
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Transmissible Spongiform Encephalopathies — The Company has been granted patents
for its transmissible spongiform encephalopathy diagnostic technology in the U.S.,
Europe (European Patent Office or “EPO”), South Africa, Australia and New Zealand.
These patents will expire between 2012 and 2015. The European patent was granted in
1999 and underwent opposition, on which a recent appeal decision was issued in favor of
the Company. The Canadian patent application has now been accepted and should proceed
to grant shortly. Patent applications are pending in the U.S. (divisional) and Japan,
claiming a priority date of December 3, 1991. The first U.S. divisional patent was
granted on April 30, 2002.
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A further application directed towards new variant Creutzfeldt-Jacob Disease was filed
in January 2004 and PCT, Argentine and Malaysian applications were filed in January
2005. The PCT application national phase was entered in 2006 and there are now also
pending applications in Australia, Brazil, Canada, China, India, Japan, Republic of
Korea, Mexico, New Zealand, Singapore, South Africa, the U.S. and Europe;
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•
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Angiotensin vaccine — The Company has pending patent applications for angiotensin
peptide analogues and vaccine uses in Canada, Japan, the U.S., and Argentina, all
claiming a priority date of June 24, 1997. The New Zealand, Australian, United States
and EPO (the parent application) patents have now been granted. A divisional patent
application is pending in the EPO with further U.S. divisional applications in process
or planned;
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•
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Anti-TNF
a
antibodies — The Company has been granted U.K., U.S., Canadian,
Japanese, EPO, New Zealand and Australian patents for use of Fab fragments of
anti-TNF
a
antibodies
|
23
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in medicine, particularly for the use in the treatment of sepsis. The EPO patent is
being maintained in France, Germany, Italy and Spain. The majority of these patents
expire in 2014, although the U.S. patent is due to expire in 2018;
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•
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Mixed monospecific polyclonal antivenins — The Company has been granted EPO, United
Kingdom, Australian, Japanese, Russian Federation, and United States patents on the use
of mixed monospecific polyclonal antivenins. These patents are projected to expire on
April 24, 2012, other than the Australian patent, which is expected to expire on April
24, 2008, and the United States patent, which is expected to expire on December 21,
2021;
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•
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Fab polyclonal antivenins — The Company has also applied for a U.S. patent for the
Fabantivenins, the prosecution of which is ongoing following a successful appeal to the
U.S. Court of Appeals for the Federal Circuit district court in 2007;
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•
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Prolarix™ (formerly NQO2) — The Company has filed patent applications in the EPO,
U.S., Japan, Canada, U.K., and Hong Kong around using NQO2 to activate prodrugs in the
presence of an added co-factor. The priority date for filing is June 1997 and the
filing date is June 15, 1998; the expected expiry date for any patents is June 15,
2018. Patents have been granted in the U.K., the U.S., Hong Kong and the EPO.
Divisional applications are pending in the U.S. and at the EPO;
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•
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CoVaccine HT adjuvant — In June 2006, the Company acquired the patent applications
and trademarks associated with CoVaccine HT adjuvant from CoVaccine B.V. The patent
family includes Canada, China, Japan and the U.S. The effective date of filing of the
PCT application is November 30, 2000, and this application claims priority from an
earlier EPO application, filed on November 30, 1999. Patents are currently granted in
Europe, China, New Zealand and Australia with remaining applications pending.
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OncoGel
®
— The Company has been granted patents for injectable
formulations of paclitaxel in the U.S., EPO, Argentina, China, Australia, South Africa,
Russian Federation, New Zealand, and Korea. These patents claim a priority dates of
October 3, 1997 and October 1, 1998, and are projected to expire in 2017 and 2018.
Applications involving this technology are currently pending in Japan, Israel, Europe,
Brazil, Canada, Poland, and Norway.
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Treatment of Pre-eclampsia — The Company has patent applications directed to
treatment of pre-eclampsia using digoxin antibodies (e.g., DigiFab
®
) which
are pending in the U.S., EPO, Australia, Canada, China, Japan, Mexico, Norway, South
Africa, and India. These applications claim priority of July 25, 2002. A
continuation-in-part application was filed in the U.S. on December 23, 2005 claiming
priority to a U.S. provisional application filed May 17, 2005, and a corresponding
P.C.T. application was filed May 14, 2006.
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Acadra™ — In December 2006, the Company entered into a license to use patent
applications associated with Acadra™. The patent family includes the principal
territories of Europe, Canada, Japan and the U.S. and is maintained by the Company’s
development partner, Advanced In Vitro Cell Technologies S.L.
|
We rely on patent protection against use of our proprietary products and technologies by
competitors. The patent positions of biotechnology firms generally are highly uncertain and
involve complex legal and factual questions. There can be no assurance that our patents or
licensed patents will afford sufficient legal protections against competitors or provide
competitive advantages. Our patents could be held invalid or unenforceable by a court or
infringed or circumvented by other parties, or others could obtain patents that we would need to
license or circumvent. Competitors or potential competitors may have filed patent applications
or received patents and may obtain patent protection and proprietary
24
rights relating to biological compounds or processes competitive with ours. Competitors may
also claim that their patent rights prevent us from commercializing our products in certain
territories.
Third Party Patent Rights
Rockefeller University had a European patent which could be construed to cover use of
anti-TNF
a
antibodies which has now been revoked. Rockefeller University also holds patent
rights related to this revoked European patent in the U.S., Australia and Japan. The Board believes
that due to the precise nature of most of these patent rights in Australia and the U.S., commercial
exploitation of CytoFab
®
in these territories will not infringe any valid claims of
these patents. In any event, the Australian and Japanese patent rights were to have expired in
August 2006, unless they were the subject of patent term extensions. The Company is aware of U.S.
patents granted to Rockefeller University in October 2001 and July 2002 relating to a neutralizing
antibody to a mediator substance which, if valid, could be used to restrict the Company’s
development of anti-TNF
a
products, including CytoFab
®
in the U.S. The Company has
an opinion from its U.S. patent attorney that CytoFab
®
does not infringe the claims of
these patents. The Company has specific patents in the U.S. and other territories covering the use
of Fab fragments of anti-TNF
a
antibodies, as summarized above.
The Company is aware of two U.S. patents granted in August 1997 and August 1998 in the name of
Genentech, Inc. (“Genentech”) that cover anti-TNF
a
antibodies. One patent relates to a
TNF
a
antagonist comprising an antibody that neutralizes cytotoxic activity of human
TNF
a
. There are also claims to Fab fragments of a variable region of the antibody. The
second patent relates to a method of treatment of graft versus host reaction that comprises
administering to a patient a therapeutically effective dose of a TNF
a
antagonist. If valid,
these patents could be used to restrict the Company’s development of anti-TNF
a
products,
including CytoFab
®
, in the U.S. and other territories in which equivalent rights exist.
However, the Company has obtained opinion from a U.S. patent attorney that the claims of the former
patent are invalid over the prior art, and that it is arguable that the claims of the latter are
similarly invalid.
The Company has identified a series of patents (e.g. European and Australian) that correspond
to the Genentech anti-TNF
a
antibody patents, and a Dainippon European patent, relating to
human recombinant TNF
a
. These patents contain claims to certain forms of recombinant human
TNF
a
and consequently they could, if valid, be used to restrict the Company’s use of
recombinant human TNF
a
(in the form claimed by the patents) to produce anti-TNF
a
antibodies in the territories in which the patent is maintained. The Company has taken steps to
ensure that its supplier of TNF
a
is appropriately licensed under the patents. In any event,
these patents have now expired. Supplementary Protection Certificates are in force in some
European territories, but it is believed that these do not cover the Company’s use of TNF
a
.
Additional patents and applications are in existence, which could limit the commercialization
of CytoFab
®
. These include patents, or patent applications, in the names of Peptide
Technology, Centocor, Kennedy Institute, Abbott (formerly Knoll) and Unisearch. The Company has
taken advice from its patent attorneys, and the progress of the patent applications is being
monitored. The Directors believe that, overall, these patents and applications will not inhibit
the use of CytoFab
®
in the treatment of sepsis. The Company has opposed an Australian
patent application and a European patent, both in the name of Abbott, which relate to the use of
TNF antagonists to treat sepsis in patients with particular IL-6 levels, with a view to preventing
the Australian application proceeding to grant and getting the European patent revoked. In
response to the opposition, Abbott withdrew the Australian patent application. There has been no
substantive response to the opposition by Abbott, and the U.K. part of the European patent has
ceased.
25
Trademarks
The Company has registered a number of active trademarks in various jurisdictions, the most
material of which are specified below:
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•
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CroFab
®
in the U.S.;
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CytoFab
®
in the United Kingdom, Europe and the U.S.;
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•
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CytoTAb™ in the United Kingdom;
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DigiFab
®
in the U.S. and Europe;
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DigiTAb™ in the United Kingdom;
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ViperaTAb™ in the United Kingdom;
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•
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Voraxaze
®
in the U.S. and Europe;
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OncoGel
®
in the U.S.;
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•
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Prolarix
®
in Europe, Japan and Australasia;
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ReGel
®
in the U.S.
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•
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Doloryn
®
in the U.S.; and
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CoVaccine™ in Europe
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In addition, applications to register the following active trademarks are currently pending:
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Prolarix™ in the U.S.; and
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Acadra™ in the U.S., Europe and Japan
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GOVERNMENT REGULATION
General
Regulation by government authorities in the U.S., Europe and other countries in which the
Company operates is a significant consideration in the development, production, marketing, labeling
and reimbursement of its products and in the continuation of its research and development
activities.
In the U.S., Europe and most other countries, in order to market and sell biological products,
drugs, medical devices and diagnostic products, there is a requirement to obtain and to maintain an
approval for the relevant product from the appropriate regulatory authority, referred to as a
marketing authorization. The Company is also subject to various laws, regulations, policies,
guidelines and recommendations relating to such matters as safe working conditions, laboratory and
manufacturing practices, the experimental use of animals and the protection of the environment.
Furthermore, there has been a general trend towards greater regulation of the pharmaceutical
industry and its products.
The submission of a marketing authorization application to a regulatory authority does not
guarantee that an authorization will be granted. Regulatory authorities require substantial data in
connection with marketing authorization applications, resulting in a lengthy approval process. The
time
26
taken to obtain such approval varies depending upon the countries concerned and the nature of
the product, but can take from a few months to several years following application and can involve
substantial expenditure. This may be due to:
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the lack of necessary results/data required by regulatory authorities;
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•
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the changing or adding of regulation; or
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new scientific standards or other scientific developments arising during the
application process.
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Furthermore, regulatory authorities of different countries may impose differing requirements
and may refuse to grant approval, or may require additional data before granting an approval, even
though the product may have been approved by the regulatory authority of another country. Even if
approval is obtained, failure to comply with present or future regulatory requirements, or the
emergence of new information reflecting adversely upon the safety or effectiveness of the approved
product, can lead the regulatory authority to suspend, vary or withdraw its approval to market the
product.
In the U.S., the principal regulatory agency is the FDA. Nearly all other countries have
similar national regulatory authorities. The Company may have to satisfy different requirements
from the FDA, European regulatory authorities and other national regulatory authorities. There is
an ongoing initiative, the International Conference on Harmonization (“ICH”), among representatives
from Japan, the United States and the E.U., to limit regulatory differences where possible.
Considerable progress has been made through the ICH process, resulting in the issuance of a wide
range of agreed pre-clinical and clinical guidelines.
In Europe, the Company must take into consideration:
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(a)
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the regulatory climate within the E.U., including the influence of the
International Conference on Harmonization, and the approach of the European Medicines
Evaluation Agency and European Commission, as well as
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(b)
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the position of the national regulatory authorities in the E.U. member states.
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Recognizing global regulatory differences, wherever practical, the Company intends to design
pre-clinical and clinical protocols which should generate sufficient data of a quality that will be
acceptable to support applications for the same product in each country where it is intended to be
marketed.
Price Regulation
In some countries it is necessary to obtain approval for the price to be charged for a
medicinal product or device. This is true in a number of E.U. member states. In the United Kingdom,
the launch price of pharmaceuticals is set by the manufacturer but is subject to certain
constraints including, in the case of branded pharmaceutical products sold to the United Kingdom
National Health Service, the Pharmaceutical Price Regulation Scheme which limits price increases on
those products.
Governments may also influence the product price through the control of national healthcare
systems and organizations which may bear the cost of supply of such products. In the United States,
government-funded or private medical care plans can influence prices, and there are a variety of
indirect controls.
27
United States Regulation
Regulatory Authorities
— The production and marketing of the Company’s products and its
research and development activities are subject to regulation by federal and state governmental
authorities in the United States. Although most states maintain one or more agencies with power to
regulate products, they commonly defer to the federal agencies discussed below in matters relating
to the development, production, marketing, labeling and reimbursement of products.
FDA Regulation
— Biological products, drugs, medical devices and diagnostic products are
subject to rigorous review by the FDA. The Federal Food, Drug and Cosmetic Act, the Public Health
Service Act and other federal statutes and regulations govern or influence the testing,
manufacture, safety, efficacy, labeling, storage, record keeping, approval, advertising and
promotion of such products. Product development and approval within this regulatory framework takes
a number of years, involves the expenditure of substantial resources and is commercially risky.
Many products ultimately do not reach the market because of toxicity or lack of effectiveness as
demonstrated by required testing. Total development time for successful compounds often exceeds 10
years. However, under the provisions of recent legislation, the FDA has committed to reduce the
review time for applications. Although the agency has achieved some reductions, especially for
high-priority medicines, the review process remains lengthy and complex. There has been little or
no reduction in the testing required before applications are submitted, which consumes most of the
time spent in developing new medicines for the United States market. In addition, there can be no
assurance that this regulatory framework will not change or that additional regulations will not
arise at any stage of product development that may affect approval, delay an application, or
require additional expenditures.
The steps required before a pharmaceutical product may be marketed in the United States
include:
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(a)
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pre-clinical laboratory testing;
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(b)
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submission to the FDA of an investigational new drug application which must
become effective before human clinical trials may be commenced;
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(c)
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adequate and well-controlled human clinical trials to establish the safety and
efficacy of the drug;
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(d)
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submission of a new drug application or biological license application to the
FDA; and
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(e)
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FDA approval of the new drug or biological license application prior to any
commercial sale or shipment of the drug.
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Good Practice Standards
— Various standards are applied either by law or custom to the
activities of pharmaceutical companies. These include principally:
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Good Laboratory Practice, applied to studies performed during pre-clinical
developments to identify the compound’s behavior and toxicity in animals;
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Good Clinical Practice, intended to ensure the quality and integrity of clinical
data and to protect the rights and safety of human subjects in clinical trials; and
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Good Manufacturing Practice, intended to ensure the quality of drugs by setting
minimum standards for all drug manufacturing facilities.
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The Company has used consulting firms in the United Kingdom and in the United States for
advice on compliance with existing regulations and guidelines.
28
Clinical Testing
— Clinical testing of new compounds in humans is designed to establish both
safety and efficacy in treating a particular disease or condition. These studies are usually
conducted in three phases of testing. The clinical trial process may take from two to six years or
more to complete.
Phase 1 trials are normally conducted in a small number of healthy human subjects or patients
with the specific condition targeted. Their purpose is to provide a preliminary evaluation of the
product candidate’s safety, toxicity and behavior when administered to humans.
In phase 2 trials, the product candidate is assessed for its short-term safety and preliminary
efficacy in a limited number of patients with the targeted disease or disorder. The appropriate
dose ranges and regimens for Phase 3 are also determined during this phase.
Phase 3 trials involve a comprehensive evaluation of safety, efficacy and toxicity that might
not have been evident in smaller studies. The trials are carried out, typically on a multi-center
basis, on a sufficient number of patients to obtain statistically significant results. All adverse
reactions are investigated in detail, and special features of the product candidate are explored.
Clinical trials for existing and future products seek to develop safety data as well as
efficacy data and will require substantial time and significant funding. There is no assurance that
clinical trials related to these products will be completed successfully within any specified time
period, if at all. Furthermore, the FDA may suspend clinical trials at any time if it believes that
the subjects participating in such trials are being exposed to unacceptable health risks.
If the drug is considered by the FDA and by prospective users to provide an important benefit
in the treatment of a serious disease, the applicant may be faced with demands from patient groups,
sometimes endorsed by the FDA, for release of the drug for treatment during the investigative stage
(prior to receipt of marketing approval by the FDA). The supply of such treatment is termed
“treatment use.” Supplying drugs on this basis can involve significant expense and resource demands
for the sponsor of the drug, which must administer the pre-approval release program. This may, in
some situations, interfere with the ability to complete controlled clinical trials of the drug.
Approval Procedures and Criteria —
The FDA generally applies the same requirements for
approval of all products:
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proof of safety and efficacy (efficacy must usually be demonstrated by two
well-controlled clinical trials carried out in accordance with FDA regulations).;
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demonstration of adequate controls in the manufacturing process; and
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conformity with requirements for labeling.
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The FDA has discretion to determine whether the data submitted is adequate for approval. The
time taken for this approval process is based on:
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the quality of the submission;
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the potential contribution of the compound in improving the treatment of the target
disease; and
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•
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the workload at the FDA.
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There can be no assurance that any new drug will successfully proceed through this approval
process or that it will be approved in any specific period of time.
29
During its review, the FDA may ask for additional test data. If the FDA approves the product,
it may require post-marketing testing, including potentially expensive post-market surveillance
studies, known as phase 4 testing. This phase further assesses the product’s therapeutic value and
provides additional information about the safety and efficacy of the product across a broader
patient base. In addition, the FDA can impose restrictions on the use of the drug that may be
difficult and expensive to administer.
Orphan Drug Status
— The Orphan Drug Act of 1983 encourages manufacturers to seek approval of
products intended to treat “rare diseases and conditions” with a prevalence of fewer than 200,000
patients in the United States or for which there is no reasonable expectation of recovering the
development costs for the product. For products that receive orphan drug designation by the FDA,
the Orphan Drug Act provides tax credits for clinical research, FDA assistance with protocol
design, eligibility for FDA grants to fund clinical studies and a period of seven years of
marketing exclusivity for the product following FDA marketing approval. The Company’s crotalid
antivenin, CroFab
®
, received marketing approval by the FDA in 2000, under the orphan
drug program, and its methotrexate therapeutic, Voraxaze
®
, for which the Company is
seeking marketing approval, received orphan drug designation by the FDA in August 2003. In February
2008, the FDA granted orphan drug designation to Oncogel™ for treatment of esophageal cancer.
Fast Track Designation and Priority Review
— Applicants may petition the FDA for “Fast Track”
review of new drugs that treat serious disease and fill an unmet medical need (e.g., providing a
therapy where none existed or providing a superior therapy). The Fast Track designation allows the
applicant to interact closely with the FDA during the drug development and clinical trial design
stage and to submit its marketing application in sections on a rolling basis as new data becomes
available. Once an application has been submitted, an applicant may request Priority Review of the
application by the FDA. Priority Review is available for drugs that offer major advances in
treatment or provide a treatment where no adequate therapy exists. Under Priority Review, the
FDA’s goal for the application review process is reduced from the standard ten months to six
months.
Accelerated Approval
— The FDA may accelerate approval of medicines that offer a significant
improvement in the treatment of fatal or life-threatening conditions, or conditions for which there
is no alternative therapy. The FDA may grant approval based on a surrogate endpoint — a measured
marker or result that is a substitute for a clinically proven outcome. In certain cases, the FDA
may permit phase 2 and phase 3 studies to be compressed into a single study or may grant marketing
approval on a provisional basis with a written commitment to complete clinical studies that
formally demonstrate patient benefit.
Acceptance of Foreign Clinical Data
— The FDA will accept reports of foreign clinical trials
if they meet requirements for good clinical practice and are relevant to United States medical
practice. It is, however, uncommon for the agency to approve a product without some evidence from
clinical trials conducted in the United States, and most sponsors carry out at least one pivotal
trial there. Studies conducted outside the United States are subject to special audits by FDA
inspectors and may be rejected if United States requirements for record-keeping, protection of
human subjects and other matters relating to good clinical practice are not met.
Non-Patent Market Exclusivity
— Under United States law, there are two forms of non-patent
market exclusivity. First, the law prohibits approval of abbreviated new drug applications or
literature-based applications for copies of innovative products for a period of five years after
the approval of a new chemical entity, and three years after the approval of a new indication or
dosage form for which substantial clinical trials were required.
Second, the law provides for a seven-year period of protection for orphan drugs (see above).
During this period, the FDA is precluded, subject to complex exceptions, from approving any
application
30
for the same drug, even if it is based on original data. These provisions apply to all drugs,
including antibiotics and biological products.
Post Approval
— After regulatory approval is obtained, products are subject to continual
review. Manufacturing, labeling and promotional activities are continually regulated by the FDA and
equivalent regulatory agencies of other countries, and the manufacturer also reports certain
adverse events involving its drugs to these agencies. Previously unidentified adverse events or an
increased frequency of adverse events that occur post-approval could result in labeling
modifications of approved products, which could adversely affect future marketing of a drug.
Finally, approvals may be withdrawn if compliance with regulatory standards is not maintained or if
problems occur following initial marketing.
Manufacturing Controls
— Certain manufacturers and suppliers are required by the Federal Food,
Drug and Cosmetic Act and by FDA regulations to follow Good Manufacturing Practice requirements and
are subject to routine inspections by the FDA and certain state and foreign regulatory agencies for
compliance with Good Manufacturing Practice and other applicable regulations. Upon routine
inspection of these facilities, there can be no assurance that the FDA and other regulatory
agencies will find the manufacturing process or facilities to be in compliance with Good
Manufacturing Practice and other regulations. Failure to achieve satisfactory Good Manufacturing
Practice compliance as confirmed by routine inspections could have a material adverse effect on a
company’s ability to continue to manufacture and distribute its products in the United States, and
in the most serious case, could result in the issuance of a regulatory warning letter or seizure or
recall of products, injunction and/or civil fines or closure of a company’s manufacturing facility
until Good Manufacturing Practice compliance is achieved.
Advertising and Promotion
— The FDA regulates advertising and promotion of prescription drugs.
Promotion for unapproved uses is prohibited, and sponsorship of medical symposia and publications
is restricted. Financial incentives to prescribers are regulated under federal and state criminal
laws, as well as codes of practice for the medical professions.
Noncompliance
— Failure to comply with the applicable regulatory requirements can, among other
things, result in fines, suspensions of regulatory approvals, product recalls, operating
restrictions and criminal prosecution. In addition, the marketing and manufacturing of
pharmaceutical products is subject to continuing FDA and other regulatory review, and later
discovery of previously unknown problems with a product, manufacturer or facility may result in the
FDA and other regulatory agencies requiring further clinical research or restrictions on the
product or the manufacturer, including withdrawal of the product from the market.
Product Liability
— Companies that market products in the United States are subject to suit in
state and federal courts for personal injuries caused by these items. The risk of product liability
litigation is significantly greater in the United States than in most European jurisdictions, and
damage awards can be substantial. FDA approval is not a defense to liability, but failure to comply
with FDA requirements may constitute evidence of negligence.
Medicare and Medicaid
— The Medicare program, a federal program that provides defined health
benefits for the aged, some disabled persons and persons with end-stage renal disease, may be an
indirect source of revenue for products. Further, the Medicaid program, a joint federal and state
program that provides defined health benefits to certain financially needy individuals, may also
provide a source of revenue for products. These programs are subject to legislative and regulatory
changes over which the Company has no control. Any restrictions on reimbursement, coverage or
eligibility under the Medicare or Medicaid program could adversely affect the revenue generated by
a product. Medicare and Medicaid fraud and abuse laws prohibit the soliciting, receiving, offering
or payment of any bribe, kickback, rebate or other remuneration in return for the referral or
recommendation of patients for items and services covered by federal health care programs. Because
some products are covered by these programs, our activities are subject to these prohibitions.
31
In addition to these prohibitions, to the extent a company directly participates in the
Medicare and Medicaid programs, it will be subject to additional extensive federal and state
regulation, including:
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(a)
|
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the provision of the Social Security Act, commonly known as the “Stark Law,”
which prohibits certain referrals of Medicare patients by a physician to an entity if
the physician or a member of such physician’s immediate family has a “financial
relationship” with the entity, defined broadly to include compensation arrangements or
ownership interests; and
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(b)
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the federal False Claims Act which imposes civil and criminal liability on
individuals or entities that submit false or fraudulent claims for payment to the
government.
|
Generic Substitution Statutes/Statutorily Required Rebates
— Many states have enacted generic
substitution statutes which permit, and in some cases require, the substitution of a different
manufacturer’s version of a product than the one prescribed. In addition, many states require
pharmaceutical companies to rebate a portion of their revenues from products sold to Medicaid
beneficiaries back to the states concerned.
European Union Regulation
The E.U. currently consists of 27 member states. Pharmaceutical companies operating in the
E.U. are subject to regulatory controls governing the development, manufacture, labeling, and
marketing of their products. National legislation in the area increasingly reflects initiatives at
the E.U. level, normally in the form of directives and regulations. There is a broad range of E.U.
legislation related to medicinal products. This legislation is supplemented by numerous non-binding
guidelines (which provide guidance on safety, quality and efficacy). However, failure to comply
with, or a departure from, the guidelines requires justification and may, for example, raise issues
as to the adequacy of data submitted in support of an application to market a product. In November
2001, many of the stand-alone Directives regulating medicinal products were brought together and
codified into a single Directive (Directive 2001/83/EC on the Community Code relating to medicinal
products for human use). This has since been amended by including Directive 2003/63/EC and
Directive 2004/27/EC.
Pre-clinical Research —
European legislation (Directive 2001/83/EC, as amended) imposes
certain specific requirements for pre-clinical testing of a product where the data generated will
be used for an application for a product marketing authorization in the E.U. Basic provisions in
the legislation are expanded upon by a broad range of guidance documents which are important for
companies to follow when products are under development. Deviation by companies from such guidance,
particularly where they are specific to product groups, would generally require a strong
justification upon application for a marketing authorization. Directive 86/609/EEC (as amended by
Directive 2003/65/EC) established pre-clinical research standards to be met by research
institutions engaged in animal research. These provisions are enforced through registration and
inspection. Other directives on good laboratory practice have established high standards of
practice for laboratories, with compliance again monitored through a system of inspection.
Clinical Research —
European legislation also stipulates requirements for conducting research
in humans where the data is intended to be utilized in a marketing authorization application
(Directive 2001/83/EC as amended by Directive 2003/63/EC and Directive 2004/27/EC). The European
Committee for Medicinal Products for Human Use (“CHMP”) and the European Commission have also
issued a number of guidelines on good clinical practice. In addition, other legislation, such as
the Data Protection Directive (95/46/EC), is also relevant to the conduct of clinical research.
Aside from these provisions, however, the conduct of research in the E.U. was not subject to
specific E.U. legislation until April 2001, when the European Commission enacted Directive
2001/20/EC on the approximation of the laws, regulations and administrative provisions of the
member states relating to the implementation of good clinical practice in the conduct of clinical
trials on medicinal products for human use. This Directive harmonized the regulation of clinical
research across the E.U.. Failure to satisfy the requirements, which
include adherence to good clinical practice, may lead to a rejection of an application for a
marketing
32
authorization. Further principles and guidelines for good clinical practice as regards
investigational medicinal products for human use have been implemented by Directive 2005/28/EC.
Obtaining a Marketing Authorization —
No pharmaceutical product may be marketed in the E.U.
without a marketing authorization (although national legislation in some member states permits a
product to be sold on a named patient basis). The UK Medicines Act 1968, as amended, governs
applications for marketing authorization for human use in the United Kingdom. The Medicines Act
implements, in the United Kingdom, detailed E.U. Directives on the licensing of pharmaceutical
products. Each time new legislation is introduced at the European level, it is implemented in the
United Kingdom pursuant to the Medicines Act. As a result, the core rules in force in the United
Kingdom are essentially the same as those in force in other states within the E.U. In addition,
individual countries within the E.U. may implement some additional national legislation relating
to, for example, specific labeling requirements or in areas where there is no existing E.U.
legislation.
Registration Systems —
Four principal systems currently exist in the E.U. for registering
pharmaceutical products in order to obtain a marketing authorization: the national system, the
mutual recognition procedure (“MRP”), the decentralized procedure (“DP”) and the centralized
procedure (“CP”). The DP provides an alternative to the MRP.
The national system involves the submission of a marketing authorization application to a
single member state of the E.U. only. When a company wishes to apply for marketing authorizations
in more than one E.U. member state, the mutual recognition procedure, the decentralized procedure
or the centralized procedure described below must be used.
The MRP involves a marketing authorization application initially directed to one national
regulatory authority, termed the Reference Member State (“RMS”). As soon as the RMS has given
approval for marketing, the decision is circulated to other member states nominated by the
applicant, termed the Concerned Member States (“CMSs”), who then have to agree or disagree with
this decision within 90 days.
The DP is an alternative to the MRP and is intended for products that have not yet received
authorization in any E.U. country. A key feature of this new process is that the RMS and the CMSs
are chosen before the first step of the process and the RMS does not grant a Marketing
Authorization prior to the application being reviewed by the CMSs (as is the case with the MRP).
Both the mutual recognition procedure and the decentralized procedure include an arbitration
process for resolving disputes and for arriving at a final decision, which is administered by CHMP.
Such decision is legally binding both on the applicant and on the E.U. member states involved.
The arbitration process may significantly lengthen the time from initial application to approval in
all nominated member states. The result of such process may impose limitations not just on the
marketing authorization applied for, but also on marketing authorizations obtained prior to the
arbitration process. In accordance with Directive 2004/27/EC a formal Coordination Group was set up
in November 2005 in order to address any issues that arise during the MRP and the new DP.
The CP is a process for which there is a single application, a single evaluation and a single
authorization for medicinal products within the E.U. This procedure applies only to certain types
of applications and is compulsory for certain biotechnology products. Under Regulation 726/2004,
new treatments for AIDS, cancer, diabetes and neurodegenerative diseases have to use the CP.
Beginning May 2008, the CP became mandatory for new treatments for autoimmune diseases and other
immune dysfunctions and viral diseases.
The CP is administered by the EMEA (described below). A marketing authorization granted
pursuant to the centralized procedure is recognized in all E.U. member states. A specific
timetable is specified for evaluation of the application, including allowances for appeals.
33
The EMEA was established by Council Regulation EEC No. 2309/93 of July 1993 with effect from
January 1, 1995. This Regulation has been replaced by Regulation 726/2004 which came into effect
November 2005. The EMEA is responsible for coordinating the evaluation and supervision of medicinal
products for both human and veterinary use across the E.U. On the basis of the EMEA’s opinion, the
European Commission authorizes the marketing of a product approved by the centralized procedure.
The EMEA comprises a management board, five committees of scientific experts responsible for
preparing the EMEA’s opinion (one for medicinal products for human use, one for medicinal products
for veterinary use, one for the designation of “orphan drugs” for rare diseases, one for herbal
medicinal products and a new one for pediatrics), an executive director and a permanent
secretariat.
Criteria Assessed in Obtaining a Marketing Authorization —
European Directive 2001/83/EC (as
amended by Directive 2003/63/EC and Directive 2004/27/EC) sets out the basic principles for the
regulation of marketing of medicinal products within the E.U. The criteria for the grant of a
marketing authorization are quality, safety and efficacy. In order to demonstrate these criteria,
a wide range of information and data are required to be submitted to the relevant regulatory
authority. The exact requirements as to the analytical, pharmacotoxicological and clinical
standards and protocols in respect of testing medicinal products to be submitted are detailed in
European Directive 2003/63/EC (as amended). In summary, any application for a marketing
authorization must be accompanied by, among other things, the results of:
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physico-chemical, biological or microbiological tests (establishing the quality of
the products),
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•
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pharmacological and toxicological tests (establishing the safety of the product),
and
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•
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clinical trials (studies in humans establishing efficacy and safety).
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The quality of the product is determined by laboratory studies and tests. These verify both
the chemical constitution and stability of the product as well as the manufacturing processes used.
The safety of the product is initially determined by studies to show matters such as toxicity,
the effect on reproductive potential, adverse effects on genes, whether the product has the ability
to cause cancer, how the product is distributed within the body, how quickly the body eliminates
the product and the product’s interaction with other body chemicals.
The efficacy and safety of the product are derived from clinical trials with volunteers and
patients. Clinical trials are generally classified into phases 1 through 4, although there are not
always distinct divisions between each phase.
Phase 1 clinical trials are normally conducted in healthy human volunteers. The purpose of
the trial is to obtain a preliminary evaluation of a product’s safety, its pharmacokinetic profile
and its biological effect on humans.
Phase 2 clinical trials assess the product for its short-term safety and preliminary efficacy
in a limited number of patients. Later phase 2 trials may be comparative (e.g. comparing the
product with a placebo). The appropriate dose ranges and regiments for phase 3 (safety and
efficacy) trials are also determined during this phase.
Phase 3 clinical trials are a comprehensive evaluation of safety and efficacy of the product
based upon larger patient groups. The pattern and profile of the more frequent adverse reactions
are investigated in detail and special features of the product are explored.
34
Phase 4 clinical trials are studies performed after a marketing authorization has been
granted. They are designed to monitor drug use in the normal patient population. These studies
are usually larger in scale and focus on efficacy in clinical practice and side effects.
Marketing Authorizations for Orphan Drugs —
In April 2000, the European Commission introduced
a Regulation regarding orphan drugs. The main requirements for qualification are:
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the target disease condition has a prevalence of no more than 5 persons per 10,000;
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either the product offers potential significant benefit over existing treatment for
the condition or there are no treatments for the condition.
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An application for orphan drug status may be made at any time up to submission of the
marketing application. The benefits to successful applicants include:
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•
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a reduced registration fee;
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•
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use of the centralized registration procedure; and
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•
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10 years’ exclusivity on the market.
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Maintenance of Marketing Authorizations —
A marketing authorization application may be
submitted when appropriate data is available. The submission of an application to a regulatory
authority does not guarantee that a license to market the product will be granted by that
regulatory authority. Furthermore, in certain cases (but excluding the centralized procedure), a
national regulatory authority may impose its own requirements and may refuse to grant approval or
may require additional data before granting an approval, even though the relevant product may have
been approved by authorities in other countries. The time taken to obtain a national approval in
individual countries varies, but can take from a few months to several years from the date of
application. In contrast, it usually takes 12 to 18 months to gain approval under the centralized
procedure. Marketing authorizations are granted subject to certain generally applicable conditions
and may also be subject to product specific restrictions determined by regulatory authorities.
When an authorization is granted and a product is brought to market, there are numerous
obligations imposed upon the marketing authorization holder by the pharmaceutical legislation.
These include the obligation to ensure that the product keeps pace with the state of scientific and
technical knowledge, in particular, in terms of its manufacture and control. This means applying to
vary the marketing authorization when the changes in the state of the art and relevant
circumstances warrant its updating and amendment. Additionally, requirements for pharmacovigilance
and the reporting of adverse reactions to products are central to the legislation. Within the E.U.,
advertising, and the production of labeling and patient information leaflets, are specifically
regulated by Directives, with local codes of conduct and practice, in some cases, providing
additional controls on corporate activity. The provisions of the legislation require significant
staff and expertise which may be provided in-house and/or by external service. Examples of such
staffing requirements include the need for pharmacovigilance and an information services individual
within the company responsible for compliance.
The regulatory authorities have the power to suspend, revoke or vary a marketing
authorization:
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if the grant no longer satisfies safety, quality or efficacy standards;
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•
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for reasons relating to and omissions in the product dossier; and
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•
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for particulars or failures in relation to product manufacture.
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35
The requirements for the performance of comprehensive pharmacovigilance for marketed products
are designed for companies and regulators to detect product safety concerns and to take appropriate
action in the interests of public health. The harmonization and streamlining of compulsory action
and decision making on such matters in the E.U. through CHMP means that, increasingly, a concern
arising in one member state in relation to a product marketed in several states will be examined at
the E.U. level and the outcome of the examination will affect the product and its authorization
across all member states in which it is sold and supplied.
Manufacturing —
Manufacturing conducted within the E.U. must meet good manufacturing practice
requirements (Directive 2003/94/EC, which replaces Directive 91/356/EEC). Legislation (Directive
2001/83/EC as amended by Directive 2003/63/EC and Directive 2004/27/EC) imposes precise obligations
upon manufacturers, in particular with regard to control, batch testing and release of products in
the European market and the qualifications for the personnel authorized to undertake such
activities. Inspections of manufacturing site facilities and procedures are regularly undertaken,
both by local inspectors and by inspectors from other countries in which the product is to be sold.
Failing an inspection may result in:
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product supplies being interrupted;
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recall; or
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plant closure pending elimination of defects.
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The legislation requires clear, contractual documentation regarding how manufacturing services
are provided by one company to another when aspects of the manufacturing process are subcontracted
to others by the marketing authorization holder and/or manufacturer.
Wholesaling —
Wholesale distribution in the E.U. is governed by Directive 2001/83/EC, as
amended, and accompanying Good Distribution Practice Guidelines. Wholesalers must meet minimum
requirements in terms of staff, facilities and procedure in order to obtain and retain
authorization.
Pricing —
In a number of member states, it is not possible to market a product until pricing
negotiations with the responsible government authorities have been concluded. Authorization by the
regulatory authorities does not guarantee the negotiation of a satisfactory price or of
reimbursement terms under national public health systems for the products concerned. In the United
Kingdom, new or existing products which already have a marketing authorization may be referred by
the Department of Health to the National Institute for Clinical Excellence (“NICE”) for a clinical
and cost-effectiveness appraisal. Adverse findings (if any) in consequent NICE Guidance can mean
that the target products will not be routinely prescribed on the National Health Service, that is,
at public expense.
Supplementary Protection Certificates —
The time taken to research and develop medicinal
products reduces the exclusivity provided by a product patent, and therefore, can reduce the period
available to the developer to recoup investment through sales. In 1992, the E.U. introduced
Regulation 1768/92 concerning the creation of a supplementary protection certificate for authorized
products. While this regulation does not extend the patent, it does confer rights of a similar
nature for the product after the patent has expired. The period during which the certificates are
effective depends on calculations based upon the date of the application for the patent and the
grant of the first E.U. marketing authorization for the product, with a maximum limit of five
years.
Abridged Applications — “Market Exclusivity” —
In cases where the patent and supplementary
protection certificate have expired or are not available, medicinal products can benefit from E.U.
provisions which are commonly described as the rules of “market exclusivity,” but which, in fact,
govern the making of abridged applications for marketing authorizations.
36
Regulation 726/2004 and Directive 2004/27/EC introduced the so called “8+2+1” data protection
rules which are designed to reward innovation while encouraging the early availability of generic
copies. These rules, which apply to applications for marketing authorizations for generic products
submitted after November 2005, allow 10 or 11 years exclusivity in the E.U. for the reference
product to which they relate. The 11 years protection will be applicable if a new marketing
authorization for a therapeutic claim bringing a significant clinical benefit is obtained in the 8
years following marketing approval. Prior to this, some E.U. member states chose to implement 10
years’ exclusivity (e.g., U.K.) while other member states chose 6 years’ exclusivity (although the
period for products approved by the centralized procedure has always been 10 years).
The above rules do not, however, prevent a competitor from making a marketing authorization
application accompanied by:
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a full data package compiled by the competitor;
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reference to published literature; or
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with the consent of the owner of the original data, cross reference to the data held
on file by the regulatory authorities.
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The rules are only intended to limit the circumstances in which a marketing authorization may
be granted without submission of a full data package, in order to protect the interests of the
originator of the filed data who undertook and resourced the original research necessary to support
an application to market.
The Company’s Product Candidates —
The human therapeutic products currently being developed by
the Company will fall within the ambit of either the centralized procedure, the decentralized
procedure or the mutual recognition procedure.
During the development phases of the products, all clinical research programs must be
conducted according to local and E.U. requirements in order to ensure the acceptability of the data
generated for E.U. regulatory purposes. The Clinical Trials Directive (2001/20/EC) requires that
both regulatory clearance and ethical approval be obtained prior to commencing a clinical study in
either healthy volunteers or patients.
Regulation of Veterinary Products —
A very similar regulatory system applies in Europe with
regard to veterinary medicinal products. In particular, biotechnology products are also subject to
centralized review and registration under Regulation 726/2004 above. As is the case with human
pharmaceutical products, no unauthorized veterinary product may be marketed in the E.U., subject to
somewhat more limited exceptions than apply in relation to human pharmaceuticals.
Regulation in Other Countries
In general, regulation is similar in countries outside the United States and Europe, with the
approval system regulated by specific agencies in each geographic area. However, approval by one
agency does not ensure approval in other countries.
In Australia, successful marketing of a therapeutic substance may be dependent on receiving
marketing approval from the Therapeutic Goods Administration and also on obtaining Commonwealth
Government subsidy for use of the product via either the Pharmaceutical Benefit Scheme or the
Special Access Scheme. Applications for listing on either of these Schemes requires additional
information, in particular economic analysis data, and approval for this second step may lag behind
obtaining marketing approval. The Australian Government is able to exercise considerable power over
price control through this process.
37
Organizational Structure
Protherics PLC acts as the holding company of a group consisting of its directly and
indirectly held subsidiaries. Protherics PLC has the following principal subsidiaries:
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% Held
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Status
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Country of Incorporation
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Direct Holdings
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Protherics Medicines Development Limited
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100
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trading
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England and Wales
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Protherics Inc.
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100
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trading
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U.S.A. (Delaware)
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Enact Pharma Limited
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100
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trading
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England and Wales
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Proteus Biotechnology Limited
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100
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dormant
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England and Wales
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Genethics Limited
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76
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dormant
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England and Wales
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Indirect Holdings
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Protherics UK Limited
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100
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trading
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England and Wales
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Protherics Australasia pty Limited
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100
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trading
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Australia
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Protherics-Utah, Inc.
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100
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trading
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U.S.A. (Tennessee)
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Protherics Services pty Limited
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100
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dormant
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Australia
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Protherics Salt Lake City, Inc.
(formerly MacroMed, Inc.)
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100
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trading
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U.S.A. (Utah)
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Kymed GB Limited
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100
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dormant
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England and Wales
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Enzacta R&D Limited
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99.8
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dormant
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England and Wales
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De Montfort Biopharma Limited
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100
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dormant
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England and Wales
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Enzacta Limited
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99.8
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dormant
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England and Wales
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TAb (Wales) Limited
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100
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dormant
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England and Wales
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TAb (London) Limited
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100
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dormant
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England and Wales
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Polyclonal Antibodies Limited
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100
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dormant
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England and Wales
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Property, Plants and Equipment
The Company leases its registered office, 3,812 sq. ft. of office space at The Heath Business
& Technical Park, Runcorn, Cheshire WA7 4QF, from SOG Limited. This lease commenced on December 1,
2007, for an initial period of three years and is subsequently renewable annually at the option of
the Company. In addition, the Company leases a corporate office, under three leases, at 3 Creed
Court, 5 Ludgate Hill, London EC4M 7AA. These leases commenced in October 2003, December 2005 and
October 2007 and are for an initial period of 3 years with a right to extend for a further two years.
The Company also leases a 6,556 sq. ft. corporate office at 5214 Maryland Way, Suite 405,
Brentwood, Tennessee 37027. The lease commenced on November 1, 2001 and will continue through
December 31, 2009. The Company also leases 5,307 sq. ft. of laboratory and office space at 615
Arapeen Drive, Suite 105, Salt Lake City, Utah 84109, the lease for which commenced June 1, 2003,
and will continue through May 31, 2012. In addition, the Company leases 17,629 sq. ft. of office,
laboratory and clean room space at 2417 South 3850 West, Suite 150, West Valley City, Utah 84120,
the lease for which commenced on September 1, 2006 and will continue through November 30, 2011,
although the Company has a right to extend the lease for a further 3 years.
Protherics UK Limited, a subsidiary of the Company, owns and operates production offices,
quality control laboratories, a manufacturing facility, and land covering approximately 200 acres,
located in Ceredigion, Wales.
Protherics Australasia Pty Limited, a subsidiary of the Company, produces antisera at its
facilities leased from the Turretfield Research Centre at Rosedale, near Adelaide, South Australia,
where the Company has constructed offices, laboratories and a cleanroom. The lease of the
Turretfield Research Centre has been extended to July 31, 2010, with an option to extend for a
further five years. The South Australian Minister for Primary Industries holds a security interest
on the buildings and equipment of Protherics Australasia Pty Limited in connection with notes
payable in the principal amount of
38
A$1,287,000, of which the final installment of $16,700 was
repaid in April 2008. The interest rate was variable at the discretion of the Minister for Primary
Industries.
The Company’s sheep flock is located at Martindale, South Australia, where the Company is
currently finalizing a new agreement with Martindale Holdings Pty Limited for the grazing rights
for 5,500 to 8,500 sheep. The new agreement would allow sheep numbers to be expanded further by
agreement with Martindale Holdings at a minimum of 12 months’ notice for pasture development. The
new lease agreement would expire on May 31, 2013 with an option to extend for an additional five
years.
All of the Company’s laboratories, production facilities and farms currently in operation are
suitably equipped for their intended purposes.
ITEM 4A. UNRESOLVED STAFF COMMENTS
None.
ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS
The following discussion and analysis of the financial condition and results of operations of
the Company should be read in conjunction with the financial statements and notes thereto.
A. Operating Results
Year Ended March 31, 2008 Compared to Year Ended March 31, 2007.
Total revenues for the fiscal year 2008 decreased by £5,052,000, or 16%, to £26,067,000 from
£31,119,000 in fiscal year 2007. Revenues for fiscal year 2007 included a £10,000,000
manufacturing milestone on the Company’s CytoFab
®
program outlicensed to AstraZeneca.
Excluding this milestone, total revenues for fiscal year 2008 increased by £4,948,000 or 23% over
fiscal year 2007.
The majority of the Company’s non-CytoFab
®
revenues were predominantly denominated
in U.S. dollars and, therefore, the increasing weakness of the U.S. dollar against sterling has had
an unfavorable impact on the revenue as reported in sterling, particularly with respect to the two
main products, CroFab
®
and DigiFab
®
.
CroFab
®
contributed sales of £15,707,000, up £1,577,000, or 11%, from the
£14,130,000 recorded in fiscal year 2007. The majority of this product is sold through Nycomed.
Our agreement with Nycomed splits revenue evenly between both parties. Seventy percent of the
Company’s share of product revenues is earned on shipment of the product to Nycomed, with the
balance earned once Nycomed sells the product. The increase in sales in the current year occurred
due to increased product shipments to Nycomed which outweighed the effect of adverse currency
exchange rate movements experienced over the year.
DigiFab
®
contributed sales of £4,811,000, up 81% from £2,658,000 in fiscal year
2007. This increase arose as Nycomed recorded increased sales of DigiFab
®
. In addition,
Nycomed also increased their product requirement to realign their inventory following reduced
shipments in the prior two years. This underlying growth was only marginally moderated by the
increasing weakness of the U.S. dollar.
Voraxaze
®
revenues increased from £1,370,000 in fiscal year 2007 to £2,795,000 in
fiscal year 2008, an increase of 104%. The increase in Voraxaze
®
revenues resulted
primarily from revenues earned under the FDA Treatment Protocol approved in May 2007. Previously,
Voraxaze
®
was only available on a named patient basis in Europe.
39
ViperaTAb™ sales in fiscal 2007 were abnormally high following the release of new product for
the European bite season that year. As anticipated, sales in 2008 decreased from £347,000 in the
prior year to £182,000.
Royalty income from Enfer Scientific relating to BSE testing has been declining for several
years due to increased competition and pricing pressures. These pressures have continued during
fiscal 2008 with revenues down from £277,000 in fiscal year 2007 to £224,000 in fiscal year 2008.
Other revenues increased from £124,000 in fiscal 2007 to £273,000 in fiscal 2008 as a result
of research income from Protherics Salt Lake City, Inc. (formerly MacroMed, Inc.) acquired in
January 2007, contributing for the full year.
Cost of sales increased by £1,129,000 to £12,463,000 in fiscal 2008, an increase of 10%.
Although total revenues decreased, trading revenues, being those earned by sale of product,
increased by £4,991,000 or 27%. This disparity arises from increased volumes of higher margin
products and resulted in an improved gross margin on trading revenues from 39% in fiscal 2007 to
47% in fiscal 2008.
Total research and development expenses increased, as planned, by £5,160,000, or 37%, from
£13,978,000 in fiscal year 2007 to £19,138,000 in fiscal year 2008 as the Company increased
investment in its development pipeline and saw the full year impact of the development activities
arising from the Company’s acquisitions of Oncogel
®
and the inlicensing of
Acadra
TM
and Digoxin Immune Fab for pre-eclampsia in January 2007. No research and
development expenditures were capitalized in either fiscal 2007 or fiscal 2008.
Administration expenses increased from £10,161,000 in fiscal year 2007 to £13,684,000 in
fiscal year 2008. This increase is a consequence of the full year impact of acquisition of
MacroMed, Inc. in January 2007 as well as losses on foreign exchange positions and increased costs
associated with employee share options.
As a consequence of the increased investment in the product pipeline and fiscal 2007 including
a milestone payment of £10,000,000 in relation to CytoFab
®
which was not repeated in
fiscal 2008, the Company recorded an operating loss of £19,218,000 in fiscal 2008, compared to a
loss of £4,354,000 in fiscal 2007.
Interest income for fiscal year 2008 increased by £1,227,000, or 106%, to £2,382,000 as a
consequence of increased cash and short-term investments. The main factor was the £36,063,000
proceeds (net of expenses) of the placing and open offer undertaken in January 2007 thereby leading
to higher average cash balances in the year. Interest expense for fiscal year 2008 reduced
marginally from £417,000 to £415,000.
The tax credit recognized in fiscal year 2008 mainly represents the anticipated receivable
from the surrender of tax losses following incurrence of qualifying U.K. research and development
expenditure from prior years and a deferred tax credit arising from the recognition of increased
tax losses at the Company’s Australian operation. This was offset by the full provision against tax
prepayments made in the U.S. following a reassessment of probability of recovery in fiscal year
2009.
The Company’s net loss for fiscal year 2008 was £16,742,000 compared to a loss of £3,357,000
for fiscal year 2007.
Year Ended March 31, 2007 Compared to Year Ended March 31, 2006.
Total revenues for the fiscal year 2007 increased by £13,410,000, or 76%, to £31,119,000 from
£17,709,000. A substantial element of this increase related to CytoFab
®
where total
revenues recognized
40
in the year amounted to £12,213,000, and included the £10,000,000 manufacturing
milestone receivable in the year, compared to £701,000 in the previous year.
The majority of the Company’s non-CytoFab
®
revenues were predominantly denominated
in U.S. dollars and, therefore, the continuing weakness of the U.S. dollar against sterling had an
unfavorable impact on the revenue as reported in sterling, particularly with respect to the two
main products, CroFab
®
and DigiFab
®
.
CroFab
®
contributed sales of £14,130,000, up £2,630,000, or 23%, from the
£11,500,000 recorded in fiscal year 2006. The majority of this product is sold through Nycomed.
Our agreement with Nycomed splits revenue evenly between both parties. Seventy percent of the
Company’s share of product revenues ,is earned on shipment of the product to Nycomed, with the
balance earned once Nycomed sells the product. The increase in sales in fiscal year 2007 occurred
due to increased product shipments to Nycomed in addition to increased royalties from Nycomed’s
sales to its customers. This outweighed the effect of adverse currency exchange rate movements
experienced over the year.
DigiFab
®
contributed sales of £2,658,000, down 30% from £3,789,000 in fiscal year
2006. Nycomed continued to record increased sales of DigiFab
®
,
however during
2005 and 2006 Nycomed reduced its orders from the Company to better align its inventory holdings
with sales levels. Nycomed worked through much of its inventory and, as a result of the strong
sales being recorded over fiscal year 2006, increased its orders for fiscal year 2007. In addition
to the reduced shipments, the adverse exchange rate movements experienced over 2006 also
contributed to the reduced sales in fiscal year 2007.
Voraxaze
®
revenues increased from £836,000 in fiscal year 2006 to £1,370,000 in
fiscal year 2007, an increase of 64%. The increase in Voraxaze
®
revenues, which is
currently available on a named patient basis in Europe, is attributed to a continuing increase in
product awareness within the medical community.
ViperaTAb™ sales increased from £96,000 in fiscal year 2006 to £347,000 in fiscal year 2007
following release of new product at the start of the European bite season.
Royalty income from Enfer Scientific relating to BSE testing suffered from increased
competition and pricing pressures which have continued since 2004, and was down from £440,000 in
fiscal year 2006 to £277,000 in fiscal year 2007.
Other revenues reduced from £347,000 in fiscal 2006 to £124,000 in fiscal 2007. Revenues for
fiscal 2006 reflected the recognition of £275,000 on technology outlicensed by Enact prior to its
acquisition.
Cost of sales increased by £42,000 to £11,334,000 in fiscal 2007, although fiscal 2006 had
included exceptional costs of £1,362,000 arising during the closedown of the Company’s main
manufacturing facility during a major upgrade and expansion. Excluding these exceptional items,
cost of goods increased by £1,404,000, or 14%, caused primarily by increased shipments of
CroFab
®
marginally offset by the reduction in shipments of the lower cost
DigiFab
®
product.
Total research and development expenses increased by £7,231,000, or 107%, from £6,747,000 in
fiscal year 2006 to £13,978,000 in fiscal year 2007. The most significant factor in this rise was
the Company’s development expenditure on CytoFab
®
following the licensing agreement with
AstraZeneca UK Limited towards the end of fiscal year 2006. In addition, the Company undertook
further work on Voraxaze
®
in support of its marketing authorization applications.
Finally, the fourth quarter of fiscal 2007 began to reflect the effects of increased spending from
the acquisition of MacroMed, Inc. in January 2007
and the two other products (Acadra
TM
and Digoxin immune fab for pre-eclampsia)
in-licensed at the same time. No research and development expenditures were capitalized in either
fiscal 2006 or fiscal 2007.
41
Administration expenses increased by £958,000, or 10%, from £9,203,000 in fiscal year 2006 to
£10,161,000 in fiscal year 2007. This increase was a consequence of the increasing size of the
business since the CytoFab
®
agreement with AstraZeneca UK Limited in the last quarter of
fiscal 2006 and the acquisition of MacroMed, Inc. in January 2007. This increased expenditure was
offset by gains on foreign currency positions and reduced costs associated with employee share
options.
As a consequence of the above, in particular the recognition of CytoFab
®
revenues,
the Company recorded an operating loss of £4,354,000 in fiscal 2007, compared to a loss of
£9,533,000 in fiscal 2006.
Interest income for fiscal year 2007 increased by £754,000, or 188%, to £1,155,000 as a
consequence of increased cash and short-term investments. The main factor in the increased funds
was the January 2006 receipt from AstraZeneca UK Limited of £23.8 million relating to the
CytoFab
®
project. In addition, proceeds of the £36,063,000 (net of expenses) placing and
open offer undertaken in January 2007 also increased interest income in the final quarter of fiscal
2007.
Interest expense for fiscal year 2007 reduced marginally from £431,000 to £417,000. This was
the result of lower levels of interest paid on the 6% unsecured convertible loan notes issued as
the main part of the consideration for the Enact acquisition in June 2003, offset by increased
charges on finance leases entered into as the Company expanded its manufacturing capability as
required under the CytoFab
®
agreement with AstraZeneca UK Limited.
The tax credit recognized in fiscal year 2007 mainly represented the anticipated receivable
from the surrender of tax losses following incurrence of qualifying U.K. research and development
expenditure. This amounted to £353,000, compared with £325,000 in fiscal year 2006, offset by the
deferred tax charge arising from the utilization of tax losses at the Company’s Australian
operation.
The Company’s net loss for fiscal year 2007 was £3,357,000 compared to a loss of £9,488,000
for fiscal year 2006.
B. Liquidity and Capital Resources
The Company has devoted its efforts and resources to drug discovery and development programs.
Capital resources have been used for the establishment and expansion of production facilities, for
product research and development activities, for clinical testing and to meet the Company’s overall
increased working capital requirements. Future capital requirements will depend on numerous
factors, including revenues generated from the sale of CroFab
®
, DigiFab
®
and
Voraxaze
®
, the success of the Company’s CytoFab
®
program with AstraZeneca,
the progress of the Company’s other research programs and clinical trials, the development of
regulatory submissions, the commercial viability of the Company’s products, the ability to attract
collaborative partners with sales, distribution and marketing capabilities, and the terms of any
new licensing arrangements.
At March 31, 2008, the Company had cash and cash equivalents totaling £37,616,000 (including
bank overdrafts). The Company had a net cash outflow from operating activities of £126,000 as
compared to an operating loss of £19,218,000. The main contributing factor to this differential was
the £10,000,000 CytoFab
®
milestone which was earned in fiscal 2007 but not received
until fiscal 2008. Excluding this item and the amount recognized from the initial £16,300,000
received under the AstraZeneca agreement in January 2006, the Company would have had a net cash
outflow from operating activities during fiscal year 2008 of £8,051,000, compared to a net cash
outflow of £5,758,000 in fiscal year 2007 calculated on the same basis. This adverse movement
resulted from the increased cost base, most notably research and development and general and
administrative expenditure, of the operation enlarged by the acquired operations and projects in
January 2007 offset by improved working capital management.
Capital expenditures financed by cash increased 179% to £3,471,000 in fiscal year 2008 from
£1,242,000 in fiscal year 2007 and were predominantly the Company’s investment in its Salt Lake
City
42
facility, expansion of manufacturing capacity in Australia and further development of its
facilities in Wales.
The Company invested no cash in intangible assets in fiscal 2008 when £4,092,000 of
expenditure was incurred in intangible assets in the prior year being primarily the digoxin immune
fab program for pre-eclampsia along with Acadra™. The Company also incurred net cash costs of
£374,000 in relation to the purchase of MacroMed, Inc. in January 2007.
Capital expenditures of approximately £3,000,000 are budgeted for fiscal year 2009 in order to
instigate process improvements to the CroFab
®
manufacturing process, to enhance capacity
at the Company’s Australian manufacturing facility in order to meet future requirements for
CytoFab
®
and to enhance the manufacturing facilities in Salt Lake City to support the
OncoGel
®
program.
Funds for operating and capital requirements historically have been provided by the issue of
equity and debt and from collaboration agreements and other financing arrangements. On June 18,
2003, the Company issued unsecured convertible loan notes to those Enact shareholders who had
accepted the offer from the Company with additional loan notes being issued with subsequent
acceptances. By September 2003, the Company had acquired the entire issued share capital of Enact
and thereby issued loan notes totaling £7,196,000. The loan notes carry interest at the rate of 6%
per annum, payable twice annually in arrears. If not previously repaid, converted or repurchased,
the loan notes will be repaid at par at the end of a 7-year period. The loan notes are convertible
at 25p per ordinary share. The terms of the loan notes permit the Company to repurchase the loan
notes at any time by tender (available to all holders alike) or by privately negotiated
transactions with individual holders at any price. The Company can enforce conversion should the
principal amount of the loan notes outstanding be equal to 20% or less of the total notes issued at
any time, or if the middle market quotation of an ordinary share at the close of a consecutive five
business day period after June 19, 2006 is greater than 32.5p. The nominal value of the loan notes
outstanding at June 30, 2008 was £2,034,000.
In January 2006, the Company received a non-refundable initial payment of £16,300,000 under
the CytoFab
®
outlicensing agreement with AstraZeneca, in order to fund the Company’s
obligation under this agreement. In addition, AstraZeneca invested £7,500,000 in the Company’s
ordinary shares.
In June 2006, the Company signed an agreement with CoVaccine BV, a Dutch company, to acquire
CoVaccine’s novel adjuvant. The Company will pay CoVaccine up to
€
1,050,000, which is to be
satisfied by the grant of the right to receive 295,413 Protherics ordinary shares, following the
signing of the deal, and a further 590,826 Protherics ordinary shares upon completion of two
development related milestones, the first of which was achieved during fiscal 2007 and resulted in
the issue of 253,211 Protherics ordinary shares.
In December 2006, the Company signed an agreement with Advance In-Vitro Cell Technologies SL
for the use of Acadra™ in the treatment of B-CLL for an initial £500,000 as well as a total of up
to £17.9 million in development and commercial milestones.
In January 2007, the Company completed the acquisition of MacroMed, Inc. and licensed the
Digoxin Immune Fab program for pre-eclampsia from Glenveigh Pharmaceuticals LLC. Consideration for
the MacroMed acquisition consisted of 15,677,199 Protherics ordinary shares issued on completion
with an additional 1,741,911 ordinary shares issued in July 2008. Consideration for the Digoxin
Immune Fab program was in the form of $6,500,000 cash and 3,093,638 Protherics ordinary shares
issued at closing, with an additional milestone payment, payable at the Company’s option either as
a $5,000,000 cash payment or the issuance of 4,944,400 Protherics ordinary shares, now falling due
following the achievement of the first clinical milestone.
In conjunction with these transactions, in January 2007 the Company raised an additional
£36,063,000 net of expenses through a fully underwritten Cash Placing and Open Offer of new
ordinary
43
shares to fund the acquisition and future development of the Digoxin Immune Fab and
Acadra™ projects as well as to fund the operations of MacroMed, Inc., which principally related to
the OncoGel
®
program.
The Company anticipates significant additional expenditure in the fulfillment of its
obligations under the CytoFab
®
agreement with AstraZeneca, in addition to increasing
expenditure on its enlarged portfolio of product candidates and marketing efforts in advance of an
anticipated launch of Voraxaze
®
in both Europe and the U.S. In the 2007 fiscal year,
the Company recognized a £10,000,000 milestone on the AstraZeneca agreement although future
milestones are dependent upon the Company and AstraZeneca achieving defined milestone points, the
achievement of which cannot be guaranteed. Management estimates that the existing cash resources,
together with anticipated revenues from product sales and royalty payments will be sufficient to
fund operations for at least the next twelve months. The principal source of liquidity in this
period will be the cash balances currently held and anticipated revenues. Management’s estimate of
product sales are based primarily on orders for CroFab
®
and DigiFab
®
currently received under its U.S. distribution agreement, which provides for orders to be made 12
months in advance of shipment. The Company’s ability to fully supply orders will depend, in part,
on its ability to maintain its current manufacturing capacity, the ability of its third party
contractors to fill and ship orders on a timely basis, and may be subject to other market and
operating risks described herein under “Item 3. Key Information — Risk Factors.”
The Company’s financial instruments comprise borrowings, some cash and liquid resources,
forward foreign currency contracts and various items, such as trade receivables and trade payables
that arise directly from its operations.
It is, and has been throughout the period under review, the Company’s policy that no
speculative trading in derivative financial instruments shall be undertaken. While the impact on
cashflows from movements in U.S. dollar exchange rates can be significantly mitigated by such
derivative financial instruments in the near term, there remains potential for significant impact
on the results of the Company from exchange rate movements over the longer term. This arises from
the main markets for the Company’s approved products being in the U.S. and therefore priced in U.S.
dollars, while manufacturing costs are incurred in British pounds sterling and Australian dollars.
For further discussion, see “Item 11. Quantitative and Qualitative Disclosures about Market Risk.”
C. Research and Development, Patents and Licenses, etc.
The Company’s research and development expenses consist primarily of salaries and related
personnel expenses, costs associated with clinical trials, costs associated with non-clinical
activities, intellectual property costs and facility-related costs. Clinical trial expenses
include payments to vendors such as clinical research organizations, suppliers of raw materials,
clinical trial sites, laboratories for testing of clinical samples and consultants. To date, the
Company has charged all research and development expenses to operations as incurred since the
Company can only recognize such expenditure as an intangible asset when it is probable that the
project will generate future economic benefit.
The Company uses its internal research and development resources, including its employees and
facilities, across various projects, the Company does not account for these internal research and
development expenses on a project basis. These expenses are included in the “non-project expenses”
category in the table below. The Company uses external service providers to assist in the conduct
of its clinical trials and to provide various other research and development related products and
services. The Company has tracked many of these external research and development expenses and
certain specific internal costs on a project basis. To the extent expenses associated with
external service providers are not attributable to a specific project, they are included in the
“non-project expenses” category in the table below.
The following table summarizes the Company’s research and development expenses for the periods
indicated:
44
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended March 31,
|
|
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
|
|
£’000
|
|
|
£’000
|
|
|
£’000
|
|
|
Project:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acadra™
|
|
|
494
|
|
|
|
14
|
|
|
|
—
|
|
|
Angiotensin (ATV)
|
|
|
983
|
|
|
|
317
|
|
|
|
375
|
|
|
CroFab
®
|
|
|
1,634
|
|
|
|
106
|
|
|
|
219
|
|
|
Oncogel
®
|
|
|
2,503
|
|
|
|
400
|
|
|
|
—
|
|
|
CoVaccine™
|
|
|
661
|
|
|
|
296
|
|
|
|
132
|
|
|
DigiFab
®
|
|
|
871
|
|
|
|
223
|
|
|
|
168
|
|
|
Prolarix™
|
|
|
1,554
|
|
|
|
621
|
|
|
|
280
|
|
|
CytoFab
®
|
|
|
5,438
|
|
|
|
7,485
|
|
|
|
1,882
|
|
|
Voraxaze
®
|
|
|
2,530
|
|
|
|
1,918
|
|
|
|
1,770
|
|
|
Other projects
|
|
|
32
|
|
|
|
14
|
|
|
|
102
|
|
|
|
|
Total Project Expense
|
|
|
16,700
|
|
|
|
11,394
|
|
|
|
4,928
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non Project Specific Expenses
|
|
|
2,438
|
|
|
|
2,584
|
|
|
|
1,819
|
|
|
|
|
Total Research and
Development Expenses
|
|
|
19,138
|
|
|
|
13,978
|
|
|
|
6,747
|
|
|
|
Management anticipates that it will make determinations as to which programs to pursue and the
level of funding to direct to each program on an ongoing basis. As indicated in Item 4 of this
Annual Report, in the financial year ending March 31, 2009, the main focus of the Company’s
research and development efforts will be to:
|
|
•
|
|
commence modification of the CroFab
®
manufacturing process and associated
regulatory matters;
|
|
|
|
|
•
|
|
continue to address outstanding issues raised by the MHRA to achieve U.K. marketing
approval for DigiFab
®
;
|
|
|
|
|
•
|
|
continue to address the issues raised by the FDA and EMEA on Voraxaze
®
to
achieve marketing approval;
|
|
|
|
|
•
|
|
further develop the CytoFab
®
manufacturing process at a batch size of 3,000
litres;
|
|
|
|
|
•
|
|
complete the phase 1 Prolarix™ solid tumor study and prepare for the planned phase 2
study in primary liver cancer;
|
|
|
|
|
•
|
|
complete the manufacturing and scale up of Angiotensin Vaccine and CoVaccine HT and
prepare for a phase 2a study due to commence in 2008;
|
|
|
|
|
•
|
|
continue the phase 1/2 safety and tolerability study of OncoGel
®
in brain
cancer and prepare and commence a phase 2b study in esophageal cancer;
|
|
|
|
|
•
|
|
plan and commence a phase 1/2 study for the treatment of B-CLL using Acadra™ ;
|
|
|
|
|
•
|
|
complete the phase 2b study report on severe pre-eclampsia using Digoxin Immune Fabs.
|
At this time, due to the risks inherent in the product development process and given the early
stage of its product development programs, the Company is unable to estimate with any certainty the
costs that will be incurred in the continued development of its product candidates for potential
commercialization. There are numerous factors associated with the successful commercialization
of any of the Company’s drug candidates, including future trial design and various regulatory
requirements, many of which cannot be determined with accuracy at this time based on the stage of
development. With
45
product development timelines, the probability of success and development costs
vary widely. While the Company is currently focused on advancing its highest priority product
development programs, future research and development expenses will depend on the determinations
that the Company’s management makes as to the scientific and clinical success of each product
candidate, as well as ongoing assessments as to each product candidate’s commercial potential and
prioritization. In addition, the Company cannot forecast with any degree of certainty which of its
current product candidates will be subject to future collaborations, when such arrangements will be
secured, if at all, and to what degree such arrangements would affect its development plans and
capital requirements.
The process of completing clinical trials and seeking regulatory approval for the Company’s
product candidates may require the expenditure of substantial resources and is subject to the
numerous risks and uncertainties associated with developing biopharmaceutical products, including
significant and changing government regulation, the uncertainty of future preclinical and clinical
study results and uncertainties associated with process development and manufacturing, distribution
and marketing. For a discussion of the risks and uncertainties associated with the timing and
expense of completing the development of a product, see “Item 3. Key Information. — Risk
Factors.”
D. Trend Information
Following the CytoFab
®
license agreement with AstraZeneca, effective in January
2006, the Company is recognizing the initial £16,300,000 milestone payment received over the period
of the earnings process, currently estimated at approximately seven years. The Company therefore
anticipates continuing to recognize additional revenue under this agreement during fiscal 2009.
Revenue in fiscal 2007 included a £10,000,000 milestone earned for the development of the
CytoFab
®
development process, however receipt of the subsequent milestones that may fall
due under this agreement will be dependent upon the further progression of the program by the
Company’s partner, AstraZeneca.
As previously noted, the Company’s product revenues are currently largely denominated in U.S.
dollars and therefore revenues from its CroFab
®
, DigiFab
®
and
ViperaTAb
TM
products are dependent upon the currency exchange rates in effect at the
date of transaction. The Company’s U.S. CroFab
®
and DigiFab
®
distributor,
Nycomed, is required to provide the Company with product sales forecasts two years before
anticipated delivery date and these estimates can be revised by +/- 25% until one year prior to
delivery, at which point a firm order is placed. A significant proportion of the Company’s U.S.
revenues for these products are based solely upon the Company supplying the required product for
these orders with the balance being recognized when Nycomed makes sales into the marketplace.
Advance orders of CroFab
®
from Nycomed for fiscal year 2009 indicate an increase in
the level of shipments from fiscal 2008 although the Company remains dependent upon the ability of
its filling and freeze-drying contractors to meet scheduled shipment dates.
It is anticipated that the level of DigiFab
®
shipments to Nycomed during fiscal
2009 will exceed that of the prior year since, during fiscal 2008, Nycomed satisfied orders
principally from its own inventories. During fiscal 2007, the Company commenced named patient sales
of DigiFab
®
in Europe. These European revenues increased in fiscal 2008, the first full
fiscal year in this market, and may increase further in fiscal year 2009 should the product obtain
regulatory approval in Europe. Again, the Company remains dependent upon the ability of its filling
and freeze-drying contractors to meet scheduled shipment dates.
The Company has a high proportion of its income derived from the U.S. markets, where pricing
is in U.S. dollars, although a major proportion of its manufacturing costs are in pounds sterling
and Australian dollars. The Company mitigates its currency exposures by a policy of forward
covering expected revenues for up to twelve months on a rolling basis. The Company intends to
implement modest
selling price increases in U.S. dollars in order to mitigate the negative effects of the weak
dollar, and in the longer term, to make further cost reductions in the manufacturing process.
However, there can be no
46
assurance that the Company can fully compensate for the effects of
continued U.S. dollar weakness on its results.
The cost of goods recorded by the Company increased marginally during fiscal year 2008, and it
would be expected to increase again should product shipments increase in the current fiscal year as
anticipated. In prior years, the Company has lost batches of CroFab
®
and DigiFab
®
due to contamination at the Company’s third party filling and freeze drying contractors.
While the Company does not expect this to recur during fiscal year 2009, it cannot guarantee that
similar product losses will not occur. See “Item 3. Key Information — Risk Factors.”
The Company has recorded a significant increase in research and development expenditures
during fiscal year 2008 as the Company continued to commit resources to CytoFab
®
and
undertake further work on Voraxaze
®
in support of the regulatory filings. In addition,
fiscal year 2008 was the first full year of increased expenditure arising from the acquisition of
MacroMed’s OncoGel
®
program in January 2007 and the other products in-licensed at the
same time. With the continuing development pipeline, it is anticipated that significant research
and development expenditures will be required in forthcoming years.
Following the expansion of Company’s activities in the final quarter of fiscal year 2007,
general and administrative expenditures increased in fiscal year 2008 as the Company managed the
enlarged business. The Company intends to increase its pre-marketing initiatives and to build small
sales forces in the U.S. in anticipation of a marketing approval for Voraxaze
®
and in
advance of the return of the rights to the Company’s CroFab
®
and DigiFab
®
products. Consequently, this will lead to increases in administrative costs during fiscal
year 2009 and 2010.
The increased research and development and general and administrative expenditures would be
funded by the current cash resources held and anticipated product revenues during fiscal year 2009.
E. Off-Balance Sheet Arrangements
None.
F. Contractual Obligations and Commercial Commitments
The Company’s contractual and commercial commitments at March 31, 2008 are illustrated below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments due by period
|
|
|
|
|
|
|
|
|
Less than
|
|
|
Between 1
|
|
|
Between 3
|
|
|
Over
|
|
|
|
|
Total
|
|
|
1 year
|
|
|
and 3 years
|
|
|
and 5 years
|
|
|
5 years
|
|
|
Contractual Obligations
|
|
£’000
|
|
|
£’000
|
|
|
£’000
|
|
|
£’000
|
|
|
£’000
|
|
|
Long-Term Debt Obligations
|
|
|
2,166
|
|
|
|
54
|
|
|
|
2,112
|
|
|
|
—
|
|
|
|
—
|
|
|
Capital Lease Obligations
|
|
|
2,678
|
|
|
|
966
|
|
|
|
1,329
|
|
|
|
383
|
|
|
|
—
|
|
|
Operating Lease Obligations
|
|
|
4,105
|
|
|
|
929
|
|
|
|
1,877
|
|
|
|
1,299
|
|
|
|
—
|
|
|
Unconditional purchase
obligations
|
|
|
126
|
|
|
|
126
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
Total
|
|
|
9,075
|
|
|
|
2,075
|
|
|
|
5,318
|
|
|
|
1,682
|
|
|
|
—
|
|
|
|
|
|
Interest, not included in the above table, for the year ending March 31, 2009 is anticipated to be
approximately £341,000.
47
Under certain of the Company’s collaboration agreements, the Company may owe milestone or
royalty payments in future periods to licensing or development partners, which payments are
contingent upon the achievement of developmental or commercial milestones and other objectives. As
of March 31, 2008, the total maximum amount of milestone payments we may be obligated to make under
these agreements was approximately £26 million. However, this amount includes obligations related
to pre-clinical and early stage products, and it is uncertain whether and when all of these
milestones will be achieved. These obligations are therefore not included in this table. For a
description of the Company’s material licensing and development agreements, see “Item 10.
Additional Information — Material Contracts.
Net Operating Loss Carryforwards
The tax credits in fiscal years 2008, 2007 and 2006 have arisen as a result of research and
development expenditure claimed under the Finance Act 2000. In fiscal year 2006, a deferred tax
asset of £247,000 previously recognized in respect of the operating losses incurred in the U.S. was
released since it is the directors’ opinion, based upon recent and forecast trading, that the level
of profits in the U.S. in the forthcoming years will, in the short term, no longer lead to the
realization of these assets, while in fiscal year 2008, the Company provided against income tax
prepayments amounting to £250,000 for the same reasons. In fiscal year 2007, £104,000 of the
deferred tax asset previously recognized in respect of operating losses incurred in Australia was
utilized due to the profits in that jurisdiction while operating losses in fiscal year 2008
resulted in an increase in the recognized asset of £236,000. At March 31, 2008, the Company had
tax losses, subject to the agreement of the Taxation Authorities, of approximately £94 million
(2007: £84 million) available for offset against future taxable profits of the same trade. Of
these losses, approximately £25 million (2007: £24.7 million) relates to net operating losses of
Protherics Inc. and Protherics Salt Lake City, Inc., the use of £14.7 million of which is
restricted to £0.9 million (US$1.9 million) per year.
Recently Issued Accounting Pronouncements
Recently issued accounting pronouncements under IFRS are discussed in Note 1 of the Notes to
the Consolidated Financial Statements included herein at Item 17.
Application of Critical Accounting Policies
The critical accounting policies and estimates applied by the Company under IFRS are:
Revenue
— Revenue represents amounts receivable in respect of the sale of goods and services,
license agreements and intellectual property to customers during the year, net of trade discounts
given and value added tax. A description of the various elements of revenue and their accounting
policies is given below:
|
|
•
|
|
Products revenue is partly recognized upon the shipment of products to the
distributor, the significant risks and rewards having been transferred to the
distributor, with further amounts being recognized in accordance with the
contractual terms upon shipment to the end user.
|
|
|
|
|
•
|
|
Non-refundable up-front and milestone payments received by the Company are
recognized over the period of the earnings process.
|
|
|
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•
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Royalty income is generated by sales of products incorporating the Company’s
proprietary technology. Royalty revenues are recognized once the amounts due can
be reliably estimated based on the sale of underlying products and collectibility
is assured.
|
48
Certain sales of the Company’s DigiFab
®
product include a right of replacement.
Under IFRS, the Company considers that sales of this product represent a multiple-element
arrangement transaction and defers a portion of the initial sale representing the estimated fair
value of the second deliverable.
The Company has a policy of holding forward foreign exchange contracts to hedge operating cash
flows denominated in currencies other than British pounds sterling. As allowed under the transition
rules to IFRS for fiscal year 2005, where the revenue denominated in a currency other than pounds
sterling is the subject of a hedged instrument, revenue is recognized at the hedged rate. For
fiscal years 2006 onwards, revenue denominated in a currency other than pounds sterling is
recognized at the rate ruling at the time of the transaction.
Application of the Revenue Policy to License Agreement with AstraZeneca UK Limited
On December 7, 2005 the Company announced an agreement with AstraZeneca UK Limited for the
development and commercialization of CytoFab
®
. Under the agreement, the Company could
receive initial and milestone payments of up to £187.3 million being due upon occurrence of the
following events:
Upfront fee (£16.3 million)
|
1.
|
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within one business day of the effective date of the AstraZeneca agreement;
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Pre-development milestones (£56 million in the aggregate)
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2.
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upon the decision by the Process Manufacturing and Supply Committee (or Steering Committee)
to progress the Process Science Programme to the manufacture of the first 3,000 litre batch of
the Product;
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3.
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upon the commencement of the first Phase 3 Trial;
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4.
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upon the decision by the relevant Person to continue the first Phase 3 Trial after the first
interim analysis of the Clinical Outcomes of such Phase 3 Trial;
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5.
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upon the filing of the first application for the first Health Registration Approval with
respect to the Product for use in the Primary Indication, wherever in the Territory;
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Post-development milestones (£115 million in the aggregate)
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6.
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upon the First Commercial Sale of the Product by or for the Licensee, any Affiliate of the
Licensee or any Sub-licensee (in each case, including by its Distributor), in the United
States;
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7.
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upon the First Commercial Sale of the Product by or for the Licensee, any Affiliate of the
Licensee or any Sub-licensee (in each case, including by its Distributor), in any Major
European Country;
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8.
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upon the First Commercial Sale of the Product by or for the Licensee, any Affiliate of the
Licensee or any Sub-licensee (in each case, including by its Distributor), in Japan;
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9.
|
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upon the grant of the first Health Registration Approval of the Product for use in the first
Secondary Indication in any Major Market;
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Manufacturing agreement and royalties
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10.
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upon shipment of commercial Product manufactured by the Company for sales post launch; and
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11.
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royalty on net sales of the Product achieved by the Licensee following launch.
|
49
In return for the above, the Company considers that the AstraZeneca agreement provides for the
following obligations to be undertaken by the Company:
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Obligations
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Performance period
|
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Deliverables
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Cash flows
|
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1.
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Delivery of
know-how and
regulatory
documentation
|
|
All current
documents and know
how provided in
early period post
effective date with
additional support
provided until
receipt of
marketing approval
by the FDA after
which the Company
will have delivered
all support it is
able to provide
|
|
Provision of
documentation and
internal resource
for no fee,
although certain
out of pocket
expenses may be
recovered for
attending specified
meetings
|
|
Payments 1, 3, 4
and 5 (listed
above)
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2.
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Development of a
manufacturing
process as set out
in the Process
Science Agreement
|
|
Period to date at
which Process
Manufacturing and
Supply Committee
(or Steering
Committee) agreed
to progress the
Process Science
Programme to the
manufacture of the
first 3,000 litre
batch of the
product
|
|
Develop a robust
manufacturing
process to produce
2 batches of
product to agreed
specification
|
|
Payment 2 (listed
above)
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3.
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Provision of
material for phase
3 clinical trial
|
|
From completion of
obligation 2 up to
completion of phase
3 clinical trial
|
|
Manufacture of
commercial batch of
material
|
|
Payments 1, 3, 4
and 5 (listed
above)
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4.
|
|
Participation in
Steering Committee
and Alliance
Manager
|
|
From inception to
the receipt of
marketing approval
by the FDA
|
|
Attendance and
participation at
meetings
|
|
Payments 1, 3, 4
and 5 (listed
above)
|
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5.
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|
Infrastructural
improvements and
contract
manufacturing
|
|
Delivery of product
for launch and
beyond
|
|
Manufacturing
capacity and
product
|
|
Payments 10 and 11
(listed above)
|
The Company has considered the remaining terms of the agreement and does not believe these
represent obligations of the Company.
IFRS treatment of the milestone payments
Under IAS 18 Revenue, it is necessary to consider by reference to paragraph 13 whether the
recognition criteria in the standard should be applied to the separately identifiable components of
a single transaction in order to reflect the substance of that transaction. IAS 18 does not give
guidance on what it means by “separately identifiable components.” In the Company’s judgment, the
separately identifiable components of the agreement are the license, with associated and
inseparable obligations, and contract manufacturing.
Having determined that the first component was a license and associated obligations, the
Company considered IAS 18’s requirements in relation to recognition of revenue from licenses —
i.e., the use by others of the Company’s assets. IAS 18 uses the terms “royalties” to describe
income generally
50
from the use of long-term intangible assets of an entity, and that license fees,
whether up front or contingent, fixed, variable or non-refundable, are all considered by reference
to the same principles. As the Company has obligations to perform under the license agreement until
FDA approval is achieved, the Company has determined that the revenue received up front should not
be recognized immediately as a sale. Therefore the Company concluded that income from the license
and its associated obligations should be recognized on an accruals basis in accordance with the
substance of the agreement, over the development term.
In determining the recognition policy for the milestone payments, the Company considered
principally the guidance in IAS 18 regarding the recognition of revenue in relation to services.
Paragraph 25 of the standard distinguishes services provided through indeterminate number of acts
over a period of time from those that relate to a significant act. The Company judges whether the
services in connection with a particular milestone represent a significant act by considering
whether the efforts and risks involved in achieving that milestone are substantive. The remaining
revenue is viewed as earned through indeterminate acts over the period for which services are
required, but only recognized when no longer contingent.
The Company, therefore, distinguishes between pre-development milestones involving substantive
efforts (in terms of time, cost and manpower) by the Company and those pre-development clinical
milestones that are largely under the control of AstraZeneca. These are referred to herein as the
“substantive efforts” milestones and the “clinical development” milestones respectively.
Under the Company’s accounting policy, milestones are treated as “substantive efforts”
milestones if the following criteria have been satisfied:
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•
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|
The milestone payments are non-refundable;
|
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•
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|
The achievement of the milestone involves a degree of risk that was not
reasonably assured at the inception of the arrangement;
|
|
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|
|
•
|
|
Substantive effort is involved in achieving the milestone;
|
|
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|
•
|
|
The amount of the milestone payment is reasonable in relation to the effort
expended or the risk associated with the achievement of the milestone; and
|
|
|
|
|
•
|
|
The time that passes between the payments compares to the effort required to
reach the milestone.
|
Provided that the above criteria are met, the Company believes that the fees earned if it
reaches a “substantive efforts” milestone represent a performance bonus that is contingent only on
performance of the specified R&D services. Therefore, the milestone is recorded as revenue in full
upon achievement of the milestone.
Taking the actual payments received and to be received under the AstraZeneca agreement:
£16,300,000 upfront, non-refundable payment
The initial payment has been deferred and amortized over the expected term of the Company’s
continued involvement in the R&D process. Changes in estimates of the timeline are recognized
prospectively. As noted above, the upfront fee is being taken to income over the period of
involvement by the Company in the development of CytoFab
®
. The Company considers that
this period of involvement will end once the first indication has been approved by the FDA. The
clinical development plan is to be undertaken by AstraZeneca, and based upon this plan, the Company
estimated that its performance under
51
the AstraZeneca agreement will cover the period to December
31, 2012, this being the targeted date of FDA approval.
£10,000,000 milestone on approval to commence 3,000 litre batch for commercial trial
The Company considered this milestone to be substantive since the achievement of this
milestone was set out in the Process Science Programme based upon the Company’s completion of
pre-defined steps to develop a manufacturing process and prove the process by producing two 600
litre batches. Under the Company’s accounting policy, this “substantive efforts” milestone payment
was recognized as revenue when the milestone was achieved, and the milestone payment became due and
collectible.
“Clinical development” milestones
Under the AstraZeneca agreement, AstraZeneca is solely responsible for the clinical trials,
regulatory approval process and sales and marketing activities, including absorbing the costs of
such activities. The Company does not consider that milestones 3-5 above will constitute
“substantive efforts” milestones in view of the level of cost and manpower efforts expected to be
dedicated by the Company to achieving the specific milestone concerned. When a “clinical
development” milestone is achieved, a portion of the milestone revenue equal to the amount of
progress toward completion will be recognized. The balance will be added to the remaining deferred
revenue from the initial upfront payment, plus any previous milestones, and amortized over the
future periods to completion. Progress to completion will be measured on a time basis, taking
account of the estimated period to completion of the Company’s obligations under the license
agreement. The Company anticipates receipt of the next milestone in 2010 upon commencement of the
phase 3 trial.
It is anticipated that milestone payments 6 to 9 will occur after FDA approval of
CytoFab
®
and, therefore, after all of the Company’s obligations under the AstraZeneca
agreement have been satisfied. Therefore, such milestones will be recognized on receipt.
Deferred
tax
— Deferred tax is the tax expected to be payable or recoverable on differences
between the carrying amounts of assets and liabilities in the financial statements and the
corresponding tax bases used in the computation of taxable profit, and is accounted for using the
balance sheet liability method. Deferred tax liabilities are recognized for all taxable temporary
differences and deferred tax assets are recognized to the extent that it is probable that taxable
profits will be available against which deductible temporary differences can be utilized. Such
assets and liabilities are not recognized if the temporary difference arises from goodwill or the
initial recognition (other than a business combination) of other assets and liabilities in a
transaction that affects neither the taxable profit nor the accounting profit.
Deferred tax liabilities are recognized for taxable temporary differences arising from
investments in subsidiaries and associates, and interests in joint ventures, except where the
Company is able to control the reversal of the temporary difference and it is probable that the
temporary difference will not reverse in the foreseeable future.
The Company’s opinion is that the trading projections do not satisfy the definition within the
relevant IFRS to enable it to recognize deferred tax assets for its U.K. and U.S. operations at
March 31, 2007 and March 31, 2008. In the event that trading projections would satisfy the
definition of the relevant IFRS, these assets could be recognized and credited to income in the
period such determination was made.
Goodwill
— Goodwill represents the excess of the cost of an acquisition over the fair value of
the Company’s share of the net identifiable assets, including intangible assets, of the acquired
subsidiary at the date of acquisition. Goodwill on acquisitions of subsidiaries is included in
intangible assets. Goodwill is tested annually for impairment or when events or changes in
circumstances indicate the carrying value may be impaired, and carried at cost less accumulated
impairment losses. Gains and losses on the disposal of a subsidiary include the carrying amount of
goodwill relating to the subsidiary sold.
52
Goodwill arising on acquisitions before the date of transition to IFRS has been retained at
the previous U.K. GAAP amount. Goodwill arising on acquisitions in the year ended March 31, 1998
and earlier periods has been written off to reserves, has not been reinstated in the balance sheet
and is not included in determining any subsequent profit or loss on disposal.
Research and development expenditure
- Research expenditure is recognized as an expense as
incurred. Expenditure incurred on development projects (relating to the design and testing of new
or improved products) are recognized as intangible assets when it is probable that the project will
be a success, considering factors including its commercial and technological feasibility, status of
regulatory approval, and the ability to measure costs reliably. Other development expenditures are
recognized as an expense as incurred. Non-inventory related research and development expenditures
previously recognized as expenses are not recognized as assets in a subsequent period. Development
expenditure that have a finite useful life and that have been capitalized are amortized from the
commencement of the commercial production of the product on a straight line basis over the period
of its expected benefit.
No development expenditure has been capitalized in fiscal years 2008, 2007 or 2006.
Research and development inventories
- Inventories relating to research and development
projects are fully written down in the income statement unless the Company considers it probable to
realize economic value from their sale or use. If the circumstances that previously caused these
inventories to be written down below cost subsequently change and there is clear evidence of an
increase in realizable value, the write down is reversed.
ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
Directors and Senior Management
The following table sets forth information as of June 30, 2008 about the directors and
executive officers of the Company.
|
|
|
|
|
|
|
|
|
Name
|
|
Age
|
|
Position within the Company
|
|
|
|
|
|
|
|
|
|
Executive Directors
|
|
|
|
|
|
|
|
Andrew John Heath, M.D., Ph.D.
(1)
|
|
|
60
|
|
|
Chief Executive Officer and Director
|
|
Rolf-Kristian Berndtson Soderstrom, BA, ACA
|
|
|
42
|
|
|
Finance Director and Director
|
|
James Campbell Christie, BSc., MBA
|
|
|
50
|
|
|
Operations Director and Director
|
|
Saul Komisar, MBA, BS
|
|
|
39
|
|
|
President, Protherics Inc. and Director
|
|
|
|
|
|
|
|
|
|
Non-Executive Directors
|
|
|
|
|
|
|
|
Stuart Michael Wallis, FCA, CTA
(1)(2)
|
|
|
62
|
|
|
Chairman
|
|
Garry Watts, FCA
(1)(2)(3)
|
|
|
51
|
|
|
Director
|
|
John Robert Brown, Ph.D, MBA, FRSE
(1)(2)(3)
|
|
|
53
|
|
|
Director
|
|
Bryan Geoffrey Morton, BSc., MBA
(1)(2)(3)
|
|
|
52
|
|
|
Director
|
|
Jacques Gonella Ph.D
(1)
|
|
|
66
|
|
|
Director
|
|
|
|
|
|
|
|
|
|
Executive Officers
|
|
|
|
|
|
|
|
Ian Scoular, Ph.D, BSc, DMS
|
|
|
58
|
|
|
Director of Business Development
|
|
Sally Waterman, Ph.D, BSc, DMS
|
|
|
50
|
|
|
Director of Research & Development
|
|
Nick Staples, Ph.D, BSc
|
|
|
38
|
|
|
Director of Corporate Affairs
|
|
|
|
|
|
(1)
|
|
Member of Nomination Committee.
|
|
|
|
(2)
|
|
Member of Remuneration Committee
|
|
|
|
(3)
|
|
Member of Audit Committee
|
Executive Directors
53
Andrew John Heath, M.D., Ph.D.
is the Chief Executive Officer of the Company. Dr. Heath holds
an M.D. and Ph.D. from Sweden’s Gothenburg University. After a career in research and clinical
medicine at Vanderbilt University, he joined the pharmaceutical industry in 1989. Dr. Heath has
held both R&D and commercial positions with Glaxo and Astra, in Europe and the U.S. He served as
Chief Executive Officer at AeroGen Inc, from 1996 until joining Therapeutic Antibodies Inc. as
Chief Executive Officer in March 1998. He continued as CEO upon the formation of Protherics in 1999
following the merger of Therapeutic Antibodies Inc. and Proteus International plc. Dr. Heath is a
non-executive director of XL Techgroup Inc. and the BioIndustry Association.
Rolf-Kristian Berndtson Soderstrom, B.A., A.C.A
. is Finance Director for the Company. Mr
Soderstrom joined the Board of Protherics in August 2007. After qualifying as a Chartered
Accountant, he worked in the Corporate Recovery and Corporate Finance department of
PricewaterhouseCoopers. In 2000, he joined Cable & Wireless plc as a Director of Corporate
Finance where he managed M&A and funding opportunities and was responsible for a range of listed
investments. In 2004, he joined Cobham plc as a Divisional Finance Director managing a portfolio of
businesses across Europe and the U.S. He is a trustee of the Protherics pension scheme.
James Campbell Christie, B.Sc., M.B.A.
is Operations Director for the Company. He has been in
the biopharmaceutical industry since 1980 and worked with GSK, Celltech and Centocor BV before
joining Therapeutic Antibodies Inc. in 1998. Mr. Christie was appointed to the Protherics Board in
September 1999. He has management responsibility for manufacturing, quality, process development
and technical support operations in Australia, the U.K. and Salt Lake City. Mr. Christie is a
trustee of the Protherics pension scheme.
Saul Komisar, M.B.A., B.S.
is President of Protherics Inc. Mr. Komisar joined Therapeutic
Antibodies Inc. in December 1996 prior to its merger with Proteus International plc to form
Protherics, having spent the previous six years working in corporate finance and banking,
specializing in the healthcare industry. He has responsibility for Protherics’ U.S. operations,
including the commercialization of the Company’s FDA approved products. He holds an M.B.A. from The
Owen Graduate School of Management at Vanderbilt University and is a non-executive Director with
Franklin Synergy Bank, a U.S. commercial retail bank. Mr. Komisar also serves on the boards of
several non-profit and volunteer organizations.
Non-Executive Directors
Stuart Michael Wallis, F.C.A., C.T.A.
became Chairman of Therapeutic Antibodies Inc. in
September 1998 and in 1999, following the merger of Therapeutic Antibodies Inc. and Proteus
International plc, he became Chairman of Protherics. He was previously the Chief Executive Officer
of Fisons plc and Chairman of Communisis plc and is currently Chairman of Plethora Solution
Holdings PLC, BCS Global Networks Ltd., LGC Holdings Ltd. and is a director of other private
companies.
Garry Watts, F.C.A.
joined the Board of Protherics in February 2004. Mr. Watts is currently
the Chief Executive Officer of SSL International PLC having previously held the position of Finance
Director and Managing Director for Europe. He is also a non-executive director of Stagecoach PLC,
where he chairs the Audit Committee, and of the Medicines and Healthcare Products Regulatory
Agency. Previously, he held executive directorships at Celltech Group plc and Medeva plc. He is a
Chartered Accountant and was previously a partner with KPMG, leading the U.K. healthcare and life
science practice.
John Robert Brown, Ph.D., M.B.A
., F.R.S.E. joined the Board of Protherics in March 2004 and
was previously the Chief Executive Officer of Acambis PLC after holding the position of Finance
Director. He is currently the Chairman of BTG plc, Scottish Biomedical Ltd and CXR Biosciences. He
is a non-executive director of several companies, including Vectura Group PLC. He is a member of
the Technology Strategy Board and is Chairman of the Roslin Foundation.
54
Bryan Geoffrey Morton, B.Sc., M.B.A.
joined the Board of Protherics in February 2004. Mr.
Morton has a B.Sc. in Pharmacology from Aberdeen University and an M.B.A. from Durham University.
He began his pharmaceutical career in sales and has held a wide range of senior positions during a
30 year career in the healthcare industry, largely with Merck and Co. Inc. and Bristol Myers
Squibb. In 2003, Mr. Morton founded Zeneus Pharma, which was sold to Cephalon in late 2005. Mr.
Morton subsequently founded and is Chief Executive Officer of EUSA Pharma
Inc., a specialty pharmaceutical company. He is a non-executive director of Aircraft Medical
Ltd, a medical device company, and is a member of the Pilgrim Software global advisory board.
Jaques Gonella, Ph.D.,
joined the Board in January 2007 following the acquisition of MacroMed,
Inc. (now Protherics Salt Lake City, Inc.). Prior to the acquisition, he was a non-executive
director of MacroMed, Inc., joining its board in 1999 in connection with an equity investment in
the company. He is the principal in the consulting firm JG Consulting AG and is the founder of
Permatec, which merged with Mediject in 2001 to form Antares Pharma, Inc., a U.S. public medical
device company. Dr. Gonella also serves as Chairman of the board of directors of Antares Pharma.
Prior to founding Permatec, he founded JAGO Pharma AG in 1983 and served as its President and Chief
Executive Officer until its acquisition in May 1996 by SkyePharma PLC. Before founding JAGO, he
occupied various positions with F. Hoffman La Roche Ltd. and Pfizer Inc. between 1968 and 1979. He
holds a doctorate in analytical chemistry from the Polytechnic Institute of Lausanne, Switzerland.
Executive Officers
Ian Scoular, Ph.D., B.Sc., D.M.S.
has served as Director of Business Development for the
Company since July 2002. Mr. Scoular has more than 20 years business development experience in the
pharmaceutical industry through positions in Nycomed Pharma, Schering Plough and Reckitt & Colman.
He is responsible for seeking commercial partners for the Company’s development products and
intellectual property portfolio.
Sally Waterman, Ph.D., B.Sc., D.M.S.
has served as Director of Research and Development since
April 2005. Ms. Waterman has over 25 years experience within the pharmaceutical industry. She
previously served as Director of Development Operations at Xenova Group plc, following its
acquisition of KS Biomedix Holdings plc, where she was Vice President of Research and Development.
Prior to this, she held various senior positions within Vanguard Medica plc (now Vernalis plc),
including Vice President of Non-Clinical Development.
Nick Staples
,
Ph.D., B.Sc.
joined Protherics in 2003 and, as Director of Corporate Affairs, is
responsible for corporate development and investor relations. He was previously a biotechnology
analyst at WestLB Panmure and spent four years as a management consultant in the Life Sciences
practice at PA Consulting Group, gaining experience in strategic planning, business analysis and
due diligence. He holds a Ph.D. in Biochemistry from the University of Cambridge.
There are no family relationships among the directors or other executive officers. There are
no arrangements or understandings with major shareholders, customers or suppliers or others
pursuant to which any person was selected to serve as a director or senior manager.
The Board has appointed the following standing committees:
Audit Committee
. The Audit Committee is comprised of Messrs. Watts, Brown and Morton. The
Audit Committee monitors the adequacy of the Company’s internal controls, reviews accounting
policies and financial reporting and discusses with the auditors the proposed audit program and the
results of the audit of the Company’s financial statements. The Audit Committee is chaired by Mr.
Watts.
Remuneration Committee
. The Remuneration Committee is comprised of Messrs. Wallis, Watts,
Brown and Morton. Dr. Gonella resigned from the Committee on July 26, 2007.
The Remuneration Committee meets at least once a year to review the Company’s policy on
directors’ remuneration. The
55
Remuneration Committee evaluates the performance of the executive
directors and other senior employees and advises the Board regarding their annual remuneration
package. The Remuneration Committee is chaired by Dr. Brown.
Nomination Committee.
The Nomination Committee has been established to recommend the
appointment of new directors to the Board. The Nomination Committee is comprised of Messrs.
Wallis, Watts, Brown, Morton, Gonella and Heath. The Nomination Committee is chaired by Mr. Wallis.
Board Practices
The Board currently has four executive directors and five non-executive directors. Although
non-executive directors are not appointed for specific terms, the Company’s Articles of Association
require directors to stand for re-election at least every three years.
Compliance with NASDAQ Marketplace Rules
Protherics’ American Depositary Shares began trading on the NASDAQ Global Market in September
2005. As a listed issuer, the Company is subject to NASDAQ’s corporate governance standards
contained in NASDAQ’s Marketplace Rules. In general, under Rule 4350, foreign private issuers such
as Protherics are permitted to follow home country corporate governance practices instead of
certain provisions of Rule 4350 without having to seek individual exemptions from NASDAQ. A foreign
private issuer that follows a home country practice instead of any such provisions of Rule 4350
must disclose in its annual reports filed with the Commission each requirement of Rule 4350 that it
does not follow and describe the home country practice followed by the issuer in lieu of such
requirements. The Company’s independent United Kingdom counsel has advised the Company that its
corporate governance practices are not prohibited by the laws of England and Wales.
The requirements of Rule 4350 and the corporate governance practices that the Company follows
in lieu thereof are described below:
|
|
•
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|
Rule 4350(f) requires that the quorum for any meeting of stockholders must not
be less than 33 1/3% of the outstanding shares of a company’s common voting stock.
The Company’s Articles of Association provide that not less than two shareholders
present in person or by proxy and entitled to vote shall constitute a quorum for
the transacting of business at any general meeting of shareholders. This quorum
requirement is consistent with customary practice in the United Kingdom and is not
prohibited by the laws of England and Wales.
|
|
|
|
|
•
|
|
Rule 4350(c) requires that a majority of the board of directors be comprised of
independent directors as defined in Nasdaq Rule 4200. The Board has determined
that four directors, Messrs. Wallis, Watts, Brown and Morton meet the definition
of “independent” under Rule 4200. Accordingly, the Company currently does not
satisfy the Nasdaq requirement that a majority of the board of directors be
“independent” under Rule 4200. The Board of Directors does satisfy the
independence requirements of the Listing Rules of the U.K. Financial Services
Authority (the “UKLA Listing Rules”) and the laws of England and Wales.
|
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|
•
|
|
Rule 4350(c) requires that nominees to a company’s board of directors be
selected, or recommended for the board’s selection, either by a majority of the
company’s independent directors or by a nominations committee comprised solely of
independent directors. Nominees for Protherics’ Board are selected by its
Nomination Committee, which is comprised of six directors, four of whom are
non-executive directors meeting NASDAQ’s definition of “independent director.”
Dr. Heath, as the Company’s Chief Executive Officer, is not considered to be
“independent” under Nasdaq Rule 4350(c). Dr.
|
56
|
|
|
|
Gonella, a former director of
MacroMed, Inc, which the Company acquired in January 2007, was a party to a
consulting agreement with MacroMed and is, therefore, not deemed to be
“independent” under Rule 4350(c). As comprised, however, the Nomination Committee
complies with the UKLA Listing Rules and the laws of England and Wales.
|
|
|
|
|
•
|
|
Rule 4350(c) requires that the compensation of a listed company’s chief
executive officer and its other executive officers be determined or recommended to
the board of directors either by a majority of the company’s independent directors
or by a compensation committee comprised solely of independent directors.
Compensation of Protherics’ executive officers is determined by the Remuneration
Committee of the Board of Directors, which is currently comprised of four
non-executive directors meeting Nasdaq’s definition of “independent director.”
Dr. Gonella resigned from the Remuneration Committee on July 26, 2007 and, as
previously disclosed, was not considered “independent” under Rule 4350. As
comprised, the Remuneration Committee also complies with the UKLA Listing Rules
and the laws of England and Wales.
|
|
|
|
|
•
|
|
Rule 4350(i) requires that issuers obtain shareholder approval before a stock
option or purchase plan is established or materially amended or other equity
compensation arrangement is made pursuant to which stock may be acquired by
officers, directors, employees or consultants of the issuer, subject to certain
exceptions. The Company seeks shareholder approval for the adoption or amendment
of stock plans or stock purchase plans only as required by the Articles of
Association of the Company, the UKLA Listing Rules and the laws of England and
Wales. Subject to the exceptions permitted in the UKLA Listing Rules, this
involves seeking shareholder approval to any such plan that falls into either of
the following categories (as defined in the UKLA Listing Rules):
|
|
|
a)
|
|
an employees’ share scheme, if the scheme involves or may
involve the issue of new shares or the transfer of treasury shares; and
|
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|
|
|
b)
|
|
a long-term incentive scheme in which one or more directors
of the Company is eligible to participate; and
|
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|
c)
|
|
to non-minor amendments of any such scheme, to the extent
required by the rules of the relevant scheme. In this context, it should be
noted that the provisions of the rules relating to whether amendments to the
scheme rules must be approved by shareholders must themselves be drafted to
ensure compliance with the UKLA Listing Rules.
|
Executive Compensation
The following overall policy has applied throughout the year and is intended to continue to
apply for the financial year ending March 31, 2009.
|
|
•
|
|
Executive remuneration packages are prudently designed to attract, motivate and
retain Directors of the necessary calibre and to reward them for enhancing value
to shareholders; and
|
|
|
|
|
•
|
|
a substantial proportion of the remuneration of the Executive Directors should
be performance related. This is delivered through participation in the Company’s
Deferred Bonus Plan and Long Term Incentive Plan, both of which are structured to
deliver share based payments which will align Directors’ interests with those of
shareholders and to reward participants for creating shareholder value.
|
57
The Remuneration Committee (the “Committee”) undertakes an annual review of market practice
and considers the remuneration levels of directors in companies of similar size from within and
outside of the industry sector. Overall reward levels depend on the achievement of corporate and
individual performance targets. To this extent the Committee has reviewed the Company’s share
incentive schemes and believes that grant levels and performance criteria remain appropriate to the
Company’s current circumstances and prospects.
The main elements of the remuneration package for Executive Directors and Senior Management to
date have been:
Fixed
|
|
•
|
|
Basic salary and benefits in kind
|
Variable
|
|
•
|
|
Annual incentive under the Deferred Bonus Plan (the “DBP”)
|
|
|
|
|
•
|
|
Long Term Incentive Plan (the “LTIP”)
|
|
|
|
|
•
|
|
Share option plans
|
For the Executive Directors, the proportion of fixed to variable remuneration is approximately
35% fixed to 65% variable at maximum. Only the basic salary element is pensionable.
|
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|
|
|
|
|
|
|
Policy
|
|
Performance Targets
|
|
|
|
|
|
|
|
Base Salary
|
|
Reflects market competitive level for
the role and individual contribution
|
|
Individual contribution
|
|
|
|
|
|
|
|
Annual incentive
under the DBP
|
|
• Maximum award 75% of base
salary for fiscal year 2008 (50% for
fiscal years 2006 and 2007)
|
|
Personal performance
targets, specific to
individual directors.
|
|
|
|
|
|
|
|
|
|
• Awards in excess of 50% of
base salary are subject to
significantly more stretching
performance conditions (fiscal year
2008 only)
|
|
Deferred portion
awarded as an option
over shares, vesting
after two years
|
|
|
|
|
|
|
|
|
|
• 50% of the award generally
deferred into shares
|
|
|
|
|
|
|
|
|
|
Long-Term Incentive
Plan
|
|
• LTIP is used as the primary
incentive mechanism for Executive
Directors and members of Senior
Management.
|
|
Total Shareholder
Return against FTSE
All Share
Pharmaceutical & Biotech companies
(excluding FTSE 100
companies)
|
|
|
|
|
|
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|
|
|
• Grants up to 100% of base
salary
|
|
|
|
|
|
|
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|
2005 Executive
Share Option Plan
|
|
• Not currently used for Executive Directors
• In any event, other than in
exceptional circumstances, no
|
|
Grants made to Senior
Management below Board
level are based on
Total Shareholder
Return against FTSE
All Share
Pharmaceutical &
Biotech companies
(excluding FTSE 100
companies)
|
58
|
|
|
|
|
|
|
|
|
Policy
|
|
Performance Targets
|
|
|
|
combined
award could be made under both the
LTIP and the Executive Share Option
Plan in any one year which would
exceed 200% of salary
|
|
|
|
|
•
|
|
Basic salaries and benefits in kind
|
Basic salaries are determined by the Remuneration Committee prior to the beginning of each
year and when an individual changes position or responsibility. In deciding appropriate levels, the
Committee considers the Company as a whole and takes into account the performance of the individual
and the rates for similar positions in comparable companies. Basic salaries are reviewed annually.
The principal benefits in kind include permanent health insurance and private medical
insurance. Benefits in kind are not pensionable.
|
|
•
|
|
Annual incentive under the Deferred Bonus Plan
|
The purpose of the DBP is to reward participants for performance over the previous financial
year and to provide an element of retention through the payment of part of any award in deferred
shares.
Participation in the DBP is at the discretion of the Committee. Current policy is to grant
awards annually to Executive Directors and Senior Management.
The maximum bonus award under the DBP is up to 75% of base salary, provided that, to the
extent that an award exceeds 50% of base salary, the vesting of such excess will, in the opinion of
the Remuneration Committee, be dependent on the achievement of significantly more stretching
Performance Targets. This allows the Company to structure and offer a remuneration package that is
sufficiently competitive to attract and incentivise the right caliber of individuals and reflects
current market practice.
While the Committee cannot disclose the actual performance targets due to commercial
sensitivity, it is satisfied that these are appropriately challenging for the level of award that
may vest. The measures for the financial year ending March 31, 2008 were based on performance
targets specific to each Director’s area of responsibility which were considered to be key to the
long term success of the business. Performance targets for the year ending March 31, 2009 will
continue to follow this policy.
For the year ending March 31, 2008 the Directors were awarded the following bonuses:
|
|
|
|
|
|
|
|
|
Bonus as % of base salary
|
|
J.C. Christie
|
|
|
50
|
%
|
|
A.J. Heath
|
|
|
50
|
%
|
|
S. Komisar
|
|
|
50
|
%
|
|
B.M. Riley
|
|
|
40
|
%
|
|
R.B. Soderstrom
|
|
|
50
|
%
(1)
|
|
|
|
|
|
(1)
|
|
The bonus payable to R.B. Soderstrom for the year to March 31, 2008 is on a
pro rata basis to his period of service.
|
59
At the discretion of the Remuneration Committee, the award under the DBP is payable in cash or
as deferred shares, or a proportion of cash and deferred shares. The Remuneration Committee
decides each year what proportion of the annual incentive should be delivered as deferred shares,
but usual policy is 50%.
Where a proportion of the award is delivered as deferred shares, these are normally granted in
the form of options. The number of deferred shares is calculated by dividing the amount of the
bonus by the market value of the shares on the date of grant, or such other day as the Committee
may determine. Options will normally be granted at nominal value and will be exercisable between
two and ten years from date of grant. If the individual leaves within the two year deferral
period, under normal circumstances the option is forfeited. However, the Committee retains the
discretion to allow the individual to retain the shares if appropriate.
Further details of awards made under this plan are discussed later in this section within
“Share Options and Warrants Granted in Protherics PLC”.
The Company operates a defined contribution pension scheme for the benefit of Executive
Directors and employees. Their dependants are eligible for a lump sum in the event of death in
service. The assets of the pension scheme are held separately from those of the Company. The
Committee may make payments to the pension scheme in lieu of bonuses or salary increases, at its
discretion. In the year ending March 31, 2008, Directors and Senior Management were given the
opportunity to waive all rights to receive an annual bonus under the Deferred Bonus Plan and, at
the sole discretion of the Remuneration Committee, the Company would make additional contributions
to the Company’s Pension Plan on behalf of those Directors and Senior Managers.
|
|
•
|
|
Long Term Incentive Plan
|
The LTIP is used as the primary incentive mechanism for Executive Directors and members of
senior management. Other key employees are also invited to participate. Other than in exceptional
circumstances, awards will not be granted in any year with a value greater than the individual’s
annual remuneration (excluding bonuses and benefits in kind). Current policy is to grant awards to
Directors and Senior Management at six-monthly intervals.
Subject to the achievement of the relevant performance conditions, awards will normally vest
three years from date of grant. Option awards may then be exercised up to ten years from the date
of grant. The Committee may amend the performance conditions in certain circumstances, subject to
their replacement with equally stretching conditions.
In exceptional circumstances, the Committee may exercise its discretion to allow a proportion
of an award to vest on cessation of employment with the Company.
Further details of these plans are discussed later in this section within “Share Options and
Warrants Granted in Protherics PLC”.
|
|
•
|
|
Discretionary share option plans
|
The Company has previously operated an Approved Share Option Plan and an Unapproved Share
Option Plan for Directors and employees. These plans have now expired and no further options may
be granted under them. Options are normally exercisable up to ten years from date of grant.
60
In exception circumstances, the Remuneration Committee has discretion to waive or amend
performance conditions on awards under the LTIP and the 2005 Executive Share Option Plan. In using
this discretion, the Committee may consider, as appropriate, the extent to which the performance
period has elapsed and the performance conditions have been met over that period although this is
not required under the rules of the schemes.
Further details of these plans are discussed later in this section within “Share Options and
Warrants Granted in Protherics PLC”.
For information relating to these elements of the compensation packages for Executive
Directors, see Note 7 of the Notes to the Consolidated Financial Statements included herein at Item
17.
Executive Director Service Contracts
— The following executive directors of Protherics have
entered into service contracts with the Company, the details of which are as follows:
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|
|
|
|
|
|
|
|
|
|
|
Date of
|
|
|
|
Notice period due from
|
|
Director
|
|
Agreement
|
|
Annual salary
|
|
the Company
|
|
the Director
|
|
A. Heath
|
|
November 6, 2001
|
|
£301,250
U.S. $95,550
|
|
12 months
|
|
12 months
|
|
B.M. Riley
|
|
July 13, 1995
|
|
£190,000
(1)
|
|
12 months
|
|
6 months
|
|
R.B. Soderstrom
|
|
March 29, 2007
|
|
£220,000
|
|
12 months
|
|
12 months
|
|
J.C. Christie
|
|
September 21, 2000
|
|
£190,000
|
|
12 months
|
|
6 months
|
|
S. Komisar
|
|
June 8, 2007
|
|
$350,000
(2)
|
|
Nil
(3)
|
|
3 months
|
|
|
|
|
|
(1)
|
|
Mr. Riley resigned from the Board effective August 9, 2007.
|
|
|
|
(2)
|
|
Mr. Komisar and Mr. Soderstrom were appointed to the Board on April 26, 2007 and
August 9, 2007, respectively.
|
|
|
|
(3)
|
|
Mr. Komisar’s contract is terminable by the Company at any time upon written notice,
which shall specify the date of termination.
|
Termination of the contracts requires six months notice by the employee and twelve months
notice by the Company, with the exception of Dr. Heath and Mr. Soderstrom, where the notice periods
are twelve months from either party. Except in the case of Mr. Komisar, upon serving or receiving
notice, the Company has the right at its discretion to pay salary in lieu of notice. Under the
terms of Mr. Komisar’s contract, he is entitled to receive an amount equal to twelve months’ base
salary, in addition to certain other payments as detailed in the contract. There are no other
provisions for compensation payable upon early termination of the service contracts.
The executive directors of Protherics are also entitled to the following benefits: private
medical insurance for themselves and their immediate families, long term disability insurance, and
payment of professional memberships and subscriptions. In addition, the Company makes
contributions to a defined contribution pension for the executive directors amounting to 20% of
salary. In the case of Mr. Riley, the Company also made pension contributions of £23,000 in lieu of
salary. Further details as to benefits provided to each director are included in Note 7 of the
Notes to the Consolidated Financial Statements included herein at Item 17.
Pursuant to the terms of his agreement, Mr. Komisar is entitled to receive an annual bonus in
an amount to be determined by the Board. The Company also has a bonus scheme under which the
remuneration committee may award the executive directors of Protherics bonuses of up to 50% of
salary, rising to 75% for year ended March 31, 2008.
Except as set out above, there are no existing or proposed service contracts between the
executive directors and any member of the Company.
61
B.M. Riley resigned from the Board effective August 9, 2007. Notice to terminate his
employment was effective from October 30, 2007 after a period of accrued leave. In accordance with
his service contract, he will receive twelve months’ salary payable monthly in arrears as
compensation for loss of office. He will continue to receive company pension contributions and
normal benefits in kind during the twelve months notice period and will participate in the Deferred
Bonus Plan for the year to March 31, 2009 on a pro rata basis. Mr. Riley has agreed to enter into
a one-year Consultancy Agreement with the Company effective November 12, 2008, under which he will
receive a monthly consultancy fee of £8,000 payable in arrears.
Non-Executive Director Letters of Appointment
— Pursuant to a consultancy agreement dated
April 1, 2007, Mr. Wallis is to receive £25,000 annually for the provision of strategic consulting
services to the Company. The agreement is terminable by 12 months notice from either party. In
addition, Mr. Wallis is entitled to receive remuneration for his services as Chairman of the Board
under a letter of appointment dated September 1, 1998, subsequently amended by agreement and
replaced by a new letter of appointment dated May 24, 2007. Under these varying letters of
appointment, Mr. Wallis received £54,167 in fiscal year 2008. These letters of appointment also
entitled Mr. Wallis to receive a fully expensed automobile and are terminable by either party on 12
months notice.
Mr. Watts has a letter of appointment dated January 19, 2004 under which he received £37,500
in fiscal year 2008. The appointment is terminable by either party on 3 months notice.
Dr. Brown has a letter of appointment dated February 23, 2004 under which he received £37,500
in fiscal year 2008. The appointment is terminable by either party on 3 months notice.
Mr. Morton has a letter of appointment dated July 21, 2005 under which he received £32,500 in
fiscal year 2008. The appointment is terminable by either party on 3 months notice.
Dr. Gonella has a letter of appointment dated January 20, 2007 under which he received £32,500
in fiscal year 2008. The appointment is terminable by either party on 3 months notice.
Employees
The number of persons, including directors, employed by the Company as of March 31, 2008, 2007
and 2006, broken down by activity and geographic location, is shown below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
2007
|
|
2006
|
|
|
|
U.K.
|
|
U.S.
|
|
Australia
|
|
U.K.
|
|
U.S.
|
|
Australia
|
|
U.K.
|
|
U.S.
|
|
Australia
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Management
|
|
|
43
|
|
|
|
4
|
|
|
|
3
|
|
|
|
36
|
|
|
|
3
|
|
|
|
5
|
|
|
|
30
|
|
|
|
2
|
|
|
|
4
|
|
|
Administration
|
|
|
24
|
|
|
|
10
|
|
|
|
8
|
|
|
|
24
|
|
|
|
12
|
|
|
|
5
|
|
|
|
28
|
|
|
|
5
|
|
|
|
3
|
|
|
Research and
production
|
|
|
127
|
|
|
|
36
|
|
|
|
53
|
|
|
|
119
|
|
|
|
32
|
|
|
|
30
|
|
|
|
106
|
|
|
|
7
|
|
|
|
29
|
|
|
Total
|
|
|
194
|
|
|
|
50
|
|
|
|
64
|
|
|
|
169
|
|
|
|
47
|
|
|
|
40
|
|
|
|
164
|
|
|
|
14
|
|
|
|
36
|
|
Briefing and consultative procedures exist throughout the Company to keep employees informed
on general business issues and other matters of concern. The Company has a policy of offering
share options to all eligible employees, subject to availability under the option plan rules. None
of the Company’s U.S. employees are subject to a collective bargaining agreement, and the Company
has never experienced a work stoppage.
The Company has made every effort to ensure that the principal members of its management and
research team are suitably incentivized, but the retention of such staff cannot be guaranteed, and
the loss
62
of their services could materially adversely affect the ability of the Company to achieve its
planned development objectives.
Share Ownership
The following table sets forth, for each executive and non-executive director of the Company,
their interest in the ordinary shares of the Company (including the interests of their immediate
families and persons connected with them) and the percentage of the Company’s outstanding share
capital represented by such ownership interests as of July 4, 2008.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6% Convertible
|
|
|
|
Ordinary
|
|
|
|
|
|
Loan Notes
|
|
Name
|
|
shares owned
|
|
Percentage
|
|
(£)
(1)
|
|
S.M. Wallis
|
|
|
566,689
|
|
|
|
0.17
|
%
|
|
|
60,606
|
|
|
A.J. Heath
|
|
|
419,810
|
|
|
|
0.12
|
%
|
|
|
24,242
|
|
|
R. B. Soderstrom
|
|
|
20,000
|
|
|
|
0.01
|
%
|
|
|
—
|
|
|
J.C. Christie
|
|
|
31,885
|
|
|
|
0.01
|
%
|
|
|
—
|
|
|
S. Komisar
|
|
|
27,594
|
|
|
|
0.01
|
%
|
|
|
—
|
|
|
G. Watts
|
|
|
90,000
|
|
|
|
0.03
|
%
|
|
|
—
|
|
|
J.R. Brown
|
|
|
22,500
|
|
|
|
0.01
|
%
|
|
|
—
|
|
|
B.G. Morton
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
J. Gonella
(2)
|
|
|
9,162,017
|
(2)
|
|
|
2.68
|
%
|
|
|
—
|
|
|
|
|
|
|
(1)
|
|
The 6% Loan Notes are convertible into ordinary shares at 25p per ordinary
share from December 19, 2004 and expire by their terms on June 19, 2010.
|
|
|
|
(2)
|
|
Dr. Gonella received the above shares in consideration for his interest in
MacroMed, Inc. when it was acquired by the Company in January 2007.
|
Share Options and Warrants Granted in Protherics PLC
The Company has operated an approved share option plan, an unapproved share option plan and an
approved savings related share option plan for executive directors and employees to motivate those
individuals through equity participation in the Company. A separate option plan was set up for the
benefit of certain former Therapeutic Antibodies employees at the time of the 1999 merger.
On January 27, 2005, the Company adopted a Long-term Incentive Plan (“LTIP”), a Deferred Bonus
Plan (“DBP”) and an Executive Share Option Plan (“ESOP”) consisting of an unapproved section with a
linked Inland Revenue approved addendum. The Company has also granted individual unapproved
options. The plans are overseen by the Remuneration Committee, which determines the amounts and
terms of awards granted to eligible individuals under each plan. Details of the plans under which
options have been granted are set out below.
|
|
•
|
|
2005 Executive Share Option Plan (the “ESOP”).
|
The option price is the greater of the market value of the shares on the date of grant (or the
average market values on the three days immediately preceding the date of grant if the Committee so
determines) and the nominal value of the shares. In any year, the value of options granted to an
individual will not exceed twice the individual’s annual remuneration (excluding bonuses,
commissions and benefits in kind). This limit may be exceeded in exceptional circumstances at the
discretion of the Remuneration Committee.
63
Subject to satisfying conditions that are imposed at the time options are granted, which are
normally market-based, options will be exercisable from the end of the vesting period, normally
three years from the date of grant, to ten years from the date of grant. The Committee may waive
the conditions, in certain circumstances subject to their replacement with equally stringent
conditions. The Committee retains discretion not to set conditions for awards made to employees
who are not Executive Directors.
|
|
•
|
|
2005 Long-term Incentive Plan (the “LTIP”)
|
Awards under the LTIP are made in the form of share options over new issue shares with an
award price equal to the aggregate nominal value of the number of shares under option. The
Remuneration Committee’s current policy is to grant awards twice yearly. The value of awards
granted in a one-year period will not exceed the amount of the individual’s annual remuneration
(excluding bonuses and benefits in kind). This limit may be exceeded in exceptional circumstances
at the discretion of the Committee.
Provided the Remuneration Committee is satisfied that the Company has achieved sound
underlying performance, awards will vest based on the Company’s Total Shareholder Return (“TSR”).
Performance will be measured after three years from the date of grant by measuring the Company’s
TSR against a comparator group consisting of the primary listed components of the FTSE All Share
Pharmaceutical and Biotech Index but excluding those companies in the FTSE 100 (currently
AstraZeneca PLC, GlaxoSmithKline PLC and Shire plc). TSR will normally be averaged across a period
of three months before the date of the award and three months before the date on which the
performance period ends, although the Committee may determine that a different averaging period is
appropriate and properly reflective of management performance. In any event, this will not be more
than six months or less than one month. This is in keeping with normal market practice and is a
practical adjustment to smooth out the impact of short-term market influences and to provide a more
robust measure of the performance of the Company. Awards will vest, on a sliding scale between each
step, as follows:
|
|
|
|
|
|
|
|
|
% of total
|
|
Protherics PLC TSR relative to comparator group
|
|
award vesting
|
|
|
|
Upper decile
|
|
|
100
|
%
|
|
Upper quartile
|
|
|
80
|
%
|
|
Median
|
|
|
30
|
%
|
|
Below median
|
|
Nil
|
Measuring the Company’s performance against these comparators recognizes the importance for
shareholders that the Company outperform its sector and reflects the importance of the Company’s
aim of sustainable share price growth. In addition, the Remuneration Committee must be satisfied
that the Company has achieved sound underlying performance.
Under the LTIP, the Board has also adopted a Performance Share Plan, pursuant to which the
Company may make conditional awards of ordinary shares to eligible employees, subject to the
achievement of certain targets, which are normally market-based, as determined by the Remuneration
Committee.
|
|
•
|
|
2005 Deferred Bonus Plan (the “DBP”)
|
Awards under the DBP may be paid, at the discretion of the Remuneration Committee, in the form
of cash or options to purchase ordinary shares, subject to achieving certain performance targets
set by the Committee. In fiscal year 2007, the maximum award was set at 50% of base salary, but
could be exceeded in exceptional circumstances. For fiscal year 2008, this maximum award was
increased to 75%
64
following approval by the shareholders on July 26, 2007. The receipt of the additional 25% is
subject to performance targets that are significantly more demanding than those applied to the
first 50%. Performance is measured against annual targets, which are set for each individual
participant and are determined with reference to the requisite performance for achieving the
overall strategic objectives of the business. These targets may be amended should the Remuneration
Committee consider this to be in the interests of the Company, subject to their replacement with
equally stringent conditions. The Committee will determine the extent to which the award will be
delivered as cash or, as an option over the Company’s ordinary shares.
Where awards under this plan are delivered as an option, the number of shares under the award
is calculated by dividing the amount of the bonus by the market value of the shares on the date on
which the award vests, or such other day as the Committee determines. Options will normally be
granted at a nominal, or nil, exercise price and will normally be exercisable between two and ten
years after grant. If the individual leaves within the two year deferral period, under normal
circumstances the option is forfeited. The Committee retains the discretion to allow the
individual to retain the shares if appropriate.
Under the DBP, awards can be made in the form of options at nil or a nominal price per share.
Options were granted under the DBP on June 12, 2006, June 11, 2007 and June 9, 2008 at 2p per
share. Benefits arising under the DBP are not pensionable.
Under the DBP, the Board has also adopted a U.S. Sub-Plan providing for awards under the DBP
to eligible employees who are U.S. taxpayers.
|
|
•
|
|
Savings-related Share Option Plan
|
The Company also operates an Approved Savings Related Share Option Plan, which is open to all
employees with a minimum of six months service. Options may be granted under this Plan at a
discount of up to 20% from market value on the date immediately preceding the date of the
invitation made to employees to subscribe for options. All options granted under this plan during
the year and outstanding at March 31, 2008, have been made at a 20% discount. Options may be
exercised during the period of six months following maturity of the savings contract. Under the
rules of the plan, participants may choose either a three-year or a five-year savings contract.
There are no Company performance criteria under the Savings Related Share Option plan.
The Company has previously operated an approved share option plan, an unapproved share option
plan and an approved savings related share option plan for Executive Directors and employees to
motivate those individuals through equity participation in the Company. The Remuneration Committee
has responsibility for supervising the plans and the grant of options to Executive Directors under
the terms of the plans.
Under both the approved and unapproved share option plans, which have been used widely across
the Company, the exercise price of the options granted is equal to the market value of the
Company’s shares at the time the options are granted. Options issued prior to March 2004 may then
be exercised on any date between three and ten years from the date of grant of the option, subject
to the Company’s share price outperforming the average price of shares in the FTSE All Share
Pharmaceutical and Biotech Index in any three year period commencing on or after the date of grant
of the option. The Unapproved Plan requires that, for options granted to holders with an aggregate
value (at the date of grant) for all options between four and eight times annual salary, those
options may be exercised between five and ten years from the date of grant, subject to the Company
meeting the required performance criteria. Prior to December 1999, the Approved Plan required real
growth in earnings per share over three years. Initially, the Unapproved Plan, adopted by Proteus
International plc in 1996 prior to the merger with Therapeutic Antibodies Inc., contained Company
performance criteria intended for an early stage biotechnology
65
company, relating principally to the successful completion of agreements with milestone
payments generating revenue. The Board considered that the criteria was not appropriate to the more
mature business of Protherics PLC, and, under the plan rules, adopted the Company performance
criteria approved in December 1999 as likely to be a more fair and effective incentive.
The options granted on March 1, 2004 are subject to revised Company performance criteria
intended to improve compliance with best practice guidelines. Company performance could be
measured at any time after three years from grant. If the TSR of the Company reaches the median of
the FTSE All Share Pharmaceuticals and Biotech Index, one third of the shares under option become
exercisable, rising on a sliding scale such that all the shares under option become exercisable if
the Company’s performance is at or above the upper quartile. For options granted to holders with an
aggregate value (at the date of grant) for all executive plan options of between four and eight
times annual salary, Company performance will be measured after five years. No options are
exercisable if the TSR of the Company is at the median of the FTSE All Share Pharmaceutical and
Biotech Index. Options may then be exercised on a sliding scale beyond this point, with the maximum
number of shares being exercisable if the Company’s performance is at or above the upper quartile.
The Committee must also be satisfied that there has been an improvement in the Company’s underlying
financial performance over the period. These performance criteria were selected to incentivize
directors to enhance shareholder value above the Company’s peer group. On March 1, 2007, the
Company’s performance was measured on these options (excluding those required to be measured after
five years), and, based on the criteria, 81.74% of these options were considered to be vested by
the Remuneration Committee.
In addition, Dr. Heath was granted an option to subscribe for 600,000 ordinary shares at 39p
on December 22, 1999. The agreement was structured as an individual option agreement to facilitate
the retention of Dr. Heath as the Chief Executive Officer of the Company. The existing options
held by Dr. Heath had exercise prices significantly in excess of the then current market price and
in order to provide Dr. Heath with sufficient incentive, it was thought appropriate to enter into
the option agreement. The terms of the agreement are similar to those of the Unapproved Share
Option Plan. In particular, the option may generally be exercised only between the third and tenth
anniversaries of the date of grant, and on the date of exercise, the share price must have
outperformed the average of the FTSE All Share Pharmaceutical and Biotech Index in any preceding
three year period. An adjustment may be made to the number of shares under option or the exercise
price in the case of a variation in share capital, subject to confirmation by the auditors that it
is in their opinion fair and reasonable. The option lapses if Dr. Heath leaves the Company
voluntarily, and must be exercised within three months if his employment ceases by reason of
injury, disability, sickness or redundancy. The agreement confers no pensionable benefits. No
amendment may be made to the benefit of Dr. Heath except with the prior approval of the Company in
General Meeting except for minor amendments to benefit the administration of the agreement or to
obtain or maintain favorable tax, exchange control or regulatory treatment for Dr. Heath or the
Company or its subsidiaries. No such options have been exercised to date.
66
The table below sets forth the details of the Company’s outstanding share options as of June
30, 2008.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At April 1,
|
|
|
|
|
|
|
|
|
|
Cancelled
|
|
At June 30,
|
|
Exercise
|
|
Date exercisable
|
|
2007
|
|
Granted
|
|
Exercised
|
|
Or expired
|
|
2008
|
|
price (p)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Individual unapproved
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22 Dec 2002 to 21 Dec 2009
|
|
|
600,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
600,000
|
|
|
|
39.00
|
|
|
9 July 2002 to 8 July 2010
|
|
|
25,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
25,000
|
|
|
|
40.00
|
|
|
9 July 2002 to 8 July 2010
|
|
|
15,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
15,000
|
|
|
|
25.00
|
|
|
9 July 2002 to 31 May 2007
|
|
|
3,850
|
|
|
|
—
|
|
|
|
—
|
|
|
|
3,850
|
|
|
|
—
|
|
|
|
U.S.$6.00
|
|
|
21 Dec 2007 to 20 Jun 2009
|
|
|
40,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
40,000
|
|
|
|
86.00
|
|
|
21 Jun 2008 to 20 Jun 2010
|
|
|
40,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
40,000
|
|
|
|
86.00
|
|
|
Approved scheme
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
28 Jan 2003 to 27 Jan 2010
|
|
|
46,924
|
|
|
|
—
|
|
|
|
5,461
|
|
|
|
2,088
|
|
|
|
39,375
|
|
|
|
37.50
|
|
|
28 Feb 2004 to 27 Feb 2011
|
|
|
264,000
|
|
|
|
—
|
|
|
|
35,000
|
|
|
|
11,000
|
|
|
|
218,000
|
|
|
|
43.50
|
|
|
19 Feb 2009 to 15 Feb 2016
|
|
|
25,401
|
|
|
|
—
|
|
|
|
—
|
|
|
|
25,401
|
|
|
|
—
|
|
|
|
93.50
|
|
|
Unapproved scheme
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22 June 2001 to 21 June 2008
|
|
|
65,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
65,000
|
|
|
|
—
|
|
|
|
46.00
|
|
|
22 Dec 2002 to 21 Dec 2009
|
|
|
385,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
385,000
|
|
|
|
39.00
|
|
|
27 Jan 2003 to 26 Jan 2010
|
|
|
87,097
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2,440
|
|
|
|
84,657
|
|
|
|
37.50
|
|
|
2 Aug 2003 to 1 Aug 2010
|
|
|
2,908
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2,908
|
|
|
|
28.50
|
|
|
22 Feb 2004 to 21 Feb 2011
|
|
|
1,145,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,145,000
|
|
|
|
43.50
|
|
|
16 Jan 2005 to 15 Jan 2012
|
|
|
2,177,000
|
|
|
|
—
|
|
|
|
25,000
|
|
|
|
137,000
|
|
|
|
2,015,000
|
|
|
|
39.50
|
|
|
9 July 2005 to 8 July 2012
|
|
|
350,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
350,000
|
|
|
|
25.00
|
|
|
20 Jun 2006 to 19 Jun 2013
|
|
|
900,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
900,000
|
|
|
|
23.25
|
|
|
24 Jun 2006 to 23 Jun 2013
|
|
|
30,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
5,000
|
|
|
|
25,000
|
|
|
|
23.00
|
|
|
1 Mar 2007 to 28 Feb 2014
|
|
|
735,660
|
|
|
|
—
|
|
|
|
40,870
|
|
|
|
—
|
|
|
|
694,790
|
|
|
|
58.50
|
|
|
1 Mar 2009 to 28 Feb 2014
|
|
|
325,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
325,000
|
|
|
|
58.50
|
|
|
27 Sep 2009 to 26 Sep 2014
|
|
|
310,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
236,185
|
|
|
|
73,815
|
|
|
|
49.50
|
|
|
28 Feb 2008 to 27 Feb 2015
*(1)
|
|
|
716,475
|
|
|
|
—
|
|
|
|
132,420
|
|
|
|
584,055
|
|
|
|
—
|
|
|
|
2.00
|
|
|
19 Jul 2008 to 18 Jul 2015
*(2)
|
|
|
113,785
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
113,785
|
|
|
|
2.00
|
|
|
7 Sep 2008 to 6 Sep 2015
|
|
|
115,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
100,000
|
|
|
|
15,000
|
|
|
|
60.50
|
|
|
21 Dec 2008 to 20 Dec 2015
*(3)
|
|
|
763,665
|
|
|
|
—
|
|
|
|
—
|
|
|
|
11,607
|
|
|
|
752,058
|
|
|
|
2.00
|
|
|
21 Dec 2008 to 20 Dec 2015
|
|
|
85,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
85,000
|
|
|
|
78.50
|
|
|
12 Jun 2009 to 11 Jun 2016
*(4)
|
|
|
944,359
|
|
|
|
—
|
|
|
|
—
|
|
|
|
69,508
|
|
|
|
874,851
|
|
|
|
2.00
|
|
|
12 Jun 2008 to 11 Jun 2016
+(1)
|
|
|
109,806
|
|
|
|
—
|
|
|
|
36,818
|
|
|
|
5,331
|
|
|
|
67,657
|
|
|
|
2.00
|
|
|
12 Jun 2009 to 11 Jun 2016
|
|
|
10,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
10,000
|
|
|
|
86.00
|
|
|
11 Jul 2009 to 10 Jul 2016
|
|
|
50,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
50,000
|
|
|
|
—
|
|
|
|
78.50
|
|
|
22 Aug 2009 to 21 Aug 2016
*(5)
|
|
|
6,383
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
6,383
|
|
|
|
2.00
|
|
|
15 Dec 2009 to 14 Dec 2016
*(6)
|
|
|
970,615
|
|
|
|
—
|
|
|
|
—
|
|
|
|
77,185
|
|
|
|
893,430
|
|
|
|
2.00
|
|
|
15 Dec 2009 to 14 Dec 2016
|
|
|
50,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
50,000
|
|
|
|
—
|
|
|
|
73.75
|
|
|
5 Jan 2010 to 4 Jan 2017
|
|
|
630,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
60,000
|
|
|
|
570,000
|
|
|
|
72.25
|
|
|
11 Jun 2009 to 10 Jun 2017
+(2)
|
|
|
—
|
|
|
|
184,317
|
|
|
|
—
|
|
|
|
14,793
|
|
|
|
169,524
|
|
|
|
2.00
|
|
|
11 Jun 2010 to 10 Jun 2017
*(7)
|
|
|
—
|
|
|
|
1,620,901
|
|
|
|
—
|
|
|
|
141,343
|
|
|
|
1,479,558
|
|
|
|
2.00
|
|
|
11 Jun 2010 to 10 Jun 2017
|
|
|
—
|
|
|
|
50,000
|
|
|
|
—
|
|
|
|
50,000
|
|
|
|
—
|
|
|
|
58.75
|
|
|
17 Jul 2010 to 16 Jul 2017
*(7)
|
|
|
—
|
|
|
|
8,510
|
|
|
|
—
|
|
|
|
—
|
|
|
|
8,510
|
|
|
|
2.00
|
|
|
31 Jul 2010 to 30 Jul 2017
*(8)
|
|
|
—
|
|
|
|
19,633
|
|
|
|
—
|
|
|
|
—
|
|
|
|
19,633
|
|
|
|
2.00
|
|
|
10 Aug 2010 to 9 Aug 2017
*(9)
|
|
|
—
|
|
|
|
423,076
|
|
|
|
—
|
|
|
|
—
|
|
|
|
423,076
|
|
|
|
2.00
|
|
|
28 Sept 2010 to 17 Sept 2017
*(10)
|
|
|
—
|
|
|
|
17,346
|
|
|
|
—
|
|
|
|
—
|
|
|
|
17,346
|
|
|
|
2.00
|
|
|
23 Nov 2010 to 22 Nov 2017
*(11)
|
|
|
—
|
|
|
|
1,594,962
|
|
|
|
—
|
|
|
|
40,408
|
|
|
|
1,554,554
|
|
|
|
2.00
|
|
|
4 Dec 2010 to 3 Dec 2017
*(12)
|
|
|
—
|
|
|
|
13,302
|
|
|
|
—
|
|
|
|
—
|
|
|
|
13,302
|
|
|
|
2.00
|
|
|
9 Jun 2011 to 8 Jun 2018
*(13)
|
|
|
—
|
|
|
|
2,905,636
|
|
|
|
—
|
|
|
|
35,076
|
|
|
|
2,870,560
|
|
|
|
2.00
|
|
|
9 Jun 2010 to 8 Jun 2018
+(3)
|
|
|
—
|
|
|
|
523,380
|
|
|
|
—
|
|
|
|
—
|
|
|
|
523,380
|
|
|
|
2.00
|
|
|
Savings related options
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 Feb 2009 to 31 Jul 2009
|
|
|
245,954
|
|
|
|
—
|
|
|
|
—
|
|
|
|
87,449
|
|
|
|
158,505
|
|
|
|
65.00
|
|
|
1 Feb 2011 to 31 Jul 2011
|
|
|
381,924
|
|
|
|
—
|
|
|
|
—
|
|
|
|
256,600
|
|
|
|
125,324
|
|
|
|
65.00
|
|
|
1 Feb 2010 to 31 Jul 2010
|
|
|
68,424
|
|
|
|
—
|
|
|
|
—
|
|
|
|
13,033
|
|
|
|
55,391
|
|
|
|
58.00
|
|
|
1 Feb 2012 to 31 Jul 2012
|
|
|
115,749
|
|
|
|
—
|
|
|
|
—
|
|
|
|
78,484
|
|
|
|
37,265
|
|
|
|
58.00
|
|
|
1 Jan 2010 to 30 Jun 2010
|
|
|
—
|
|
|
|
285,759
|
|
|
|
—
|
|
|
|
22,325
|
|
|
|
263,434
|
|
|
|
2.00
|
|
67
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At April 1,
|
|
|
|
|
|
|
|
|
|
Cancelled
|
|
At June 30,
|
|
Exercise
|
|
Date exercisable
|
|
2007
|
|
Granted
|
|
Exercised
|
|
Or expired
|
|
2008
|
|
price (p)
|
|
1 Jan 2012 to 30 Jun 2012
|
|
|
—
|
|
|
|
379,746
|
|
|
|
—
|
|
|
|
—
|
|
|
|
379,746
|
|
|
|
|
2.00
|
|
Protherics PLC option plan for ex-Therapeutic Antibodies employees
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27 Jan 2000 to 29 June 2008
|
|
|
162,238
|
|
|
|
—
|
|
|
|
—
|
|
|
|
162,238
|
|
|
|
—
|
|
|
175.0 to 312.0
|
|
|
|
|
|
|
13,112,217
|
|
|
|
8,026,568
|
|
|
|
275,569
|
|
|
|
2,397,399
|
|
|
|
18,465,817
|
|
|
|
|
|
|
|
|
|
|
|
|
*
|
|
Options issued or conditional shares awarded under the Long Term Incentive Plan approved by
the shareholders on January 27, 2005. The price of a share at the date of grant was
(1)
54.75p,
(2)
57.00p,
(3)
78.50p,
(4)
85.00p,
(5)
79.25p,
(6)
73.75p,
(7)
58.75p,
(8)
47.75p,
(9)
52.00p,
(10)
49.00p,
(11)
53.75p,
(12)
54.75p and
(13)
37.00p.
|
|
|
|
+
|
|
Options issued or conditional shares awarded under the Deferred Bonus Plan approved by the
shareholders on January 27, 2005. The price of a share at the date of grant was
(1)
85.00p,
(2)
58.75p and
(3)
37.00p.
|
At March 31, 2008, there were no unexercised warrants (2007: nil; 2006: nil) for ordinary
shares, however, there are unexercised warrants for 100,000 (2007: 100,000, 2006: 212,500) ordinary
shares in Enact Pharma PLC which expire on July 9, 2012 and are exercisable at 30p per share.
Should these be exercised, the Company is entitled to repurchase these shares by issuing £17.05 6%
convertible loan notes (“6% Loan Notes”) per 100 Enact Pharma PLC ordinary shares. The 6% Loan
Notes became convertible at 25p per ordinary share on December 19, 2004. The terms of the 6% Loan
Notes permit the Company to repurchase the 6% Loan Notes at any time by tender (available to all
holders alike) or by privately negotiated transactions with individual holders at any price.
68
Share Options held by Directors of Protherics PLC
Details of share options granted to directors are set forth in the table below as of June 30, 2008.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At April
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At June
|
|
Exercise
|
|
Exercisable
|
|
|
|
|
|
1, 2007
|
|
Granted
|
|
Exercised
|
|
Cancelled
|
|
30, 2008
|
|
Price (p)
|
|
From
|
|
To
|
|
Unapproved options
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
B. M. Riley
(2)
|
|
Unapproved
|
|
|
65,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
65,000
|
|
|
|
46.00
|
|
|
22 Jun 2001
|
|
21 Jun 2008
|
|
|
|
Unapproved
|
|
|
50,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
50,000
|
|
|
|
39.00
|
|
|
22 Dec 2002
|
|
21 Dec 2009
|
|
|
|
Unapproved
|
|
|
120,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
120,000
|
|
|
|
43.50
|
|
|
22 Feb 2004
|
|
30 Apr 2010
|
|
|
|
Unapproved
|
|
|
350,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
350,000
|
|
|
|
39.50
|
|
|
16 Jan 2005
|
|
30 Apr 2010
|
|
|
|
Unapproved
|
|
|
200,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
200,000
|
|
|
|
23.25
|
|
|
20 Jun 2006
|
|
30 Apr 2010
|
|
|
|
Unapproved
|
|
|
183,915
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
183,915
|
|
|
|
58.50
|
|
|
1 Mar 2007
|
|
30 Apr 2010
|
|
|
|
LTIP
|
|
|
132,420
|
|
|
|
—
|
|
|
|
132,420
|
(4)(6)
|
|
|
—
|
|
|
|
—
|
|
|
|
2.00
|
(7)
|
|
28 Feb 2008
|
|
30 Apr 2010
|
|
|
|
LTIP
|
|
|
92,357
|
|
|
|
—
|
|
|
|
—
|
|
|
|
4,302
|
(3)
|
|
|
88,055
|
(4)
|
|
|
2.00
|
(8)
|
|
1 Nov 2008
|
|
30 Apr 2010
|
|
|
|
LTIP
|
|
|
102,128
|
|
|
|
—
|
|
|
|
—
|
|
|
|
20,892
|
(3)
|
|
|
81,236
|
(4)
|
|
|
2.00
|
(9)
|
|
1 Nov 2008
|
|
30 Apr 2010
|
|
|
|
LTIP
|
|
|
119,322
|
|
|
|
—
|
|
|
|
—
|
|
|
|
44,678
|
(3)
|
|
|
74,644
|
(4)
|
|
|
2.00
|
(10)
|
|
1 Nov 2008
|
|
30 Apr 2010
|
|
|
|
LTIP
|
|
|
—
|
|
|
|
161,702
|
|
|
|
—
|
|
|
|
86,832
|
(3)
|
|
|
74,870
|
(4)
|
|
|
2.00
|
(11)
|
|
1 Nov 2008
|
|
30 Apr 2010
|
|
|
|
|
|
|
|
|
|
|
1,415,142
|
|
|
|
161,702
|
|
|
|
132,420
|
|
|
|
156,704
|
|
|
|
1,287,720
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
J. C. Christie
|
|
Unapproved
|
|
|
250,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
250,000
|
|
|
|
39.00
|
|
|
22 Dec 2002
|
|
21 Dec 2009
|
|
|
|
Unapproved
|
|
|
80,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
80,000
|
|
|
|
43.50
|
|
|
22 Feb 2004
|
|
21 Feb 2011
|
|
|
|
Unapproved
|
|
|
250,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
250,000
|
|
|
|
39.50
|
|
|
16 Jan 2005
|
|
15 Jan 2012
|
|
|
|
Unapproved
|
|
|
100,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
100,000
|
|
|
|
23.25
|
|
|
20 Jun 2006
|
|
19 Jun 2013
|
|
|
|
Unapproved
|
|
|
122,610
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
122,610
|
|
|
|
58.50
|
|
|
1 Mar 2007
|
|
28 Feb 2014
|
|
|
|
LTIP
|
|
|
111,416
|
|
|
|
—
|
|
|
|
—
|
|
|
|
111,416
|
|
|
|
—
|
|
|
|
2.00
|
(7)
|
|
28 Feb 2008
|
|
27 Feb 2015
|
|
|
|
LTIP
|
|
|
77,707
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
77,707
|
|
|
|
2.00
|
(8)
|
|
21 Dec 2008
|
|
20 Dec 2015
|
|
|
|
LTIP
|
|
|
101,547
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
101,547
|
|
|
|
2.00
|
(9)
|
|
12 Jun 2009
|
|
11 Jun 2016
|
|
|
|
LTIP
|
|
|
118,644
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
118,644
|
|
|
|
2.00
|
(10)
|
|
15 Dec 2009
|
|
14 Dec 2016
|
|
|
|
LTIP
|
|
|
—
|
|
|
|
161,702
|
|
|
|
—
|
|
|
|
—
|
|
|
|
161,702
|
|
|
|
2.00
|
(11)
|
|
11 Jun 2010
|
|
10 Jun 2017
|
|
|
|
LTIP
|
|
|
—
|
|
|
|
176,744
|
|
|
|
—
|
|
|
|
—
|
|
|
|
176,744
|
|
|
|
2.00
|
(13)
|
|
23 Nov 2010
|
|
22 Nov 2017
|
|
|
|
LTIP
|
|
|
—
|
|
|
|
270,270
|
|
|
|
—
|
|
|
|
—
|
|
|
|
270,270
|
|
|
|
2.00
|
(14)
|
|
9 Jun 2011
|
|
8 Jun 2018
|
|
|
|
DBP
|
|
|
—
|
|
|
|
128,378
|
|
|
|
—
|
|
|
|
—
|
|
|
|
128,378
|
|
|
|
2.00
|
(14)
|
|
9 Jun 2010
|
|
8 Jun 2018
|
|
|
|
SAYE
|
|
|
14,384
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
14,384
|
|
|
|
65.00
|
|
|
1 Feb 2009
|
|
31 Jul 2009
|
|
|
|
Total
|
|
|
|
|
|
|
1,226,308
|
|
|
|
737,094
|
|
|
|
—
|
|
|
|
111,416
|
|
|
|
1,851,986
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
S. Komisar
(1)
|
|
Unapproved
|
|
|
15,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
15,000
|
|
|
|
39.00
|
|
|
22 Dec 2002
|
|
21 Dec 2009
|
|
|
|
Unapproved
|
|
|
11,629
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
11,629
|
|
|
|
37.50
|
|
|
27 Jan 2003
|
|
26 Jan 2010
|
|
|
|
Unapproved
|
|
|
200,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
200,000
|
|
|
|
43.50
|
|
|
22 Feb 2004
|
|
21 Feb 2011
|
|
|
|
Unapproved
|
|
|
150,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
150,000
|
|
|
|
23.25
|
|
|
20 Jun 2006
|
|
19 Jun 2013
|
|
|
|
Unapproved
|
|
|
143,045
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
143,045
|
|
|
|
58.50
|
|
|
1 Mar 2007
|
|
28 Feb 2014
|
|
|
|
LTIP
|
|
|
100,251
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
100,251
|
|
|
|
2.00
|
(7)
|
|
19 Jul 2008
(5)
|
|
|
|
|
|
|
|
LTIP
|
|
|
72,380
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
72,380
|
|
|
|
2.00
|
(8)
|
|
21 Dec 2008
(5)
|
|
|
|
|
|
|
|
LTIP
|
|
|
91,456
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
91,456
|
|
|
|
2.00
|
(9)
|
|
12 Jun 2009
(5)
|
|
|
|
|
|
|
|
LTIP
|
|
|
100,173
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
100,173
|
|
|
|
2.00
|
(10)
|
|
15 Dec 2009
(5)
|
|
|
|
|
|
|
|
LTIP
|
|
|
—
|
|
|
|
151,396
|
|
|
|
—
|
|
|
|
—
|
|
|
|
151,396
|
|
|
|
2.00
|
(11)
|
|
11 Jun 2010
(5)
|
|
|
|
|
|
|
|
LTIP
|
|
|
—
|
|
|
|
157,980
|
|
|
|
—
|
|
|
|
—
|
|
|
|
157,980
|
|
|
|
2.00
|
(13)
|
|
23 Nov 2010
(5)
|
|
|
|
|
|
|
|
LTIP
|
|
|
—
|
|
|
|
252,460
|
|
|
|
—
|
|
|
|
—
|
|
|
|
252,460
|
|
|
|
2.00
|
(14)
|
|
9 Jun 2011
(5)
|
|
|
|
|
|
|
|
DBP
|
|
|
27,594
|
|
|
|
—
|
|
|
|
27,594
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2.00
|
(9)
|
|
12 Jun 2008
(5)
|
|
|
|
|
|
|
|
DBP
|
|
|
—
|
|
|
|
50,177
|
|
|
|
—
|
|
|
|
—
|
|
|
|
50,177
|
|
|
|
2.00
|
(11)
|
|
11 Jun 2009
(5)
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
911,528
|
|
|
|
612,013
|
|
|
|
27,594
|
|
|
|
—
|
|
|
|
1,495,947
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
A. J. Heath
|
|
TA Plan
|
|
|
116,300
|
|
|
|
—
|
|
|
|
—
|
|
|
|
116,300
|
|
|
|
—
|
|
|
|
175.00
|
|
|
27 Jan 2000
|
|
29 Jun 2008
|
|
|
|
Unapproved
|
|
|
500,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
500,000
|
|
|
|
43.50
|
|
|
22 Feb 2004
|
|
21 Feb 2011
|
|
|
|
Unapproved
|
|
|
1,000,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,000,000
|
|
|
|
39.50
|
|
|
16 Jan 2005
|
|
15 Jan 2012
|
|
|
|
Unapproved
|
|
|
300,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
300,000
|
|
|
|
23.25
|
|
|
20 Jun 2006
|
|
19 Jun 2013
|
|
|
|
Unapproved
|
|
|
325,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
325,000
|
|
|
|
58.50
|
|
|
1 Mar 2009
|
|
28 Feb 2014
|
69
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At April
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At June
|
|
Exercise
|
|
Exercisable
|
|
|
|
|
|
1, 2007
|
|
Granted
|
|
Exercised
|
|
Cancelled
|
|
30, 2008
|
|
Price (p)
|
|
From
|
|
To
|
|
|
|
LTIP
|
|
|
221,233
|
|
|
|
—
|
|
|
|
—
|
|
|
|
221,233
|
|
|
|
—
|
|
|
|
2.00
|
(7)
|
|
28 Feb 2008
|
|
27 Feb 2015
|
|
|
|
LTIP
|
|
|
157,556
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
157,556
|
|
|
|
2.00
|
(8)
|
|
21 Dec 2008
|
|
20 Dec 2015
|
|
|
|
LTIP
|
|
|
186,507
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
186,507
|
|
|
|
2.00
|
(9)
|
|
12 Jun 2009
|
|
11 Jun 2016
|
|
|
|
LTIP
|
|
|
215,304
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
215,304
|
|
|
|
2.00
|
(10)
|
|
15 Dec 2009
|
|
14 Dec 2016
|
|
|
|
LTIP
|
|
|
—
|
|
|
|
297,661
|
|
|
|
—
|
|
|
|
—
|
|
|
|
297,661
|
|
|
|
2.00
|
(11)
|
|
11 Jun 2010
|
|
10 Jun 2017
|
|
|
|
LTIP
|
|
|
—
|
|
|
|
325,581
|
|
|
|
—
|
|
|
|
—
|
|
|
|
325,581
|
|
|
|
2.00
|
(13)
|
|
23 Nov 2010
|
|
22 Nov 2017
|
|
|
|
LTIP
|
|
|
—
|
|
|
|
500,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
500,000
|
|
|
|
2.00
|
(14)
|
|
9 Jun 2011
|
|
8 Jun 2018
|
|
|
|
Individual Plan
|
|
|
600,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
600,000
|
|
|
|
39.00
|
|
|
22 Dec 2002
|
|
21 Dec 2009
|
|
|
|
Total
|
|
|
|
|
|
|
3,621,900
|
|
|
|
1,123,242
|
|
|
|
—
|
|
|
|
337,533
|
|
|
|
4,407,609
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R. B.
|
|
LTIP
|
|
|
—
|
|
|
|
423,076
|
|
|
|
—
|
|
|
|
—
|
|
|
|
423,076
|
|
|
|
2.00
|
(12)
|
|
10 Aug 2010
|
|
9 Aug 2017
|
|
Soderstrom
(1)
|
|
LTIP
|
|
|
—
|
|
|
|
204,651
|
|
|
|
—
|
|
|
|
—
|
|
|
|
204,651
|
|
|
|
2.00
|
(13)
|
|
23 Nov 2010
|
|
22 Nov 2017
|
|
|
|
LTIP
|
|
|
—
|
|
|
|
313,513
|
|
|
|
—
|
|
|
|
—
|
|
|
|
313,513
|
|
|
|
2.00
|
(14)
|
|
9 Jun 2011
|
|
8 Jun 2018
|
|
|
|
DBP
|
|
|
—
|
|
|
|
99,099
|
|
|
|
—
|
|
|
|
—
|
|
|
|
99,099
|
|
|
|
2.00
|
(14)
|
|
9 Jun 2010
|
|
8 Jun 2018
|
|
|
|
Total
|
|
|
|
|
|
|
—
|
|
|
|
1,040,339
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,040,339
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Messrs.Komisar and Soderstrom were appointed to the Board on April 26, 2007 and
August 9, 2007 respectively. Their options are stated as at their date of appointment.
|
|
|
|
(2)
|
|
Mr. Riley resigned from the Board effective August 9, 2007.
|
|
|
|
(3)
|
|
Following Mr. Riley’s resignation from the Board, these awards were forfeited to
the extent shown (see Note 4 below).
|
|
|
|
(4)
|
|
Having carefully considered Mr. Riley’s performance during his tenure as Finance
Director and with due regard to the requirement to mitigate loss, the Committee has exercised
its discretion under the terms of the Long Term Incentive Plan to allow a proportion of Mr.
Riley’s LTIP option awards to vest with effect from August 9, 2007, being the effective date
of his resignation from the Board. In determining whether it was appropriate to exercise this
discretion, the Committee gave due consideration to Mr. Riley’s achievements in delivering
shareholder value during his tenure as a Director of the Company. The percentage of the LTIP
option awards vesting was time apportioned from the date of grant of the award to the date of
his termination of employment with the Company on October 30, 2008. All options held by Mr.
Riley under the Unapproved Scheme at the time of his resignation from the Board had met the
relevant performance conditions and were exercisable in full. The Committee has determined
that Mr. Riley’s LTIP and Unapproved options will expire 18 months from his termination date,
or, if earlier, ten years from the their date of grant.
|
|
|
|
(5)
|
|
Awards made under the terms of the LTIP and DBP to Mr. Komisar are in the form of
Performance Shares. LTIP awards vest three years from the date of grant subject to the
achievement of the relevant performance conditions. Awards under the DBP vest two years from
the date of grant.
|
|
|
|
(6)
|
|
On March 7, 2008, Mr. Riley exercised an option over 132,420 ordinary shares
granted under the terms of the LTIP. The market price of the Company’s ordinary shares on the
date of exercise was 51.00p.
|
|
|
|
The market price of the Company’s ordinary shares on the date of grant was
(7)
57.00p
(8)
78.50p,
(9)
85.00p,
(10)
73.75p,
(11)
58.75p,
(12)
52.0p, and
(13)
53.75p, and
(14)
37.00p
|
Performance criteria for awards made under the terms of the Company’s various share option plans
are summarized in the table below.
70
|
|
|
|
|
|
|
Plan
|
|
Performance condition
(1)
|
|
Option granted
prior to March 1,
2004 under the
Unapproved and
Approved Share
Option Plans
|
|
May be exercised on any date between three and ten years from the date of
the grant of the option subject to the Company’s share price
outperforming the average price of shares in the FTSE Pharmaceutical
Index in any three-year period commencing on or after the date of grant
of the option.
|
|
|
|
|
|
|
|
Option granted on
March 1, 2004 under
the Unapproved Plan
|
|
Performance is measured after three years from the date of grant by
measuring the Total Shareholder Return (“TSR”) of the Company against a
comparator group consisting of the FTSE All Share Pharmaceutical and Biotech Index.
|
|
|
|
|
|
|
|
Options issued to
existing holders
with a total
aggregate value (at
the date of grant)
of up to four times
annual salary
|
|
TSR performance
Upper quartile
Median
Below median
|
|
% of award vesting
100%
33%
Nil
|
|
|
|
The Committee must also be satisfied that there has been an improvement
in the Company’s underlying financial performance over the period.
|
|
|
|
|
|
|
|
|
|
Options granted under the Unapproved Plan on September 27, 2004 matured on September 27, 2007.
Following application of the above measures, the Remuneration Committee determined that 35.15% of
the shares would vest.
|
|
|
|
|
|
|
|
Option granted on
March 1, 2004 under
the Unapproved Plan
|
|
Performance is measured after five years from the date of grant by
measuring the TSR of the Company against a comparator group consisting of
the FTSE All Share Pharmaceutical and Biotech Index.
|
|
|
|
|
|
|
|
For options granted
to existing holders
with a total
aggregate value (at
the date of grant)
between four and
eight times annual
salary
|
|
TSR performance
Upper quartile
Median
Below median
|
|
% of award vesting
100%
33%
Nil
|
|
|
|
The Committee must also be satisfied that there has been an improvement
in the Company’s underlying financial performance over the period.
|
|
|
|
|
|
|
Option granted
under the 2005
Executive Share
Option Plan
|
|
Performance is measured after three years from the date of grant by
measuring the TSR of the Company against a comparator group consisting of
the FTSE All Share Pharmaceutical and Biotech Index excludes those
companies in the FTSE 100 (currently AstraZeneca PLC, GlaxoSmithKline PLC and Shire plc)
|
|
|
|
|
|
|
|
None of the
Directors hold
options under this
Plan.
|
|
TSR performance
Upper decile
Upper quartile
Median
Below median
|
|
% of award vesting
100%
80%
30%
Nil
|
71
|
|
|
|
|
|
|
Plan
|
|
Performance condition
(1)
|
Long Term Incentive
Plan
|
|
Performance is measured after three years from the date of grant by
measuring the TSR of the Company against a comparator group consisting of
the FTSE All Share Pharmaceutical and Biotech Index excludes those
companies in the FTSE 100 (currently AstraZeneca PLC, GlaxoSmithKline PLC
and Shire plc)
|
|
|
|
|
|
|
|
|
|
TSR performance
Upper decile
Upper quartile
Median
Below median
|
|
% of award vesting
100%
80%
30%
Nil
|
|
|
|
Options granted on February 28, 2005 matured on February 28, 2008.
Following application of the above measures, the Remuneration Committee
determined that nil shares would vest.
|
|
|
|
|
|
|
|
Performance
criteria for
individual options
granted to A.J.
Heath (Individual
Plan):
|
|
The option may generally be exercised only between the third and tenth
anniversaries of the date of grant, and on the date of exercise, the
share price must have outperformed the average of the FTSE
Pharmaceuticals Index in any preceding three-year period.
|
|
|
|
|
|
|
|
|
|
The option lapses if Dr. Heath leaves the Company voluntarily, and must
be exercised within three months if his employment ceases by reason of
injury, disability, sickness or redundancy. The agreement confers no
pensionable benefits. No amendment may be made to the benefit of Dr.
Heath without the prior approval of the Company in General Meeting except
for minor amendments to benefit the administration of the agreement or to
obtain or maintain favorable tax, exchange control or regulatory
treatment for Dr. Heath or any Group Member.
|
|
|
|
|
|
|
Performance
criteria for the
Protherics PLC Plan
for ex-Therapeutic
Antibodies
employees (TAb
Plan):
|
|
Dr. Heath holds options over 116,300 shares under the Protherics PLC Plan
for ex-Therapeutic Antibodies employees (TAb). There are no performance
criteria under this Plan, which mirrors the terms of the Therapeutic
Antibodies 1990 Plan, from which the options were transferred.
|
|
|
|
|
|
(1)
|
|
In exception circumstances, the Remuneration Committee has discretion to
waive or amend performance conditions on awards under the LTIP and the 2005 Executive Share Option
Plan. In using this discretion, the Committee may consider, as appropriate, the extent to which the
performance period has elapsed and the performance conditions have been met over that period
although this is not required under the rules of the schemes.
|
Messrs. Wallis, Watts, Brown, Morton and Gonella do not hold options over the Company’s ordinary
shares.
The price of the Company’s ordinary shares to which the options relate was 54.00p at March 31,
2008, and fluctuated between 42.75p and 72.50p during the year.
72
ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
Major Shareholders
The table below shows all holders who, to the Company’s knowledge, own, directly or
indirectly, 5% or more of the Company’s ordinary shares, as of June 30, 2008, being the most recent
practicable date before reporting.
|
|
|
|
|
|
|
|
|
|
|
|
|
# of
|
|
% of
|
|
Shareholder
|
|
shares
|
|
issued shares
|
|
AXA S.A.
|
|
|
41,716,497
|
|
|
|
12.26
|
%
|
|
Aviva plc
|
|
|
40,910,879
|
|
|
|
12.05
|
%
|
|
INVESCO plc
|
|
|
37,361,912
|
|
|
|
11.01
|
%
|
|
HBOS plc
|
|
|
20,245,926
|
|
|
|
5.97
|
%
|
All of the Company’s major shareholders have the same voting rights.
At June 30, 2008, a total of 344,417,123 ordinary shares were issued and outstanding, of which
13,247,698 shares were held of record by approximately 365 holders with registered addresses in the
U.S., representing approximately 3.9% of the currently outstanding ordinary shares. Of those
shares, at July 28, 2008, 1,519,400 ordinary shares were represented by American Depositary
Receipts issued by The Bank of New York, as depositary, in the name of The Depositary Trust
Company, as nominee. Because certain of these ordinary shares and American Depositary Receipts were
held by brokers or other nominees, the number of record or registered holders in the U.S. is not
representative of the number of beneficial holders in the U.S. or of the residence of the
beneficial holders.
To the Company’s knowledge, it is not directly or indirectly owned or controlled by another
corporation, by any foreign government, or by any other natural or legal person, nor are there any
arrangements known to the Company, the operation of which could result in a change in control of
the Company.
Related Party Transactions
On January 4, 2007, the Company completed the acquisition of MacroMed, Inc. (subsequently
renamed Protherics Salt Lake City, Inc.). Dr. Gonella was a non-executive director and shareholder
of MacroMed, Inc. As consideration for his interest in MacroMed, Inc., Dr. Gonella received
8,245,815 Protherics PLC 2p ordinary shares, valued at £6,102,000 at the date of the transaction
and a further 916,202 shares on July 4, 2008 at the expiration of the 18 month holdback period.
JG Consulting, a business owned by Dr. Gonella, charged to MacroMed, Inc. a total of $60,000
during the year (2007: $71,000, 2006: $nil) for the provision of consultancy services supplied by
employees other than Dr. Gonella.
During fiscal year 2008, the Company acquired goods and services from BCS Global Networks
Limited, a company of which Stuart Wallis is a director, at a cost of £15,000 (2007: £33,000, 2006:
£nil). During fiscal year 2008, LGC Promochem Limited provided testing service to the Company at a
cost of £3,000 (2007: £1,000). LGC Promochem Limited is part of LGC Group Holdings plc, a Company
of which Stuart Wallis became a director during fiscal year 2007.
The Company rents its Nashville office from C.A. Gardner, a relative of Mr. Komisar. During
the year, the Company paid $140,000 in rent to C.A. Gardner (2007: $120,000, 2006: $103,000)
73
All the above transactions are considered by the Board to be at arms-length and undertaken
under standard terms and conditions.
Interests of Experts and Counsel
Not applicable.
ITEM 8. FINANCIAL INFORMATION
Consolidated Statements and Other Financial Information
Reference is made to Item 19 for a list of all financial statements filed as part of this
Annual Report.
Legal Proceedings
From time to time, the Company must engage in formal opposition proceedings to protect its
proprietary rights and to challenge patent claims of third parties. See “Item 4. Information on the
Company — Intellectual Property, Patents and Trademarks.”
Dividend Policy
To date, the Company has not paid dividends on its ordinary shares. The Company intends to
retain any future earnings to finance the expansion of its business and has no present intention to
pay cash dividends. The declaration and payment of future dividends will be determined by the
Company’s Board of Directors in light of conditions existing in the future and are expected to
depend upon earnings, financial condition, capital requirements and other relevant factors not
presently determinable.
ITEM 9. LISTING
The principal trading market for the Company’s ordinary shares is the London Stock Exchange
(“LSE”) under the symbol “PTI.L.” The Company’s ordinary shares were admitted to the Official List
of the LSE in December 1996.
The Company’s American Depositary Shares are listed for trading on the NASDAQ Stock Market
under the symbol “PTIL.” Each American Depositary Share represents 10 ordinary shares deposited
with The Bank of New York (the “Depositary”). The Depositary issues American Depositary Receipts,
which may represent any number of American Depositary Shares. The Company furnishes the Depositary
with annual reports containing a review of operations, audited consolidated financial statements
prepared in accordance with IFRS and an opinion on the Consolidated Financial Statements by the
Company’s independent auditors. The Company also furnishes the Depositary with semi-annual reports
containing unaudited interim consolidated financial information prepared in accordance with IFRS.
The Depositary arranges for the mailing of Protherics’ reports to all record holders of American
Depositary Shares. In addition, the Company furnishes the Depositary with copies of all notices of
shareholders’ meetings and other reports and communications that are distributed generally to its
shareholders, and the Depositary arranges for the mailing of such notices, reports and
communications to all record holders of American Depositary Shares.
The following table sets forth for the periods indicated, (i) the high and low closing
mid-market prices as reported in the Daily Official List for the ordinary shares as reported by the
London Stock Exchange and (ii) the high and low reported sale prices for the American Depositary
Shares on the NASDAQ Stock Market.
74
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary Shares
|
|
American Depositary Shares
(1)
|
|
Financial Year Ended March 31,
|
|
High
|
|
Low
|
|
High
|
|
Low
|
|
|
|
£
|
|
£
|
|
$
|
|
$
|
|
2004
|
|
|
0.618
|
|
|
|
0.165
|
|
|
|
|
|
|
|
|
|
|
2005
|
|
|
0.658
|
|
|
|
0.467
|
|
|
|
|
|
|
|
|
|
|
2006
|
|
|
0.998
|
|
|
|
0.450
|
|
|
|
18.99
|
(2)
|
|
|
8.50
|
(2)
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First Quarter
|
|
|
0.925
|
|
|
|
0.783
|
|
|
|
16.99
|
|
|
|
15.15
|
|
|
Second Quarter
|
|
|
0.910
|
|
|
|
0.780
|
|
|
|
17.25
|
|
|
|
13.90
|
|
|
Third Quarter
|
|
|
0.953
|
|
|
|
0.640
|
|
|
|
17.26
|
|
|
|
12.53
|
|
|
Fourth Quarter
|
|
|
0.793
|
|
|
|
0.658
|
|
|
|
15.44
|
|
|
|
12.64
|
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First Quarter
|
|
|
0.725
|
|
|
|
0.535
|
|
|
|
14.36
|
|
|
|
10.90
|
|
|
Second Quarter
|
|
|
0.598
|
|
|
|
0.458
|
|
|
|
12.30
|
|
|
|
9.00
|
|
|
Third Quarter
|
|
|
0.578
|
|
|
|
0.460
|
|
|
|
12.40
|
|
|
|
9.48
|
|
|
Fourth Quarter
|
|
|
0.608
|
|
|
|
0.428
|
|
|
|
12.33
|
|
|
|
9.74
|
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First Quarter
|
|
|
0.548
|
|
|
|
0.300
|
|
|
|
10.50
|
|
|
|
6.45
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Calendar Year 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Most Recent Six Months
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
January
|
|
|
0.605
|
|
|
|
0.495
|
|
|
|
12.33
|
|
|
|
9.74
|
|
|
February
|
|
|
0.560
|
|
|
|
0.503
|
|
|
|
12.00
|
|
|
|
10.71
|
|
|
March
|
|
|
0.540
|
|
|
|
0.428
|
|
|
|
11.59
|
|
|
|
10.25
|
|
|
April
|
|
|
0.548
|
|
|
|
0.450
|
|
|
|
10.50
|
|
|
|
8.52
|
|
|
May
|
|
|
0.488
|
|
|
|
0.420
|
|
|
|
9.30
|
|
|
|
8.52
|
|
|
June
|
|
|
0.410
|
|
|
|
0.300
|
|
|
|
8.92
|
|
|
|
6.45
|
|
|
|
|
|
|
(1)
|
|
Each American Depositary Share represents 10 ordinary shares.
|
|
|
|
(2)
|
|
Period covers from September 28, 2005, the date trading of the American Depositary
Shares on the NASDAQ Stock Market commenced, to March 31, 2006.
|
ITEM 10. ADDITIONAL INFORMATION
Memorandum and Articles of Association
Objects and Purposes
The Company was originally founded in 1987 and was incorporated in England and Wales under the
Companies Act 1985 (as amended) (the “Companies Act”) on January 12, 1990, as a public company
limited by shares with the registered number 2459087. The Memorandum of Association of the Company
provides that the Company’s principal object is to carry on the business of a holding company. The
objects of the Company are set out in full in clause 4 of the Memorandum of Association which is
available for inspection at The Heath Business & Technical Park, Runcorn, Cheshire, WA7 4QX.
The Articles of Association of the Company (the “Articles”) contain provisions, inter alia, to
the following effect:
Voting Rights
Subject to any special terms as to voting upon which any shares may have been issued, every
shareholder present in person or as a duly appointed proxy of a member shall upon a show of hands
have one vote, and on a poll, shall have one vote for every share of which he is a holder. A
shareholder in respect of whom an order has been made by any court or official having jurisdiction
in matters concerning
75
mental disorder or incapacity to manage one’s affairs may vote, whether on a
show of hands or on a poll, by his receiver or curator bonis and such receiver or curator bonis
may, on a poll, vote by proxy.
In the case of joint holders of a share, any one of such persons may vote at any meeting
either personally or by proxy. If more than one such joint holders is present at any meeting,
either personally or by proxy, the shareholder whose name stands first on the register shall be
entitled to vote.
No shareholder shall, unless otherwise determined by the Directors, be entitled to be present
and vote, either in person or by proxy, at any general meeting or upon any poll in respect of any
shares held by him if:
|
|
(a)
|
|
any calls or other moneys due and payable in respect of these shares remain unpaid; or
|
|
|
|
|
(b)
|
|
he or any person appearing to be interested in shares held by
him has been duly served with a direction notice under section 793 of the
Companies Act 2006 concerning the disclosure of interests in voting shares, and
has failed to supply the Company with the information required by the notice or
has supplied information which is false or misleading in a material respect.
|
The instrument appointing a proxy and accompanying documentation if necessary, shall be
deposited at the registered office or at such other place within the United Kingdom as is specified
in the notice convening the meeting or in case of an appointment sent in electronic form, at the
address specified for such purpose not less than 48 hours before the time of meeting.
Dividends and other payments
Holders of ordinary shares are entitled to the profits of the Company available for
distribution and resolved to be distributed in accordance with the Companies Act, although no
interest shall be payable on such distribution. The profits which the Company may determine to
distribute in respect of any financial year shall be distributed rateably among the holders of the
ordinary shares according to the amounts paid up on the ordinary shares held by them respectively,
unless otherwise provided by the terms of issue. Dividends may be satisfied wholly or partly by the
distribution of assets.
The Board, if authorized by an ordinary resolution of the Company, may offer the holders of
ordinary shares the right to elect to receive new ordinary shares, credited as fully paid, instead
of cash for all or part of the dividend specified by that ordinary resolution.
The Board may from time to time declare an interim dividend.
The Board may deduct from any dividend payable to the holder of ordinary shares all such sums
as may be due from such holder to the Company on account of calls or otherwise in relation to such
ordinary shares.
The Company may make use of all dividends unclaimed after one year until so claimed. A
dividend unclaimed for 12 years from the date when it became due for payment will be forfeited and
revert to the Company.
Return of Capital
In a winding-up, a liquidator must distribute any surplus after payment to all creditors to
the holders of ordinary shares pro rata to their holdings of shares.
76
Variation of Rights
All or any of the rights attached to any class of shares of the Company for the time being in
issue may be varied or abrogated in such manner as may be provided by such rights, or in the
absence of any such provision, either with the consent in writing of the holders of not less than
three quarters in nominal value of the issued shares of that class, or the sanction of a special
resolution passed at a separate general meeting of the holders of the issued shares of that class,
but not otherwise. The provisions of the Articles of Association relating to general meetings apply
to every such separate meeting, save that the necessary quorum at such meeting, other than an
adjourned meeting, shall be two persons present holding or representing by proxy at least one third
in nominal value of the issued shares of that class.
Transfers
All transfers of uncertified shares shall be made in accordance with and be subject to the
provisions of the Uncertified Securities Regulations 2001 and the facilities and requirements of
the relevant system and, subject thereto, in accordance with any arrangements made by the Directors
pursuant to the Articles of Association.
The instrument of transfer of a certificated share shall be in the usual form or such other
form as shall be approved by the Directors of Protherics and shall be signed by or on behalf of the
transferor, and if the share is not fully paid, by the transferee. The transferor shall be deemed
to remain the holder of the share until the name of the transferee is entered in the register in
respect thereof.
The Directors may decline to recognize any instrument of transfer of a share which is not
fully paid, provided that where any shares which are not fully paid are admitted to the Official
List of the Financial Services Authority or AIM, the discretion shall not be exercised in such a
way as to prevent open and proper dealings in those shares. The Articles of Association do not
contain any restriction on the free transferability of fully paid shares provided that the
instrument of transfer is in favor of not more than four transferees. In relation to a
certificated share, the Directors may decline to recognize any instrument of transfer unless the
instrument of transfer is left at the registered office of the Company or at such other place as
determined by the Directors, accompanied by the certificate for those shares and evidence as
reasonably required by the Directors to prove the title of the transferor and due execution.
No fee shall be charged for the registration of any instrument of transfer or other document
relating to or affecting the title to any share. Any instrument of transfer which is registered
may be retained by the Company. If the Directors refuse to register a transfer they shall, in the
case of certificated shares, within two months after the date on which the transfer was lodged with
the Company, send to the transferee notice of the refusal and (except in the case of fraud), return
to him the instrument of transfer, or in the case of uncertified shares, notify such persons as may
be required by the Uncertified Securities Regulations 2001 and the requirements of the relevant
system concerned.
Directors of Protherics
Except as provided in this paragraph, a Director shall not vote, or be counted in the quorum
in relation to, any resolution of the Board or of a committee of the Board concerning any matter in
which he has to his knowledge, directly or indirectly, a material interest (together with any
interest of any person connected with him within the meaning of Sections 252-5 of the Companies Act
2006), other than his interest in shares or debentures or other securities of the Company. If he
shall do so, his vote shall not be counted.
A Director shall (in the absence of some other material interest that is indicated below) be
entitled to vote (and be counted in the quorum) in respect of any resolution concerning any of the
following matters, namely:
77
|
|
(a)
|
|
the giving of any guarantee, security or indemnity to him in
respect of money lent or obligations incurred by him or by any other person at
the request of or for the benefit of the Company or any of its subsidiary
undertakings;
|
|
|
|
|
(b)
|
|
the giving of any guarantee, security or indemnity to a third
party in respect of a debt or obligation of the Company or any of its
subsidiary undertakings for which he himself has assumed responsibility in
whole or in part under a guarantee or indemnity or by the giving of security;
|
|
|
|
|
(c)
|
|
any proposal concerning an offer of any shares, debentures or
other securities of or by the Company or any of its subsidiary undertakings for
subscription or purchase in which offer he is or may be entitled to participate
as a holder of securities or in the underwriting or sub-underwriting of which
he is to participate;
|
|
|
|
|
(d)
|
|
any contract, arrangement or transaction concerning any other
body corporate in which he or any other person connected with him within the
meaning of Section 252-2 of the Companies Act 2006 is interested, directly or
indirectly and whether as an officer or shareholder or otherwise howsoever
provided that he is not nor any persons connected with him are not to his
knowledge, the holder of or beneficially interested in (under sections 820-825
of the Companies Act 2006) one per cent or more of any class of the equity
share capital of such body corporate or of the voting rights available to
members of the relevant body corporate;
|
|
|
|
|
(e)
|
|
any contract, arrangement or transaction for the benefit of the
employees of the Company or any of its subsidiaries which does not accord to
them privileges or advantages not accorded to the employees to whom the scheme
relates;
|
|
|
|
|
(f)
|
|
any contract, arrangement or transaction concerning any
insurance which the Company is to purchase and/or maintain for the benefit of
any Directors;
|
|
|
|
|
(g)
|
|
the giving of any indemnity pursuant to the articles of
association; and
|
|
|
|
|
(h)
|
|
the provision of funds to any Director to meet or doing an act
enabling the directors to avoid incurring expenditure as described in sections
205(1) or 206 of the Companies Act 2006.
|
A Director shall not vote or be counted in the quorum on any resolution concerning his own
appointment as the holder of any office or place of profit with the Company or any company in which
the Company is interested including fixing or varying the terms of his appointment or the
termination thereof.
Each of the Directors shall be paid a fee for his services at a rate determined by the Board
from time to time provided that the aggregate of such fees (excluding any amounts payable under any
other provision of the Articles) shall not exceed £400,000 per annum or such higher amount as the
Company may determine from time to time. These provisions do not apply to executive Directors or
managing Directors.
The Directors may be paid all reasonable traveling, hotel and other expenses incurred by them
in performing their duties as Directors including all such expenses incurred in connection with
attendance at meetings of the Board or any committee of the Directors or general meetings or if in
the opinion of the Directors it is desirable to make special journeys or perform special services.
A Director appointed to an executive office may be paid such remuneration in such manner as
the Board may decide.
78
The Board may make provision for the payment of pension or life assurance benefits for any
Director or former Director who holds or has held any executive office or employment with the
Company or a body corporate which is or was a subsidiary undertaking or a parent undertaking of the
Company or another subsidiary undertaking of a parent undertaking of the Company or otherwise
associated with the Company or any such body corporate, or a predecessor in business of the Company
or any such body corporate , and for any member of his family or any of his dependants.
Each Director shall retire from office at the third annual general meeting after the annual
general meeting at which they were last elected, but they may stand for reelection at the meeting
at which they retire. A separate vote must be held on each Director standing for reelection.
Borrowing powers
The Directors may exercise all the powers of the Company to borrow money and to mortgage or
charge all or any part of its undertaking, property and uncalled capital, and to issue debentures.
The Directors shall restrict the borrowings of the Company and exercise all voting and other
rights or powers of control exercisable by the Company in relation to its subsidiary undertakings,
so as to secure (as regards subsidiary undertakings, so far as by such exercise they can secure)
that the aggregate amount at any one time owing by the Group (being the Company and its subsidiary
undertakings for the time being owing to persons outside the Group) in respect of all monies
borrowed, exclusive of moneys borrowed by the Company or any of its subsidiaries from any other of
such companies shall not at any time, without the previous sanction of an ordinary resolution of
the Company, exceed an amount equal to three times the aggregate of:
|
|
(a)
|
|
the nominal issued and paid up capital of the Company; and
|
|
|
|
|
(b)
|
|
the amounts standing to the credit of the consolidated reserves
of the Group whether distributable or undistributable and including (without
limitation) share premium amount, capital redemption reserve and profit and
loss account all as shown in a consolidation of the then latest audited balance
sheet of the Group but after:
|
|
|
(A)
|
|
making such adjustments as may be appropriate
in respect of any variation in the issued and paid up share capital the
share premium account and the capital redemption reserve fund of the
Company or merger reserve since the date of its latest audited
consolidated balance sheet and any shares whose issue has been
underwritten, but which have not yet been issued shall be deemed to
have been paid up to the extent that the underwriters or other persons
are liable therefore;
|
|
|
|
|
(B)
|
|
excluding therefrom (i) any sums set aside for
future taxation; (ii) amounts attributable to outside shareholders in
subsidiary undertakings and adding back an amount equal to amounts
charged in respect of any deferred tax liabilities and any deficit
relating to pensions and other post retirement/employment benefits or
any asset or liability which has been revalued; and deducting from
reserves amounts credited in respect of any deferred tax assets and any
surpluses relating to pensions and other post retirement/employment
benefits or any asset or liability which has been revalued;.
|
|
|
|
|
(C)
|
|
deducting therefrom (i) an amount equal to any
distribution by the Company or any subsidiary undertaking out of
profits earned prior to the date of its latest audited balance sheet
and which have been declared, recommended or made since that date
except so far as provided for in
|
79
|
|
|
|
such balance sheet, (ii) goodwill and other intangible assets and
(iii) any debit balances on profit and loss account; and
|
|
|
(D)
|
|
making such adjustments (if any) as the
Auditors may consider appropriate.
|
Alteration of Capital
The Company may, from time to time, by ordinary resolution increase its share capital by the
creation of new shares, such increase to be of such aggregate amount and to be divided into shares
of respective amounts as the resolution may prescribe. All new shares will be subject to the
provisions of the articles with reference to allotment payment of calls, lien, transfer and
otherwise.
The Company may by ordinary resolution consolidate its shares or subdivide its shares into
shares of smaller amount and may by such resolution determine that, as between the holders of the
shares resulting from such subdivision, one or more of such shares shall have some preferred or
other advantage as regards dividends, capital, voting or otherwise.
The Company may from time to time, by special resolution, reduce its share capital, any
capital redemption reserve fund and any share premium account in any manner authorized by law. The
Company may also by ordinary resolution cancel any shares not taken or agreed to be taken by any
person and diminish the amount of its share capital by the nominal value of the shares so
cancelled.
The Company may purchase its own shares in any manner authorized by law and under the articles
of association.
Liability to further capital calls by the Company
The Company may issue shares that are not fully paid up and can make different arrangements
between the shareholders as to the amount of calls to be paid and the time of payment of such
calls. Subject to the terms of allotment thereof, the Directors can call up for all or part of the
monies unpaid on the shares as they think fit. A minimum of fourteen days notice must be given to
the shareholder stating the amount to be paid, to whom payment must be made and the time and place
at which payment must be made. The Company does not currently have any shares in issue that are
not fully paid up.
Annual and Extraordinary General Meetings
Extraordinary general meetings are convened by the Directors whenever they think fit.
An annual general meeting must be held by the Company once a year.
The annual general meeting must be convened on a minimum of 21 clear days notice. All
meetings other than an annual general meeting, i.e., Extraordinary General meetings, are called by
a minimum of 14 clear days notice when either special or ordinary resolutions are proposed.
Ordinary Resolutions must be passed by a simple majority of those members who (being entitled to do
so) vote at the general meeting, and special resolutions must be passed by a majority of not less
than 75% of the members who (being entitled to do so) vote at the general meeting.
The notice must specify the place, day and hour of the meeting and the general nature of any
special business to be discussed.
To be held valid, a quorum of not less than two shareholders present in person or by proxy and
entitled to vote must be present at each general meeting.
80
Limitations on the Right to Own Securities
Fully paid shares are issued free from all liens and from any restriction on the right of
transfer except any restriction imposed by failure to comply with a notice issued under section 793
of the U.K. Companies Act 2006, by which a public company can, by notice in writing, require a
shareholder to confirm his present and past shareholding in the share capital of the Company or
give particulars of his identity and the extent of his interest and of any other person interested
in the same shares as the case may be.
Any shareholder who has failed to comply with a section 793 notice is not entitled to be
present and vote at general meetings.
Relevant Provisions Applicable to Companies Under English Law
Discrimination against shareholders as a result of such shareholder owning a substantial
number of shares
The City Code on Takeovers and Mergers (the “City Code”) applies inter alia to offers for all
public companies considered by the Panel on Takeover and Mergers (the “Panel”) to be resident in
the United Kingdom, the Channel Islands or the Isle of Man.
The City Code regulates the conduct, structure and timetable of UK takeovers and is designed
principally to ensure that shareholders are treated fairly and not denied an opportunity to decide
on the merits of a takeover and that shareholders of the same class are afforded equivalent
treatment by an offeror. The City Code comprises general principles that are essentially
statements of good standards of commercial behavior and a series of rules expanding on them and
regulating particular areas of takeover activity that often have the effect of delaying or defining
a change in control of the company.
Under the City Code, if any person acquires shares which results in that person (and any
persons acting in concert with him, as defined in the City Code) holding shares carrying 30 percent
or more of the voting rights of the Company, that person shall be compelled to offer to acquire the
remainder of the share capital of the Company at a cash price of not less than the highest price
paid by the offeror or persons acting in concert with it during the preceding 12 months.
Changes in Control of the Company
The City Code prescribes a timetable for takeover offers. An offer document must be posted
normally within 28 days of the announcement of a firm intention to make an offer, and an offer must
initially be open for a minimum of 21 days following the date on which the offer document is posted
(the “Posting Date”). The City Code provides that the 60th day after the Posting Date is the final
day for an offer to become or be declared unconditional as to acceptances. In practice, where 90%
acceptances for the offer are received, the bidder can implement the provisions for compulsorily
acquiring holdings of any outstanding minority shareholders. The 81st day is the last day for
fulfillment of all other conditions if the offer is declared unconditional as to acceptances on day
60. If these timings are not met, the offer will lapse.
Disclosure of Shareholder Ownership
Under part 6 of the Financial Services and Markets Act 2000, Chapter 5 of the Disclosure and
Transparency Rules (DTR) sets out the notification thresholds and deadlines for shareholders and
issuers to notify major shareholders in a company, where shares are admitted to and trading on a
regulated market or a prescribed market. Once a person has a holding of 3% or more of the target’s
total voting rights and capital in issue and also if their holding changes to reach, exceed or fall
below every 1% above 3% of the target’s total voting rights and capital in issue, a notification
must be made to the company within two trading days from the date of such change. A company must
release details to a Regulatory
81
Information Service (RIS) as soon as possible on receipt of a notice and by no later than end
of the following trading day for U.K. issuers with shares admitted to trading in a regulated
market.
Material Contracts
The following is a summary of the Company’s existing principal licensing agreements,
collaborative arrangements and other material agreements:
AstraZeneca UK Limited
On December 7, 2005, the Company announced an agreement with AstraZeneca UK Limited for the
development and commercialization of CytoFab
®
, as a treatment for the initial indication
of severe sepsis. Under the agreement, the Company received an initial payment of £16.3 million.
In addition, AsztraZeneca made a £7.5 million equity investment at 68.24p per share, a 30% premium
to the average mid-market closing price over the three months prior to the agreement, representing
4.3% of the Company’s share capital following the transaction.
The Company could receive up to £171 million on the achievement of further milestones and will
also receive royalties on global product sales of 20% of net sales for a minimum of 10 years in
each country in which CytoFab
®
is sold along with payments in return for the commercial
supply of bulk drug substance and drug product. AstraZeneca is responsible for clinical
development and sales and marketing of CytoFab
®
. The Company is primarily responsible
for drug product manufacturing including clinical trial material.
During fiscal year 2006, the Company received an initial payment of £16.3 million along with
the £7.5 million equity investment. In accordance with the accounting policies adopted by the
Company, £701,000, £2,213,000 and £2,075,000 was recorded as revenue in fiscal year 2006, 2007 and
2008, respectively. In addition, a milestone of £10,000,000 was earned and recognized as revenue
in fiscal year 2007.
Altana, Inc.
In October 1997, the Company entered into an agreement with Altana, Inc. which provides Altana
with exclusive U.S. distribution rights for CroFab
®
and DigiFab
®
(Altana, Inc
were subsequently acquired by Nycomed). Under the agreement terms, the Company is entitled to
receive certain milestone, product sales and royalty payments. In February 2001 and February 2002,
Altana began marketing and distributing the Company’s CroFab
®
and DigiFab
®
products, respectively, under the agreement in the United States. In November 2005, Altana
exercised its nil-cost option to renew the agreement for a further five years, ending in 2010. The
Company recognized a total of £19,826,000 as revenue under the agreement in fiscal year 2008.
Glenveigh Pharmaceuticals LLC
In January 2007, the Company entered into an agreement to in-license from Glenveigh
Pharmaceuticals LLC and certain affiliated parties (collectively, “Glenveigh”) intellectual
property relating to the use of antibody fragments that bind digoxin, including Protherics’
DigiFab
®
and GlaxoSmithKline’s Digibind
®
, for the treatment of pre-eclampsia
and eclampsia. Under the Glenveigh license, the Company paid Glenveigh $6.5 million cash at closing
and issued Protherics ordinary shares with an aggregate market value of $5 million (3,093,638
shares). The Company will pay an additional milestone of $5 million (in ordinary shares of the
Company or cash, at the Company’s option) following successful completion of the phase 2b trial,
with further milestones and royalties upon successful completion of the subsequent clinical and
commercial events amounting to a maximum of $10 million or a percentage of any subsequent
sublicense receipts. Glenveigh will also receive a royalty of up to 5% on net sales.
82
CoVaccine BV
In June 2006, the Company entered into an agreement with CoVaccine BV to acquire CoVaccine’s
novel adjuvant, primarily for inclusion in the Company’s Angiotensin Vaccine product candidate. The
Company will pay CoVaccine up to
€
1,050,000, which is to be satisfied by the issuance of zero
coupon unsecured convertible loan notes, repayable at March 31, 2026 unless previously converted.
These notes grant the right to receive 295,413 Protherics ordinary shares following the signing of
the agreement, and a further 590,826 Protherics ordinary shares upon completion of two development
related milestones or are repayable at par if not previously repaid, converted or purchased. The
first of these milestones, being 253,211 Protherics ordinary shares, was paid during fiscal 2008.
In addition to these shares, CoVaccine is entitled to a royalty on the net sales of products
containing the CoVaccine adjuvant for a period ended the earlier of the tenth anniversary of the
first sale and the expiry of the last valid claim on the first patent application to be granted in
respect of the CoVaccine adjuvant. Both notes issued to date, for 295,413 and 253,211 shares, have
subsequently been converted.
Advance In Vitro Cell Technologies S.L. (“Advancell”)
In December 2006, the Company entered into an in-license and co-development agreement with
Advancell with respect to intellectual property rights for the use of Acadra™ (formerly Acadesine)
in the treatment of B-cell chronic lymphocytic leukemia (“B-CLL”). The Company has paid Advancell
an initial £500,000 cash consideration, as well as a total of up to £17.9 million in development
and commercialization milestones. The Company expects to invest approximately £1.5 million in the
development of Acadra™ through the end of the first clinical study. Under the agreement, Advancell
will receive a 12.8% royalty on net sales.
Diatos SA
In December 2004, MacroMed, Inc., which was acquired by the Company in January 2007, entered
into an agreement with Diatos SA for the development and commercialization of OncoGel
®
outside North America, Mexico, North Korea and South Korea, The maximum upfront and milestone
payments under this agreement for the European market total $10,450,000, of which $1,850,000 was
received prior to MacroMed, Inc. being acquired. Further milestones may be received for development
in Asia and the rest of the world amounting to $5,175,000 and $2,170,000, respectively. In
addition, the Company will receive royalties in net sales of up to 12%.
Samyang Genex Corporation
In an agreement dated November 2001 and updated in June 2006, MacroMed entered into an license
and supply agreement with Samyang Genex Corporation. This agreement provides Samyang Genex
Corporation with the right to distribute OncoGel
®
in North and South Korea. Under this
agreement, Samyang Genex will pay a royalty to MacroMed of 5% of net sales and 12% of other
revenues received in respect of OncoGel
®
in North and South Korea. MacroMed will pay
Samyang Genex similar royalties for net sales and other OncoGel
®
revenues outside of
North and South Korea. Since MacroMed was acquired by the Company, no amounts have been paid or
received under this agreement. This agreement also permits MacroMed to purchase supplies of
Genexol, a generic brand of paclitaxel, a raw material required in the manufacture of
OncoGel
®
.
Idis Limited
Under an agreement dated March 1, 2006, Idis Limited distributes the Company’s
Voraxaze
®
product in the E.U. on a named patient supply basis. The Company is paid for
all product supplied to customers and during fiscal year 2008 the Company recognized revenue of
£1,232,000 under this agreement.
83
Chesapeake Biological Laboratories Inc
In March 2003, the Company entered into a contract manufacturing agreement with Chesapeake
Biological Laboratories Inc. to fill and freeze dry the Company’s CroFab
®
and
DigiFab
®
products. Under the agreement, which commenced in May 2003, Chesapeake is
entitled to a set fee per batch of product filled and freeze-dried. Costs of £1,144,000 have been
incurred under this contract in fiscal year 2008.
Scientific Collaborations
A portion of the Company’s research and development and product testing activities are carried
out through affiliations and consulting arrangements in place from time to time with clinical
research organizations and scientists at academic institutions in the United Kingdom, Scandinavia
and North America. These include arrangements in respect of pre-clinical and clinical research,
consultancy, patents, royalties and facility leases. Where appropriate, the Company has entered
into formal agreements with such third parties, which ensure that ownership of any intellectual
property rights arising out of such arrangements vests with the Company.
Exchange Controls
There are currently no English laws, decrees or regulations that restrict the export or import
of capital, including, but not limited to, foreign exchange controls or that affect the remittance
of dividends, interest or other payments to non-U.K. resident holders of ordinary shares.
Taxation
The following is a general description of the principal United States federal income tax
consequences and certain United Kingdom tax consequences of the ownership and disposition of the
Company’s ordinary shares and American Depositary Shares (“ADSs”), as evidenced by American
Depositary Receipts, by a U.S. holder (as defined below). The following discussion assumes that
U.S. holders of ADSs will be treated as owners of the ordinary shares underlying their ADSs for
U.S. federal income tax purposes. Accordingly, except as noted, the U.S. federal and U.K. tax
consequences discussed below apply equally to U.S. holders of ADSs and ordinary shares. This
description is for general information purposes only and is based on the tax laws of the United
States (including the Internal Revenue Code of 1986, as amended, Treasury regulations promulgated
thereunder, and judicial and administrative interpretations thereof) and the United Kingdom, and
the Convention Between the Government of the United States of America and the Government of the
United Kingdom of Great Britain and Northern Ireland for the Avoidance of Double Taxation and the
Prevention of Fiscal Evasion with respect to Taxes on Income and Capital Gains and which came into
force on March 31, 2003 (the “Income Tax Convention”), all as in effect on the date hereof and all
of which are subject to change, possibly with retroactive effect. In particular, numerous
provisions of current U.S. federal income tax law (including certain tax rates referred to herein)
are scheduled to change in future years, without further legislative action, as a result of
“sunset” provisions.
This discussion is based in part on representations by the Depositary and assumes that the
obligations under the Amended and Restated Deposit Agreement among the Company, the Depositary, and
the Owners and Beneficial Owners of the American Depositary Receipts (the “Deposit Agreement”) and
any related agreements will be performed in accordance with their terms. The tax treatment of a
holder of ordinary shares or ADSs may vary depending upon his or her particular situation.
The discussion below does not address the tax treatment of holders subject to special
treatment under the U.S. federal income tax law (including, but not limited to, U.S. expatriates,
insurance companies, tax-exempt organizations, financial institutions, persons subject to the
alternative minimum tax, securities broker-dealers, persons that have a “functional currency” other
than the U.S. dollar, holders who hold ordinary shares or ADSs as part of hedging or conversion
transactions and holders owning, directly or indirectly, 10% or more of the voting shares of the
Company). Further, this discussion does not
84
consider the tax treatment of holders who are partnerships or who hold ordinary shares or ADSs
through a partnership or other pass-through entity. The following summary is directed to U.S.
holders who will hold the ordinary shares and ADSs as a capital asset.
For purposes of this discussion, a “U.S. holder” is any beneficial owner of ordinary shares or
ADSs that is not and has not been resident (and, in the case of an individual, is not and has not
been ordinarily resident) in the United Kingdom for U.K. tax purposes and is (i) an individual
citizen or resident of the United States, for the purpose of the Income Tax Convention, (ii) a
corporation or other entity taxable as a corporation for U.S. federal income tax purposes, created
or organized under the laws of the United States or any state thereof, (iii) an estate the income
of which is subject to U.S. federal income tax without regard to its source, or (iv) a trust if a
court within the United States is able to exercise primary supervision over the administration of
the trust and one or more United States persons have the authority to control all substantial
decisions of the trust.
The discussion below does not address the effect of any U.S. state or local tax law on a
holder of ordinary shares or ADSs, nor any U.S. or U.K. gift or estate tax consequences. This
summary is not intended to be, nor should it be construed to be, legal or tax advice. Investors
are urged to consult their own tax advisors regarding the U.S. federal, state and local and the
U.K. and other tax consequences of their purchase, ownership and disposition of ordinary shares and
ADSs.
This discussion does not apply to any person who is not a U.S. holder or to any person who
does not hold ordinary shares or ADSs.
United States Federal Income Tax Consequences to U.S. Holders
Taxation of Dividends
The Company does not expect to pay dividends for the foreseeable future. In the event the
Company does pay a dividend, a U.S. holder receiving a distribution on ordinary shares or ADSs
generally will be required to include such distribution in gross income as a taxable dividend to
the extent such distribution is paid from the current or accumulated earnings and profits of the
Company (as determined for U.S. federal income tax purposes). Such dividend will be treated as
foreign source dividend income to the U.S. holder for U.S. federal income tax purposes. To the
extent that the Company makes distributions in excess of its current and accumulated earnings and
profits, these distributions will be treated first as a tax-free return of capital to each U.S.
holder. This treatment will reduce the adjusted basis which each U.S. holder has in his or her
ordinary shares or ADSs, but not below zero. Distributions in excess of a U.S. holder’s adjusted
tax basis in his or her ordinary shares or ADSs will be taxable as a capital gain, provided such
shares have been held as capital assets. This gain will be taxable as a long-term capital gain if
the ordinary shares or ADSs have been held for more than one year. Dividends paid by the Company
generally will not be eligible for the dividends received deduction otherwise available to
corporate holders. See also the discussion below entitled “Passive Foreign Investment Company
Rules.”
The amount of any distribution paid in pounds sterling will equal the U.S. dollar value of the
pounds sterling received calculated using the exchange rate in effect on the date the dividend is
received by the U.S. holder or by the Depositary (in the case of ADSs), regardless of whether the
pounds sterling are converted into U.S. dollars on this date. If the pounds sterling received as a
distribution are converted into U.S. dollars on the date of receipt, the recipient U.S. holder
generally will not be required to recognize foreign currency gain or loss upon such conversion. If
the pounds sterling received as a distribution are not converted into U.S. dollars on the date of
receipt, the recipient U.S. holder will have a basis in the pounds sterling equal to their U.S.
dollar value on the date of receipt. Generally, any gain or loss realized on a subsequent
conversion or other disposition of the pounds sterling will be taxable as ordinary income or loss.
Dividends paid to a non-corporate U.S. holder for taxable years that begin before January 1,
2011 that constitute qualified dividend income generally will be taxable to the U.S. holder at a
maximum tax rate of 15% provided that the ordinary shares or ADSs are held by such U.S. holder for
more than 60 days
85
during the 121-day period beginning 60 days before the date that the relevant share or ADS
becomes ex-dividend with respect to such dividend and the U.S. holder meets other holding period
requirements. For this purpose, “qualified dividend income” generally includes dividends received
from a U.S. corporation, as well as from a qualified foreign corporation. A “qualified foreign
corporation” is generally defined as (i) a foreign corporation incorporated in a possession of the
United States, (ii) a foreign corporation that is eligible for benefits of a comprehensive income
tax treaty with the United States which the U.S. Treasury determines is satisfactory and which
includes an exchange of information program, or (iii) a foreign corporation if the stock with
respect to which such dividend is paid is readily tradable on an established securities market in
the United States. However, a qualified foreign corporation does not include a “passive foreign
investment company” — see discussion below entitled “Passive Foreign Investment Company Rules.”
The U.S. Internal Revenue Service (the “IRS”) has determined that the Income Tax Convention meets
the above treaty test. The Company’s ordinary shares will not be considered readily tradable on an
established securities market in the United States. U.S. Treasury Department guidance indicates
that the Company’s ADSs, which are listed on the NASDAQ Global Market, are readily tradable on an
established securities market in the United States. There can be no assurance that the Company’s
ADSs will be considered readily tradable on an established securities market in later years. U.S.
holders should consult their own tax advisors on the eligibility of any dividends paid by us as
“qualified dividend income” and any reduced rates of taxation.
There will be no U.K. withholding tax on dividends. Therefore, a U.S. holder will not be
entitled to claim a foreign tax credit in respect of any dividends.
Taxation of Capital Gains
If you are a U.S. holder and you sell or dispose of ordinary shares or ADSs, you will
recognize a gain or loss for U.S. federal income tax purposes in an amount equal to the difference
between the U.S. dollar amount of cash and the fair market value of any property you receive and
your adjusted tax basis (determined in U.S. dollars) in the ordinary shares or ADSs sold or
disposed of. This gain or loss will be capital if you held the ordinary shares or ADSs as a
capital asset and generally will be U.S. source income or loss. Such gain or loss will be
long-term capital gain or loss if you held the ordinary shares or ADSs sold or disposed of for more
than one year. In the case of a U.S. holder who is an individual, capital gains will generally be
subject to U.S. federal income tax at preferential rates if specified minimum holding periods are
met. The maximum capital gains tax for non-corporate U.S. holders is 15% for capital assets held
for over one year and sold or exchanged in taxable years beginning before January 1, 2011. The
deduction of capital losses is subject to certain limitations. See also the discussion below
entitled “Passive Foreign Investment Company Rules.”
Information Reporting and Backup Withholding
The Company reports to its U.S. holders and the IRS the amount of dividends and other proceeds
paid during each calendar year and the amount of any tax withheld. Under the backup withholding
rules, a U.S. holder may be subject to backup withholding at a current rate of 28% with respect to
dividends paid unless the U.S. holder is a corporation or is otherwise exempt and:
|
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•
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when required, demonstrates this fact or provides a taxpayer identification number;
|
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|
•
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|
certifies as to no loss of exemption from backup withholding; and
|
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|
|
•
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|
otherwise complies with the backup withholding rules.
|
If you do not provide the Company with your correct taxpayer identification number, you may
also be subject to penalties imposed by the IRS. Backup withholding is not an additional tax. Any
amount you pay as backup withholding will be creditable against your income tax liability.
86
The foregoing discussion assumes that the Company is not currently, and will not in the future
become, a “passive foreign investment company” for U.S. federal income tax purposes. If the
Company were classified as a passive foreign investment company, the U.S. federal income tax
consequences to you with respect to the ordinary shares and ADSs would be significantly different
than that described above and you generally would be subject to increased U.S. federal income tax
liabilities and possibly interest charges, as described below.
Passive Foreign Investment Company Rules
U.S. holders owning shares of a “passive foreign investment company” (“PFIC”) are subject to
special U.S. federal income tax treatment with respect to certain distributions received from the
PFIC and with respect to gain from the sale or other disposition of PFIC shares. For U.S. federal
income tax purposes, the Company will be a PFIC for any taxable year if either (i) 75% or more of
the Company’s gross income in a taxable year were passive; or (ii) at least 50% of the average
percentage of the Company’s assets, by value, produced or were held for the production of passive
income. For this purpose, if the Company were to own, directly or indirectly, at least 25% by
value of the stock of another company, it would be treated for purposes of the above tests as if it
held its proportionate share of the assets, and received directly its proportionate share of the
income, of that company. Passive income generally includes dividends, interest, royalties, rents
(other than certain rents and royalties derived in the active conduct of a trade or business),
annuities, and gains from assets which would produce income of this type.
If the Company is treated as a PFIC, U.S. holders may be subject to increased tax liability
upon the disposition of the ordinary shares and ADSs or upon the receipt of certain distributions,
unless such holder makes one of two elections. Special rules would apply to direct and certain
indirect U.S. holders upon disposition of their ordinary shares and ADSs, receipt of an “excess
distribution,” certain non-recognition transactions, or use of ordinary shares or ADSs as security
for a loan. You could be subject to tax as if any gain or distribution were ordinary income earned
ratably over the period of time during which you held the ordinary shares or ADSs, including an
interest charge on the deferred tax, and other adverse tax consequences. If you were to make a
timely filed mark-to-market election with respect to the ordinary shares or ADSs you owned or were
treated as having owned, at the close of your taxable year, you would include as ordinary income in
that taxable year any excess of the fair market value of the ordinary shares or ADSs as of the
close of the year over your adjusted tax basis in those shares. In turn, you would be allowed a
deduction for the taxable year in the amount of any excess of the adjusted basis of the ordinary
shares or ADSs over their fair market value at the close of the taxable year, limited to the amount
of the net mark-to-market gains you previously included in your income. If you were to make a
timely qualified electing fund election, the above-described rules generally would not apply. If a
qualified electing fund election were made, you would be currently taxable on your pro-rata share
of the Company’s ordinary earnings and profits and net capital gains, regardless of whether the
income or gain was actually distributed to you.
You should consult your own tax advisors prior to the purchase of ordinary shares or ADSs and
from time to time concerning the status of the Company as a PFIC and the consequences of making an
election as described above. Neither the Company nor its advisors have a duty or will undertake to
inform you that the Company is a PFIC or of changes in circumstances that would cause the Company
to become a PFIC.
United Kingdom Tax Consequences to U.S. Holders
Taxation of Dividends
The Company does not expect to pay dividends for the foreseeable future. In the event the
Company does pay a dividend, under current U.K. taxation legislation, no tax will be withheld from
dividend payments by the Company. A U.K. tax credit in respect of any dividend paid by the Company
is
87
available for certain persons not resident in the United Kingdom. However, U.S. holders are
not entitled to such tax credit.
Taxation of Capital Gains
A U.S. holder should not generally be liable for U.K. taxation on capital gains realized on
the disposal of such holder’s ordinary shares or ADSs unless at the time of the disposal such U.S.
holder is either (i) a non-corporate person or entity which carries on a trade, profession or
vocation in the United Kingdom through a branch or agency and which used the ordinary shares or
ADSs in or for the purposes of the trade or which used, held or acquired the ordinary shares or
ADSs for the purposes of such branch or agency; or (ii) a corporate entity which carries on a trade
in the United Kingdom through a permanent establishment and which used the ordinary shares or ADSs
in or for the purposes of the trade or which used, held or acquired the ordinary shares or ADSs for
the purposes of such permanent establishment.
Stamp Duty and Stamp Duty Reserve Tax
If ordinary shares are transferred to the Depositary under the Deposit Agreement, the
Depositary may charge the U.S. holder who receives the ADSs representing those shares for the U.K.
stamp duty or Stamp Duty Reserve Tax (“SDRT”) owed at a rate of 1.5% of the market value of those
shares (such market value potentially being rounded up to the nearest multiple of £5.00. No SDRT
will be payable on an agreement to transfer ADSs, nor will stamp duty be payable on transfer of the
ADSs, provided, among other requirements, that the instrument of transfer is executed outside the
United Kingdom and subsequently remains at all times outside the United Kingdom. If the Depositary
transfers the underlying ordinary shares to a U.S. holder who owned ADSs representing such ordinary
shares, such U.S. holder will pay duty at a rate of £5.00 per transfer. If the Depositary
transfers the underlying ordinary shares to a purchaser at the direction of a U.S. holder who owned
ADSs representing such ordinary shares, such purchaser will pay duty at a rate of 0.5% of the
purchase price (such price being rounded up to the nearest multiple of £5.00).
If an owner of ordinary shares transfers his or her shares to another person through the use
of a transfer document executed in or brought into the United Kingdom, the purchaser usually pays
the stamp duty at a rate of 0.5% (the price being rounded up to the nearest multiple of £5.00).
When ordinary shares are transferred without the use of a transfer document, stamp duty does not
apply. Instead, the purchaser pays SDRT at a rate of 0.5% of the purchase price. If stamp duty is
subsequently paid on the transfer, SDRT may, in certain circumstance, be refunded.
Documents on Display
It is possible to read and copy documents referred to in this annual report on Form 20-F that
have been filed with the SEC at the SEC’s public reference room located at 100 F Street, N.E.,
Washington, DC 20549. Please call the SEC at 1(800) SEC-0330 for further information on the public
reference rooms and their copy charges. Certain documents are on display at the Company’s offices
at The Heath Business & Technical Park, Runcorn, Cheshire WA7 4QX.
ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Financial instruments
The Company’s financial instruments comprise primarily cash and cash equivalents, borrowings,
foreign currency contracts and other derivative instruments, and various items, such as trade
receivables and trade payables, which arise directly from its operations. The main purpose of these
financial instruments is to provide working capital for the Company’s operations.
The main risks arising from the Company’s activities and involving the use of financial
instruments are foreign currency risk, interest rate risk and liquidity risk. The Board reviews and
88
determines the Company’s objectives and policies for managing each of these risks. Details of the
Company’s objectives and policies, both during the year and since the year end, are set out below,
along with numerical disclosures for each category of financial instrument. Except where indicated,
these disclosures are indicative of the situation throughout the year.
Foreign currency risk
The Company makes use of forward foreign currency contracts to fix a proportion of its
expected U.S. dollar sales into sterling, thereby reducing uncertainty over the level of the
Company’s cash inflows from sales when reported in sterling. Typically in fiscal 2008, the Company
took out forward contracts and options for anticipated U.S. dollar receipts, in excess of U.S.
dollar expenses, for a rolling period of 12 months. At March 31, 2008, the Company held such
instruments amounting to $9,000,000, all of which mature within the following 12 months. The fair
value of these instruments is disclosed in Note 27 to the Financial Statements attached hereto.
While the Company has orders from its U.S. distributor for sales which will be denominated in U.S.
dollars, under the terms of the contract, the precise value of the sale is not determinable until
the point of sale.
The Company has overseas subsidiaries in the U.S. and Australia whose revenues, expenses,
assets and liabilities are denominated in U.S. dollars and Australian dollars respectively. In
order to protect the Company’s sterling balance sheet from movements in exchange rates, subsidiary
companies have borrowed funds in their local currency. The Company does not consider that its
external debt denominated in currencies other than its functional currency produces any material
foreign exchange risk.
The Company had overall surplus cash funds throughout the year. Determining in which currency
to hold cash is undertaken with reference to anticipated future expenditure patterns and relative
returns on funds held in different currencies. The Company’s policy has been to hold surplus funds
in sterling over the long term, which has achieved a high interest rate return and is the currency
in which a large proportion of the Company’s expenditure is incurred. This also mitigates the risk
of fluctuations in the Company’s net assets, when reported in sterling.
Where subsidiary companies have monetary assets and liabilities denominated in currencies
other than their functional currency, these balances are translated into that subsidiary’s
functional currency. Gains and losses on those intercompany balances that are considered to be ‘as
permanent as equity’ are recorded in reserves. Other foreign exchange gains and losses arising are
recorded immediately in the income statement.
Exchange Rate Sensitivity
The table below provides information about the Company’s derivative financial instruments and
other financial instruments and presents such financial instruments in U.K. pounds sterling, which
is the Company’s reporting currency. The table presents principal cash flows and related weighted
average interest rates by expected maturity dates on instruments that are sensitive to foreign
currency exchange rates, being US dollar and Australian dollar denominated debt obligations.
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Fair
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2009
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2010
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2011
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2012
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2013
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Total
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value
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On-Balance Sheet Financial Instruments
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£’000
|
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£’000
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|
£’000
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|
£’000
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|
£’000
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|
£’000
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|
£’000
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Finance Lease obligations
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Fixed Rate (US$ denominated)
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17
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12
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2
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1
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—
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32
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(1)
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Average interest rate
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16.6
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%
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16.0
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%
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12.1
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%
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|
11.3
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%
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—
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16.0
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%
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Bank Loans
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89
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Fair
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2009
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2010
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2011
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2012
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2013
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Total
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value
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£’000
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£’000
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£’000
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£’000
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£’000
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£’000
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£’000
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On-Balance Sheet Financial Instruments
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Fixed Rate (US$ denominated)
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2
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141
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—
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—
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—
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|
143
|
|
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|
142
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Average interest rate
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5.6
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%
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|
5.6
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%
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5.6
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%
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—
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—
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5.6
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%
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Finance Lease obligations
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Fixed Rate (A$ denominated)
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|
63
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|
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|
30
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|
|
|
18
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|
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8
|
|
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|
—
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|
119
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|
|
(1)
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Average interest rate
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|
7.5
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%
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7.6
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%
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|
7.6
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%
|
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7.6
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%
|
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|
—
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7.5
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%
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Australian Notes payable
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|
|
|
|
|
|
Floating Rate (A$ denominated)
|
|
|
8
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
8
|
|
|
|
8
|
|
|
Average interest rate
|
|
|
6.3
|
%
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
6.3
|
%
|
|
|
|
|
|
|
|
|
|
(1)
|
|
The fair value of the Company’s lease obligations approximates to their
carrying value.
|
Interest rate risk
The Company finances its operations predominantly through cash and cash equivalents generated
through operating activities, from the issuance of equity shares, and through finance leases. It is
the Company’s policy to invest surplus cash on deposit for short or medium term periods. At March
31, 2008, 2007 and 2006, all cash reserves, as quantified in Note 17 to the Financial Statements
attached as an exhibit hereto, were held overnight by financial institutions.
The following table sets out the carrying value under IFRS by maturity, for each financial
instrument that is exposed to interest rate risk at March 31, 2008.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts falling due:
|
|
|
|
|
Within
|
|
|
Between
|
|
|
Between
|
|
|
Between
|
|
|
Between
|
|
|
Over 5
|
|
|
|
|
|
|
|
1 year
|
|
|
1 and 2 years
|
|
|
2 and 3 years
|
|
|
3 and 4 years
|
|
|
4 and 5 years
|
|
|
years
|
|
|
Total
|
|
|
|
|
£’000
|
|
|
£’000
|
|
|
£’000
|
|
|
£’000
|
|
|
£’000
|
|
|
£’000
|
|
|
£’000
|
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Floating rate:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash at hand and in bank
|
|
|
1,166
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,166
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed rate:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short term bank deposits
|
|
|
36,494
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
36,494
|
|
|
Bank overdrafts
|
|
|
(44
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(44
|
)
|
|
Borrowings
|
|
|
(10
|
)
|
|
|
(141
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(151
|
)
|
|
6% Convertible unsecured loan notes
|
|
|
—
|
|
|
|
(1,971
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(1,971
|
)
|
|
Obligations under finance lease
|
|
|
(966
|
)
|
|
|
(682
|
)
|
|
|
(638
|
)
|
|
|
(333
|
)
|
|
|
(59
|
)
|
|
|
—
|
|
|
|
(2,678
|
)
|
Anticipated Transactions and Related Derivatives
The Company also utilizes currency derivatives to hedge future transactions and cash flows.
The Company is a party to a variety of foreign currency forward contracts and options in the
management of its exchange rate exposures. The instruments purchased are denominated in US dollars
and Australian dollars. Details of the instruments held by the Company are disclosed in Note 27 to
the financial statements attached as an exhibit hereto.
90
Interest Rate Sensitivity
The table below provides information about the Company’s derivative financial instruments and
other financial instruments that are sensitive to changes in interest rates, including debt
obligations. For debt obligations, the table presents principal cash flows and related weighted
average interest rates by expected maturity dates. The information is presented in U.K. pounds
sterling, which is the Company’s reporting currency. The instrument’s actual cash flows are
determined in both U.S. dollars (US$) and Australian dollars (A$), as indicated in parentheses.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair
|
|
|
|
|
2009
|
|
|
2010
|
|
|
2011
|
|
|
2012
|
|
|
2013
|
|
|
Total
|
|
|
value
|
|
|
|
|
£’000
|
|
|
£’000
|
|
|
£’000
|
|
|
£’000
|
|
|
£’000
|
|
|
£’000
|
|
|
£’000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finance Lease obligations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed Rate (£ denominated)
|
|
|
886
|
|
|
|
640
|
|
|
|
618
|
|
|
|
324
|
|
|
|
59
|
|
|
|
2,527
|
|
|
|
|
(1)
|
|
Average interest rate
|
|
|
7.9
|
%
|
|
|
7.9
|
%
|
|
|
8.0
|
%
|
|
|
8.2
|
%
|
|
|
8.8
|
%
|
|
|
8.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed Rate (US$ denominated)
|
|
|
17
|
|
|
|
12
|
|
|
|
2
|
|
|
|
1
|
|
|
|
—
|
|
|
|
32
|
|
|
|
|
(1)
|
|
Average interest rate
|
|
|
16.6
|
%
|
|
|
16.0
|
%
|
|
|
12.1
|
%
|
|
|
11.3
|
%
|
|
|
—
|
|
|
|
16.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed Rate (A$ denominated)
|
|
|
63
|
|
|
|
30
|
|
|
|
18
|
|
|
|
8
|
|
|
|
—
|
|
|
|
119
|
|
|
|
|
(1)
|
|
Average interest rate
|
|
|
7.5
|
%
|
|
|
7.6
|
%
|
|
|
7.6
|
%
|
|
|
7.6
|
%
|
|
|
—
|
|
|
|
7.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bank Loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed Rate (US$ denominated)
|
|
|
2
|
|
|
|
141
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
143
|
|
|
|
142
|
|
|
Average interest rate
|
|
|
5.6
|
%
|
|
|
5.6
|
%
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
5.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Australian Notes payable
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Floating Rate (A$ denominated)
|
|
|
8
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
8
|
|
|
|
8
|
|
|
Average interest rate
|
|
|
6.3
|
%
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
6.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Convertible Loan Notes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed Rate (£ denominated)
(2)
|
|
|
—
|
|
|
|
—
|
|
|
|
2,050
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2,050
|
|
|
|
1,965
|
(3)
|
|
Average interest rate
|
|
|
—
|
|
|
|
—
|
|
|
|
6.0
|
%
|
|
|
—
|
|
|
|
—
|
|
|
|
6.0
|
%
|
|
|
|
|
|
|
|
|
|
(1)
|
|
The fair value of the Company’s lease obligations approximates to their
carrying value.
|
|
|
|
(2)
|
|
The book value of this instrument was £1,971,000 at March 31, 2008.
|
|
|
|
(3)
|
|
This represents the fair value of the liability component of a bifurcated
instrument.
|
Liquidity risk
The Board and senior management monitor the level of cash and liquid resources on a regular
basis to ensure that the Company has sufficient liquid funds to enable it to meet its commitments
as they fall due. This is achieved through the production and review of cash forecasts, including
sensitivity analyses. The Company’s cash and liquid resources are invested in bank deposits, with
institutions with high credit ratings.
Fair values of financial assets and financial liabilities
The fair values of the Company’s borrowings and 6% Convertible Unsecured Loan Notes are
disclosed in Notes 20 and 21 to the Financial Statements attached as an exhibit hereto. The Company
considers that there is no material difference between the book values and fair values of its
remaining financial assets and liabilities as at March 31, 2008. Fair values have been calculated
by discounting cash flows at prevailing interest rates.
91
The fair value of the Company’s derivative financial instruments is disclosed in Note 27 to
the Financial Statements attached as an exhibit hereto.
ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
Not applicable.
PART II
ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
None.
ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
None.
ITEM 15. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
As of the end of the period covered by this report, management carried out an evaluation, with
the participation of the Company’s chief executive officer and chief financial officer, of the
effectiveness of the Company’s disclosure controls and procedures (as defined in Exchange Act Rule
13a-15(e) and 15d-15(e)). Based on their evaluation of such controls and procedures, management
concluded that the disclosure controls and procedures are effective to ensure that information
required to be disclosed by the Company in the reports are filed under the Securities Exchange Act
of 1934, as amended, is recorded, processed, summarized and reported within the time periods
specified in the rules and forms of the Securities and Exchange Commission and that such
information is accumulated and communicated to management, including the Company’s chief executive
officer and chief financial officer, as appropriate to allow timely decisions regarding required
disclosure.
Management’s Annual Report on Internal Control over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over
financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). The Company’s internal
control over financial reporting is a process designed under the supervision of and with the
participation of management, including the principal executive officer and principal financial
officer, to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of the Company’s financial statements for external reporting purposes in accordance
with IFRS. As of the end of the 2008 fiscal year, management conducted an assessment of the
effectiveness of internal control over financial reporting in relation to criteria for effective
internal control over financial reporting described in “Internal Control — Integrated Framework”
issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this
assessment, management concluded that the Company’s internal control over financial reporting was
effective as of March 31, 2008.
There has been no change in the Company’s internal control over financial reporting during the
fiscal year ended March 31, 2008 that has materially affected, or is reasonably likely to
materially affect, the Company’s internal control over financial reporting.
92
KPMG Audit Plc, which has audited the Company’s consolidated financial statements for the
fiscal year March 31, 2008, has also audited the effectiveness of the Company’s internal control
over financial reporting. The report of KPMG Audit Plc is included under Item 17 of this Form 20-F.
ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT
The Board of Directors has determined that Mr. Garry Watts, the Chairman of the Audit
Committee, meets the requirement of an “Audit Committee Financial Expert” as defined by the
Securities and Exchange Commission. Mr. Watts was appointed to the Audit Committee on February 2,
2004. The Board of Directors has determined that Mr. Watts is “independent” as that term is defined
in the NASDAQ listing standards applicable to audit committee members and as required by the
Securities Exchange Act of 1934, and the rules and regulations of the Securities and Exchange
Commission thereunder.
ITEM 16B. CODE OF ETHICS
The Board of Directors has adopted a Code of Ethics applicable to the Chief Executive Officer,
Finance Director and Financial Controller. A copy of this Code of Ethics is available on the
Company’s website at www.protherics.com.
In addition, the Company complied with the provisions of the Financial Reporting Council
Combined Code on Corporate Governance issued in June 2006 (“the Code”) throughout the year ended
March 31, 2008 except for Section 1 of the Code:
|
|
•
|
|
Composition of the Remuneration Committee. Dr. Gonella, who is not considered by the
Board to be independent due to the material business relationship he has had with the
Company as a non-executive director and shareholder of MacroMed, Inc., a company acquired
by Protherics in January 2007, was a member of the Remuneration Committee from the start of
the year until July 26, 2007. Dr. Gonella brings substantial knowledge and experience of
the pharmaceutical business, which assists the Committee in discharging its duties.
However, the Board acknowledges the recommendations of the Code in the respect of
Remuneration Committee independence and has resolved that Dr. Gonella will attend meetings
of the Committee by invitation only. Accordingly, Dr. Gonella resigned from the Committee
on July 26, 2007. Following his resignation, the Committee is comprised solely of
independent non-executive Directors.
|
ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The following summarizes the audit and non-audit fees paid to the Company’s independent
auditors, for the years ended March 31, 2008, 2007 and 2006. During the year ended March 31, 2007,
KPMG Audit Plc replaced PricewaterhouseCoopers LLP as auditors of the Company. The table includes
remuneration earned during the period each party held the position of auditor.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
|
|
|
|
2007
|
|
|
|
|
|
|
2006
|
|
|
|
|
|
|
|
|
|
|
KPMG Audit PLC
|
|
|
PwC LLP
|
|
|
Total
|
|
|
|
|
|
|
|
£’000
|
|
|
£’000
|
|
|
£’000
|
|
|
£’000
|
|
|
£’000
|
|
|
|
|
Audit fees
|
|
|
245
|
|
|
|
174
|
|
|
|
61
|
|
|
|
235
|
|
|
|
101
|
|
|
Audit related fees
|
|
|
16
|
|
|
|
10
|
|
|
|
—
|
|
|
|
10
|
|
|
|
36
|
|
|
Tax fees
|
|
|
50
|
|
|
|
26
|
|
|
|
54
|
|
|
|
80
|
|
|
|
117
|
|
|
All other fees
|
|
|
94
|
|
|
|
249
|
|
|
|
—
|
|
|
|
249
|
|
|
|
—
|
|
|
|
|
Total
|
|
|
405
|
|
|
|
459
|
|
|
|
115
|
|
|
|
574
|
|
|
|
254
|
|
|
|
In addition to the above, PricewaterhouseCoopers LLP earned £43,000 in the year ended March
31, 2007 following their resignation from services related to corporate finance transactions.
93
Audit Fees
Audit fees consisted of fees for professional services rendered by the independent auditor in
connection with statutory audits and regulatory filings.
Audit Related Fees
Audit related fees consisted fees for professional services rendered by the independent
auditor such as assurance and related services that are reasonably related to the performance of
the audit or review of the Company’s financial statements and include accounting reviews and
reviews of Company assessments as to the effects of new accounting standards and other regulatory
requirements.
Tax Fees
Tax fees consisted principally of assistance with matters related to compliance, planning and
advice.
All Other Fees
All other fees in fiscal year 2008 were principally related to assistance in preparing
responses to comments from the Securities and Exchange Commission related to the Company’s 2007
Annual Report on Form 20-F. In fiscal year 2007, such fees were principally related to assistance
in acquisitions and disposals of businesses.
The Audit Committee follows an audit and non-audit services pre-approval practice and has
delegated the pre-approval of non-audit services to be performed by Company’s auditors to the Audit
Committee chairman, and where appropriate, the Audit Committee Chairman refers back to the full
Audit Committee for approval. All audit engagements are pre-approved by the full Audit Committee.
ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
Not applicable.
ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
None.
94
PART III
ITEM 17. FINANCIAL STATEMENTS
Reference is made to Item 19 for a list of all financial statements filed as part of this
Annual Report.
ITEM 18. FINANCIAL STATEMENTS
The Company has elected to provide financial statements pursuant to Item 17.
ITEM 19. EXHIBITS
(A) Financial Statements and Schedules
1. Financial Statements
|
|
|
|
|
|
|
Page
|
|
Auditors’ Report (KPMG Audit Plc)
|
|
F-1
|
|
|
|
|
|
Auditors’ Report (PricewaterhouseCoopers LLP)
|
|
F-3
|
|
|
|
|
|
Income Statements for the years ended
March 31, 2006, 2007 and 2008
|
|
F-4
|
|
|
|
|
|
Statements of Recognised Income & Expense
March 31, 2006, 2007 and 2008
|
|
F-4
|
|
|
|
|
|
Balance Sheets at March 31, 2007 and March 31, 2008
|
|
F-5
|
|
|
|
|
|
Cash Flow Statements for the years ended
March 31, 2006, 2007 and 2008
|
|
F-6
|
|
|
|
|
|
Notes to Financial Statements
|
|
F-7
|
2. Financial Schedules
All financial statement schedules have been omitted because they are not required or the required
information is provided in the Consolidated Financial Statements and Notes thereto.
(B) Exhibits
|
|
|
|
|
Exhibit
|
|
|
|
Number
|
|
Exhibit Title
|
|
|
|
|
|
1.1
|
|
Articles of Association of Protherics PLC, as amended on July 22, 2008
*
|
|
|
|
|
|
1.2
|
|
Memorandum of Association of Protherics PLC
(6)
|
|
|
|
|
|
2.1
|
|
Instrument constituting 6 per cent. Unsecured Convertible Loan Notes 2010
(3)
|
95
|
|
|
|
|
Exhibit
|
|
|
|
Number
|
|
Exhibit Title
|
|
|
|
|
|
2.2
|
|
Instrument constituting Unsecured Convertible Loan Notes 2026
(2)
|
|
|
|
|
|
4.1
|
|
Distribution Agreement, dated October 11, 1997, between Therapeutic Antibodies Inc. and Altana,
Inc.
(7)
|
|
|
|
|
|
4.2
|
|
First Amendment to the Distribution Agreement, dated October 25, 1999, between Altana, Inc. and
Protherics
(6)
|
|
|
|
|
|
4.3
|
|
Amendment No. 1 to Distribution Agreement, dated September 12, 2000, between Altana, Inc. and
Protherics
(6)
|
|
|
|
|
|
4.4
|
|
Amendment No. 3 to Distribution Agreement, dated February 2002, between Altana Inc. and Protherics
(4) (+)
|
|
|
|
|
|
4.5
|
|
Manufacturing Agreement, dated March 19, 2003, between Protherics UK Limited and Chesapeake
Biological Laboratories Inc
(4) (+)
|
|
|
|
|
|
4.6
|
|
Memorandum of Lease, dated August 1, 1995, between Minister for Primary Industries, as Lessor, and
TAb Australasia Pty. Limited, as Lessee
(8)
|
|
|
|
|
|
4.7
|
|
Patent and Know-how Licence Agreement, dated December 7, 2005, between Protherics Inc., Protherics
UK Limited and AstraZeneca Ireland Operations (a branch in Ireland of AstraZeneca UK Limited)
(2)(+)
|
|
|
|
|
|
4.8
|
|
Asset Sale and Purchase Agreement, dated June 6, 2006, between CoVaccine B.V., Protherics Molecular
Design Limited and Protherics PLC
(2)(+)
|
|
|
|
|
|
4.9
|
|
Agreement and Plan of Merger and Reorganization dated as of December 7, 2006, by and among
Protherics PLC, MacroMed Acquisition Corp. and MacroMed, Inc.
(1) (+)
|
|
|
|
|
|
4.10
|
|
Exclusive License Agreement, dated December 15, 2004, between MacroMed, Inc. and Diatos SA
(1)
(+)
|
|
|
|
|
|
4.11
|
|
Restated License and Supply Agreement, dated June 20, 2006, between Samyang Genex Corporation and
MacroMed, Inc.
(1) (+)
|
|
|
|
|
|
4.12
|
|
Collaboration Agreement, dated December 6, 2006, between Protherics Medicines Development Limited
and Advance In Vitro Cell Technologies S.L.
(1) (+)
|
|
|
|
|
|
4.13
|
|
License Agreement, dated December 7, 2006, between Protherics Medicines Development Limited and
Glenveigh Pharmaceuticals, LLC, Glenveigh Research, LLC, C. David Adair, M.D., CDA Royalty
Investors, LLC, and CDA Licensing Administrators, LLC.
(1) (+)
|
|
|
|
|
|
4.14
|
|
First Amendment to License Agreement, dated April 15, 2008, between Protherics Medicines
Development Limited and Glenveigh Pharmaceuticals, LLC, Glenveigh Research, LLC, C. David Adair,
M.D., CDA Royalty Investors, LLC, and CDA Licensing Administrators, LLC.
*
|
|
|
|
|
|
4.15
|
|
Supply and Distribution Agreement, dated March 1, 2006, between Protherics Molecular Design Limited
and Idis Limited
*
|
|
|
|
|
|
4.16
|
|
Proteus Approved Executive Share Option Scheme
(7)
|
|
|
|
|
|
4.17
|
|
Proteus Unapproved Share Option Scheme
(7)
|
96
|
|
|
|
|
Exhibit
|
|
|
|
Number
|
|
Exhibit Title
|
|
|
|
|
|
4.18
|
|
Amendment to the Protherics PLC Employee Share Option Scheme (formerly known as the Proteus
Unapproved Share Option Scheme)
*
|
|
|
|
|
|
4.19
|
|
Option Deed, dated December 22, 1999, between Protherics PLC and Andrew J. Heath
(6)
|
|
|
|
|
|
4.20
|
|
Protherics PLC 2005 Long-Term Incentive Plan
(2)
|
|
|
|
|
|
4.21
|
|
Protherics PLC Performance Share Plan
(2)
|
|
|
|
|
|
4.22
|
|
Protherics PLC 2005 Deferred Bonus Plan
(2)
|
|
|
|
|
|
4.23
|
|
U.S. Sub-plan to Protherics PLC 2005 Deferred Bonus Plan
(2)
|
|
|
|
|
|
4.24
|
|
Protherics PLC 2005 Executive Share Option Plan
(2)
|
|
|
|
|
|
4.25
|
|
The Protherics PLC Company Share Option Plan for Therapeutic Antibodies Inc. Employees adopted on
January 27, 2000
(6)
|
|
|
|
|
|
4.26
|
|
Protherics PLC 2008 Sharesave Scheme
*
|
|
|
|
|
|
4.27
|
|
Employment Agreement, dated November 13, 2001, between Protherics Inc. and Andrew J. Heath
(5)
|
|
|
|
|
|
4.28
|
|
Employment Agreement, dated November 13, 2001, between Protherics PLC and Andrew J. Heath
(5)
|
|
|
|
|
|
4.29
|
|
Employment Agreement, dated April 17, 2007, between Protherics PLC and Rolf B. Soderstrom
*
|
|
|
|
|
|
4.30
|
|
Employment Agreement, dated July 13, 1995, between Protherics PLC and James C. Christie
(5)
|
|
|
|
|
|
4.31
|
|
Employment Agreement, dated June 8, 2007, between Protherics Inc and Saul Komisar
(1)
|
|
|
|
|
|
4.32
|
|
Letter of Appointment dated May 24, 2007, between Protherics PLC and Stuart M.Wallis
(1)
|
|
|
|
|
|
4.33
|
|
Consultancy Agreement, dated May 24, 2007, between Protherics PLC and Stuart M. Wallis
(1)
|
|
|
|
|
|
4.34
|
|
Letter of Appointment dated January 19, 2004, between Protherics PLC and Garry Watts
(3)
|
|
|
|
|
|
4.35
|
|
Letter of Appointment dated February 23, 2004, between Protherics PLC and John R. Brown
(3)
|
|
|
|
|
|
4.36
|
|
Letter of Appointment dated July 21, 2005, between Protherics PLC and Bryan G. Morton
(2)
|
|
|
|
|
|
4.37
|
|
Letter of Appointment dated January 24, 2007, between Protherics PLC and Jacques Gonella
(1)
|
|
|
|
|
|
8.1
|
|
List of Subsidiaries*
|
|
|
|
|
|
11.1
|
|
Code of Ethics
(3)
|
|
|
|
|
|
31.1
|
|
Certification pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, as
adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
*
|
97
|
|
|
|
|
Exhibit
|
|
|
|
Number
|
|
Exhibit Title
|
|
|
|
|
|
31.2
|
|
Certification pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, as
adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
*
|
|
|
|
|
|
32.1
|
|
Certifications pursuant to Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended, and
18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002
*
|
|
|
|
|
|
*
|
|
Filed herewith
|
|
|
|
(+)
|
|
Portions of this exhibit have been omitted pursuant to a request for confidential treatment
and have been filed separately with the Commission.
|
|
|
|
(1)
|
|
Incorporated by reference to exhibits filed with the Company’s Annual Report on Form 20-F,
filed on August 13, 2007.
|
|
|
|
(2)
|
|
Incorporated by reference to exhibits filed with the Company’s Annual Report on Form 20-F,
filed on July 31, 2006.
|
|
|
|
(3)
|
|
Incorporated by reference to exhibits filed with the Company’s Annual Report on Form 20-F,
filed on September 30, 2004.
|
|
|
|
(4)
|
|
Incorporated by reference to exhibits filed with the Company’s Annual Report on Form 20-F,
filed on September 30, 2003.
|
|
|
|
(5)
|
|
Incorporated by reference to exhibits filed with the Company’s Annual Report on Form 20-F,
filed on September 30, 2002.
|
|
|
|
(6)
|
|
Incorporated by reference to exhibits filed with the Company’s Annual Report on Form 20-F,
filed on September 27, 2001.
|
|
|
|
(7)
|
|
Incorporated by reference to exhibits filed with the Company’s Registration Statement on Form
F-4, filed on August 16, 1999, File No. 333-85347.
|
|
|
|
(8)
|
|
Incorporated by reference to exhibits filed by Therapeutic Antibodies Inc. with its Quarterly
Report on Form 10-Q for the quarterly period ended September 30, 1995, File No. 0-25978.
|
98
SIGNATURES
The Registrant hereby certifies that it meets all of the requirements for filing on Form 20-F
and that it has duly caused and authorized the undersigned to sign this annual report on its
behalf.
|
|
|
|
|
|
|
July 31, 2008
|
PROTHERICS PLC
|
|
|
|
By:
|
/s/ Rolf Soderstrom
|
|
|
|
|
Rolf Soderstrom
|
|
|
|
|
Finance Director
|
|
|
|
Report of the Independent Registered Public Accounting Firm
To the Board of Directors and Shareholders of Protherics PLC
We have audited Protherics PLC’s (“Protherics”) internal control over financial reporting as of 31
March 2008, based on criteria established in
Internal Control — Integrated Framework
issued by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO). Protherics’ management is
responsible for maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting included in the
accompanying
Management’s Report on Internal Control over Financial Reporting
. Our responsibility
is to express an opinion on the Company’s internal control over financial reporting based on our
audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether effective internal control over financial reporting was
maintained in all material respects. Our audit included obtaining an understanding of internal
control over financial reporting, assessing the risk that a material weakness exists, and testing
and evaluating the design and operating effectiveness of internal control based on the assessed
risk. Our audit also included performing such other procedures as we considered necessary in the
circumstances. We believe that our audit provides a reasonable basis for our opinion.
A company’s internal control over financial reporting is a process designed to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted accounting principles. A
company’s internal control over financial reporting includes those policies and procedures that (1)
pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the company; (2) provide reasonable assurance that
transactions are recorded as necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that receipts and expenditures of the company
are being made only in accordance with authorizations of management and directors of the company;
and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use, or disposition of the company’s assets that could have a material effect on the
financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or
detect misstatements. Also, projections of any evaluation of effectiveness to future periods are
subject to the risk that controls may become inadequate because of changes in conditions, or that
the degree of compliance with the policies or procedures may deteriorate.
In our opinion, Protherics maintained, in all material respects, effective internal control over
financial reporting as of 31 March 2008, based on criteria established in
Internal Control —
Integrated Framework
issued by the Committee of Sponsoring Organizations of the Treadway
Commission.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight
Board (United States), the consolidated balance sheets of Protherics as of 31 March 2008 and 2007,
and the related consolidated income statements, consolidated statements of recognized income and
expense, and consolidated cash flow statements for the two years then ended, and our report dated [ ] 2008 expressed an unqualified opinion on those consolidated financial statements.
KPMG Audit Plc
Manchester, United Kingdom
31 July 2008
F-1
Report of the Independent Registered Public Accounting Firm
To the Board of Directors and Shareholders of Protherics PLC
We have audited the accompanying consolidated balance sheets of Protherics PLC and subsidiaries as
of 31 March 2008 and 2007, and the related consolidated income statements, consolidated statements
of recognized income and expense and consolidated statements of cash flows for the two years then
ended. These consolidated financial statements are the responsibility of the Company’s management.
Our responsibility is to express an opinion on these consolidated financial statements based on
our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all
material respects, the financial position of Protherics PLC and subsidiaries as of 31 March 2008
and 2007, and the results of their operations and their cash flows for the two years then ended, in
conformity with International Financial Reporting Standards (“IFRS”) as issued by the International
Accounting Standards Board (“IASB”) and IFRS as adopted by the European Union.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight
Board (United States), Protherics PLC’s internal control over financial reporting as of 31 March
2008, based on criteria established in
Internal Control — Integrated Framework
issued by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated [ ]
2008 expressed an unqualified opinion on the effectiveness of the Company’s internal control over
financial reporting.
KPMG Audit Plc
Manchester, United Kingdom
31 July 2008
F-2
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Shareholders of Protherics PLC:
In our opinion, the accompanying statements of income, of recognized income and expense and cash
flows for the year ended 31 March 2006 present fairly, in all material respects, the results of
operations and cash flows of Protherics PLC and its subsidiaries for the year ended 31 March 2006,
in conformity with International Financial Reporting Standards (“IFRS”) as adopted by the European
Union and IFRS as issued by the International Accounting Standards Board. These financial
statements are the responsibility of the Company’s management. Our responsibility is to express an
opinion on these financial statements based on our audit. We conducted our audit of these
statements in accordance with the standards of the Public Company Accounting Oversight Board
(United States). Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements, assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We believe that our audit
provides a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
London, United Kingdom
25 July 2006
F-3
Income Statements
for the year ended 31 March 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
|
|
Notes
|
|
|
£’000
|
|
|
£’000
|
|
|
£’000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
4
|
|
|
|
26,067
|
|
|
|
31,119
|
|
|
|
17,709
|
|
|
Cost of sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales excluding exceptional closedown costs
|
|
|
|
|
|
|
(12,463
|
)
|
|
|
(11,334
|
)
|
|
|
(9,930
|
)
|
|
Exceptional closedown costs
|
|
|
6
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(1,362
|
)
|
|
|
|
Total cost of sales
|
|
|
|
|
|
|
(12,463
|
)
|
|
|
(11,334
|
)
|
|
|
(11,292
|
)
|
|
|
|
Gross profit
|
|
|
|
|
|
|
13,604
|
|
|
|
19,785
|
|
|
|
6,417
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Administrative expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development
|
|
|
|
|
|
|
(19,138
|
)
|
|
|
(13,978
|
)
|
|
|
(6,747
|
)
|
|
General and administrative
|
|
|
|
|
|
|
(13,684
|
)
|
|
|
(10,161
|
)
|
|
|
(9,203
|
)
|
|
|
|
Total administrative expenses
|
|
|
|
|
|
|
(32,822
|
)
|
|
|
(24,139
|
)
|
|
|
(15,950
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating loss
|
|
|
6
|
|
|
|
(19,218
|
)
|
|
|
(4,354
|
)
|
|
|
(9,533
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finance income
|
|
|
8
|
|
|
|
2,382
|
|
|
|
1,155
|
|
|
|
401
|
|
|
Finance costs
|
|
|
9
|
|
|
|
(415
|
)
|
|
|
(417
|
)
|
|
|
(431
|
)
|
|
|
|
Loss before tax
|
|
|
|
|
|
|
(17,251
|
)
|
|
|
(3,616
|
)
|
|
|
(9,563
|
)
|
|
Tax
|
|
|
10
|
|
|
|
509
|
|
|
|
259
|
|
|
|
75
|
|
|
|
|
Loss for the year
|
|
|
25
|
|
|
|
(16,742
|
)
|
|
|
(3,357
|
)
|
|
|
(9,488
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pence
|
|
|
Pence
|
|
|
Pence
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted loss per share
|
|
|
11
|
|
|
|
(4.9
|
)
|
|
|
(1.2
|
)
|
|
|
(3.8
|
)
|
The results relate to continuing operations.
Statements of Recognised Income & Expense
for the year ended 31 March 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
|
|
|
|
|
|
£’000
|
|
|
£’000
|
|
|
£’000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exchange differences on translation of foreign operations
|
|
|
|
|
|
|
236
|
|
|
|
749
|
|
|
|
(158
|
)
|
|
|
|
Net expense recognised directly in equity
|
|
|
|
|
|
|
236
|
|
|
|
749
|
|
|
|
(158
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss for the year
|
|
|
|
|
|
|
(16,742
|
)
|
|
|
(3,357
|
)
|
|
|
(9,488
|
)
|
|
|
|
Total recognised expense for the year
|
|
|
|
|
|
|
(16,506
|
)
|
|
|
(2,608
|
)
|
|
|
(9,646
|
)
|
|
Adjustments arising on first time adoption of IAS 32 and
IAS 39
|
|
|
25
|
|
|
|
—
|
|
|
|
—
|
|
|
|
211
|
|
|
|
|
Total losses recognised since last financial statements
|
|
|
|
|
|
|
|
|
|
|
(2,608
|
)
|
|
|
(9,435
|
)
|
|
|
All recognised income and expense is attributable to equity shareholders.
The notes on pages F-7 to F-56 form part of these financial statements.
F-4
Balance Sheets
at 31 March 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
|
|
Notes
|
|
|
£’000
|
|
|
£’000
|
|
|
Non-current assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill
|
|
|
12
|
|
|
|
10,865
|
|
|
|
10,878
|
|
|
Intangible assets
|
|
|
13
|
|
|
|
19,119
|
|
|
|
19,652
|
|
|
Property, plant and equipment
|
|
|
14
|
|
|
|
11,884
|
|
|
|
9,987
|
|
|
Deferred tax asset
|
|
|
10
|
|
|
|
345
|
|
|
|
99
|
|
|
|
|
|
|
|
|
|
|
|
42,213
|
|
|
|
40,616
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Inventories
|
|
|
15
|
|
|
|
10,205
|
|
|
|
10,707
|
|
|
Derivative instruments
|
|
|
22
|
|
|
|
—
|
|
|
|
114
|
|
|
Tax receivables
|
|
|
|
|
|
|
763
|
|
|
|
773
|
|
|
Trade and other receivables
|
|
|
16
|
|
|
|
3,975
|
|
|
|
15,066
|
|
|
Cash and cash equivalents
|
|
|
17
|
|
|
|
37,660
|
|
|
|
39,989
|
|
|
|
|
|
|
|
|
|
|
|
52,603
|
|
|
|
66,649
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
|
|
|
|
|
94,816
|
|
|
|
107,265
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade and other payables
|
|
|
18
|
|
|
|
19,210
|
|
|
|
14,037
|
|
|
Current tax liabilities
|
|
|
|
|
|
|
370
|
|
|
|
273
|
|
|
Obligations under finance leases
|
|
|
21
|
|
|
|
966
|
|
|
|
1,048
|
|
|
Bank overdrafts and loans
|
|
|
19
|
|
|
|
54
|
|
|
|
46
|
|
|
Derivative instruments
|
|
|
22
|
|
|
|
170
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
20,770
|
|
|
|
15,404
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-current liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade and other payables
|
|
|
18
|
|
|
|
8,670
|
|
|
|
10,844
|
|
|
Borrowings
|
|
|
19
|
|
|
|
141
|
|
|
|
157
|
|
|
Convertible loan notes
|
|
|
20
|
|
|
|
1,971
|
|
|
|
2,100
|
|
|
Obligations under finance leases
|
|
|
21
|
|
|
|
1,712
|
|
|
|
2,289
|
|
|
|
|
|
|
|
|
|
|
|
12,494
|
|
|
|
15,390
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
|
|
|
|
33,264
|
|
|
|
30,794
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net assets
|
|
|
|
|
|
|
61,552
|
|
|
|
76,471
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders’ equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share capital
|
|
|
23
|
|
|
|
6,806
|
|
|
|
6,783
|
|
|
Share premium account
|
|
|
24
|
|
|
|
136,292
|
|
|
|
135,951
|
|
|
Shares to be issued
|
|
|
25
|
|
|
|
1,289
|
|
|
|
1,289
|
|
|
Merger reserve
|
|
|
25
|
|
|
|
51,163
|
|
|
|
51,163
|
|
|
Equity reserve
|
|
|
25
|
|
|
|
203
|
|
|
|
220
|
|
|
Cumulative translation reserve
|
|
|
25
|
|
|
|
794
|
|
|
|
558
|
|
|
Retained earnings
|
|
|
25
|
|
|
|
(134,995
|
)
|
|
|
(119,493
|
)
|
|
|
|
Total equity
|
|
|
|
|
|
|
61,552
|
|
|
|
76,471
|
|
|
|
The financial statements were approved by the Board of Directors and authorised for issue on
•
July
2008. They were signed on its behalf by:
R Soderstrom
Director
The notes on pages F-7 to F-56 form part of these financial statements.
F-5
Cash Flow Statements
for the year ended 31 March 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
|
|
Notes
|
|
|
£’000
|
|
|
£’000
|
|
|
£’000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from operating activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash (outflow) / inflow from operations
|
|
|
32
|
|
|
|
(126
|
)
|
|
|
(16,051
|
)
|
|
|
12,609
|
|
|
Income tax paid
|
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(50
|
)
|
|
Income tax received
|
|
|
|
|
|
|
282
|
|
|
|
293
|
|
|
|
5
|
|
|
|
|
Net inflow / (outflow) from operating activities
|
|
|
|
|
|
|
156
|
|
|
|
(15,758
|
)
|
|
|
12,564
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest received
|
|
|
|
|
|
|
2,382
|
|
|
|
1,155
|
|
|
|
401
|
|
|
Proceeds on disposal of property, plant and equipment
|
|
|
|
|
|
|
2
|
|
|
|
2
|
|
|
|
52
|
|
|
Purchases of property, plant and equipment
|
|
|
|
|
|
|
(3,471
|
)
|
|
|
(1,242
|
)
|
|
|
(1,989
|
)
|
|
Purchases of other intangible non-current assets
|
|
|
|
|
|
|
—
|
|
|
|
(4,092
|
)
|
|
|
—
|
|
|
Acquisition of subsidiary, net of cash acquired
|
|
|
|
|
|
|
—
|
|
|
|
(374
|
)
|
|
|
—
|
|
|
Capital grants received
|
|
|
|
|
|
|
9
|
|
|
|
—
|
|
|
|
250
|
|
|
|
|
Net cash used in investing activities
|
|
|
|
|
|
|
(1,078
|
)
|
|
|
(4,551
|
)
|
|
|
(1,286
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest paid
|
|
|
|
|
|
|
(160
|
)
|
|
|
(170
|
)
|
|
|
(257
|
)
|
|
Interest paid on finance leases
|
|
|
|
|
|
|
(238
|
)
|
|
|
(213
|
)
|
|
|
(133
|
)
|
|
Repayment of borrowings
|
|
|
|
|
|
|
(55
|
)
|
|
|
(36
|
)
|
|
|
(171
|
)
|
|
Repayment of finance leases
|
|
|
|
|
|
|
(1,063
|
)
|
|
|
(837
|
)
|
|
|
(582
|
)
|
|
Proceeds from issue of loan note
|
|
|
|
|
|
|
—
|
|
|
|
30
|
|
|
|
—
|
|
|
Proceeds from issue of shares
|
|
|
|
|
|
|
53
|
|
|
|
36,162
|
|
|
|
8,049
|
|
|
|
|
Net cash (outflow) / inflow from financing activities
|
|
|
|
|
|
|
(1,463
|
)
|
|
|
34,936
|
|
|
|
6,906
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (decrease) / increase in cash and cash equivalents
|
|
|
|
|
|
|
(2,385
|
)
|
|
|
14,627
|
|
|
|
18,184
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at the beginning of year
|
|
|
|
|
|
|
39,989
|
|
|
|
25,438
|
|
|
|
7,242
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of foreign exchange rate changes
|
|
|
|
|
|
|
12
|
|
|
|
(76
|
)
|
|
|
12
|
|
|
|
|
Cash and cash equivalents at the end of year
|
|
|
17
|
|
|
|
37,616
|
|
|
|
39,989
|
|
|
|
25,438
|
|
|
|
The notes on pages F-7 to F-56 form part of these financial statements.
F-6
1 General Information
Protherics PLC is a company incorporated in the United Kingdom under the Companies Act 1985.
The financial information set out below does not constitute the company’s statutory accounts for
the years ended 31 March 2008, 2007 or 2006. Statutory accounts for 2006 and 2007 have been
delivered to the registrar of companies, and those for 2008 will be delivered in due course. The
auditors have reported on those accounts; their report was (i) unqualified, (ii) did not include a
reference to any matters to which the auditors drew attention by way of emphasis without qualifying
their report and (iii) did not contain a statement under section 237(2) or (3) of the Companies Act
1985.
These financial statements are presented in Sterling because that is the currency of the primary
economic environment in which the Company operates. Foreign operations are included in accordance
with the policies set out in note 2.
Standards effective in the current period
In the current year, the Company has adopted IFRS 7, Financial Instruments: Disclosures, which is
effective for annual reporting periods beginning on or after 1 January 2007, and consequential
amendments to IAS 1, Presentation of Financial Statements. The impact of the adoption of IFRS 7
and the changes to IAS 1 has been to expand the disclosures provided in these financial statements
regarding the Company’s financial instruments and management of capital (see note 27). As a
disclosure based standard there have been no changes in either accounting policy or the primary
financial statements.
The following standards and interpretations had no material impact on the Company’s results, assets
or liabilities or were not relevant:
|
|
•
|
|
IFRS 2 (Amendment), Share-Based Payment — Vesting Conditions and Cancellations;
|
|
|
|
|
•
|
|
IFRS 4, Insurance Contracts;
|
|
|
|
|
•
|
|
IAS 1, Amendment on Capital Disclosures;
|
|
|
|
|
•
|
|
IFRIC 7, Applying the Restatement Approach under IAS 29, Financial Reporting in
Hyperinflationary Economies;
|
|
|
|
|
•
|
|
IFRIC 8, Scope of IFRS 2, Share-Based Payment;
|
|
|
|
|
•
|
|
IFRIC 9, Reassessment of Embedded Derivatives; and
|
|
|
|
|
•
|
|
IFRIC 11, IFRS 2 — Group and Treasury Share Transactions.
|
F-7
Standards in issue not yet adopted
At the date of authorisation of these financial statements the following standards and
interpretations were in issue but not yet effective:
|
|
•
|
|
IFRS 8, Operating Segments;
|
|
|
|
|
•
|
|
Amendment to IAS 1, Presentation of Financial Statements;
|
|
|
|
|
•
|
|
Amendment to IAS 23, Borrowing Costs;
|
|
|
|
|
•
|
|
IFRIC 13, Customer Loyalty Programmes; and
|
|
|
|
|
•
|
|
IFRIC 14, IAS 19 — The Limit on a Defined Benefit Asset, Minimum Funding Requirements
and Their Interaction.
|
IFRS 8 was endorsed by the EU during 2007 and the Directors anticipate that the adoption of this
standard may result in additional segment disclosures when it comes into effect for periods
commencing on or after 1 January 2009.
All other standards referred to above are yet to be endorsed by the EU and the Directors do not
anticipate that the adoption of these standards will have a significant impact on the Financial
Statements of the Group when they come into effect for periods commencing on or after 1 January
2009.
None of the interpretations have been endorsed by the EU and none are expected to have a
significant impact on adoption.
2 Accounting Policies
The principal accounting policies adopted in the preparation of these financial statements are set
out below. These policies have been consistently applied to all years presented unless otherwise
stated.
Basis of accounting
The Company financial statements have been prepared in accordance with International Financial
Reporting Standards issued by the International Accounting Standards Board (“IASB”) and
International Financial Reporting Standards as adopted by the European Union (collectively referred
to as “IFRS”).
The financial information presented on pages
•
to
•
has been prepared based on IFRS, including
International Accounting Standards (“IAS”) and Interpretations issued by the International
Accounting Standards Board (“IASB”) and the International Financial Reporting Interpretations
Committee (“IFRIC”) of the IASB that are relevant to its operation and effective for accounting
periods beginning on 1 April 2007.
The financial statements have been prepared under the historical cost convention as modified by the
revaluation of certain financial assets and liabilities. A summary of the more important policies
are set out below.
The preparation of financial statements in conformity with IFRS requires the use of estimates and
assumptions that affect the reported amounts of assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reporting period. Although
these estimates are based on management’s best knowledge of the amount, events or actions, actual
results ultimately may differ from those estimates.
F-8
Basis of consolidation
The consolidated financial statements of Protherics PLC incorporate the financial statements of the
Company and all entities over which it can exercise control (its “subsidiaries”). Control is
achieved by the power to govern the financial and operating policies of the subsidiary so as to
obtain benefits from it’s activities, and generally accompanies a shareholding of more than one
half of the voting rights. The existence and effect of potential voting rights that are currently
exercisable or convertible are considered when assessing whether the Company controls another
entity. Subsidiaries are fully consolidated from the date on which control is transferred to the
Company. They are de-consolidated from the date on which control ceases.
The purchase method is used to account for the acquisition of subsidiaries by the Company. The cost
of an acquisition is measured as the fair value of the assets given, equity instruments issued and
liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the
acquisition. Identifiable assets acquired and liabilities and contingent liabilities assumed are
measured initially at their fair values on the date of acquisition, irrespective of the extent of
any minority interest. The excess of the cost of acquisition over the fair value of the Company’s
share of identifiable net assets, including intangible assets acquired, is recorded as goodwill. If
the cost of acquisition is less than the fair value of the Company’s share of net assets of the
subsidiary acquired, the difference is recognised directly in the income statement.
Where necessary, adjustments are made to the financial statements of subsidiaries to bring
accounting policies used into line with those used by the Company.
On consolidation, all intra-group transactions, balances, income and expenditure are eliminated.
Segment reporting
A business segment is a group of assets, liabilities and operations engaged in providing products
or services that are subject to risks and returns that are different from those of other parts of
the business. A geographical business segment is engaged in providing products or services within a
particular economic environment that is subject to risks and returns that are different from those
of segments operating in other economic environments.
Foreign currency translation
Items included in the financial statements of each of the Company’s entities are measured using the
functional currency of the primary economic environment in which the entity operates (the
“functional currency”). The consolidated financial statements are presented in Sterling, which is
the Company’s functional and presentational currency.
Transactions in foreign currencies are recorded at the rate of exchange ruling at the date of
transaction. Monetary assets and liabilities denominated in foreign currencies at the balance sheet
date are translated at the rates of exchange prevailing at that date. Gains and losses arising on
translation are included in the income statement.
On consolidation, the results of operations that have a functional currency different from the
presentational currency are translated at the average rate of exchange during the year and their
balance sheets at the rates ruling at the date of the balance sheet. Exchange differences arising
on translation from 1 April 2004 are taken directly to a separate component of equity, the
cumulative translation reserve.
F-9
Revenue recognition
Revenue represents amounts received or receivable in respect of the sale of goods and services to
customers during the year, net of trade discounts given and value added tax, and in respect of
licence agreements and research and collaboration agreements.
A description of the various elements of revenue and the associated accounting policies is given
below:
|
|
•
|
|
Products
|
|
|
|
|
|
|
The Company recognises revenue for product sales when each condition of IAS 18, paragraph
14 is wholly-satisfied. Where sales arrangements specify a second element of revenue
contingent upon a specified event, this revenue is not recognised until this event has
occurred and it is certain that the economic benefit triggered by this event will flow to
the Company. In cases where product is sold to a customer with a right of replacement, the
Company views the transaction as a multi-element arrangement and a portion of the value
from the sale is deferred and allocated to the replacement right based on the fair value of
the replacement right.
|
|
|
|
|
•
|
|
Upfront and milestone payments
|
|
|
|
|
|
|
Non-refundable upfront and milestone payments are deferred and recognised as the earnings
process is completed. Where the Company has performance obligations, upfront payments are
deferred over the period in which these obligations are satisfied. In determining the
performance obligations under the contract, consideration is given as to whether elements
of the obligations meet the criteria for separate accounting. The Company applies the
substantive milestone method in accounting for subsequent milestone payments. Milestone
payments that are considered substantive are recognised into income in the year in which
they are received. Milestones that do not satisfy the criteria to be considered as
substantive are amortised over the remaining period in which the Company expects to fulfil
its performance obligations under the agreement. The Company considers the following when
assessing whether a milestone is considered substantive:
|
|
|
•
|
|
Are the milestone payments non-refundable?
|
|
|
|
|
•
|
|
Does the achievement of the milestone involve a degree of risk that was not
reasonably assured at the inception of the arrangement?
|
|
|
|
|
•
|
|
Is substantive effort involved in achieving the milestone?
|
|
|
|
|
•
|
|
Is the amount of the milestone payment reasonable in relation to the effort
expended or the risk associated with the achievement of the milestone?
|
|
|
|
|
•
|
|
How does the time that passes between the payments compare to the effort required
to reach the milestone?
|
|
|
•
|
|
Outlicensed product royalties
|
|
|
|
|
|
|
Royalty income is generated by sales of products incorporating the Company’s proprietary
technology. Royalty revenues are recognised once the amounts due can be reliably estimated
based on the sale of underlying products and recoverability is assured. Where there is
insufficient historical data on sales and returns to fulfil these requirements, for example
in the case of a new product, the royalty revenue will not be recognised until the Company
can reliably estimate the underlying sales.
|
Research and development expenditure
Research expenditure is recognised as an expense as incurred. Expenditure incurred on development
projects (relating to the design and testing of new or improved products) is recognised as
intangible assets when it is probable that the project will generate future economic benefit,
considering factors including its commercial and technological feasibility, status of regulatory
approval, and the ability to measure costs reliably. Other development expenditures are recognised
as an expense as incurred. Development expenditure previously recognised as an expense is not
recognised as an asset in a subsequent period. Development expenditure that has a finite useful
life and which has been capitalised is amortised from the commencement of the commercial production
of the product on a straight line basis over the period of its expected benefit.
No development expenditure has been capitalised in either the current or prior two years.
Exceptional items
The Company defines exceptional items as those items which are not expected to occur frequently and
by their nature or size, would distort the comparability of results from year to year.
F-10
Finance income and costs
Finance income comprises of income on funds invested and is recognised as it accrues using the
effective interest method.
Finance costs comprise interest expenses on borrowings and are recognised in the Income Statement
using the effective interest method.
Intangible fixed assets — Goodwill
Goodwill represents the excess of the cost of an acquisition over the fair value of the Company’s
share of the net identifiable assets, including intangible assets, of the acquired subsidiary at
the date of acquisition. Goodwill on acquisitions of subsidiaries is included in intangible assets.
Goodwill is tested annually for impairment or when events or changes in circumstances indicate the
carrying value may be impaired, and is carried at cost less accumulated impairment losses. Gains
and losses on the disposal of a subsidiary include the carrying amount of goodwill relating to the
subsidiary sold.
Goodwill arising on acquisitions before the date of transition to IFRS has been retained at the
previous UK GAAP amount. Goodwill arising on acquisitions in the year ended 31 March 1998 and
earlier periods has been written off to reserves, has not been reinstated in the balance sheet and
is not included in determining any subsequent profit or loss on disposal.
Intangible fixed assets — Other
Purchased trademarks, licenses and customer lists are recognised at cost on acquisition and are
subject to amortisation over their useful life from the point at which the asset is available for
use. The amortisation charge is calculated on a straight-line basis over their estimated useful
lives (currently a maximum of 10 years).
Property, plant and equipment
Land and buildings comprise mainly factories and offices. All property, plant and equipment is
shown at cost less subsequent depreciation and impairment losses, except for land, which is shown
at cost less impairment. Cost includes expenditure that is directly attributable to the acquisition
of the items.
Subsequent costs are included in an asset’s carrying amount only when it is probable that future
economic benefits associated with the asset will flow to the Company and the cost of the asset can
be measured reliably.
Depreciation on assets is calculated using the straight-line method to allocate the cost of each
asset less its residual value over its estimated useful life as follows:
|
|
|
|
|
Buildings and improvements
|
|
5% to 10% per year
|
|
Plant and machinery
|
|
10% to 15% per year
|
|
Computer equipment and software
|
|
20% to 33% per year
|
|
Fixtures, fittings and motor vehicles
|
|
20% to 25% per year
|
Asset residual values and useful lives are reviewed and adjusted as appropriate at each balance
sheet date.
Assets are reviewed for impairment whenever events or changes in circumstances indicate that the
carrying value of the asset may not be recoverable. An asset’s carrying amount is written down
immediately to its recoverable amount if the carrying amount exceeds the higher of the asset’s fair
value less cost to sell and value in use. Any impairment charge is recorded in the income
statement.
Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These
are included in the income statement. Borrowing costs incurred during the construction of assets
are expensed as incurred.
F-11
Impairment of tangible and intangible assets
The Company reviews the carrying amounts of its tangible assets and intangible assets with finite
lives when events or circumstances indicate the carrying value may be impaired, whilst goodwill
with an indefinite life is reviewed for impairment on an annual basis. In performing such reviews,
the recoverable amount of the asset is estimated in order to determine the extent of the impairment
loss (if any). Where the asset does not generate cash flows that are independent from other assets,
the Company estimates the recoverable amount of the cash-generating unit to which the asset
belongs. An intangible asset with an indefinite life is tested for impairment annually and whenever
there is an indication that the asset may be impaired.
Recoverable amount is the higher of fair value less costs to sell 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 assessments of the time value of money and the risks specific
to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its
carrying amount, the carrying amount of the asset (cash-generating unit) is reduced to its
recoverable amount. An impairment loss is recognised as an expense immediately.
Where an impairment loss subsequently reverses, the carrying value of the asset (cash-generating
unit) is increased to the revised estimate of its recoverable amount, provided 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 (cash-generating unit) in prior years. A reversal of
an impairment loss is recognised as income immediately.
Inventories
Inventories are valued at the lower of cost and net realisable value. Cost comprises materials,
direct labour and a share of production overheads appropriate to the relevant stage of production.
Provision is made for obsolete, slow-moving or defective items where appropriate. Net realisable
value is determined at the balance sheet date on commercially saleable products based on estimated
selling price less all further costs to completion and all relevant marketing, selling and
distribution costs.
Inventories relating to research and development projects are fully written down in the income
statement unless the Company considers it probable to realise economic value from their sale or
use. If the circumstances that previously caused these inventories to be written down below cost
subsequently change and there is clear evidence of an increase in realisable value, the write down
is reversed.
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net
profit as reported in the income statement because it excludes items of income and expense that are
taxable or deductible in other periods and it further excludes items that are never taxable or
deductible. The Company’s liability for current tax is calculated using tax rates that have been
enacted or substantively enacted by the balance sheet date.
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying
amounts of assets and liabilities in the financial statements and the corresponding tax bases used
in the computation of taxable profit, and is accounted for using the balance sheet liability
method. Deferred tax liabilities are recognised for all taxable temporary differences and deferred
tax assets are recognised to the extent that it is probable that taxable profits will be available
against which deductible temporary differences can be utilised. Such assets and liabilities are not
recognised if the temporary difference arises from goodwill or the initial recognition (other than
a business combination) of other assets and liabilities in a transaction that affects neither the
taxable profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences arising from investments
in subsidiaries and associates, and interests in joint ventures, except where the Company is able
to control the reversal of the temporary difference and it is probable that the temporary
difference will not reverse in the foreseeable future.
F-12
The carrying amount of deferred tax assets is reviewed at each balance sheet date and is reduced to
the extent that it is no longer probable that sufficient taxable profits will be available to allow
the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the year when the
liability is settled or the asset is realised based on tax rates that have been enacted or
substantively enacted by the balance sheet date. Deferred tax is charged or credited in the income
statement, except when it relates to items charged or credited directly to equity, in which case
the deferred tax is also dealt with in equity.
Leases
Leases are classified as finance leases whenever the terms of the lease transfer substantially all
the risks and rewards of ownership to the lessee. All other leases are classified as operating
leases.
Assets held under finance leases are recognised as assets of the Company at their fair value or, if
lower, at the present value of the minimum lease payments, each determined at the inception of the
lease. The corresponding liability to the lessor is included in the balance sheet as a finance
lease obligation. Lease payments are apportioned between finance charges and reduction of the lease
obligation so as to achieve a constant rate of interest on the remaining balance of the liability.
Finance charges are charged directly against income. Such assets are depreciated over the shorter
of their estimated useful lives or the length of the lease. Assets purchased under hire purchase
agreements are accounted for similarly, except that these assets are depreciated over their
estimated useful lives.
Rentals under operating leases are charged to income on a straight-line basis over the term of the
relevant lease.
Government grants
Government grants towards staff re-training costs are recognised as income over the periods in
which the related costs are incurred and are deducted in reporting the related expense.
Government grants relating to property, plant and equipment are treated as deferred income and
released to the income statement over the useful lives of the assets concerned.
Pensions
The Company operates a defined contribution retirement benefit scheme for all members of staff who
wish to participate. The funds of the scheme are administered by trustees and are independent of
the Company’s finances. The Company’s contributions are charged in the income statement as they
fall due.
Share-based payments
The Company has applied the requirements of IFRS 2, Share-Based Payments. In accordance with the
transitional provisions, IFRS 2 has been applied to all grants of equity instruments after 7
November 2002 that were unvested at 1 January 2005.
The Company grants share options to Directors and employees. Equity-settled share-based payments
are measured at fair value at the date of grant and expensed on a straight-line basis over the
expected life of the option, based on the estimate of the number of options that will eventually
vest.
The share options granted have varying performance criteria required for the option to vest and
these are considered in the method of measuring the fair value. Where it is considered appropriate,
the fair value is measured using the Black-Scholes model. Where complex market based performance
criteria exist, a simulation model has been used, based on the same underlying methodology as the
Black-Scholes model, to establish the fair value on grant.
F-13
Financial liabilities and equity instruments issued by the Company
|
|
•
|
|
Classification as debt or equity
|
|
|
|
|
|
|
Debt and equity instruments are classified as either financial liabilities or as equity in
accordance with the substance of the contractual arrangement.
|
|
|
|
|
•
|
|
Equity instruments
|
|
|
|
|
|
|
An equity instrument is any contract that evidences a residual interest in the assets of an
entity after deducting all of its liabilities. Equity instruments issued by the Company are
recorded at the proceeds received, net of direct issue costs.
|
|
|
|
|
•
|
|
Compound instruments
|
|
|
|
|
|
|
The component parts of compound instruments issued by the Company are classified separately
as financial liabilities and equity in accordance with the substance of the contractual
arrangement. At the date of issue, the fair value of the liability component is estimated
using the prevailing market interest rate for a similar non-convertible instrument. This
amount is recorded as a liability on an amortised cost basis using the effective interest
method until extinguished upon conversion or at the instrument’s maturity date. The equity
component is determined by deducting the amount of the liability component from the fair
value of the compound instrument as a whole. This is recognised and included in equity, net
of income tax effects, and is not subsequently remeasured.
|
|
|
|
|
•
|
|
Financial liabilities
|
|
|
|
|
|
|
Financial liabilities, including borrowings, are initially measured at fair value, net of
transaction costs.
|
|
|
|
|
|
|
Financial liabilities are subsequently measured at amortised cost using the effective
interest method, with interest expense recognised on an effective yield basis.
|
|
|
|
|
|
|
The effective interest method is a method of calculating the amortised cost of a financial
liability and of allocating interest expense over the relevant period. The effective
interest rate is the rate that exactly discounts estimated future cash payments through the
expected life of the financial liability, or, where appropriate, a shorter period.
|
|
|
|
|
•
|
|
Derecognition of financial liabilities
|
|
|
|
|
|
|
The Company derecognises financial liabilities when, and only when, the Company’s
obligations are discharged, cancelled or they expire.
|
|
|
|
|
•
|
|
Derivative financial instruments
|
|
|
|
|
|
|
The Company’s activities expose it primarily to the financial risks of changes in foreign
currency exchange rates. The Company uses foreign exchange forward contracts and options to
hedge these exposures. These hedges do not qualify as accounting hedges in accordance with
IAS 39. The Company does not use derivative financial instruments for speculative
purposes. The use of financial derivatives is in accordance with the Company’s policies
approved by the Board of Directors, which is to hedge the foreign currency exposure from
the expected US dollar sales on a rolling twelve month basis.
|
|
|
|
|
|
|
Further details of derivative financial instruments are disclosed in note 27.
|
|
|
|
|
|
|
Derivatives are initially recognised at fair value at the date a derivative contract is
entered into and are subsequently remeasured to their fair value at each balance sheet
date. The resulting gain or loss is recognised in the income statement immediately.
|
|
|
|
|
|
|
A derivative is presented as a non-current asset or a non-current liability if the
remaining maturity of the instrument is more than twelve months and it is not expected to
be realised or settled within twelve months. Other derivatives are presented as current
assets or current liabilities.
|
|
|
|
|
•
|
|
Embedded derivatives
|
|
|
|
|
|
|
Derivatives embedded in other financial instruments or other host contracts are treated as
separate derivatives when their risks and characteristics are not closely related to those
of the host contracts and the host contracts are not measured at fair value with changes in
fair value recognised in profit or loss.
|
F-14
Convertible loan notes
The convertible loan notes are considered by the Company to be compound financial instruments and
are accounted for in accordance with the policy set out above.
Issue costs are apportioned between the liability and equity components of the convertible loan
notes based on their relative carrying amounts at the date of issue. The portion relating to the
equity component is charged directly against equity.
The interest expense on the liability component consists of the coupon rate and the element of the
equity component proportionate to the liability component outstanding. This latter part is added to
the carrying amount of the convertible loan notes.
Trade receivables
Trade receivables do not carry any interest and are stated at their face value as reduced by
appropriate allowances for estimated irrecoverable amounts.
Trade payables
Trade payables are not interest bearing and are stated at their face value.
Cash and cash equivalents
For the purpose of the cash flow statement, cash and cash equivalents includes cash in hand,
deposits held at call with banks, other short-term highly liquid investments with original
maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within
borrowings in current liabilities on the balance sheet.
Financial guarantees
Where the Company enters into financial guarantee contracts to guarantee the indebtedness of other
companies within its group, the Company considers these to be insurance arrangements, and accounts
for them as such. In this respect, the Company treats the guarantee contract as a contingent
liability until such time as it becomes probable that the Company will be required to make a
payment under the guarantee.
Financial risk management
The Company’s multinational operations expose it to a variety of financial risks that include the
effects of changes in foreign exchange rates, credit risks and liquidity risks. The Company
undertakes procedures which aim to reduce uncertainty in the financial performance of the Company
which are discussed below:
|
|
•
|
|
Foreign exchange risk
|
|
|
|
|
|
|
A significant element of the Company’s revenue is denominated in US dollars whilst much of
its cost base in the provision of these products is denominated in Sterling. The Company
enters into foreign exchange contracts and similar derivatives to manage cash flows in the
form of foreign exchange contracts and similar derivatives which typically extend for
twelve months and cover 70 to 100% of anticipated Sterling requirements.
|
|
|
|
|
•
|
|
Credit risk
|
|
|
|
|
|
|
A significant element of the Company’s revenue is generated from sales to one customer in
the US. Management are constantly in communication with this customer and monitor both
sales and payments from this customer to minimise the credit risk exposure.
|
|
|
|
|
•
|
|
Liquidity risk
|
|
|
|
|
|
|
The Company maintains a mixture of short and medium term deposits that are designed to
ensure the Company has sufficient available funds for operations and planned expansions.
|
|
|
|
|
•
|
|
Interest rate risk
|
|
|
|
|
|
|
The Company seeks to mitigate partially against increased interest rates whilst maintaining
a degree of flexibility to benefit from decreasing rates of interest by holding a mix of
fixed and floating rate financial liabilities. The Company seeks to maximise the amount of
interest income from its cash balances by using a variety of short-terms, fixed
high0interest deposit and money-market accounts.
|
F-15
3 Critical Accounting Judgements and Key Sources of Estimation Uncertainty
Critical Accounting Judgements
In the process of applying the Company’s accounting policies, described in note 2, management has
made the following judgements that have had the most significant effect on the amounts recognised
in the financial statements.
Revenue recognition
As described in note 2, it is the Company’s policy to recognise non-refundable upfront
payments over the period of the earnings process. During the year ended 31 March 2006, the
Company received £16.3m from AstraZeneca UK Ltd in a Patent and License Know How agreement
for CytoFab™. The Company considers that its obligations under the license agreement
consist of the license, provision of development services, regulatory support and steering
committee participation. The Company considers that the development services and the
regulatory support it can supply will cease with the approval of CytoFab™ by the FDA and
while the steering committee continues to operate after product approval by the FDA, the
Company has received confirmation that its participation after this date would become
voluntary. Based on the clinical development plan to be undertaken by AstraZeneca, the
Company currently estimates that its performance under the agreement will be completed over
the period to December 31, 2012 and, therefore, is recognising the £16.3m on a straight
line basis, over the estimated performance period.
During the year ended 31 March 2007, the Company earned a £10 million milestone from
AstraZeneca UK Ltd which was recognised as revenue in that year since the Company
considered this a substantive milestone for which the earnings process had been completed.
This milestone was payable upon the decision of the Process Manufacturing and Supply
Committee to progress the Process Science Programme to the manufacture of the first full
commercial scale batch of CytoFab™, the decision reflecting AstraZeneca’s acknowledgement
that the Company had successfully developed a commercially viable manufacturing process
capable of providing material for clinical trial and also subsequent launch. The previous
methods applied by the Company had used alternative processes and techniques that were not
commercially viable and had such development failed, no further amounts would have been
received under the agreement. The Company considered the non-refundable nature of the
milestone along with risks set out above, the substantial costs and efforts incurred in its
achievement over a 14 month period, and considered that this satisfied the criteria used to
determine whether a milestone is substantive as set out in its accounting policies.
In determining the revenue recognition period, management considered the detailed criteria
for the recognition of revenue per IAS 18, Revenue, and is satisfied that all requirements
have been met by the Company.
Acquisitions
Judgements have been made in respect of the identification of intangible assets made on
acquisitions in the prior year based on pre-acquisition forecasts, analysis and
negotiations. In addition to the judgements and estimates made in establishing the
intangible assets acquired and their value, in certain instances, these assets are in
development and are only amortised once the development phase has been completed, although
these assets are subjected to impairment review in accordance with the accounting policy
described in note 2.
Key Sources of Estimation Uncertainty
The key assumptions concerning the future, and other key sources of estimation uncertainty at the
balance sheet date, that have a significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year, are discussed below.
Impairment of goodwill
Determining whether goodwill is impaired requires an estimation of the value in use of the
cash-generating units to which goodwill has been allocated. The value in use calculation
requires the entity to estimate the future cash flows expected to arise from the
cash-generating unit and a suitable discount rate in order to calculate present value.
F-16
4 Revenue
An analysis of the Company’s revenue is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
|
|
£’000
|
|
|
£’000
|
|
|
£’000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sale of products
|
|
|
23,495
|
|
|
|
18,504
|
|
|
|
16,221
|
|
|
Revenue in respect of product development
|
|
|
2,296
|
|
|
|
12,213
|
|
|
|
976
|
|
|
Other
|
|
|
52
|
|
|
|
125
|
|
|
|
72
|
|
|
|
|
|
|
|
25,843
|
|
|
|
30,842
|
|
|
|
17,269
|
|
|
Outlicensed product royalties
|
|
|
224
|
|
|
|
277
|
|
|
|
440
|
|
|
|
|
|
|
|
26,067
|
|
|
|
31,119
|
|
|
|
17,709
|
|
|
Finance income
|
|
|
2,382
|
|
|
|
1,155
|
|
|
|
401
|
|
|
|
|
|
|
|
28,449
|
|
|
|
32,274
|
|
|
|
18,110
|
|
|
|
5 Segmental Reporting
For management purposes, the Company is organised into two operating segments, the sale,
manufacture and development of pharmaceutical products and royalties arising from outlicensed
technology. These divisions are the basis on which the Company reports its primary segment
information.
The revenue and costs of each segment are clearly identifiable and allocated to each segment
accordingly. There are no inter-segmental revenues. The exceptional item shown within cost of
sales for the year ended 31 March 2006 is included within the sale, manufacture and development of
pharmaceutical products operating segment.
Business segments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
|
|
|
Sale, manufacture
|
|
|
|
|
|
|
|
|
|
|
and development of
|
|
|
Outlicensed
|
|
|
|
|
|
|
|
pharmaceutical
|
|
|
product
|
|
|
|
|
|
|
|
products
|
|
|
royalties
|
|
|
Total
|
|
|
|
|
£’000
|
|
|
£’000
|
|
|
£’000
|
|
|
Continuing operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
25,843
|
|
|
|
224
|
|
|
|
26,067
|
|
|
|
|
Segment result
|
|
|
(19,429
|
)
|
|
|
211
|
|
|
|
(19,218
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finance income
|
|
|
|
|
|
|
|
|
|
|
2,382
|
|
|
Finance costs
|
|
|
|
|
|
|
|
|
|
|
(415
|
)
|
|
|
|
Loss before tax
|
|
|
|
|
|
|
|
|
|
|
(17,251
|
)
|
|
Tax
|
|
|
|
|
|
|
|
|
|
|
509
|
|
|
|
|
Loss for the year attributable to equity shareholders
|
|
|
|
|
|
|
|
|
|
|
(16,742
|
)
|
|
|
|
Segment assets
|
|
|
57,005
|
|
|
|
151
|
|
|
|
57,156
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unallocated assets
|
|
|
|
|
|
|
|
|
|
|
37,660
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
94,816
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment liabilities
|
|
|
(33,178
|
)
|
|
|
(86
|
)
|
|
|
(33,264
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other segment items
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditure (note 14)
|
|
|
3,874
|
|
|
|
—
|
|
|
|
3,874
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation (note 14)
|
|
|
2,076
|
|
|
|
—
|
|
|
|
2,076
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortisation of Intangible assets (note 13)
|
|
|
498
|
|
|
|
—
|
|
|
|
498
|
|
F-17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
|
|
|
|
Sale, manufacture
|
|
|
|
|
|
|
|
|
|
|
and development of
|
|
|
Outlicensed
|
|
|
|
|
|
|
|
pharmaceutical
|
|
|
product
|
|
|
|
|
|
|
|
products
|
|
|
royalties
|
|
|
Total
|
|
|
|
|
£’000
|
|
|
£’000
|
|
|
£’000
|
|
|
Continuing operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
30,842
|
|
|
|
277
|
|
|
|
31,119
|
|
|
|
|
Segment result
|
|
|
(4,621
|
)
|
|
|
267
|
|
|
|
(4,354
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finance income
|
|
|
|
|
|
|
|
|
|
|
1,155
|
|
|
Finance costs
|
|
|
|
|
|
|
|
|
|
|
(417
|
)
|
|
|
|
Loss before tax
|
|
|
|
|
|
|
|
|
|
|
(3,616
|
)
|
|
Tax
|
|
|
|
|
|
|
|
|
|
|
259
|
|
|
|
|
Loss for the year attributable to equity shareholders
|
|
|
|
|
|
|
|
|
|
|
(3,357
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment assets
|
|
|
67,182
|
|
|
|
94
|
|
|
|
67,276
|
|
|
Unallocated assets
|
|
|
|
|
|
|
|
|
|
|
39,989
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
107,265
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment liabilities
|
|
|
(30,727
|
)
|
|
|
(67
|
)
|
|
|
(30,794
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other segment items
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditure (note 14)
|
|
|
3,278
|
|
|
|
—
|
|
|
|
3,278
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation (note 14)
|
|
|
1,373
|
|
|
|
—
|
|
|
|
1,373
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortisation of Intangible assets (note 13)
|
|
|
135
|
|
|
|
—
|
|
|
|
135
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2006
|
|
|
|
|
|
Sale, manufacture
|
|
|
|
|
|
|
|
|
|
|
and development of
|
|
|
Outlicensed
|
|
|
|
|
|
|
|
pharmaceutical
|
|
|
product
|
|
|
|
|
|
|
|
products
|
|
|
royalties
|
|
|
Total
|
|
|
|
|
£’000
|
|
|
£’000
|
|
|
£’000
|
|
|
Continuing operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
17,269
|
|
|
|
440
|
|
|
|
17,709
|
|
|
|
|
Segment result
|
|
|
(9,961
|
)
|
|
|
428
|
|
|
|
(9,533
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finance income
|
|
|
|
|
|
|
|
|
|
|
401
|
|
|
Finance costs
|
|
|
|
|
|
|
|
|
|
|
(431
|
)
|
|
|
|
Loss before tax
|
|
|
|
|
|
|
|
|
|
|
(9,563
|
)
|
|
Tax
|
|
|
|
|
|
|
|
|
|
|
75
|
|
|
|
|
Loss for the year attributable to equity shareholders
|
|
|
|
|
|
|
|
|
|
|
(9,488
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment assets
|
|
|
34,566
|
|
|
|
132
|
|
|
|
34,698
|
|
|
Unallocated assets
|
|
|
|
|
|
|
|
|
|
|
25,438
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
60,136
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment liabilities
|
|
|
(33,709
|
)
|
|
|
(75
|
)
|
|
|
(33,784
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other segment items
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditure
|
|
|
2,629
|
|
|
|
—
|
|
|
|
2,629
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation (note 14)
|
|
|
1,391
|
|
|
|
—
|
|
|
|
1,391
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortisation of Intangible assets (note 13)
|
|
|
114
|
|
|
|
—
|
|
|
|
114
|
|
F-18
Geographical segments
The Company’s operations are located in the UK, United States and Australia. The UK is the home
country of the parent.
The following table provides an analysis of the Company’s sales by geographical market,
irrespective of the origin of the goods / services, along with the carrying amount of segment
assets and capital expenditure (on both property, plant and equipment and intangible assets):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
Segment assets
|
|
|
Capital expenditure
|
|
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
Continuing operations
:
|
|
£
|
’000
|
|
|
£
|
’000
|
|
|
£
|
’000
|
|
|
£
|
’000
|
|
|
£
|
’000
|
|
|
£
|
’000
|
|
|
£
|
’000
|
|
|
£
|
’000
|
|
|
£
|
’000
|
|
|
United Kingdom
|
|
|
2,536
|
|
|
|
1,905
|
|
|
|
1,562
|
|
|
|
61,549
|
|
|
|
74,551
|
|
|
|
27,905
|
|
|
|
2,146
|
|
|
|
2,396
|
|
|
|
2,194
|
|
|
United States
|
|
|
23,137
|
|
|
|
29,190
|
|
|
|
16,087
|
|
|
|
(2,953
|
)
|
|
|
(493
|
)
|
|
|
(5,015
|
)
|
|
|
1,190
|
|
|
|
215
|
|
|
|
17
|
|
|
Europe
|
|
|
349
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Australia
|
|
|
45
|
|
|
|
24
|
|
|
|
60
|
|
|
|
2,956
|
|
|
|
2,413
|
|
|
|
3,462
|
|
|
|
538
|
|
|
|
667
|
|
|
|
418
|
|
|
|
|
|
|
|
26,067
|
|
|
|
31,119
|
|
|
|
17,709
|
|
|
|
61,552
|
|
|
|
76,471
|
|
|
|
26,352
|
|
|
|
3,874
|
|
|
|
3,278
|
|
|
|
2,629
|
|
|
|
6 Operating Loss
Operating loss has been arrived at after charging / (crediting):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
|
|
£’000
|
|
|
£’000
|
|
|
£’000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in fair value of derivative financial instruments
|
|
|
284
|
|
|
|
(250
|
)
|
|
|
531
|
|
|
Other net foreign exchange (gains) / losses
|
|
|
(439
|
)
|
|
|
(504
|
)
|
|
|
(77
|
)
|
|
Research and development expenditure
|
|
|
19,138
|
|
|
|
13,978
|
|
|
|
6,747
|
|
|
Inventories
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of inventories recognised as expense
|
|
|
12,234
|
|
|
|
11,192
|
|
|
|
11,193
|
|
|
Depreciation of property, plant and equipment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Owned assets
|
|
|
1,356
|
|
|
|
870
|
|
|
|
1,154
|
|
|
Assets owned under finance leases
|
|
|
720
|
|
|
|
503
|
|
|
|
237
|
|
|
Amortisation of purchased intangible fixed assets
|
|
|
498
|
|
|
|
135
|
|
|
|
114
|
|
|
Operating leases — rentals payable:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plant and equipment
|
|
|
11
|
|
|
|
15
|
|
|
|
25
|
|
|
Other
|
|
|
885
|
|
|
|
529
|
|
|
|
463
|
|
|
Loss on disposal of tangible fixed assets
|
|
|
134
|
|
|
|
634
|
|
|
|
108
|
|
|
Repairs and maintenance expenditure on property, plant and
equipment
|
|
|
745
|
|
|
|
653
|
|
|
|
595
|
|
|
Amortisation of government grants
|
|
|
(104
|
)
|
|
|
(111
|
)
|
|
|
(78
|
)
|
|
Government grants towards training costs
|
|
|
(17
|
)
|
|
|
(25
|
)
|
|
|
(11
|
)
|
|
Government grants towards research and development costs
|
|
|
(695
|
)
|
|
|
—
|
|
|
|
—
|
|
|
Exceptional closedown costs (within cost of sales)
(1)
|
|
|
—
|
|
|
|
—
|
|
|
|
1,362
|
|
|
|
|
|
|
(1)
|
|
During the year ended 31 March 2006, the Company completed a major upgrade and
expansion of its manufacturing facility in Wales. During this phase of the work, the facility was
shutdown for a substantial part of the year incurring £1,362,000 of expenditure which, under normal
circumstances would have been absorbed into stock manufactured during the year. These costs had no
effect on the tax credit for the period.
|
F-19
The analysis of Auditors’ remuneration is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
KPMG
|
|
|
KPMG
|
|
|
2007
|
|
|
|
|
|
|
2006
|
|
|
|
|
Audit
|
|
|
Audit
|
|
|
PwC
|
|
|
|
|
|
|
PwC
|
|
|
|
|
Plc
|
|
|
Plc
|
|
|
LLP
|
|
|
Total
|
|
|
LLP
|
|
|
|
|
£’000
|
|
|
£’000
|
|
|
£’000
|
|
|
£’000
|
|
|
£’000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees payable to the Company’s auditors for the audit of the
Company’s annual accounts
|
|
|
62
|
|
|
|
42
|
|
|
|
62
|
|
|
|
104
|
|
|
|
21
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees payable to the Company’s auditors and their associates for the
audit of the Company’s annual consolidated accounts:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The audit of the Company’s subsidiaries pursuant to legislation
|
|
|
183
|
|
|
|
100
|
|
|
|
(2
|
)
|
|
|
98
|
|
|
|
56
|
|
|
Other services pursuant to legislation
|
|
|
16
|
|
|
|
42
|
|
|
|
(1
|
)
|
|
|
41
|
|
|
|
24
|
|
|
Tax services
|
|
|
50
|
|
|
|
26
|
|
|
|
54
|
|
|
|
80
|
|
|
|
117
|
|
|
Services relating to corporate finance transactions entered into or
proposed to be entered into by or on behalf of the Company or
any of its associates
|
|
|
—
|
|
|
|
239
|
|
|
|
—
|
|
|
|
239
|
|
|
|
—
|
|
|
Other services
|
|
|
92
|
|
|
|
10
|
|
|
|
—
|
|
|
|
10
|
|
|
|
34
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees in respect of the audit of Company’s defined contribution
pension scheme
|
|
|
2
|
|
|
|
—
|
|
|
|
2
|
|
|
|
2
|
|
|
|
2
|
|
During the prior year, KPMG Audit Plc replaced PricewaterhouseCoopers LLP as auditors of the
Company. The above table illustrates remuneration earned during the period each party held the
position of auditor. In addition to the above, PricewaterhouseCoopers LLP earned £43,000 following
their resignation in the prior year from services related to corporate finance transactions.
Fees payable to the Company’s respective auditors and their associates for non-audit services
provided to the Company are not required to be disclosed because the consolidated financial
statements are required to disclose such fees on a consolidated basis.
Of the fees earned by KPMG Audit Plc in relation to corporate finance transactions in the prior
year, £107,000 form part of the assets acquired and £132,000 has been charged to the share premium
account.
7 Staff Costs
The average number of persons, including Directors, employed by the Company during the year was:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
|
|
Number
|
|
|
Number
|
|
|
Number
|
|
|
Management
|
|
|
48
|
|
|
|
38
|
|
|
|
35
|
|
|
Administration
|
|
|
45
|
|
|
|
35
|
|
|
|
27
|
|
|
Research and production
|
|
|
207
|
|
|
|
164
|
|
|
|
135
|
|
|
|
|
|
|
|
300
|
|
|
|
237
|
|
|
|
197
|
|
|
|
Their total remuneration was:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
£’000
|
|
|
£’000
|
|
|
£’000
|
|
|
Salaries
|
|
|
12,536
|
|
|
|
8,861
|
|
|
|
6,849
|
|
|
Social security costs
|
|
|
982
|
|
|
|
749
|
|
|
|
649
|
|
|
Pension costs
|
|
|
905
|
|
|
|
714
|
|
|
|
629
|
|
|
|
|
|
|
|
14,423
|
|
|
|
10,324
|
|
|
|
8,127
|
|
|
|
The Company operates a defined contribution pension scheme for the benefit of all qualifying
Executive Directors and employees. The assets of the scheme are held separately from those of the
Company in funds under the control of the trustees. Where there are employees who leave the scheme
prior to the contributions fully vesting in the scheme, the contributions paid by the Company are
refunded.
F-20
Included within salaries above are bonuses of which £416,000 (2007: £536,000, 2006: £397,000) will
be paid into the Company’s defined contribution pension scheme.
Pension contributions of £92,000 (2007: £87,000, 2006: £74,000) were included in accruals at the
year end for the Company.
In addition to the wages and salaries analysis above are the effects of the share-based
compensation charge to the Company during the year of £1,240,000 (2007: £703,000, 2006: £311,000).
Key management compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
|
|
£’000
|
|
|
£’000
|
|
|
£’000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aggregate emoluments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and short-term employee benefits
|
|
|
2,157
|
|
|
|
1,848
|
|
|
|
1,577
|
|
|
Post employment benefits
|
|
|
322
|
|
|
|
258
|
|
|
|
256
|
|
|
Compensation for loss of office
|
|
|
119
|
|
|
|
—
|
|
|
|
50
|
|
|
|
|
|
|
|
2,598
|
|
|
|
2,104
|
|
|
|
1,883
|
|
|
|
In addition to the above, the charge to income in respect of share options for key management
personnel was £789,000 (2007 £491,000, 2006: £232,000).
The key management figures given above include Directors.
Directors’ emoluments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
|
|
£’000
|
|
|
£’000
|
|
|
£’000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aggregate emoluments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and short-term employee benefits
|
|
|
1,620
|
|
|
|
1,145
|
|
|
|
942
|
|
|
Post employment benefits
|
|
|
220
|
|
|
|
165
|
|
|
|
202
|
|
|
Compensation for loss of office
|
|
|
119
|
|
|
|
—
|
|
|
|
50
|
|
|
|
|
|
|
|
1,959
|
|
|
|
1,310
|
|
|
|
1,194
|
|
|
|
F-21
The remuneration of the Executive Directors is decided by the Remuneration Committee. Full details
of the Directors’ remuneration and details of the Directors’ options, including gains made on the
exercise of share options, is illustrated below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees/basic
|
|
|
Compensation for
|
|
|
Benefits in
|
|
|
Annual
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
|
|
salary
|
|
|
loss of office
|
|
|
kind
(6)
|
|
|
bonuses
|
|
|
Total
|
|
|
Total
|
|
|
Total
|
|
|
Name of director
|
|
£’000
|
|
|
£’000
|
|
|
£’000
|
|
|
£’000
|
|
|
£’000
|
|
|
£’000
|
|
|
£’000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
J C Christie
|
|
|
190
|
|
|
|
—
|
|
|
|
1
|
|
|
|
47
|
(1)
|
|
|
238
|
|
|
|
272
|
|
|
|
210
|
|
|
A J Heath
|
|
|
349
|
|
|
|
—
|
|
|
|
7
|
|
|
|
192
|
|
|
|
548
|
|
|
|
453
|
|
|
|
334
|
|
|
S Komisar
(7)
|
|
|
173
|
|
|
|
—
|
|
|
|
4
|
|
|
|
87
|
|
|
|
264
|
|
|
|
—
|
|
|
|
—
|
|
|
B M Riley
(2) (5)
|
|
|
48
|
|
|
|
119
|
|
|
|
1
|
|
|
|
84
|
|
|
|
252
|
|
|
|
228
|
|
|
|
201
|
|
|
R B Soderstrom
(3)
|
|
|
145
|
|
|
|
—
|
|
|
|
1
|
|
|
|
37
|
(1)
|
|
|
183
|
|
|
|
—
|
|
|
|
—
|
|
|
Non-executive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
A Atkinson
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
47
|
|
|
J R Brown
|
|
|
38
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
38
|
|
|
|
30
|
|
|
|
30
|
|
|
J Gonella
|
|
|
33
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
33
|
|
|
|
4
|
|
|
|
—
|
|
|
D W Gration
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
20
|
|
|
B G Morton
|
|
|
33
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
33
|
|
|
|
25
|
|
|
|
17
|
|
|
S M Wallis
(4)
|
|
|
79
|
|
|
|
—
|
|
|
|
33
|
|
|
|
—
|
|
|
|
112
|
|
|
|
103
|
|
|
|
103
|
|
|
G Watts
|
|
|
38
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
38
|
|
|
|
30
|
|
|
|
30
|
|
|
|
|
|
|
|
1,126
|
|
|
|
119
|
|
|
|
47
|
|
|
|
447
|
|
|
|
1,739
|
|
|
|
1,145
|
|
|
|
992
|
|
|
|
|
|
|
|
|
(1)
|
|
J C Christie and R B Soderstrom will also receive options to the value of £45,000
and £37,000 respectively, to be issued under the terms of the Deferred Bonus Plan.
|
|
|
|
(2)
|
|
B M Riley resigned from the Board on 9 August 2007. Notice to terminate his
employment was effective from 30 October 2007 after a period of accrued leave. In accordance
with his service contract, he will receive twelve months’ salary payable monthly in arrears as
compensation for loss of office. He will continue to receive company pension contributions
and normal benefits in kind during the twelve months notice period and will participate in the
Deferred Bonus Plan for the year to 31 March 2009 on a pro rata basis. Mr Riley has agreed to
enter into a one-year Consultancy Agreement with the Company with effect from 12 November 2008
under which he will receive a monthly consultancy fee of £8,000 payable in arrears.
|
|
|
|
(3)
|
|
R B Soderstrom was appointed to the Board on 9 August 2007. The bonus payable for
the year to 31 March 2008 is on a pro rata basis to his period of service.
|
|
|
|
(4)
|
|
The fees in respect of S M Wallis include £25,000 paid to his management company
(2007: £35,000, 2006: £35,000).
|
|
|
|
(5)
|
|
The fees/basic salary exclude entitlements waived by B M Riley of £23,000 (2007:
£46,000, 2006: £30,000). The Remuneration Committee determined that this sum be paid into his
pension fund and accordingly the amount is included in the Directors’ Pension Entitlement
table on page [
•
].
|
|
|
|
(6)
|
|
Benefits in kind predominantly reflect the provision of private healthcare with
the exception of S M Wallis for whom a fully expensed car is provided.
|
|
|
|
(7)
|
|
S Komisar was appointed to the Board on 26 April 2007.
|
Andrew Heath, Barry Riley and Saul Komisar waived their right to receive a bonus under the DBP for
the year ended 31 March 2008, and the Remuneration Committee determined that an amount to be
classified as a bonus be paid into the Company pension fund on their behalf. The amount paid is
equal to the amount which would otherwise have been receivable under the DBP (in cash) plus 10%
thereof in respect of Andrew Heath and Barry Riley, being a portion of the saving to the Company as
a result of the method of bonus payment. The annual bonus disclosure above includes the additional
10%. These amounts are not included in the Directors’ Pension Entitlements table on page [
•
].
F-22
Directors Pension Entitlements
Five Directors were members of money purchase schemes during the year (2007: three, 2006: three).
Contributions made by the Company in respect of such Directors were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
|
|
£’000
|
|
|
£’000
|
|
|
£’000
|
|
|
J C Christie
|
|
|
38
|
|
|
|
17
|
|
|
|
14
|
|
|
A J Heath
|
|
|
67
|
|
|
|
84
|
|
|
|
142
|
|
|
S Komisar
(1)
|
|
|
35
|
|
|
|
—
|
|
|
|
—
|
|
|
B M Riley
|
|
|
51
|
|
|
|
64
|
|
|
|
46
|
|
|
R B Soderstrom
(1)
|
|
|
29
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
220
|
|
|
|
165
|
|
|
|
202
|
|
|
|
|
|
|
|
|
(1)
|
|
S Komisar and R B Soderstrom were appointed to the Board on 26 April 2007 and 9
August 2007 respectively.
|
Directors’ Share Options
Aggregate emoluments do not include any amounts for the value of options to acquire ordinary shares
in the Company granted to or held by the Directors. Details of the options for Directors who
served during the three years ended 31 March 2008 are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 1 April
|
|
|
|
|
|
|
|
|
|
|
Cancelled
|
|
|
At 31 March
|
|
|
Exercise
|
|
|
Exercisable
|
|
|
|
|
2007
(7)
|
|
|
Granted
|
|
|
Exercised
|
|
|
or expired
|
|
|
2008
|
|
|
price
|
|
|
From
|
|
|
to
|
|
|
Unapproved options
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
B M Riley
(8)
|
|
|
65,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
65,000
|
|
|
|
46.00
|
|
|
22 Jun 2001
|
|
22 Jun 2008
|
|
B M Riley
(8)
|
|
|
50,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
50,000
|
|
|
|
39.00
|
|
|
22 Dec 2002
|
|
22 Dec 2009
|
|
B M Riley
(8)
|
|
|
120,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
120,000
|
|
|
|
43.50
|
|
|
22 Feb 2004
|
|
30 April 2010
|
|
B M Riley
(8)
|
|
|
350,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
350,000
|
|
|
|
39.50
|
|
|
16 Jan 2005
|
|
30 April 2010
|
|
B M Riley
(8)
|
|
|
200,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
200,000
|
|
|
|
23.25
|
|
|
20 Jun 2006
|
|
30 April 2010
|
|
B M Riley
(8)
|
|
|
183,915
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
183,915
|
|
|
|
58.50
|
|
|
1 Mar 2007
|
|
30 April 2010
|
|
B M Riley
(8)
|
|
|
132,420
|
|
|
|
—
|
|
|
|
132,420
|
(10)(12)
|
|
|
—
|
|
|
|
—
|
|
|
|
2.00
|
(13)
|
|
28 Feb 2008
|
|
30 April 2010
|
|
B M Riley
(8)
|
|
|
92,357
|
|
|
|
—
|
|
|
|
—
|
|
|
|
4,302
|
(9)
|
|
|
88,055
|
(11)
|
|
|
2.00
|
(14)
|
|
1 Nov 2008
|
|
30 April 2010
|
|
B M Riley
(8)
|
|
|
102,128
|
|
|
|
—
|
|
|
|
—
|
|
|
|
20,892
|
(9)
|
|
|
81,236
|
(11)
|
|
|
2.00
|
(15)
|
|
1 Nov 2008
|
|
30 April 2010
|
|
B M Riley
(8)
|
|
|
119,322
|
|
|
|
—
|
|
|
|
—
|
|
|
|
44,678
|
(9)
|
|
|
74,644
|
(11)
|
|
|
2.00
|
(16)
|
|
1 Nov 2008
|
|
30 April 2010
|
|
B M Riley
(8)
|
|
|
—
|
|
|
|
161,702
|
|
|
|
—
|
|
|
|
86,832
|
(9)
|
|
|
74,870
|
(11)
|
|
|
2.00
|
(17)
|
|
1 Nov 2008
|
|
30 April 2010
|
|
J C Christie
|
|
|
250,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
250,000
|
|
|
|
39.00
|
|
|
22 Dec 2002
|
|
21 Dec 2009
|
|
J C Christie
|
|
|
80,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
80,000
|
|
|
|
43.50
|
|
|
22 Feb 2004
|
|
21 Feb 2011
|
|
J C Christie
|
|
|
250,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
250,000
|
|
|
|
39.50
|
|
|
16 Jan 2005
|
|
15 Jan 2012
|
|
J C Christie
|
|
|
100,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
100,000
|
|
|
|
23.25
|
|
|
20 Jun 2006
|
|
19 Jun 2013
|
|
J C Christie
|
|
|
122,610
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
122,610
|
|
|
|
58.50
|
|
|
1 Mar 2007
|
|
28 Feb 2014
|
|
J C Christie
|
|
|
111,416
|
|
|
|
—
|
|
|
|
—
|
|
|
|
111,416
|
|
|
|
—
|
|
|
|
2.00
|
(13)
|
|
28 Feb 2008
|
|
27 Feb 2015
|
|
J C Christie
|
|
|
77,707
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
77,707
|
|
|
|
2.00
|
(14)
|
|
21 Dec 2008
|
|
20 Dec 2015
|
|
J C Christie
|
|
|
101,547
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
101,547
|
|
|
|
2.00
|
(15)
|
|
12 Jun 2009
|
|
11 Jun 2016
|
|
J C Christie
|
|
|
118,644
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
118,644
|
|
|
|
2.00
|
(16)
|
|
15 Dec 2009
|
|
14 Dec 2016
|
|
J C Christie
|
|
|
—
|
|
|
|
161,702
|
|
|
|
—
|
|
|
|
—
|
|
|
|
161,702
|
|
|
|
2.00
|
(17)
|
|
11 Jun 2010
|
|
10 Jun 2017
|
|
J C Christie
|
|
|
—
|
|
|
|
176,744
|
|
|
|
—
|
|
|
|
—
|
|
|
|
176,744
|
|
|
|
2.00
|
(19)
|
|
23 Nov 2010
|
|
22 Nov 2017
|
|
A J Heath
|
|
|
116,300
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
116,300
|
|
|
|
175.00
|
|
|
27 Jan 2000
|
|
29 Jun 2008
|
|
A J Heath
|
|
|
500,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
500,000
|
|
|
|
43.50
|
|
|
22 Feb 2004
|
|
21 Feb 2011
|
|
A J Heath
|
|
|
1,000,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,000,000
|
|
|
|
39.50
|
|
|
16 Jan 2005
|
|
15 Jan 2012
|
|
A J Heath
|
|
|
300,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
300,000
|
|
|
|
23.25
|
|
|
20 Jun 2006
|
|
19 Jun 2013
|
|
A J Heath
|
|
|
325,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
325,000
|
|
|
|
58.50
|
|
|
1 Mar 2009
|
|
28 Feb 2014
|
|
A J Heath
|
|
|
221,233
|
|
|
|
—
|
|
|
|
—
|
|
|
|
221,233
|
|
|
|
—
|
|
|
|
2.00
|
(13)
|
|
28 Feb 2008
|
|
27 Feb 2015
|
|
A J Heath
|
|
|
157,556
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
157,556
|
|
|
|
2.00
|
(14)
|
|
21 Dec 2008
|
|
20 Dec 2015
|
|
A J Heath
|
|
|
186,507
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
186,507
|
|
|
|
2.00
|
(15)
|
|
12 Jun 2009
|
|
11 Jun 2016
|
|
A J Heath
|
|
|
215,304
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
215,304
|
|
|
|
2.00
|
(16)
|
|
15 Dec 2009
|
|
14 Dec 2016
|
|
A J Heath
|
|
|
—
|
|
|
|
297,661
|
|
|
|
—
|
|
|
|
—
|
|
|
|
297,661
|
|
|
|
2.00
|
(17)
|
|
11 Jun 2010
|
|
10 Jun 2017
|
F-23
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 1 April
|
|
|
|
|
|
|
|
|
|
|
Cancelled
|
|
|
At 31 March
|
|
|
Exercise
|
|
|
Exercisable
|
|
|
|
|
2007
(7)
|
|
|
Granted
|
|
|
Exercised
|
|
|
or expired
|
|
|
2008
|
|
|
price
|
|
|
From
|
|
|
to
|
|
|
A J Heath
|
|
|
—
|
|
|
|
325,581
|
|
|
|
—
|
|
|
|
—
|
|
|
|
325,581
|
|
|
|
2.00
|
(19)
|
|
23 Nov 2010
|
|
22 Nov 2017
|
|
|
|
S Komisar
(7)
|
|
|
15,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
15,000
|
|
|
|
39.00
|
|
|
22 Dec 2002
|
|
21 Dec 2009
|
|
S Komisar
(7)
|
|
|
11,629
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
11,629
|
|
|
|
37.50
|
|
|
27 Jan 2003
|
|
26 Jan 2010
|
|
S Komisar
(7)
|
|
|
200,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
200,000
|
|
|
|
43.50
|
|
|
22 Feb 2004
|
|
21 Feb 2011
|
|
S Komisar
(7)
|
|
|
150,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
150,000
|
|
|
|
23.25
|
|
|
20 Jun 2006
|
|
19 Jun 2013
|
|
S Komisar
(7)
|
|
|
143,045
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
143,045
|
|
|
|
58.50
|
|
|
1 Mar 2007
|
|
28 Feb 2014
|
|
S Komisar
(7)
|
|
|
100,251
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
100,251
|
|
|
|
2.00
|
(13)
|
|
19 Jul 2008
|
(11)
|
|
|
|
|
S Komisar
(7)
|
|
|
72,380
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
72,380
|
|
|
|
2.00
|
(14)
|
|
21 Dec 2008
|
(11)
|
|
|
|
|
S Komisar
(7)
|
|
|
91,456
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
91,456
|
|
|
|
2.00
|
(15)
|
|
12 Jun 2009
|
(11)
|
|
|
|
|
S Komisar
(7)
|
|
|
100,173
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
100,173
|
|
|
|
2.00
|
(16)
|
|
15 Dec 2009
|
(11)
|
|
|
|
|
S Komisar
(7)
|
|
|
—
|
|
|
|
151,396
|
|
|
|
—
|
|
|
|
—
|
|
|
|
151,396
|
|
|
|
2.00
|
(17)
|
|
11 Jun 2010
|
(11)
|
|
|
|
|
S Komisar
(7)
|
|
|
—
|
|
|
|
157,980
|
|
|
|
—
|
|
|
|
—
|
|
|
|
157,980
|
|
|
|
2.00
|
(19)
|
|
23 Nov 2010
|
(11)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R B Soderstrom
(7)
|
|
|
—
|
|
|
|
423,076
|
|
|
|
—
|
|
|
|
—
|
|
|
|
423,076
|
|
|
|
2.00
|
(18)
|
|
10 Aug 2010
|
|
9 Aug 2017
|
|
R B Soderstrom
(7)
|
|
|
—
|
|
|
|
204,651
|
|
|
|
—
|
|
|
|
—
|
|
|
|
204,651
|
|
|
|
2.00
|
(19)
|
|
23 Nov 2010
|
|
22 Nov 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred bonus plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
S Komisar
(7)
|
|
|
27,594
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
27,594
|
|
|
|
2.00
|
(16)
|
|
12 Jun 2008
|
(11)
|
|
|
|
|
S Komisar
(7)
|
|
|
—
|
|
|
|
50,177
|
|
|
|
—
|
|
|
|
—
|
|
|
|
50,177
|
|
|
|
2.00
|
(17)
|
|
11 Jun 2009
|
(11)
|
|
|
|
|
Savings-related options
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
J C Christie
|
|
|
14,384
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
14,384
|
|
|
|
65.00
|
|
|
1 Feb 2009
|
|
31 Jul 2009
|
|
Individual
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
A J Heath
|
|
|
600,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
600,000
|
|
|
|
39.00
|
|
|
22 Dec 2002
|
|
21 Dec 2009
|
|
|
|
|
|
|
7,174,878
|
|
|
|
2,110,670
|
|
|
|
132,420
|
|
|
|
489,353
|
|
|
|
8,663,775
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 1 April
|
|
|
|
|
|
|
|
|
|
|
Cancelled
|
|
|
At 31 March
|
|
|
Exercise
|
|
|
Exercisable
|
|
|
|
|
2006
|
|
|
Granted
|
|
|
Exercised
|
|
|
or expired
|
|
|
2007
|
|
|
price
|
|
|
from
|
|
|
to
|
|
|
Unapproved options
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
B M Riley
|
|
|
65,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
65,000
|
|
|
|
46.00
|
|
|
22 Jun 2001
|
|
21 Jun 2008
|
|
B M Riley
|
|
|
50,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
50,000
|
|
|
|
39.00
|
|
|
22 Dec 2002
|
|
21 Dec 2009
|
|
B M Riley
|
|
|
120,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
120,000
|
|
|
|
43.50
|
|
|
22 Feb 2004
|
|
21 Feb 2011
|
|
B M Riley
|
|
|
350,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
350,000
|
|
|
|
39.50
|
|
|
16 Jan 2005
|
|
15 Jan 2012
|
|
B M Riley
|
|
|
200,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
200,000
|
|
|
|
23.25
|
|
|
20 Jun 2006
|
|
19 Jun 2013
|
|
B M Riley
|
|
|
225,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
41,085
|
|
|
|
183,915
|
|
|
|
58.50
|
|
|
1 Mar 2007
|
|
28 Feb 2014
|
|
B M Riley*
(1)
|
|
|
132,420
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
132,420
|
|
|
|
2.00
|
|
|
28 Feb 2008
|
|
27 Feb 2015
|
|
B M Riley*
(2)
|
|
|
92,357
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
92,357
|
|
|
|
2.00
|
|
|
21 Dec 2008
|
|
20 Dec 2015
|
|
B M Riley*
(3)
|
|
|
—
|
|
|
|
102,128
|
|
|
|
—
|
|
|
|
—
|
|
|
|
102,128
|
|
|
|
2.00
|
|
|
12 Jun 2009
|
|
11 Jun 2016
|
|
B M Riley*
(4)
|
|
|
—
|
|
|
|
119,322
|
|
|
|
—
|
|
|
|
—
|
|
|
|
119,322
|
|
|
|
2.00
|
|
|
15 Dec 2009
|
|
14 Dec 2016
|
|
J C Christie
|
|
|
250,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
250,000
|
|
|
|
39.00
|
|
|
22 Dec 2002
|
|
21 Dec 2009
|
|
J C Christie
|
|
|
80,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
80,000
|
|
|
|
43.50
|
|
|
22 Feb 2004
|
|
21 Feb 2011
|
|
J C Christie
|
|
|
250,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
250,000
|
|
|
|
39.50
|
|
|
16 Jan 2005
|
|
15 Jan 2012
|
|
J C Christie
|
|
|
100,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
100,000
|
|
|
|
23.25
|
|
|
20 Jun 2006
|
|
19 Jun 2013
|
|
J C Christie
|
|
|
150,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
27,390
|
|
|
|
122,610
|
|
|
|
58.50
|
|
|
1 Mar 2007
|
|
28 Feb 2014
|
|
J C Christie*
(1)
|
|
|
111,416
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
111,416
|
|
|
|
2.00
|
|
|
28 Feb 2008
|
|
27 Feb 2015
|
|
J C Christie*
(2)
|
|
|
77,707
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
77,707
|
|
|
|
2.00
|
|
|
21 Dec 2008
|
|
20 Dec 2015
|
|
J C Christie*
(3)
|
|
|
—
|
|
|
|
101,547
|
|
|
|
—
|
|
|
|
—
|
|
|
|
101,547
|
|
|
|
2.00
|
|
|
12 Jun 2009
|
|
11 Jun 2016
|
|
J C Christie*
(4)
|
|
|
—
|
|
|
|
118,644
|
|
|
|
—
|
|
|
|
—
|
|
|
|
118,644
|
|
|
|
2.00
|
|
|
15 Dec 2009
|
|
14 Dec 2016
|
|
A J Heath
|
|
|
116,300
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
116,300
|
|
|
|
175.00
|
|
|
27 Jan 2000
|
|
29 Jun 2008
|
|
A J Heath
|
|
|
500,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
500,000
|
|
|
|
43.50
|
|
|
22 Feb 2004
|
|
21 Feb 2011
|
F-24
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 1 April
|
|
|
|
|
|
|
|
|
|
|
Cancelled
|
|
|
At 31 March
|
|
|
Exercise
|
|
|
Exercisable
|
|
|
|
|
2006
|
|
|
Granted
|
|
|
Exercised
|
|
|
or expired
|
|
|
2007
|
|
|
price
|
|
|
from
|
|
|
to
|
|
|
A J Heath
|
|
|
1,000,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,000,000
|
|
|
|
39.50
|
|
|
16 Jan 2005
|
|
15 Jan 2012
|
|
A J Heath
|
|
|
300,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
300,000
|
|
|
|
23.25
|
|
|
20 Jun 2006
|
|
19 Jun 2013
|
|
A J Heath
|
|
|
325,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
325,000
|
|
|
|
58.50
|
|
|
1 Mar 2009
|
|
28 Feb 2014
|
|
A J Heath*
(1)
|
|
|
221,233
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
221,233
|
|
|
|
2.00
|
|
|
28 Feb 2008
|
|
27 Feb 2015
|
|
A J Heath*
(2)
|
|
|
157,556
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
157,556
|
|
|
|
2.00
|
|
|
21 Dec 2008
|
|
20 Dec 2015
|
|
A J Heath*
(3)
|
|
|
—
|
|
|
|
186,507
|
|
|
|
—
|
|
|
|
—
|
|
|
|
186,507
|
|
|
|
2.00
|
|
|
12 Jun 2009
|
|
11 Jun 2016
|
|
A J Heath*
(4)
|
|
|
—
|
|
|
|
215,304
|
|
|
|
—
|
|
|
|
—
|
|
|
|
215,304
|
|
|
|
2.00
|
|
|
15 Dec 2009
|
|
14 Dec 2016
|
|
Savings-related options
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
J C Christie
|
|
|
14,384
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
14,384
|
|
|
|
65.00
|
|
|
1 Feb 2009
|
|
31 Jul 2009
|
|
Individual
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
A J Heath
|
|
|
600,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
600,000
|
|
|
|
39.00
|
|
|
22 Dec 2002
|
|
21 Dec 2009
|
|
|
|
|
|
|
5,488,373
|
|
|
|
843,452
|
|
|
|
—
|
|
|
|
68,475
|
|
|
|
6,263,350
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 1 April
|
|
|
|
|
|
|
|
|
|
|
Cancelled
|
|
|
At 31 March
|
|
|
Exercise
|
|
|
Exercisable
|
|
|
|
|
2005
|
|
|
Granted
|
|
|
Exercised
|
|
|
or expired
|
|
|
2006
|
|
|
price
|
|
|
from
|
|
|
to
|
|
|
Approved options
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
B M Riley
|
|
|
52,955
|
|
|
|
—
|
|
|
|
—
|
|
|
|
52,955
|
|
|
|
—
|
|
|
|
68.83
|
|
|
25 Jul 1998
|
|
24 Jul 2005
|
|
Unapproved options
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
D W Gration
|
|
|
90,000
|
|
|
|
—
|
|
|
|
90,000
|
(5)
|
|
|
—
|
|
|
|
—
|
|
|
|
46.00
|
|
|
22 Jun 2001
|
|
21 Jun 2008
|
|
B M Riley
|
|
|
65,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
65,000
|
|
|
|
46.00
|
|
|
22 Jun 2001
|
|
21 Jun 2008
|
|
B M Riley
|
|
|
50,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
50,000
|
|
|
|
39.00
|
|
|
22 Dec 2002
|
|
21 Dec 2009
|
|
B M Riley
|
|
|
120,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
120,000
|
|
|
|
43.50
|
|
|
22 Feb 2004
|
|
21 Feb 2011
|
|
B M Riley
|
|
|
350,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
350,000
|
|
|
|
39.50
|
|
|
16 Jan 2005
|
|
15 Jan 2012
|
|
B M Riley
|
|
|
200,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
200,000
|
|
|
|
23.25
|
|
|
20 Jun 2006
|
|
19 Jun 2013
|
|
B M Riley
|
|
|
225,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
225,000
|
|
|
|
58.50
|
|
|
1 Mar 2007
|
|
28 Feb 2014
|
|
B M Riley*
(1)
|
|
|
132,420
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
132,420
|
|
|
|
2.00
|
|
|
28 Feb 2008
|
|
27 Feb 2015
|
|
B M Riley*
(2)
|
|
|
—
|
|
|
|
92,357
|
|
|
|
—
|
|
|
|
—
|
|
|
|
92,357
|
|
|
|
2.00
|
|
|
21 Dec 2008
|
|
20 Dec 2015
|
|
A Atkinson
|
|
|
100,000
|
|
|
|
—
|
|
|
|
100,000
|
**
(5)
|
|
|
—
|
|
|
|
—
|
|
|
|
23.25
|
|
|
20 Jun 2006
|
|
19 Jun 2013
|
|
A Atkinson
|
|
|
135,000
|
|
|
|
—
|
|
|
|
135,000
|
**
(5)
|
|
|
—
|
|
|
|
—
|
|
|
|
58.50
|
|
|
1 Mar 2007
|
|
28 Feb 2014
|
|
J C Christie
|
|
|
250,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
250,000
|
|
|
|
39.00
|
|
|
22 Dec 2002
|
|
21 Dec 2009
|
|
J C Christie
|
|
|
80,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
80,000
|
|
|
|
43.50
|
|
|
22 Feb 2004
|
|
21 Feb 2011
|
|
J C Christie
|
|
|
250,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
250,000
|
|
|
|
39.50
|
|
|
16 Jan 2005
|
|
15 Jan 2012
|
|
J C Christie
|
|
|
100,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
100,000
|
|
|
|
23.25
|
|
|
20 Jun 2006
|
|
19 Jun 2013
|
|
J C Christie
|
|
|
150,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
150,000
|
|
|
|
58.50
|
|
|
1 Mar 2007
|
|
28 Feb 2014
|
|
J C Christie*
(1)
|
|
|
111,416
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
111,416
|
|
|
|
2.00
|
|
|
28 Feb 2008
|
|
27 Feb 2015
|
|
J C Christie*
(2)
|
|
|
—
|
|
|
|
77,707
|
|
|
|
—
|
|
|
|
—
|
|
|
|
77,707
|
|
|
|
2.00
|
|
|
21 Dec 2008
|
|
20 Dec 2015
|
|
A J Heath
|
|
|
116,300
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
116,300
|
|
|
|
175.00
|
|
|
27 Jan 2000
|
|
29 Jun 2008
|
|
A J Heath
|
|
|
500,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
500,000
|
|
|
|
43.50
|
|
|
22 Feb 2004
|
|
21 Feb 2011
|
|
A J Heath
|
|
|
1,000,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,000,000
|
|
|
|
39.50
|
|
|
16 Jan 2005
|
|
15 Jan 2012
|
|
A J Heath
|
|
|
300,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
300,000
|
|
|
|
23.25
|
|
|
20 Jun 2006
|
|
19 Jun 2013
|
|
A J Heath
|
|
|
325,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
325,000
|
|
|
|
58.50
|
|
|
1 Mar 2009
|
|
28 Feb 2014
|
|
A J Heath*
(1)
|
|
|
221,233
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
221,233
|
|
|
|
2.00
|
|
|
28 Feb 2008
|
|
27 Feb 2015
|
|
A J Heath*
(2)
|
|
|
—
|
|
|
|
157,556
|
|
|
|
—
|
|
|
|
—
|
|
|
|
157,556
|
|
|
|
2.00
|
|
|
21 Dec 2008
|
|
20 Dec 2015
|
|
Savings-related options
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
J C Christie
|
|
|
27,000
|
|
|
|
—
|
|
|
|
27,000
|
(6)
|
|
|
—
|
|
|
|
—
|
|
|
|
37.50
|
|
|
1 Apr 2005
|
|
31 Oct 2005
|
|
J C Christie
|
|
|
—
|
|
|
|
14,384
|
|
|
|
—
|
|
|
|
—
|
|
|
|
14,384
|
|
|
|
65.00
|
|
|
1 Feb 2009
|
|
31 Jul 2009
|
|
Individual
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
A J Heath
|
|
|
600,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
600,000
|
|
|
|
39.00
|
|
|
22 Dec 2002
|
|
21 Dec 2009
|
|
|
|
|
|
|
5,551,324
|
|
|
|
342,004
|
|
|
|
352,000
|
|
|
|
52,955
|
|
|
|
5,488,373
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-25
|
|
|
|
|
*
|
|
Options issued under the LTIP approved by the shareholders on 27 January 2005. The market price
of a share at the date of grant was
(1)
57.00p,
(2)
78.50p,
(3)
85.00p and
(4)
73.75p.
|
|
|
|
**
|
|
Following the resignation of A Atkinson from the Board on 19 April 2005, under the rules of the
Unapproved Share Option Plan, the Remuneration Committee determined that his options would be
exercisable during the period to 31 December 2005.
|
The market price of a share on the date of exercise was
(5)
81.00p and
(6)
49.50p
Gains on exercise were as follows:
|
|
|
|
|
|
|
D W Gration
|
|
£
|
31,500
|
|
|
A Atkinson
|
|
£
|
88,125
|
|
|
J C Christie
|
|
£
|
3,240
|
|
Notes
|
|
|
|
|
(7)
|
|
S Komisar and R B Soderstrom were appointed to the Board on 26 April
2007 and 9 August 2007 respectively. Their options are stated as at their date of
appointment.
|
|
|
|
(8)
|
|
B M Riley resigned from the Board on 9 August 2007.
|
|
|
|
(9)
|
|
Following Mr Riley’s resignation from the Board, these awards were forfeited to the
extent shown (see Note 10 below).
|
|
|
|
(10)
|
|
Having carefully considered Mr Riley’s performance during his tenure as Finance
Director and with due regard to the requirement to mitigate loss, the Committee has exercised
its discretion under the terms of the Long term Incentive Plan to allow a proportion of Mr.
Riley’s LTIP option awards to vest with effect from 9 August 2007, being the date of his
resignation from the Board. In determining whether it was appropriate to exercise this
discretion, the Committee gave due consideration to Mr. Riley’s achievements in delivering
shareholder value during his tenure as a Director of the Company. The percentage of the LTIP
option awards vesting was time apportioned from the date of grant of the award to the date of
his termination of employment with the Company on 30 October 2008. All options held by Mr
Riley under the Unapproved Scheme at the time of his resignation from the Board had met the
relevant performance conditions and were exercisable in full. The Committee has determined
that Mr. Riley’s LTIP and Unapproved options will expire 18 months from his termination date,
or, if earlier, ten years from the their date of grant.
|
|
|
|
(11)
|
|
Awards made under the terms of the LTIP and DBP to S Komisar are in
the form of Performance Shares. LTIP awards vest three years from the date of grant subject
to the achievement of the relevant performance conditions. Awards under the DBP vest two
years from the date of grant.
|
|
|
|
(12)
|
|
On 7 March 2008, Barry Riley exercised an option over 132,420 ordinary shares
granted under the terms of the LTIP. The market price of the Company’s ordinary shares on the
date of exercise was 51.00p.
|
The market price of the Company’s ordinary shares on the date of grant was
(13)
57.00p,
(14)
78.50p,
(15)
85.00p,
(16)
73.75p,
(17)
58.75p,
(18)
52.0p, and
(19)
53.75p.
Performance criteria for awards made under the terms of the Company’s share option plans are set
out in the table overleaf.
As at 31 March 2008, the market price of the Company’s ordinary shares was 54.00p and fluctuated
between 42.75p and 72.50p during the year.
F-26
Performance Criteria for Directors’ Share Awards
|
|
|
|
|
|
|
|
|
Plan
|
|
Performance
condition
|
|
Option granted prior to 1 March 2004 under the Unapproved
and Approved Share Option Plans
|
|
May be exercised on any date
between three and ten years from the date of the grant of the option
subject to the Company’s share price outperforming the average
price of shares in the FTSE Pharmaceutical Index in any three-year period
commencing on or after the date of grant of the option.
|
|
|
|
|
|
|
|
|
|
Option granted on 1 March 2004 under
the Unapproved Plan
|
|
Performance is measured after
three years from the date of grant by measuring the Total Shareholder
Return (“TSR”) of the Company against a comparator group consisting
of the FTSE All Share Pharmaceutical and Biotech Index.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options issued to
existing holders
with a total
aggregate value (at
the date of grant)
of up to four times annual salary
|
|
TSR performance
|
|
% of award vesting
|
|
|
Upper quartile
|
|
|
100
|
%
|
|
|
Median
|
|
|
33
|
%
|
|
|
Below median
|
|
Nil
|
|
|
|
|
|
The Committee must also be
satisfied that there has been an improvement in the Company’s underlying
financial performance over the period.
Options granted under the Unapproved
Plan on 27 September 2004 matured on 27 September 2007. Following
application of the above measures, the Remuneration Committee determined
that 35.15% of the shares would vest.
|
|
|
|
|
|
|
|
|
|
Option granted on 1 March 2004 under the Unapproved
Plan
|
|
Performance is measured after
five years from the date of grant by measuring the TSR of the Company
against a comparator group consisting of the FTSE All Share Pharmaceutical
and Biotech Index.
|
|
|
|
|
|
|
|
|
|
For options granted
to existing holders with a total aggregate value (at
the date
of grant) between four and eight times annual salary
|
|
TSR performance
|
|
% of award vesting
|
|
|
Upper quartile
|
|
|
100
|
%
|
|
|
Median
|
|
|
33
|
%
|
|
|
Below median
|
|
Nil
|
|
|
|
|
|
The Committee must also be
satisfied that there has been an improvement in the Company’s underlying
financial performance over the period.
|
|
|
|
|
|
|
|
|
|
Option granted under the 2005 Executive Share Option
Plan
|
|
Performance is measured after
three years from the date of grant by measuring the TSR of the Company
against a comparator group consisting of the FTSE All Share Pharmaceutical
and Biotech Index excludes those companies in the FTSE 100 (currently
AstraZeneca PLC, GlaxoSmithKline PLC and Shire plc)
|
|
|
|
|
|
|
|
|
|
None of the Directors
hold
options under this Plan
|
|
TSR performance
|
|
% of award vesting
|
|
|
Upper decile
|
|
|
100
|
%
|
|
|
Upper quartile
|
|
|
80
|
%
|
|
|
|
Median
|
|
|
30
|
%
|
|
|
|
Below median
|
|
Nil
|
|
|
|
|
|
|
|
|
|
Long Term Incentive Plan
|
|
Performance is measured after
three years from the date of grant by measuring the TSR of the Company
against a comparator group consisting of the FTSE All Share Pharmaceutical
and Biotech Index excludes those companies in the FTSE 100 (currently
AstraZeneca PLC, GlaxoSmithKline PLC and Shire plc)
|
|
|
|
|
|
TSR performance
|
|
% of award vesting
|
|
|
|
Upper decile
|
|
|
100
|
%
|
|
|
|
Upper quartile
|
|
|
80
|
%
|
|
|
|
Median
|
|
|
30
|
%
|
|
|
|
Below median
|
|
Nil
|
|
|
|
|
|
Options granted on 28 February 2005
matured on 28 February 2008. Following application of the above
measures, the Remuneration Committee determined that nil shares would
vest.
|
|
|
|
|
|
|
|
|
|
Performance criteria for individual options granted
to A J Heath (Individual Plan):
|
|
The option may generally
be exercised only between the third and tenth anniversary of the date
of grant, and on the date of exercise, the share price must have outperformed
the average of the FTSE Pharmaceuticals Index in any preceding three-year
period.
The option lapses if A J Heath leaves the Company voluntarily, and must
be exercised within three months if his employment ceases by reason
of injury, disability, sickness or redundancy. The agreement confers
no pensionable benefits. No amendment may be made to the benefit of
A J
|
|
|
|
|
|
|
|
|
F-27
|
|
|
|
|
|
|
|
|
Plan
|
|
Performance condition
|
|
|
|
Heath without the prior approval of the Company in General Meeting except
for minor amendments to benefit the administration of the agreement or to
obtain or maintain favourable tax, exchange control or regulatory
treatment for A J Heath or any Group Member.
|
|
|
|
|
|
|
|
|
|
Performance
criteria for the
Protherics PLC Plan
for ex Therapeutic
Antibodies
employees (TAB
Plan):
|
|
A J Heath holds options over 116,300 shares under the Protherics PLC Plan
for ex Therapeutic Antibodies employees (TAB). There are no performance
criteria under this Plan, which mirrors the terms of the Therapeutic
Antibodies 1990 Plan, from which the options were transferred.
|
Transactions with Directors
On 4 January 2007, the Company completed the acquisition of MacroMed Inc. (subsequently renamed
Protherics Salt Lake City Inc.). Dr J Gonella was a Non-Executive Director and shareholder of
MacroMed Inc. In consideration for his interest in MacroMed Inc., Dr Gonella received 8,245,815
Protherics PLC 2p ordinary shares, valued at £6,102,000 at the date of the transaction with a
further 916,202 2p ordinary shares, valued at £678,000 at the date of the transaction, to be issued
18 months after the date of the transaction.
JG Consulting, a business owned by Dr Gonella, has charged the Company for the provision of
consultancy services supplied by employees other than Dr Gonella, a total of $61,000 during the
year (2007: $71,000, 2006: n/a).
During the prior year, the Company purchased equipment from BCS Global Networks Limited, a Company
for which S M Wallis is a Director, at a cost of £28,000. No such purchases were made 2008 or
2006. BCS Global Networks Limited also provided services amounting to £15,000 in the year (2007:
£5,000, 2006: £nil). In addition, the Company also purchased services at a cost of £3,000 from LCG
Promochem Limited, a subsidiary of LGC Holdings Limited, a company for which S M Wallis is Chairman
(2007: £1,000, 2006: £nil).
The Company rents its Nashville office from C. A. Gardner, a family member of S Komisar. During
the year the Company paid $140,000 in rent to C. A. Gardner (2007: $120,000; 2006: $103,000).
All the transactions are considered by the Board to be at arms-length.
8 Finance Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
|
|
£’000
|
|
|
£’000
|
|
|
£’000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bank interest and interest on deposits
|
|
|
2,382
|
|
|
|
1,155
|
|
|
|
401
|
|
|
|
9 Finance Costs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
|
|
£’000
|
|
|
£’000
|
|
|
£’000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest payable on finance lease and hire purchase borrowings
|
|
|
238
|
|
|
|
213
|
|
|
|
133
|
|
|
Interest payable on bank borrowings
|
|
|
11
|
|
|
|
17
|
|
|
|
22
|
|
|
Interest payable on 6% convertible unsecured loan notes
|
|
|
127
|
|
|
|
134
|
|
|
|
193
|
|
|
Amortisation of 6% convertible unsecured loan notes
|
|
|
37
|
|
|
|
41
|
|
|
|
57
|
|
|
Notes payable to South Australian Minister for Primary Industries
|
|
|
—
|
|
|
|
1
|
|
|
|
7
|
|
|
Other
|
|
|
2
|
|
|
|
11
|
|
|
|
19
|
|
|
|
|
|
|
|
415
|
|
|
|
417
|
|
|
|
431
|
|
|
|
F-28
10 Tax
An analysis of credit for the year, all relating to continuing operations, is set out below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
|
|
£’000
|
|
|
£’000
|
|
|
£’000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current tax
|
|
|
|
|
|
|
|
|
|
|
|
|
|
UK corporation tax credit for the current year
|
|
|
—
|
|
|
|
353
|
|
|
|
325
|
|
|
Adjustment in respect of prior years
UK corporation tax
|
|
|
624
|
|
|
|
7
|
|
|
|
—
|
|
|
|
|
|
|
|
624
|
|
|
|
360
|
|
|
|
325
|
|
|
Foreign tax
|
|
|
(351
|
)
|
|
|
3
|
|
|
|
(3
|
)
|
|
|
|
Total current taxation
|
|
|
273
|
|
|
|
363
|
|
|
|
322
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred taxation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reduction in estimate of recoverable deferred tax asset
|
|
|
236
|
|
|
|
—
|
|
|
|
(247
|
)
|
|
Utilisation of losses
|
|
|
—
|
|
|
|
(104
|
)
|
|
|
—
|
|
|
|
|
|
|
|
509
|
|
|
|
259
|
|
|
|
75
|
|
|
|
Corporation tax in the UK is calculated at 30% (2007: 30%, 2006: 30%) of the estimated assessable
profit for the year. Taxes for other jurisdictions are calculated at the rates prevailing in the
respective jurisdictions.
The UK tax credits arising in respect of the prior years were as a result of research and
development expenditure claimed under the Finance Act 2000.
The tax for the year is lower (2007 and 2006: lower) than that arising from applying the standard
rate of corporation tax in the UK of 30% (2007 and 2006: 30%). The differences are explained below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
|
|
£’000
|
|
|
£’000
|
|
|
£’000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before tax
|
|
|
(17,251
|
)
|
|
|
(3,616
|
)
|
|
|
(9,563
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit on ordinary activities multiplied by rate of corporation tax in
the UK of 30% (2007: 30%, 2006: 30%)
|
|
|
(5,175
|
)
|
|
|
(1,085
|
)
|
|
|
(2,869
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments in respect of foreign tax rates
|
|
|
(463
|
)
|
|
|
778
|
|
|
|
386
|
|
|
Timing differences between capital allowances and depreciation
|
|
|
673
|
|
|
|
520
|
|
|
|
509
|
|
|
Other timing differences
|
|
|
—
|
|
|
|
3,646
|
|
|
|
4,041
|
|
|
Other expenditure not deductible for tax purposes
|
|
|
404
|
|
|
|
692
|
|
|
|
(302
|
)
|
|
Additional tax credit for research and development expenditure incurred
|
|
|
(126
|
)
|
|
|
(449
|
)
|
|
|
(349
|
)
|
|
Lower rate of tax on research and development credits surrendered
|
|
|
—
|
|
|
|
310
|
|
|
|
284
|
|
|
Addition to / (utilisation of) losses carried forward
|
|
|
4,451
|
|
|
|
(4,661
|
)
|
|
|
(1,775
|
)
|
|
Tax levied on utilisation of overseas losses
|
|
|
351
|
|
|
|
|
|
|
|
|
|
|
Adjustments to tax in respect of prior years
|
|
|
(624
|
)
|
|
|
(10
|
)
|
|
|
—
|
|
|
|
|
Total taxation
|
|
|
(509
|
)
|
|
|
(259
|
)
|
|
|
(75
|
)
|
|
|
Deferred tax is calculated in full on temporary differences under the liability method using a tax
rate of 30% (2007: 30%, 2006: 30%). The movement on the deferred tax account is as shown below:
F-29
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
|
|
£’000
|
|
|
£’000
|
|
|
£’000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred tax asset recognised at 1 April
|
|
|
99
|
|
|
|
206
|
|
|
|
432
|
|
|
Income statement credit / (debit)
|
|
|
236
|
|
|
|
(104
|
)
|
|
|
(247
|
)
|
|
Exchange differences
|
|
|
10
|
|
|
|
(3
|
)
|
|
|
21
|
|
|
|
|
Deferred tax asset recognised at 31 March
|
|
|
345
|
|
|
|
99
|
|
|
|
206
|
|
|
|
The deferred tax asset, which relates to trading losses incurred in Australia, has been recognised
in the financial statements following the development of the Company’s products in prior years and
the Directors are of the opinion, based on recent and forecast trading, that the level of profits
in Australia in the forthcoming years will lead to the realisation of this asset.
In addition to the losses on which the deferred tax asset has been recognised, the Company has
additional taxable losses and other timing differences in the United Kingdom and the United States
which arose as a result of the research and development incurred during the start-up of the
Company’s activities. These losses are available for offset against future taxable profits in
these territories. A deferred tax asset has not been recognised in respect of these losses and
other temporary differences since the Company does not anticipate generating sufficient taxable
profits to utilise these losses within the immediate future and consequently the recoverability of
the deferred tax asset is uncertain. The total amount of deferred tax asset not recognised,
measured at 28%, the rate of corporation tax in the United Kingdom with effect from 1 April 2008
(2007: 30%, 2006: 30%) is approximately £31 million of which £3 million related to temporary
differences and £28 million was in respect of losses (2007: approximately £23 million, of which £1
million related to temporary differences and £22 million was in respect of losses, 2006:
approximately £27 million, of which £4 million related to temporary differences and £23 million was
in respect of losses).
The movements in the deferred tax asset and liabilities (prior to the offsetting of balances within
the same jurisdiction as permitted by IAS 12, Income Taxes) during the year are as shown below. The
deferred tax asset and liabilities are only offset where there is a legally enforceable right of
offset and there is an intention to settle the balance net.
Deferred tax asset
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax losses
|
|
|
Total
|
|
|
|
|
£’000
|
|
|
£’000
|
|
|
|
|
|
|
|
|
|
|
|
|
At 1 April 2006
|
|
|
206
|
|
|
|
206
|
|
|
Charged to the income statement
|
|
|
(104
|
)
|
|
|
(104
|
)
|
|
Exchange differences
|
|
|
(3
|
)
|
|
|
(3
|
)
|
|
|
|
At 1 April 2007
|
|
|
99
|
|
|
|
99
|
|
|
|
|
|
|
|
|
|
|
|
|
Credited to the income statement
|
|
|
236
|
|
|
|
236
|
|
|
Exchange differences
|
|
|
10
|
|
|
|
10
|
|
|
|
|
At 31 March 2008
|
|
|
345
|
|
|
|
345
|
|
|
|
There were no net recognised deferred tax liabilities at 31 March 2008, 31 March 2007 or 31 March
2006.
At 31 March 2008 the Company had tax losses, subject to the agreement of the Taxation Authorities,
of approximately £94 million (2007: £84 million, 2006: £72 million) available for offset against
future taxable profits of the same trade. Included within these total losses, approximately £25.0
million (2007: £24.7 million, 2006: £18.6 million) relates to the Company’s US subsidiaries, and of
these, the use of £14.7 million (2007: £21.6 million, 2006: £11.5 million) is restricted to US$1.9
million (2007: US$2.7 million, 2006: US$1.5 million) per year.
At the balance sheet date, the aggregate amount of temporary differences associated with
undistributed earnings of subsidiaries for which deferred tax liabilities had not been recognised
was £nil (2007: £nil, 2006: £nil). No liability has been recognised in respect of these
differences because the Company is in a position to control the timing of the reversal of the
temporary differences and it is probable that such differences will not reverse in the foreseeable
future.
F-30
In March 2007, proposals were announced to change the UK rate of corporation tax from 30% to 28%
with effect from 1 April 2008.
11 Loss per Share
Basic loss per share is calculated by dividing the loss attributable to ordinary shareholders by
the weighted average number of ordinary shares outstanding during the year. For diluted loss per
share, the weighted average number of ordinary shares in issue would be adjusted to assume
conversion of all dilutive potential ordinary shares. The Company would have three categories of
dilutive potential ordinary shares: share options, warrants and the 6% convertible unsecured loan
notes.
The Company has been loss making in the current and the prior two years and as such, should the
Company be called upon to issue shares, the effect would be anti-dilutive.
The calculation of the basic and diluted loss per share is based on the loss of £16,742,000 (2007:
£3,357,000, 2006: £9,488,000) and on 339,541,951 ordinary shares (2007: 285,365,704, 2006:
246,854,698) being the weighted average number of ordinary shares in issue. The weighted average
number of shares in issue for the year ended 31 March 2006 has been adjusted for the cash placing
and open offer the year ended 31 March 2007. This had no effect on the loss per share previously
reported.
12 Goodwill
|
|
|
|
|
|
|
|
|
£’000
|
|
|
|
|
|
|
|
|
Cost
|
|
|
|
|
|
At 1 April 2006
|
|
|
9,199
|
|
|
Additions (see note 29)
|
|
|
1,676
|
|
|
Exchange differences
|
|
|
3
|
|
|
|
|
At 1 April 2007
|
|
|
10,878
|
|
|
|
|
|
|
|
|
Exchange differences
|
|
|
(13
|
)
|
|
|
|
At 31 March 2008
|
|
|
10,865
|
|
|
|
|
|
|
|
|
|
|
Accumulated impairment losses
|
|
|
|
|
|
At 1 April 2006, 1 April 2007 and 31 March 2008
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
Carrying amount
|
|
|
|
|
|
31 March 2008
|
|
|
10,865
|
|
|
|
|
31 March 2007
|
|
|
10,878
|
|
|
|
|
31 March 2006
|
|
|
9,199
|
|
|
|
The goodwill at 31 March 2007 arose on the acquisition of Enact Pharma PLC in June 2003 and the
acquisition of MacroMed Inc. in January 2007, each of which is considered to be a separate
cash-generating unit.
F-31
The carrying amount of goodwill has been allocated as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
|
|
£’000
|
|
|
£’000
|
|
|
|
|
|
|
|
|
|
|
|
|
Enact Pharma PLC
|
|
|
9,199
|
|
|
|
9,199
|
|
|
MacroMed Inc.
|
|
|
1,666
|
|
|
|
1,679
|
|
|
|
|
|
|
|
10,865
|
|
|
|
10,878
|
|
|
|
The Company tests goodwill annually for impairment or more frequently if there are indications that
goodwill might be impaired. At 31 March 2008 there were no accumulated impairment losses. The
recoverable amount of the cash-generating unit is determined from a value in use calculation.
The key assumptions for the value-in-use calculation are those regarding the launch dates of
products which in the cases of Enact Pharma PLC and MacroMed Inc. are principally Voraxaze™ and
Oncogel™ respectively, the expected unit sales, and expected changes to selling prices and direct
costs during the year. Changes are based on expectations of future changes in the market. A
discount rate of 13.06% (2007: 14%) has been applied. The calculations are based upon the most
recent cash flow forecasts covering the next 10 years in the case of Voraxaze™ and 20 years in the
case of Oncogel™. These forecast periods are calculated based on the expected launch date of the
products and expectations of future changes in the market. These forecasts have been approved by
management.
13 Other Intangible Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Patents
|
|
|
|
|
|
|
|
|
|
|
and
|
|
|
Other
|
|
|
|
|
|
|
|
trademarks
|
|
|
intangibles
|
|
|
Total
|
|
|
|
|
£’000
|
|
|
£’000
|
|
|
£’000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 1 April 2006
|
|
|
934
|
|
|
|
615
|
|
|
|
1,549
|
|
|
Acquisitions
|
|
|
—
|
|
|
|
18,830
|
|
|
|
18,830
|
|
|
Exchange differences
|
|
|
(108
|
)
|
|
|
(55
|
)
|
|
|
(163
|
)
|
|
|
|
At 1 April 2007
|
|
|
826
|
|
|
|
19,390
|
|
|
|
20,216
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additions
|
|
|
—
|
|
|
|
128
|
|
|
|
128
|
|
|
Exchange differences
|
|
|
(10
|
)
|
|
|
(154
|
)
|
|
|
(164
|
)
|
|
|
|
At 31 March 2008
|
|
|
816
|
|
|
|
19,364
|
|
|
|
20,180
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortisation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 1 April 2006
|
|
|
489
|
|
|
|
—
|
|
|
|
489
|
|
|
Charge for the year
|
|
|
107
|
|
|
|
28
|
|
|
|
135
|
|
|
Exchange differences
|
|
|
(60
|
)
|
|
|
—
|
|
|
|
(60
|
)
|
|
|
|
At 1 April 2007
|
|
|
536
|
|
|
|
28
|
|
|
|
564
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charge for the year
|
|
|
101
|
|
|
|
397
|
|
|
|
498
|
|
|
Exchange differences
|
|
|
(5
|
)
|
|
|
4
|
|
|
|
(1
|
)
|
|
At 31 March 2008
|
|
|
632
|
|
|
|
429
|
|
|
|
1,061
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carrying amount
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31 March 2008
|
|
|
184
|
|
|
|
18,935
|
|
|
|
19,119
|
|
|
|
|
31 March 2007
|
|
|
290
|
|
|
|
19,362
|
|
|
|
19,652
|
|
|
|
|
31 March 2006
|
|
|
445
|
|
|
|
615
|
|
|
|
1,060
|
|
|
|
F-32
Patents and trademarks are amortised over their estimated useful lives, which is on average eight
years.
|
|
|
|
|
|
|
|
|
|
|
Carrying
|
|
|
|
|
|
|
Value
|
|
|
Remaining
|
|
|
|
£’000
|
|
|
amortisation period
|
|
Significant other intangible assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Intangible assets arising from the acquisition of Protherics Salt Lake City Inc.
(formerly MacroMed Inc.)
|
|
|
12,075
|
|
|
Not amortised
(1)
|
|
Customer list purchased from F Hoffman La-Roche Limited
|
|
|
179
|
|
|
6 months
(2)
|
|
CoVaccine HT™
|
|
|
396
|
|
|
9 years
(3)
|
|
Advanced In Vitro Cell Technologies S.L. — asset in development
|
|
|
563
|
|
|
Not amortised
(1)
|
|
Glenveigh Pharmaceuticals LLP — asset in development
|
|
|
5,722
|
|
|
Not amortised
(1), (4)
|
|
|
|
|
|
(1)
|
|
Assets in development are not amortised until the development is complete and
the asset available for use. Upon completion of assets under development, the Company
estimates that such assets will have finite useful lives.
|
|
|
|
(2)
|
|
Amortisation commenced in the year over a period of 18 months, which was deemed
to be the estimated useful life of the customer list.
|
|
|
|
(3)
|
|
Constitutes a purchased intangible asset.
|
|
|
|
(4)
|
|
On 22 April 2008, the Company announced that in accordance with its license
agreement it would make an additional $5 million milestone payment to Glenveigh.
|
There are no self-generated intangibles.
14 Property, Plant and Equipment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Furniture,
|
|
|
|
|
|
|
|
Land &
|
|
|
Plant &
|
|
|
fixtures &
|
|
|
|
|
|
|
|
buildings
|
|
|
machinery
|
|
|
equipment
|
|
|
Total
|
|
|
|
|
£’000
|
|
|
£’000
|
|
|
£’000
|
|
|
£’000
|
|
|
Cost
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 1 April 2006
|
|
|
5,409
|
|
|
|
9,780
|
|
|
|
2,258
|
|
|
|
17,447
|
|
|
Reclassification
|
|
|
—
|
|
|
|
11
|
|
|
|
(11
|
)
|
|
|
—
|
|
|
Additions
|
|
|
319
|
|
|
|
2,290
|
|
|
|
669
|
|
|
|
3,278
|
|
|
Acquisition of subsidiary
|
|
|
253
|
|
|
|
342
|
|
|
|
28
|
|
|
|
623
|
|
|
Disposals
|
|
|
(5
|
)
|
|
|
(1,664
|
)
|
|
|
(78
|
)
|
|
|
(1,747
|
)
|
|
Exchange differences
|
|
|
(4
|
)
|
|
|
(2
|
)
|
|
|
(25
|
)
|
|
|
(31
|
)
|
|
|
|
At 1 April 2007
|
|
|
5,972
|
|
|
|
10,757
|
|
|
|
2,841
|
|
|
|
19,570
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reclassification
|
|
|
(14
|
)
|
|
|
9
|
|
|
|
5
|
|
|
|
—
|
|
|
Additions
|
|
|
575
|
|
|
|
2,168
|
|
|
|
1,131
|
|
|
|
3,874
|
|
|
Disposals
|
|
|
(61
|
)
|
|
|
(356
|
)
|
|
|
(355
|
)
|
|
|
(772
|
)
|
|
Exchange differences
|
|
|
188
|
|
|
|
245
|
|
|
|
174
|
|
|
|
607
|
|
|
|
|
At 31 March 2008
|
|
|
6,660
|
|
|
|
12,823
|
|
|
|
3,796
|
|
|
|
23,279
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 1 April 2006
|
|
|
3,354
|
|
|
|
4,800
|
|
|
|
1,184
|
|
|
|
9,338
|
|
|
Reclassification
|
|
|
—
|
|
|
|
8
|
|
|
|
(8
|
)
|
|
|
—
|
|
|
Charge for the year
|
|
|
337
|
|
|
|
666
|
|
|
|
370
|
|
|
|
1,373
|
|
|
Disposals
|
|
|
(3
|
)
|
|
|
(1,042
|
)
|
|
|
(66
|
)
|
|
|
(1,111
|
)
|
|
Exchange differences
|
|
|
—
|
|
|
|
(3
|
)
|
|
|
(14
|
)
|
|
|
(17
|
)
|
|
|
|
At 1 April 2007
|
|
|
3,688
|
|
|
|
4,429
|
|
|
|
1,466
|
|
|
|
9,583
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reclassification
|
|
|
(3
|
)
|
|
|
2
|
|
|
|
1
|
|
|
|
—
|
|
|
Charge for the year
|
|
|
394
|
|
|
|
1,218
|
|
|
|
464
|
|
|
|
2,076
|
|
|
Disposals
|
|
|
(5
|
)
|
|
|
(328
|
)
|
|
|
(303
|
)
|
|
|
(636
|
)
|
|
Exchange differences
|
|
|
105
|
|
|
|
170
|
|
|
|
97
|
|
|
|
372
|
|
|
|
|
At 31 March 2008
|
|
|
4,179
|
|
|
|
5,491
|
|
|
|
1,725
|
|
|
|
11,395
|
|
|
|
F-33
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Furniture,
|
|
|
|
|
|
|
|
Land &
|
|
|
Plant &
|
|
|
fixtures &
|
|
|
|
|
|
|
|
buildings
|
|
|
machinery
|
|
|
equipment
|
|
|
Total
|
|
|
|
|
£’000
|
|
|
£’000
|
|
|
£’000
|
|
|
£’000
|
|
|
Carrying amount
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31 March 2008
|
|
|
2,481
|
|
|
|
7,332
|
|
|
|
2,071
|
|
|
|
11,884
|
|
|
|
|
31 March 2007
|
|
|
2,284
|
|
|
|
6,328
|
|
|
|
1,375
|
|
|
|
9,987
|
|
|
|
|
31 March 2006
|
|
|
2,055
|
|
|
|
4,980
|
|
|
|
1,074
|
|
|
|
8,109
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
|
|
£’000
|
|
|
£’000
|
|
|
Land & buildings comprise:
|
|
|
|
|
|
|
|
|
|
Freehold
|
|
|
1,070
|
|
|
|
1,213
|
|
|
Short leasehold
|
|
|
1,411
|
|
|
|
1,071
|
|
|
|
|
|
|
|
2,481
|
|
|
|
2,284
|
|
|
|
Plant & machinery includes cost of £426,000 (2007: £498,000) in respect of assets in the course of
construction.
The net book value of plant and machinery and furniture, fixtures and equipment includes £4,205,000
(2007: £4,740,000) in respect of assets held under finance lease and hire purchase agreements.
Depreciation for the year on those assets was £720,000 (2007: £503,000).
15 Inventories
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
|
|
£’000
|
|
|
£’000
|
|
|
|
|
|
|
|
|
|
|
|
|
Raw materials and consumables
|
|
|
2,919
|
|
|
|
2,540
|
|
|
Work in progress
|
|
|
5,964
|
|
|
|
8,049
|
|
|
Finished goods
|
|
|
1,322
|
|
|
|
118
|
|
|
|
|
|
|
|
10,205
|
|
|
|
10,707
|
|
|
|
16 Trade and Other Receivables
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
|
|
£’000
|
|
|
£’000
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts falling due within one year:
|
|
|
|
|
|
|
|
|
|
Trade receivables
|
|
|
2,418
|
|
|
|
13,516
|
|
|
Less: Allowance for impairment of receivables
|
|
|
—
|
|
|
|
—
|
|
|
|
|
Trade receivables — net
|
|
|
2,418
|
|
|
|
13,516
|
|
|
Other receivables
|
|
|
415
|
|
|
|
560
|
|
|
Prepayments and accrued income
|
|
|
1,142
|
|
|
|
990
|
|
|
|
|
|
|
|
3,975
|
|
|
|
15,066
|
|
|
|
The average credit period taken on sale of goods is 30 days (2007: 30 days). No interest has been
charged on the trade receivables balance in the current year (2007: £nil), however the Company
reserves the right to charge interest on overdue invoices on an individual case basis where
contractually entitled to do so. The Company reviews all overdue debts and provides against any
debts based on estimated irrecoverable amounts from the sale of goods, determined by reference to
past default experience. In determining the recoverability of a trade receivable, the Company
considers any change in the credit quality of the trade receivable from the date credit was
initially granted up to the reporting date. In the past four years the Company has not experienced
a bad debt.
Before accepting any new customer, the Company uses an external credit agency to assess the
potential customer’s credit quality and with reference to these findings and the managements
judgement and experience defines each customer a credit limit. Limits attributed to customers are
reviewed as necessary based on credit history and customer requirements.
F-34
A significant proportion of the Company’s revenue is generated by the sale of its CroFab™ and
DigiFab™ products into the US through its distribution agreement with Fougera, a division of
Nycomed, which would generally make up the majority of the trade receivables. The carrying value of
this and other trade receivables has been determined by the Company’s management based on prior
experience and their assessment of the current economic environment. At 31 March 2007, trade
receivables included an amount of £10,000,000 due from AstraZeneca UK Ltd in relation to a
milestone due on the CytoFab™ licence agreement, an amount which was invoiced in March 2007 and
paid in April 2007. The Directors consider that the carrying amount of trade and other receivables
approximates to their fair value.
Included in the Company’s trade receivable balance are debtors with a carrying amount of £93,000
(2007: £40,000) which are past due at the reporting date for which the Company has not provided as
there has not been a significant change in credit quality and the amounts are still considered
recoverable. The Company does not hold any collateral over these balances. The average age of these
receivables is 134 days (2007: 167 days).
Ageing of past due but not impaired
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
|
|
£’000
|
|
|
£’000
|
|
|
|
|
|
|
|
|
|
|
|
|
60 to 90 days
|
|
|
32
|
|
|
|
—
|
|
|
90 to 120 days
|
|
|
—
|
|
|
|
19
|
|
|
120 days +
|
|
|
61
|
|
|
|
21
|
|
|
|
|
Total
|
|
|
93
|
|
|
|
40
|
|
|
|
17 Cash and Cash Equivalents
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
|
|
£’000
|
|
|
£’000
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash at bank and in hand
|
|
|
7,439
|
|
|
|
1,216
|
|
|
Short term bank deposits
|
|
|
30,221
|
|
|
|
38,773
|
|
|
|
|
|
|
|
37,660
|
|
|
|
39,989
|
|
|
Bank overdrafts (note 19)
|
|
|
(44
|
)
|
|
|
—
|
|
|
|
|
|
|
|
37,616
|
|
|
|
39,989
|
|
|
|
Cash and cash equivalents comprise current accounts held by the Company with immediate access and
short-term bank deposits with a maturity of three months or less. Market rates of interest are
earned on such deposits. The credit risk on such funds is limited because the counterparties are
banks with high credit ratings assigned by international credit rating agencies.
18 Trade and Other Payables
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
|
|
£’000
|
|
|
£’000
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
Trade payables
|
|
|
5,447
|
|
|
|
4,303
|
|
|
Other payables
|
|
|
454
|
|
|
|
183
|
|
|
Accruals
|
|
|
4,702
|
|
|
|
2,924
|
|
|
Deferred income
|
|
|
8,607
|
|
|
|
6,627
|
|
|
|
|
|
|
|
19,210
|
|
|
|
14,037
|
|
|
|
|
Non-current liabilities:
|
|
|
|
|
|
|
|
|
|
Accruals
|
|
|
104
|
|
|
|
120
|
|
|
Deferred income
|
|
|
8,566
|
|
|
|
10,724
|
|
|
|
|
|
|
|
8,670
|
|
|
|
10,844
|
|
|
|
F-35
Trade payables and accruals principally comprise amounts outstanding for trade purchases and
ongoing costs. The average credit taken for trade purchases is 49 days (2007: 48 days). No interest
has been charged on the trade payables although certain suppliers have varying terms for payment
past due date. The Company has policies in place to manage payments in line with agreements made
with each individual supplier.
Included within deferred income are the following capital grants:
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
|
|
£’000
|
|
|
£’000
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred income — falling due in less than one year
|
|
|
104
|
|
|
|
102
|
|
|
Deferred income — falling due after more than one year
|
|
|
563
|
|
|
|
660
|
|
|
|
|
|
|
|
667
|
|
|
|
762
|
|
|
|
During the year, capital grants of £9,000 (2007: £nil) were received and £104,000 (2007: £111,000)
was released to the income statement. As a result of these grants, the Welsh Development Agency has
a legal charge over certain buildings, plant and equipment securing grants received amounting to
£33,000 (2007: £33,000) and the Company is required to maintain certain employment levels at its
Welsh manufacturing facility.
The Directors consider that the carrying amount of trade payables approximates to their fair value.
19 Borrowings
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
|
|
£’000
|
|
|
£’000
|
|
|
|
|
|
|
|
|
|
|
|
|
Bank overdrafts
|
|
|
44
|
|
|
|
—
|
|
|
Bank loans
Secured
|
|
|
143
|
|
|
|
157
|
|
|
|
|
|
|
|
187
|
|
|
|
157
|
|
|
Notes payable to South Australian Minister for Primary Industries
|
|
|
8
|
|
|
|
46
|
|
|
|
|
|
|
|
195
|
|
|
|
203
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The borrowings are repayable as follows:
|
|
|
|
|
|
|
|
|
|
On demand or within one year
|
|
|
54
|
|
|
|
46
|
|
|
In the second year
|
|
|
141
|
|
|
|
14
|
|
|
In the third to fifth years inclusive
|
|
|
—
|
|
|
|
143
|
|
|
After five years
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
195
|
|
|
|
203
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts due for settlement within one year
|
|
|
54
|
|
|
|
46
|
|
|
Amounts due for settlement after one year
|
|
|
141
|
|
|
|
157
|
|
|
|
|
|
|
|
195
|
|
|
|
203
|
|
|
|
F-36
Analysis of borrowings by currency:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
US
|
|
|
Australian
|
|
|
|
|
|
|
|
Sterling
|
|
|
dollars
|
|
|
dollars
|
|
|
Total
|
|
|
|
|
£’000
|
|
|
£’000
|
|
|
£’000
|
|
|
£’000
|
|
|
At 31 March 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bank overdrafts
|
|
|
—
|
|
|
|
—
|
|
|
|
44
|
|
|
|
44
|
|
|
Bank loans
|
|
|
—
|
|
|
|
143
|
|
|
|
—
|
|
|
|
143
|
|
|
Notes payable to South Australian Minister for Primary Industries
|
|
|
—
|
|
|
|
—
|
|
|
|
8
|
|
|
|
8
|
|
|
|
|
|
|
|
—
|
|
|
|
143
|
|
|
|
52
|
|
|
|
195
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 31 March 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bank loans
|
|
|
9
|
|
|
|
148
|
|
|
|
—
|
|
|
|
157
|
|
|
Notes payable to South Australian Minister for Primary Industries
|
|
|
—
|
|
|
|
—
|
|
|
|
46
|
|
|
|
46
|
|
|
|
|
|
|
|
9
|
|
|
|
148
|
|
|
|
46
|
|
|
|
203
|
|
|
|
The effective interest rates at the balance sheet dates were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
|
|
%
|
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Australian dollar bank overdrafts
|
|
|
13.5
|
|
|
|
—
|
|
|
Sterling bank loans
|
|
|
—
|
|
|
|
8.0
|
|
|
US dollar bank loans
|
|
|
5.6
|
|
|
|
5.6
|
|
|
Notes payable to South Australian Minister for Primary Industries
|
|
|
6.3
|
|
|
|
6.5
|
|
The Directors estimate the fair value of the Company’s borrowings, by discounting the future cash
flows at the market rate set out below, to be as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
|
|
£’000
|
|
|
%
|
|
|
£’000
|
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Australian dollar bank overdraft
|
|
|
44
|
|
|
|
13.5
|
|
|
|
—
|
|
|
|
—
|
|
|
Sterling bank loans
|
|
|
—
|
|
|
|
—
|
|
|
|
9
|
|
|
|
9.2
|
|
|
US dollar bank loans
|
|
|
142
|
|
|
|
6.4
|
|
|
|
137
|
|
|
|
9.4
|
|
|
Notes payable to South Australian Minister for Primary Industries
|
|
|
8
|
|
|
|
6.3
|
|
|
|
42
|
|
|
|
6.5
|
|
|
|
|
|
|
|
194
|
|
|
|
|
|
|
|
188
|
|
|
|
|
|
|
|
The Company had no undrawn committed borrowing facilities available at 31 March 2008 (31 March
2007: £nil).
F-37
The other principal features of the Company’s borrowings are as follows:
|
|
•
|
|
The Company’s Sterling loan was obtained upon the acquisition of Enact Pharma PLC in
June 2003. The loan was taken out by Enact Pharma PLC in June 2002. Repayments commenced
in March 2003 and continued until August 2007 when the loan was fully repaid. The loan was
secured over the assets of that company and its immediate subsidiaries. The loan carried
a fixed interest rate of 8% per annum.
|
|
|
|
|
•
|
|
The Company’s US dollar denominated loan was taken out in August 2004. Repayments
commenced in September 2004 and will continue until August 2009, when substantially all of
the principal received on inception will become repayable. The loan is secured by a
charge over certain of the Company’s assets and carries an interest rate of 5.625%.
|
|
|
|
|
•
|
|
The notes payable to the South Australian Minister for Primary Industries (the
“Minister”) are secured on buildings and equipment of Protherics Australasia Pty Limited.
Repayment is in equal annual instalments, with the final instalment due in the year to 31
March 2009. The interest rate is variable at the discretion of the Minister and is
payable annually. The rate is currently in line with market interest rates at 6.25% (2007:
6.5%).
|
20 6% Convertible Unsecured Loan Notes
The 6% convertible unsecured loan notes, denominated in Sterling, were issued on 19 June 2003 as
part of the consideration to acquire Enact Pharma PLC. Interest on the loan notes is payable twice
annually in arrears. If not previously repaid, converted or repurchased, the loan notes will be
repaid at par on 19 June 2010. The loan notes are convertible at 25p per ordinary share, at the
holder’s option, from the earlier of 19 December 2004, or such date that the Company has received
FDA marketing approval for Voraxaze™ but in any event no earlier than 19 June 2004. The Company can
enforce conversion should the principal amount of the loan notes outstanding be equal to 20% or
less of the total notes issued at any time, or if the middle market quotation of an ordinary share
at the close of a consecutive five business day period after 19 June 2006 is greater or equal to
32.5p. The terms of the loan notes permit the Company to repurchase the loan notes at any time by
tender (available to all holders alike) or by privately negotiated transactions with individual
holders at any price.
Upon adoption of IAS 32, Financial Instruments: Disclosure and Information, and IAS 39, Financial
Instruments: Recognition and Measurement, at 1 April 2005, the net proceeds received from the issue
of the 6% convertible unsecured loan notes have been split between the liability element and an
equity component, representing the fair value of the embedded option to convert the liability into
the equity of the Company, as follows:
F-38
|
|
|
|
|
|
|
|
|
£‘000
|
|
|
Nominal value of convertible loan notes issued
|
|
|
7,196
|
|
|
Equity component at date of issue
|
|
|
(711
|
)
|
|
|
|
Liability component at date of issue
|
|
|
6,485
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
|
|
£‘000
|
|
|
£‘000
|
|
|
Liability component at 1 April
|
|
|
2,100
|
|
|
|
2,469
|
|
|
Interest charged
|
|
|
37
|
|
|
|
41
|
|
|
Liability converted to equity
|
|
|
(166
|
)
|
|
|
(410
|
)
|
|
|
|
Liability component at 31 March
|
|
|
1,971
|
|
|
|
2,100
|
|
|
|
The Directors estimate that the fair value of the liability component at 31 March 2008 to be
approximately £1,965,000 (2007: £2,047,000) using an interest rate to discount estimated future
cash flows of 9.8% (2007: 9.8%).
During the prior year, an additional loan note amounting to £17,000, with identical terms to the
original loan notes above, was issued following the exercise of warrants in Enact Pharma Limited
(see note 23). The note was considered to be wholly equity and was converted in its entirety
shortly after issue.
In addition, a non-interest bearing loan note, repayable at par on 31 March 2026, was issued to
CoVaccine BV as consideration for the in-license of the CoVaccine HT adjuvant. The
€
350,000 loan
note could be converted into 295,413 Protherics PLC ordinary 2p shares.
Net proceeds received from the issue of this loan note was split between the liability element and
the equity component, representing the fair value of the embedded option to convert the liability
into the equity of the Company as follows:
|
|
|
|
|
|
|
|
|
2007
|
|
|
|
|
£‘000
|
|
|
|
|
|
|
|
|
Nominal value of convertible loan notes issued
|
|
|
242
|
|
|
Equity component at date of issue
|
|
|
(169
|
)
|
|
|
|
Liability component at date of issue
|
|
|
73
|
|
|
|
The entire loan note was converted during the prior year.
A further non-interest bearing note, repayable at par on 31 March 2026, was issued to CoVaccine BV
as consideration for the in-licence of the CoVaccine HT adjuvant in the current year. The
€
300,000
loan note was converted to 253,211 Protherics PLC ordinary 2p shares on 29 November 2007 and has
been accounted for entirely as an equity instrument (see note 23).
F-39
21 Obligations under Finance Leases
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Present value
|
|
|
|
|
Minimum lease
|
|
|
of minimum
|
|
|
|
|
payments
|
|
|
lease payments
|
|
|
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
|
|
|
£‘000
|
|
|
£‘000
|
|
|
£‘000
|
|
|
£‘000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts payable under finance leases:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Within one year
|
|
|
1,136
|
|
|
|
1,392
|
|
|
|
966
|
|
|
|
1,048
|
|
|
In the second to fifth years inclusive
|
|
|
1,897
|
|
|
|
3,084
|
|
|
|
1,712
|
|
|
|
2,289
|
|
|
|
|
|
|
|
3,033
|
|
|
|
4,476
|
|
|
|
2,678
|
|
|
|
3,337
|
|
|
Less: future finance charges
|
|
|
(355
|
)
|
|
|
(1,139
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Present value of lease obligations
|
|
|
2,678
|
|
|
|
3,337
|
|
|
|
2,678
|
|
|
|
3,337
|
|
|
|
|
Less: Amounts due for settlement within one year (shown
within current liabilities)
|
|
|
|
|
|
|
|
|
|
|
(966
|
)
|
|
|
(1,048
|
)
|
|
|
|
Amount due for settlement after one year
|
|
|
|
|
|
|
|
|
|
|
1,712
|
|
|
|
2,289
|
|
|
|
It is the Company’s policy to lease certain of it plant and equipment under finance leases. The
average lease term on inception is three to five years with an option to purchase equipment for a
nominal amount at the conclusion of the lease agreement.
For the year ended 31 March 2008, the average effective borrowing rate for the Company was 8.5%
(2007: 8.1%). Interest rates are fixed at the contract date. All leases are on a fixed repayment
basis and no arrangements have been entered into for contingent rental payments.
The fair value of the Company’s lease obligations approximates to their carrying amount.
The denomination of the Company’s lease obligations were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
|
|
£‘000
|
|
|
£‘000
|
|
|
|
|
|
|
|
|
|
|
|
|
Sterling
|
|
|
2,527
|
|
|
|
3,078
|
|
|
US dollars
|
|
|
32
|
|
|
|
82
|
|
|
Australian dollars
|
|
|
119
|
|
|
|
177
|
|
|
|
|
|
|
|
2,678
|
|
|
|
3,337
|
|
|
|
The obligations under hire purchase agreements for the Company are secured by a charge over the
leased assets.
F-40
22 Derivative Financial Instruments
The Company utilises currency derivatives to hedge significant future transactions and cash flows.
The Company is party to a variety of foreign currency forward contracts and options in the
management of its exchange rate exposures. The instruments purchased are primarily denominated in
US dollars, the currency of the Company’s principal market.
At the balance sheet date, the fair market value of the derivative financial instruments were:
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
|
|
£’000
|
|
|
£’000
|
|
|
|
|
|
|
|
|
|
|
|
|
Contracts with positive fair values:
|
|
|
|
|
|
|
|
|
|
Forward foreign exchange contracts
|
|
|
—
|
|
|
|
114
|
|
|
|
|
Derivative instrument assets
|
|
|
—
|
|
|
|
114
|
|
|
|
|
|
|
Contracts with negative fair values:
|
|
|
|
|
|
|
|
|
|
Forward foreign exchange contracts
|
|
|
170
|
|
|
|
—
|
|
|
|
|
Derivative instrument liabilities
|
|
|
170
|
|
|
|
—
|
|
|
|
Changes in fair market value are recognised in the income statement as they arise. The charge for
the year ended 31 March 2008 was £284,000 (2007: credit of 250,000, 2006: charge of £531,000).
All the contracts mature within one year of the balance sheet date.
23 Share Capital
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
|
|
No. Shares
|
|
|
£’000
|
|
|
No. Shares
|
|
|
£’000
|
|
|
Authorised
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary shares of 2p each
|
|
|
485,000,000
|
|
|
|
9,700
|
|
|
|
475,000,000
|
|
|
|
9,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allotted, called-up and fully paid
Ordinary shares of 2p each
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 1 April
|
|
|
339,128,755
|
|
|
|
6,783
|
|
|
|
259,287,068
|
|
|
|
5,186
|
|
|
Allotted under share option schemes
|
|
|
238,751
|
|
|
|
4
|
|
|
|
231,321
|
|
|
|
5
|
|
|
Cash placing and open offer
|
|
|
—
|
|
|
|
—
|
|
|
|
58,715,544
|
|
|
|
1,174
|
|
|
Issued in consideration of Glenveigh Pharmaceuticals
LLP in-licence agreement
|
|
|
—
|
|
|
|
—
|
|
|
|
3,093,638
|
|
|
|
62
|
|
|
Issued as consideration for acquisition of MacroMed Inc.
|
|
|
—
|
|
|
|
—
|
|
|
|
15,677,199
|
|
|
|
314
|
|
|
Conversion of 6% convertible unsecured loan notes
|
|
|
698,892
|
|
|
|
14
|
|
|
|
1,828,572
|
|
|
|
36
|
|
|
Conversion of CoVaccine convertible loan note (note 20)
|
|
|
253,211
|
|
|
|
5
|
|
|
|
295,413
|
|
|
|
6
|
|
|
|
|
At 31 March
|
|
|
340,319,609
|
|
|
|
6,806
|
|
|
|
339,128,755
|
|
|
|
6,783
|
|
|
|
Share warrants
At 31 March 2008 there are unexercised warrants for 100,000 ordinary shares (2007: 100,000 ordinary
shares) in Enact Pharma Limited, a company acquired in June 2003, which expire 9 July 2012 and are
exercisable at 30p per share. Should these be exercised, the Company is entitled to repurchase
these shares by issuing £17.05 of 6% convertible unsecured loan notes per 100 Enact Pharma Limited
ordinary shares. The terms of these loan notes are disclosed in note 20 to the accounts.
F-41
Share options
Details of outstanding share options are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 31
|
|
|
|
|
|
|
|
April
|
|
|
|
|
|
|
|
|
|
|
Cancelled
|
|
|
March
|
|
|
Exercise
|
|
|
|
|
2007
|
|
|
Granted
|
|
|
Exercised
|
|
|
or expired
|
|
|
2008
|
|
|
price (p)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Date exercisable
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Individual unapproved
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22 Dec 2002 to 21 Dec 2009
|
|
|
600,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
600,000
|
|
|
|
39.00
|
|
|
9 July 2002 to 8 July 2010
|
|
|
25,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
25,000
|
|
|
|
40.00
|
|
|
9 July 2002 to 8 July 2010
|
|
|
15,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
15,000
|
|
|
|
25.00
|
|
|
9 July 2002 to 31 May 2007
|
|
|
3,850
|
|
|
|
—
|
|
|
|
—
|
|
|
|
3,850
|
|
|
|
—
|
|
|
US$
|
6.00
|
|
|
12 Dec 2007 to 11 Dec 2009
|
|
|
40,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
40,000
|
|
|
|
86.00
|
|
|
12 June 2008 to 11 Jun 2010
|
|
|
40,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
40,000
|
|
|
|
86.00
|
|
|
Approved
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
28 Jan 2003 to 27 Jan 2010
|
|
|
46,924
|
|
|
|
—
|
|
|
|
5,461
|
|
|
|
1,856
|
|
|
|
39,607
|
|
|
|
37.50
|
|
|
28 Feb 2004 to 27 Feb 2011
|
|
|
264,000
|
|
|
|
—
|
|
|
|
35,000
|
|
|
|
6,000
|
|
|
|
223,000
|
|
|
|
43.50
|
|
|
16 Feb 2009 to 15 Feb 2016
|
|
|
25,401
|
|
|
|
—
|
|
|
|
—
|
|
|
|
25,401
|
|
|
|
—
|
|
|
|
93.50
|
|
|
Unapproved
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22 June 2001 to 21 June 2008
|
|
|
65,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
65,000
|
|
|
|
46.00
|
|
|
22 Dec 2002 to 21 Dec 2009
|
|
|
385,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
385,000
|
|
|
|
39.00
|
|
|
27 Jan 2003 to 26 Jan 2010
|
|
|
87,097
|
|
|
|
—
|
|
|
|
—
|
|
|
|
814
|
|
|
|
86,283
|
|
|
|
37.50
|
|
|
2 Aug 2003 to 1 Aug 2010
|
|
|
2,908
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2,908
|
|
|
|
28.50
|
|
|
22 Feb 2004 to 21 Feb 2011
|
|
|
1,145,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,145,000
|
|
|
|
43.50
|
|
|
16 Jan 2005 to 15 Jan 2012
|
|
|
2,177,000
|
|
|
|
—
|
|
|
|
25,000
|
|
|
|
127,000
|
|
|
|
2,025,000
|
|
|
|
39.50
|
|
|
9 July 2005 to 8 July 2012
|
|
|
350,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
350,000
|
|
|
|
25.00
|
|
|
20 Jun 2006 to 19 Jun 2013
|
|
|
900,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
900,000
|
|
|
|
23.25
|
|
|
24 Jun 2006 to 23 Jun 2013
|
|
|
30,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
5,000
|
|
|
|
25,000
|
|
|
|
23.00
|
|
|
1 Mar 2007 to 28 Feb 2014
|
|
|
735,660
|
|
|
|
—
|
|
|
|
40,870
|
|
|
|
—
|
|
|
|
694,790
|
|
|
|
58.50
|
|
|
1 Mar 2009 to 28 Feb 2014
|
|
|
325,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
325,000
|
|
|
|
58.50
|
|
|
27 Sep 2007 to 26 Sep 2014
|
|
|
310,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
201,035
|
|
|
|
108,965
|
|
|
|
49.50
|
|
|
28 Feb 2008 to 27 Feb 2015*
(1)
|
|
|
716,475
|
|
|
|
—
|
|
|
|
132,420
|
|
|
|
584,055
|
|
|
|
—
|
|
|
|
2.00
|
|
|
19 Jul 2008 to 18 Jul 2015*
(2)
|
|
|
113,785
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
113,785
|
|
|
|
2.00
|
|
|
7 Sep 2008 to 6 Sep 2015
|
|
|
115,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
115,000
|
|
|
|
60.50
|
|
|
21 Dec 2008 to 20 Dec 2015*
(3)
|
|
|
763,665
|
|
|
|
—
|
|
|
|
—
|
|
|
|
11,607
|
|
|
|
752,058
|
|
|
|
2.00
|
|
|
21 Dec 2008 to 20 Dec 2015
|
|
|
85,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
85,000
|
|
|
|
78.50
|
|
|
12 June 2009 to 11 June 2016*
(4)
|
|
|
944,359
|
|
|
|
—
|
|
|
|
—
|
|
|
|
52,434
|
|
|
|
891,925
|
|
|
|
2.00
|
|
|
12 June 2008 to 11 June 2016
+(1)
|
|
|
109,806
|
|
|
|
—
|
|
|
|
—
|
|
|
|
5,331
|
|
|
|
104,475
|
|
|
|
2.00
|
|
|
12 June 2008 to 11 June 2016
|
|
|
10,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
10,000
|
|
|
|
86.00
|
|
|
11 July 2009 to 10 July 2016
|
|
|
50,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
50,000
|
|
|
|
86.00
|
|
|
22 Aug 2009 to 21 Aug 2016*
(6)
|
|
|
6,383
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
6,383
|
|
|
|
2.00
|
|
|
15 Dec 2009 to 14 Dec 2016*
(7)
|
|
|
970,615
|
|
|
|
—
|
|
|
|
—
|
|
|
|
60,779
|
|
|
|
909,836
|
|
|
|
2.00
|
|
|
15 Dec 2009 to 14 Dec 2016
|
|
|
50,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
50,000
|
|
|
|
73.75
|
|
|
5 Jan 2010 to 4 Jan 2017
|
|
|
630,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
50,000
|
|
|
|
580,000
|
|
|
|
72.25
|
|
|
11 June 2009 to 10 June 2017
+(2)
|
|
|
—
|
|
|
|
184,317
|
|
|
|
—
|
|
|
|
—
|
|
|
|
184,317
|
|
|
|
2.00
|
|
|
11 June 2010 to 10 June 2017*
(8)
|
|
|
—
|
|
|
|
1,620,901
|
|
|
|
—
|
|
|
|
86,832
|
|
|
|
1,534,069
|
|
|
|
2.00
|
|
|
11 June 2010 to 10 June 2017
|
|
|
—
|
|
|
|
50,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
50,000
|
|
|
|
58.75
|
|
|
17 July 2010 to 16 July 2017*
(8)
|
|
|
—
|
|
|
|
8,510
|
|
|
|
—
|
|
|
|
—
|
|
|
|
8,510
|
|
|
|
2.00
|
|
|
31 July 2010 to 30 July 2017*
(9)
|
|
|
—
|
|
|
|
19,633
|
|
|
|
—
|
|
|
|
—
|
|
|
|
19,633
|
|
|
|
2.00
|
|
|
10 Aug 2010 to 9 Aug 2017*
(10)
|
|
|
—
|
|
|
|
423,076
|
|
|
|
—
|
|
|
|
—
|
|
|
|
423,076
|
|
|
|
2.00
|
|
|
28 Sep 2010 to 27 Sep 2017*
(11)
|
|
|
—
|
|
|
|
17,346
|
|
|
|
—
|
|
|
|
—
|
|
|
|
17,346
|
|
|
|
2.00
|
|
|
23 Nov 2010 to 22 Nov 2017*
(12)
|
|
|
—
|
|
|
|
1,594,962
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,594,962
|
|
|
|
2.00
|
|
|
4 Dec 2010 to 3 Dec 2017*
(13)
|
|
|
—
|
|
|
|
13,302
|
|
|
|
—
|
|
|
|
—
|
|
|
|
13,302
|
|
|
|
2.00
|
|
|
Savings related options
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 Feb 2009 to 31 July 2009
|
|
|
245,954
|
|
|
|
—
|
|
|
|
—
|
|
|
|
78,820
|
|
|
|
167,134
|
|
|
|
65.00
|
|
|
1 Feb 2011 to 31 July 2011
|
|
|
381,924
|
|
|
|
—
|
|
|
|
—
|
|
|
|
246,694
|
|
|
|
135,230
|
|
|
|
65.00
|
|
|
1 Feb 2010 to 31 July 2010
|
|
|
68,424
|
|
|
|
—
|
|
|
|
—
|
|
|
|
13,033
|
|
|
|
55,391
|
|
|
|
58.00
|
|
|
1 Feb 2012 to 31 July 2012
|
|
|
115,749
|
|
|
|
—
|
|
|
|
—
|
|
|
|
61,545
|
|
|
|
54,204
|
|
|
|
58.00
|
|
|
1 Jan 2010 to 30 June 2010
|
|
|
—
|
|
|
|
285,759
|
|
|
|
—
|
|
|
|
—
|
|
|
|
285,759
|
|
|
|
43.00
|
|
F-42
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 31
|
|
|
|
|
|
|
|
April
|
|
|
|
|
|
|
|
|
|
|
Cancelled
|
|
|
March
|
|
|
Exercise
|
|
|
|
|
2007
|
|
|
Granted
|
|
|
Exercised
|
|
|
or expired
|
|
|
2008
|
|
|
price (p)
|
|
|
1 Jan 2012 to 30 June 2012
|
|
|
—
|
|
|
|
379,746
|
|
|
|
—
|
|
|
|
—
|
|
|
|
379,746
|
|
|
|
43.00
|
|
|
Protherics PLC option plan for Therapeutic Antibodies Inc. employees
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27 Jan 2000 to 29 June 2008
|
|
|
162,238
|
|
|
|
—
|
|
|
|
—
|
|
|
|
45,938
|
|
|
|
116,300
|
|
|
|
175.0 to 312.0
|
|
|
|
|
|
|
|
13,112,217
|
|
|
|
4,597,552
|
|
|
|
238,751
|
|
|
|
1,668,024
|
|
|
|
15,802,994
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 31
|
|
|
|
|
|
April
|
|
|
|
|
|
|
|
|
|
Cancelled
|
|
March
|
|
Exercise
|
|
|
|
2006
|
|
Granted
|
|
Exercised
|
|
or expired
|
|
2007
|
|
price (p)
|
|
Date exercisable
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Individual unapproved
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22 Dec 2002 to 21 Dec 2009
|
|
|
600,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
600,000
|
|
|
|
39.00
|
|
|
9 July 2002 to 8 July 2010
|
|
|
25,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
25,000
|
|
|
|
40.00
|
|
|
9 July 2002 to 8 July 2010
|
|
|
15,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
15,000
|
|
|
|
25.00
|
|
|
9 July 2002 to 31 May 2007
|
|
|
3,850
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
3,850
|
|
|
US$
|
6.00
|
|
|
12 Dec 2007 to 11 Dec 2009
|
|
|
—
|
|
|
|
40,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
40,000
|
|
|
|
85.00
|
|
|
12 June 2008 to 11 Jun 2010
|
|
|
—
|
|
|
|
40,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
40,000
|
|
|
|
85.00
|
|
|
Approved
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
28 Jan 2003 to 27 Jan 2010
|
|
|
49,245
|
|
|
|
—
|
|
|
|
2,321
|
|
|
|
—
|
|
|
|
46,924
|
|
|
|
37.50
|
|
|
28 Feb 2004 to 27 Feb 2011
|
|
|
292,000
|
|
|
|
—
|
|
|
|
24,000
|
|
|
|
4,000
|
|
|
|
264,000
|
|
|
|
43.50
|
|
|
16 Feb 2009 to 15 Feb 2016
|
|
|
25,401
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
25,401
|
|
|
|
93.50
|
|
|
Unapproved
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22 June 2001 to 21 June 2008
|
|
|
170,000
|
|
|
|
—
|
|
|
|
105,000
|
|
|
|
—
|
|
|
|
65,000
|
|
|
|
46.00
|
|
|
22 Dec 2002 to 21 Dec 2009
|
|
|
485,000
|
|
|
|
—
|
|
|
|
100,000
|
|
|
|
—
|
|
|
|
385,000
|
|
|
|
39.00
|
|
|
27 Jan 2003 to 26 Jan 2010
|
|
|
87,097
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
87,097
|
|
|
|
37.50
|
|
|
2 Aug 2003 to 1 Aug 2010
|
|
|
2,908
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2,908
|
|
|
|
28.50
|
|
|
22 Feb 2004 to 21 Feb 2011
|
|
|
1,145,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,145,000
|
|
|
|
43.50
|
|
|
16 Jan 2005 to 15 Jan 2012
|
|
|
2,177,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2,177,000
|
|
|
|
39.50
|
|
|
9 July 2005 to 8 July 2012
|
|
|
350,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
350,000
|
|
|
|
25.00
|
|
|
20 Jun 2006 to 19 Jun 2013
|
|
|
900,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
900,000
|
|
|
|
23.25
|
|
|
24 Jun 2006 to 23 Jun 2013
|
|
|
30,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
30,000
|
|
|
|
23.00
|
|
|
1 Mar 2007 to 28 Feb 2014
|
|
|
900,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
164,340
|
|
|
|
735,660
|
|
|
|
58.50
|
|
|
1 Mar 2009 to 28 Feb 2014
|
|
|
325,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
325,000
|
|
|
|
58.50
|
|
|
27 Sep 2007 to 26 Sep 2014
|
|
|
310,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
310,000
|
|
|
|
49.50
|
|
|
28 Feb 2008 to 27 Feb 2015*
(1)
|
|
|
716,475
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
716,475
|
|
|
|
2.00
|
|
|
19 Jul 2008 to 18 Jul 2015*
(2)
|
|
|
113,785
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
113,785
|
|
|
|
2.00
|
|
|
7 Sep 2008 to 6 Sep 2015
|
|
|
115,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
115,000
|
|
|
|
60.50
|
|
|
21 Dec 2008 to 20 Dec 2015*
(3)
|
|
|
763,665
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
763,665
|
|
|
|
2.00
|
|
|
21 Dec 2008 to 20 Dec 2015
|
|
|
85,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
85,000
|
|
|
|
78.50
|
|
|
12 June 2009 to 11 June 2016*
(4)
|
|
|
—
|
|
|
|
953,820
|
|
|
|
—
|
|
|
|
9,461
|
|
|
|
944,359
|
|
|
|
2.00
|
|
|
12 June 2008 to 11 June 2016
+
|
|
|
—
|
|
|
|
109,806
|
|
|
|
—
|
|
|
|
—
|
|
|
|
109,806
|
|
|
|
2.00
|
|
|
12 June 2008 to 11 June 2016
|
|
|
—
|
|
|
|
10,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
10,000
|
|
|
|
85.00
|
|
|
11 July 2009 to 10 July 2016
|
|
|
—
|
|
|
|
50,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
50,000
|
|
|
|
78.50
|
|
|
1 Aug 2009 to 31 July 2016*
(5)
|
|
|
—
|
|
|
|
9,284
|
|
|
|
—
|
|
|
|
9,284
|
|
|
|
—
|
|
|
|
2.00
|
|
|
22 Aug 2009 to 21 Aug 2016*
(6)
|
|
|
—
|
|
|
|
6,383
|
|
|
|
—
|
|
|
|
—
|
|
|
|
6,383
|
|
|
|
2.00
|
|
|
15 Dec 2009 to 14 Dec 2016*
(7)
|
|
|
—
|
|
|
|
970,615
|
|
|
|
—
|
|
|
|
—
|
|
|
|
970,615
|
|
|
|
2.00
|
|
|
15 Dec 2009 to 14 Dec 2016
|
|
|
—
|
|
|
|
50,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
50,000
|
|
|
|
73.75
|
|
|
5 Jan 2010 to 4 Jan 2017
|
|
|
—
|
|
|
|
740,000
|
|
|
|
—
|
|
|
|
110,000
|
|
|
|
630,000
|
|
|
|
72.25
|
|
|
Savings related options
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 Feb 2009 to 31 July 2009
|
|
|
270,118
|
|
|
|
—
|
|
|
|
—
|
|
|
|
24,164
|
|
|
|
245,954
|
|
|
|
65.00
|
|
|
1 Feb 2011 to 31 July 2011
|
|
|
401,738
|
|
|
|
—
|
|
|
|
—
|
|
|
|
19,814
|
|
|
|
381,924
|
|
|
|
65.00
|
|
|
1 Feb 2010 to 31 July 2010
|
|
|
—
|
|
|
|
68,424
|
|
|
|
—
|
|
|
|
—
|
|
|
|
68,424
|
|
|
|
58.00
|
|
|
1 Feb 2012 to 31 July 2012
|
|
|
—
|
|
|
|
115,749
|
|
|
|
—
|
|
|
|
—
|
|
|
|
115,749
|
|
|
|
58.00
|
|
|
Protherics PLC option plan for Therapeutic Antibodies Inc. employees
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27 Jan 2000 to 29 June 2008
|
|
|
162,238
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
162,238
|
|
|
|
175.0 to 312.0
|
|
|
|
|
|
|
|
10,520,520
|
|
|
|
3,164,081
|
|
|
|
231,321
|
|
|
|
341,063
|
|
|
|
13,112,217
|
|
|
|
|
|
|
|
F-43
|
|
|
|
|
*
|
|
Options issued under the long term incentive plan, approved by the shareholders on 27 January
2005. The price of a share at the date of grant was (1) 54.75p, (2) 57.00p, (3) 78.50p, (4)
85.00p, (5) 80.00p, (6) 79.25p, (7) 73.75p, (8) 58.75p, (9) 47.75p, (10) 52.00p, (11) 49.00p, (12)
53.75p and (13) 54.75p.
|
|
|
|
+
|
|
Options issued under the deferred bonus plan, approved by the shareholders on 27
January 2005. The price of a share at the date of grant was (1) 85.00p and (2) 58.75p.
|
24 Share Premium Account
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
|
|
£’000
|
|
|
£’000
|
|
|
|
|
|
|
|
|
|
|
|
|
At 1 April
|
|
|
135,951
|
|
|
|
86,770
|
|
|
Premium arising on issue of equity shares:
|
|
|
|
|
|
|
|
|
|
Allotted under share option schemes
|
|
|
49
|
|
|
|
94
|
|
|
Cash placing and open offer
|
|
|
—
|
|
|
|
36,991
|
|
|
Issued in consideration of Glenveigh Pharmaceuticals LLP in-licence
Agreement
|
|
|
—
|
|
|
|
2,227
|
|
|
Issued as consideration for acquisition of MacroMed Inc.
|
|
|
—
|
|
|
|
11,288
|
|
|
Conversion of unsecured convertible loan notes
|
|
|
292
|
|
|
|
683
|
|
|
Expenses on issue of equity shares
|
|
|
—
|
|
|
|
(2,102
|
)
|
|
|
|
At 31 March
|
|
|
136,292
|
|
|
|
135,951
|
|
|
|
25 Statement of Changes in Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
|
|
|
|
|
|
|
|
|
|
|
Cumulative
|
|
|
|
|
|
|
|
|
|
|
Share
|
|
|
Share
|
|
|
to be
|
|
|
Merger
|
|
|
Equity
|
|
|
translation
|
|
|
Retained
|
|
|
|
|
|
|
|
capital
|
|
|
premium
|
|
|
issued
|
|
|
reserve
|
|
|
reserve
|
|
|
reserve
|
|
|
earnings
|
|
|
Total
|
|
|
|
|
£’000
|
|
|
£’000
|
|
|
£’000
|
|
|
£’000
|
|
|
£’000
|
|
|
£’000
|
|
|
£’000
|
|
|
£’000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at 1 April 2006
|
|
|
5,186
|
|
|
|
86,770
|
|
|
|
—
|
|
|
|
51,163
|
|
|
|
263
|
|
|
|
(191
|
)
|
|
|
(116,839
|
)
|
|
|
26,352
|
|
|
|
|
Currency translation
adjustments
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
749
|
|
|
|
—
|
|
|
|
749
|
|
|
|
|
Net income recognised
directly in equity
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
749
|
|
|
|
—
|
|
|
|
749
|
|
|
Loss for the year
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(3,357
|
)
|
|
|
(3,357
|
)
|
|
|
|
Total recognised profit /
(loss) for the year
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
749
|
|
|
|
(3,357
|
)
|
|
|
(2,608
|
)
|
|
|
|
New share capital subscribed
|
|
|
1,560
|
|
|
|
48,499
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
50,059
|
|
|
Shares to be issued
|
|
|
—
|
|
|
|
—
|
|
|
|
1,289
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,289
|
|
|
New loan notes issued
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
186
|
|
|
|
—
|
|
|
|
—
|
|
|
|
186
|
|
|
Conversion of convertible loan
notes
|
|
|
37
|
|
|
|
682
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(229
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
490
|
|
|
Employee share option scheme
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
703
|
|
|
|
703
|
|
|
|
|
Balance at 31 March 2007
|
|
|
6,783
|
|
|
|
135,951
|
|
|
|
1,289
|
|
|
|
51,163
|
|
|
|
220
|
|
|
|
558
|
|
|
|
(119,493
|
)
|
|
|
76,471
|
|
|
|
|
Currency translation
adjustments
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
236
|
|
|
|
—
|
|
|
|
236
|
|
|
|
|
Net income recognised
directly in equity
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
236
|
|
|
|
—
|
|
|
|
236
|
|
|
Loss for the year
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(16,742
|
)
|
|
|
(16,742
|
)
|
|
|
|
Total recognised profit /
(loss) for the year
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
236
|
|
|
|
(16,742
|
)
|
|
|
(16,506
|
)
|
|
|
|
New share capital subscribed
|
|
|
4
|
|
|
|
49
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
53
|
|
|
Conversion of convertible loan
notes
|
|
|
19
|
|
|
|
292
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(17
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
294
|
|
|
Employee share option scheme
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,240
|
|
|
|
1,240
|
|
|
|
|
Balance at 31 March 2008
|
|
|
6,806
|
|
|
|
136,292
|
|
|
|
1,289
|
|
|
|
51,163
|
|
|
|
203
|
|
|
|
794
|
|
|
|
(134,995
|
)
|
|
|
61,552
|
|
|
|
F-44
The merger reserve arose upon a merger involving the Company in September 1999. The equity reserve
arises from the 6% convertible unsecured loan notes (see note 20).
Goodwill on acquisition written off in prior years amounts to £1,909,000 (2007: £1,909,000, 2006:
£1,909,000).
The equity reserve arises from the 6% convertible unsecured loan notes (see note 20).
26 Operating Lease Commitments
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
|
|
£’000
|
|
|
£’000
|
|
|
|
|
|
|
|
|
|
|
|
|
Minimum lease payments under operating leases
recognised in income for the year
|
|
|
896
|
|
|
|
544
|
|
|
|
At the balance sheet date, the outstanding commitments for future minimum lease payments under
non-cancellable operating leases fell due as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
|
Vehicles,
|
|
|
|
|
|
|
Vehicles,
|
|
|
|
|
|
|
|
|
plant and
|
|
|
|
|
|
|
plant and
|
|
|
|
|
Property
|
|
|
equipment
|
|
|
Property
|
|
|
Equipment
|
|
|
|
|
£’000
|
|
|
£’000
|
|
|
£’000
|
|
|
£’000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Within one year
|
|
|
926
|
|
|
|
3
|
|
|
|
535
|
|
|
|
14
|
|
|
In the second to fifth years inclusive
|
|
|
3,166
|
|
|
|
10
|
|
|
|
510
|
|
|
|
18
|
|
|
After five years
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
4,092
|
|
|
|
13
|
|
|
|
1,045
|
|
|
|
32
|
|
|
|
Operating lease payments represent rentals payable for certain of its office properties, plant and
equipment under non-cancellable operating lease agreements. Vehicle, plant and equipment leases
have lease terms between one and five years with no option to extend nor purchase at expiry of the
lease period.
The Company leases property in Salt Lake City, Nashville, Utah, London, Runcorn and Australia.
These leases have lease terms between one and five years. The leases in Nashville, Salt Lake City
and Australia contain options to extend for a further three, three and five years respectively. In
event of renewal the lease contracts contain market review clauses. None of the property leases
provide the Company with an option to purchase the leased asset at the expiry of the lease period.
27 Financial Instruments
Capital risk management
The Company manages its capital to ensure that entities in the Company will be able to continue as
a going concern while maximising the return to stakeholders through the optimisation of the debt
and equity balance. The Company’s overall strategy remains unchanged from 2007.
The capital structure of the Company consists of debt, which includes the borrowings disclosed in
note 19 and 6% convertible unsecured loan notes disclosed in note 20 and equity attributable to the
shareholders, comprising issued capital, reserves and retained earnings as disclosed in notes 23,
24 and 25.
Gearing ratio
Due to the nature and risk associated with the Company’s operations, the Company is restricted in
its ability to increase its gearing ratio as determined by the proportion of net debt to equity.
The Company therefore envisages that this ratio would remain as a relatively low level although the
Board of Directors continues to monitor both the position of the Company’s operations and the
capital markets to assess the most appropriate structure for the Company.
F-45
Significant accounting policies
Details of the significant accounting policies and methods adopted, including criteria for
recognition, the basis of measurement and the basis on which income and expenses are recognised, in
respect of each class of financial asset, financial liability and equity instrument are disclosed
in note 2 to the financial statements.
Categories of financial assets and financial liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans and
|
|
|
Amortised
|
|
|
Financial
|
|
|
|
|
|
|
|
receivables
|
|
|
cost
|
|
|
instruments
|
|
|
Total
|
|
|
|
|
£’000
|
|
|
£’000
|
|
|
£’000
|
|
|
£’000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade and other receivables
|
|
|
3,975
|
|
|
|
—
|
|
|
|
—
|
|
|
|
3,975
|
|
|
Derivative financial instruments
|
|
|
—
|
|
|
|
—
|
|
|
|
(170
|
)
|
|
|
(170
|
)
|
|
Cash and cash equivalents
|
|
|
37,660
|
|
|
|
—
|
|
|
|
—
|
|
|
|
37,660
|
|
|
Borrowings
|
|
|
—
|
|
|
|
(195
|
)
|
|
|
—
|
|
|
|
(195
|
)
|
|
Trade and other payables
|
|
|
—
|
|
|
|
(32,899
|
)
|
|
|
—
|
|
|
|
(32,899
|
)
|
|
|
|
|
|
|
41,635
|
|
|
|
(33,094
|
)
|
|
|
(170
|
)
|
|
|
8,371
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade and other receivables
|
|
|
15,066
|
|
|
|
—
|
|
|
|
—
|
|
|
|
15,066
|
|
|
Derivative financial instruments
|
|
|
—
|
|
|
|
—
|
|
|
|
114
|
|
|
|
114
|
|
|
Cash and cash equivalents
|
|
|
39,989
|
|
|
|
—
|
|
|
|
—
|
|
|
|
39,989
|
|
|
Borrowings
|
|
|
—
|
|
|
|
(203
|
)
|
|
|
—
|
|
|
|
(203
|
)
|
|
Trade and other payables
|
|
|
—
|
|
|
|
(30,591
|
)
|
|
|
—
|
|
|
|
(30,591
|
)
|
|
|
|
|
|
|
55,055
|
|
|
|
(30,794
|
)
|
|
|
114
|
|
|
|
24,375
|
|
|
|
Financial risk management objectives
The Company’s treasury function provides services to the business, co-ordinates access to the
domestic and international financial markets, monitors and manages the financial risks relating to
the operations of the Company through internal risk reports which analyse exposures by degree and
magnitude of risks. These risks include market risk (including currency risk, fair value interest
rate risk and price risk), credit risk, liquidity risk and cash flow interest rate risk.
The Company seeks to minimise the effects of these risks by using derivative financial instruments
to hedge these risk exposures. The use of financial derivatives is governed by the Company’s
policies approved by the Board of Directors. The Company does not enter into or trade financial
instruments, including derivative financial instruments, for speculative purposes.
Market risk
Market risk is the risk that changes in the market prices, such as foreign exchange rates, interest
rates and equity prices will affect the Company’s income or the value of its holding of financial
instruments.
The Company’s activities expose it primarily to the financial risks of changes in foreign currency
exchange rates, which is covered in more detail below. The Company enters into derivative financial
instruments to manage its exposure foreign currency risk, in the form of forward foreign exchange
contracts to hedge the exchange rate risk arising from the expected US dollar sales on a rolling
twelve-month basis.
There has been no change to the Company’s exposure to market risks or the manner in which it
manages and measures the risk.
F-46
Foreign currency risk management
The Company undertakes certain transactions denominated in foreign currencies. Hence, exposure to
exchange rate fluctuations arises. Exchange rate exposures are managed within approved policy
parameters utilising forward foreign exchange contracts.
The carrying amounts of the Company’s foreign currency denominated monetary assets and monetary
liabilities at the reporting date are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
Assets
|
|
|
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
|
|
|
£’000
|
|
|
£’000
|
|
|
£’000
|
|
|
£’000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
US dollar
|
|
|
(13,692
|
)
|
|
|
(14,613
|
)
|
|
|
8,789
|
|
|
|
4,404
|
|
|
Australian dollar
|
|
|
(1,041
|
)
|
|
|
(661
|
)
|
|
|
446
|
|
|
|
345
|
|
|
|
|
|
|
|
(14,733
|
)
|
|
|
(15,274
|
)
|
|
|
9,235
|
|
|
|
4,749
|
|
|
|
Foreign currency sensitivity analysis
The Company is mainly exposed to the US and Australian dollar currency.
The following table details the Company’s sensitivity to a 10% increase and decrease in Sterling
against the US and Australian dollar. 10% is the sensitivity rate used when reporting foreign
currency risk internally to key management personnel and represents management’s assessment of the
reasonably possible change in foreign exchange rates. The sensitivity analysis includes only
outstanding foreign currency denominated monetary items and adjusts their translation at the period
end for a 10% change in foreign currency rates. The sensitivity analysis includes external loans
as well as loans to foreign operations within the Company where the denomination of the loan is in
a currency other than the currency of the lender or the borrower. A positive number below
indicates an increase in profit and other equity where Sterling strengthens 10% against the US and
Australian dollar. For a 10% weakening of Sterling against the US and Australian dollar, there
would be an equal and opposite impact on the profit or loss and other equity, and the balances
below would be negative.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
US dollar
|
|
|
Australian dollar
|
|
|
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
|
|
|
£’000
|
|
|
£’000
|
|
|
£’000
|
|
|
£’000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit or loss
|
|
|
(570
|
)
|
|
|
(2
|
)
|
|
|
(1
|
)
|
|
|
(1
|
)
|
|
Other equity
|
|
|
674
|
|
|
|
930
|
|
|
|
55
|
|
|
|
30
|
|
|
|
|
|
|
|
104
|
|
|
|
928
|
|
|
|
54
|
|
|
|
29
|
|
|
|
The Company’s sensitivity to foreign currency has decreased during the current year mainly due to a
significant amount of US denominated cash being held in the parent Company, which has offset the US
denominated liabilities held in the Company’s US entities.
F-47
Forward foreign exchange contracts
It is the policy of the Company to enter into forward foreign exchange contracts to cover specific
foreign currency receipts within 70% to 100% of the exposure generated. The Company also enters
into forward foreign exchange contracts to manage the risk associated with anticipated sales and
purchase transactions out to 12 months within 70% to 100% of the exposure generated.
The following table details the forward foreign currency contracts (FCC) outstanding as at
reporting date:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Exchange Rate
|
|
|
Foreign Currency
|
|
|
Contract value
|
|
|
Fair value
|
|
|
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
‘000s
|
|
|
‘000s
|
|
|
£’000
|
|
|
£’000
|
|
|
£’000
|
|
|
£’000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FCC
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Buy Australian dollar
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less than 3 months
|
|
|
—
|
|
|
|
2.4560
|
|
|
|
—
|
|
|
|
1,000
|
|
|
|
—
|
|
|
|
407
|
|
|
|
—
|
|
|
|
412
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sell US dollar
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less than 3 months
|
|
|
2.0467
|
|
|
|
1.8730
|
|
|
|
4,000
|
|
|
|
8,000
|
|
|
|
(1,954
|
)
|
|
|
(4,271
|
)
|
|
|
(2,025
|
)
|
|
|
(4,169
|
)
|
|
3 to 6 months
|
|
|
2.0399
|
|
|
|
1.8730
|
|
|
|
5,000
|
|
|
|
600
|
|
|
|
(2,451
|
)
|
|
|
(320
|
)
|
|
|
(2,550
|
)
|
|
|
(313
|
)
|
|
6 to 9 months
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
9 to 12 months
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(4,405
|
)
|
|
|
(4,184
|
)
|
|
|
(4,575
|
)
|
|
|
(4,070
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Changes in fair market value are recognised in the income statement as they arise. The loss for the
year ended 31 March 2008 was £284,000 (2007: profit of £250,000, 2006: loss of £531,000).
Interest rate risk management
The Company is not exposed to significant interest rate risk as the Company does not have
significant floating rate borrowings although the Company does carry significant cash balances on
which it seeks to maximise interest return by using a variety of short-term, fixed high-interest
deposit and money-market accounts. The Company’s exposure to interest rates on financial assets
and financial liabilities are detailed in the liquidity risk management section of this note.
Credit risk management
Credit risk refers to the risk that a counterparty will default on its contractual obligations
resulting in financial loss to the Company. The Company has adopted a policy of only dealing with
creditworthy counterparties and obtaining sufficient collateral, where appropriate, as a means of
mitigating the risk of financial loss from defaults. The Company only transacts with entities that
are rated the equivalent of investment grade and above. This information is supplied by independent
rating agencies where available and, if not available, the Company uses other publicly available
financial information and its own trading records and judgement to rate its major customers.
A significant element of the Company’s revenue and trade receivables balance is generated from
sales to one customer in the US. Management are constantly in communication with this customer and
monitor both sales and payments from this customer to minimise the credit risk exposure.
The carrying amount of financial assets recorded in the financial statements, which is net of
impairment losses, represents the Company’s maximum exposure to credit risk without taking account
of the value of any collateral obtained.
Liquidity risk management
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as
they fall due.
Ultimate responsibility for liquidity risk management rests with the Board of Directors, which has
built an appropriate liquidity risk management framework for the management of the Company’s short,
medium and long-term funding and liquidity requirements. The Company manages liquidity risk by
maintaining adequate reserves, banking facilities and reserve borrowing facilities, by continuously
monitoring forecast and actual cash flows and matching the maturity profiles of financial assets
and liabilities.
F-48
Liquidity and interest risk tables
The following tables detail the Company’s remaining contractual maturity for their non-derivative
financial liabilities. The tables have been drawn up based on the undiscounted cash flows of
financial liabilities based on the earliest date on which the Company can be required to pay. The
table includes both interest and principal cash flows.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
effective interest
|
|
|
Less than
|
|
|
1 to 3
|
|
|
3 months
|
|
|
|
|
|
|
|
|
|
|
|
|
|
rate
|
|
|
1 month
|
|
|
months
|
|
|
to 1 year
|
|
|
1 to 5 years
|
|
|
5 + years
|
|
|
Total
|
|
|
|
|
%
|
|
|
£’000
|
|
|
£’000
|
|
|
£’000
|
|
|
£’000
|
|
|
£’000
|
|
|
£’000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non interest bearing
|
|
|
—
|
|
|
|
4,554
|
|
|
|
8,201
|
|
|
|
6,825
|
|
|
|
8,670
|
|
|
|
—
|
|
|
|
28,250
|
|
|
Finance lease liability
|
|
|
8.50
|
|
|
|
95
|
|
|
|
189
|
|
|
|
852
|
|
|
|
1,897
|
|
|
|
—
|
|
|
|
3,033
|
|
|
Variable interest rate
instruments
|
|
|
6.25
|
|
|
|
8
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
8
|
|
|
Fixed interest rate
instruments
|
|
|
6.13
|
|
|
|
44
|
|
|
|
67
|
|
|
|
69
|
|
|
|
2,390
|
|
|
|
—
|
|
|
|
2,570
|
|
|
|
|
|
|
|
|
|
|
|
4,701
|
|
|
|
8,457
|
|
|
|
7,746
|
|
|
|
12,957
|
|
|
|
—
|
|
|
|
33,861
|
|
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non interest bearing
|
|
|
—
|
|
|
|
3,144
|
|
|
|
5,923
|
|
|
|
5,243
|
|
|
|
9,344
|
|
|
|
1,500
|
|
|
|
25,154
|
|
|
Finance lease liability
|
|
|
8.06
|
|
|
|
116
|
|
|
|
232
|
|
|
|
1,044
|
|
|
|
3,084
|
|
|
|
—
|
|
|
|
4,476
|
|
|
Variable interest rate
instruments
|
|
|
6.50
|
|
|
|
—
|
|
|
|
6
|
|
|
|
29
|
|
|
|
11
|
|
|
|
—
|
|
|
|
46
|
|
|
Fixed interest rate
instruments
|
|
|
5.98
|
|
|
|
—
|
|
|
|
67
|
|
|
|
78
|
|
|
|
2,528
|
|
|
|
—
|
|
|
|
2,673
|
|
|
|
|
|
|
|
|
|
|
|
3,260
|
|
|
|
6,228
|
|
|
|
6,394
|
|
|
|
14,967
|
|
|
|
1,500
|
|
|
|
32,349
|
|
|
|
The following table details the Company’s liquidity analysis for their derivative financial
instruments. The table has been drawn up based on the undiscounted gross inflows and (outflows) on
those derivatives that require gross settlement. When the amount payable or receivable is not
fixed, the amount disclosed has been determined by reference to the projected interest rates as
illustrated by the yield curves existing at the reporting date.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less than
|
|
|
1 to 3
|
|
|
3 months
|
|
|
1 to 5
|
|
|
|
|
|
|
|
|
|
|
1 month
|
|
|
months
|
|
|
to 1 year
|
|
|
years
|
|
|
5 + years
|
|
|
Total
|
|
|
|
|
£’000
|
|
|
£’000
|
|
|
£’000
|
|
|
£’000
|
|
|
£’000
|
|
|
£’000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross settled:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange forward contracts
|
|
|
—
|
|
|
|
1,955
|
|
|
|
2,451
|
|
|
|
—
|
|
|
|
—
|
|
|
|
4,406
|
|
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross settled:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange forward contracts
|
|
|
661
|
|
|
|
3,203
|
|
|
|
320
|
|
|
|
—
|
|
|
|
—
|
|
|
|
4,184
|
|
|
|
28 Capital and Other Financial Commitments
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
|
|
£’000
|
|
|
£’000
|
|
|
|
|
|
|
|
|
|
|
|
|
Contracts placed for future capital expenditure not
provided in the financial statements
|
|
|
126
|
|
|
|
581
|
|
|
|
F-49
29 Acquisition of business operations
On 4 January 2007, the Company acquired 100% of the issued share capital of MacroMed Inc.
(subsequently renamed Protherics Salt Lake City Inc.), a private US Company, in order to access its
lead product Oncogel
®
, a novel sustained release formulation of Paclitaxel for local
administration in oesophageal and brain cancers. Prior to the acquisition, the Company had loaned
$1 million to MacroMed Inc.
The goodwill arising on acquisition resulted from assets which could not be recognised separately
including early stage pipeline products and a highly skilled workforce.
Protherics Salt Lake City Inc. contributed revenue of £26,000 and a loss of £637,000 in the period
from acquisition to 31 March 2007.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair
|
|
|
|
|
|
|
|
Book
|
|
|
value
|
|
|
Fair
|
|
|
|
|
value
|
|
|
adjustment
|
|
|
value
|
|
|
|
|
£’000
|
|
|
£’000
|
|
|
£’000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-current assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Intangible assets
|
|
|
157
|
|
|
|
12,051
|
|
|
|
12,208
|
|
|
Property, plant & equipment
|
|
|
623
|
|
|
|
—
|
|
|
|
623
|
|
|
Current assets
|
|
|
432
|
|
|
|
—
|
|
|
|
432
|
|
|
Current liabilities
(1)
|
|
|
(1,680
|
)
|
|
|
178
|
|
|
|
(1,502
|
)
|
|
Non-current liabilities
|
|
|
(241
|
)
|
|
|
194
|
|
|
|
(47
|
)
|
|
|
|
Total assets acquired
|
|
|
(709
|
)
|
|
|
12,423
|
|
|
|
11,714
|
|
|
Goodwill
|
|
|
—
|
|
|
|
1,676
|
|
|
|
1,676
|
|
|
|
|
Total consideration
|
|
|
(709
|
)
|
|
|
14,099
|
|
|
|
13,390
|
|
|
Settled by equity (issued at market value on date of acquisition)
|
|
|
|
|
|
|
|
|
|
|
(11,602
|
)
|
|
Deferred consideration, to be paid in equity
|
|
|
|
|
|
|
|
|
|
|
(1,289
|
)
|
|
|
|
Cash paid
|
|
|
|
|
|
|
|
|
|
|
499
|
|
|
Cash and cash equivalents included in undertaking acquired
|
|
|
|
|
|
|
|
|
|
|
(125
|
)
|
|
|
|
Net cash consideration
|
|
|
|
|
|
|
|
|
|
|
374
|
|
|
|
|
|
|
|
|
(1)
|
|
Includes £509,000 advanced to MacroMed Inc. by the Company prior to its acquisition.
|
Total consideration includes £499,000 of directly attributable costs.
Deferred tax liabilities that arose on the recognition of in process research and development were
offset by deferred tax assets relating to trading losses.
Notes disclosing the revenue and loss for the Company had the acquisition been completed on the
first day of the financial year have not been provided as the Board of Directors believe disclosure
of this information would be impracticable since, for the period to acquisition, MacroMed Inc.’s
ongoing operations had been substantially reduced due to financial constraints which affected its
financial structure, financing costs, operations and activity levels, most notably its expenditure
on research and development. For the period after the acquisition to 31 March 2007, the
operations, expenditure and financial structure of MacroMed Inc. differed significantly.
F-50
30 Share-Based Payments
The Company has elected to apply IFRS 2, Share-Based Payments to all share-based awards and options
granted post 7 November 2002 that had not vested by 1 January 2005. These options have been issued
under the Unapproved Share Option Plan, individual option arrangements, the Executive Share Option
Plan (ESOP), the Long-term Incentive Plan (LTIP), Savings Related Share Option Plan and the
Deferred Bonus Plan.
Under the Unapproved Share Option Plan and the ESOP, the Remuneration Committee can grant options
over shares in the Company to employees of the Company. Options are granted with a fixed exercise
price equal to the market price of the shares under option at the date of the grant. The vesting
period is generally three years and subject to Company performance criteria. If the options remain
unexercised after a period of ten years from the date of grant, the options expire. Furthermore,
except in defined circumstances, options are forfeited if the employee leaves the Company before
the option vests.
Under the LTIP, the Remuneration Committee can grant equity-settled options over shares in the
Company but these awards are generally reserved for Directors and employees at Senior Manager
level. The options are granted at a fixed exercise price which is generally equal to the nominal
value of the shares under the award. As with the above plans, the vesting period is generally three
years, subject to Company performance criteria and, if the options remain unexercised after a
period of ten years from the date of grant, the options expire. Furthermore, except in defined
circumstances, options are forfeited if the employee leaves the Company before the option vests.
Awards under the Savings Related Share Option Plan are made available to all employees who have
been with the Company for more than six months. Options under this plan are awarded at a discount
of up to 20% of the market price of the shares under option at the date of the invitation to enter
the plan. The vesting period is either three or five years with a six month period to exercise
after the vesting period. There are no Company performance criteria attached to these options.
The options are forfeited if the employee leaves the Company during the vesting period.
Under the Deferred Bonus Plan, the Remuneration Committee can grant options over shares in the
Company but these awards are generally reserved for Directors and employees at Senior Manager
level. The options are granted at a fixed price which is generally equal to the nominal value of
the shares under the award. The vesting period is generally two years, with no Company performance
criteria. If the options remain unexercised after a period of ten years from the date of grant, the
options expire. Furthermore, except in defined circumstances, options are forfeited if the employee
leaves the Company before the option vests.
The share options granted have varying performance criteria required for the option to vest and
these are considered in the method of measuring the fair value. Where it is considered appropriate,
the fair value is measured using the Black-Scholes model. Where complex market based performance
criteria exist, a simulation model has been used, based on the same underlying methodology as the
Black-Scholes model, to establish the fair value on grant.
The fair values of the options granted, performance criteria, and the assumptions used in the
calculation of fair value are as follows:
F-51
Awards under ESOP and unapproved share option plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20 Jun
|
|
|
24 Jun
|
|
|
1 Mar
|
|
|
1 Mar
|
|
|
27 Sep
|
|
|
7 Sep
|
|
|
Grant date
|
|
2003
|
|
|
2003
|
|
|
2004
|
|
|
2004
|
|
|
2004
|
|
|
2005
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share price at grant date (p)
|
|
|
23.25
|
|
|
|
23.00
|
|
|
|
58.50
|
|
|
|
58.50
|
|
|
|
49.50
|
|
|
|
60.50
|
|
|
Exercise price (p)
|
|
|
23.25
|
|
|
|
23.00
|
|
|
|
58.50
|
|
|
|
58.50
|
|
|
|
49.50
|
|
|
|
60.50
|
|
|
Number of employees
|
|
|
10
|
|
|
|
2
|
|
|
|
15
|
|
|
|
1
|
|
|
|
3
|
|
|
|
2
|
|
|
Shares under option
|
|
|
1,250,000
|
|
|
|
30,000
|
|
|
|
1,240,000
|
|
|
|
325,000
|
|
|
|
310,000
|
|
|
|
115,000
|
|
|
Fair value (p)
|
|
|
9.45
|
|
|
|
9.45
|
|
|
|
25.57
|
|
|
|
33.77
|
|
|
|
19.31
|
|
|
|
19.98
|
|
|
Dividends yield
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Vesting period (years)
|
|
|
3
|
|
|
|
3
|
|
|
|
3
|
|
|
|
5
|
|
|
|
3
|
|
|
|
3
|
|
|
Expected volatility
|
|
|
46.2
|
%
|
|
|
46.2
|
%
|
|
|
47.0
|
%
|
|
|
47.0
|
%
|
|
|
45.3
|
%
|
|
|
38.5
|
%
|
|
Option life (years)
|
|
|
10
|
|
|
|
10
|
|
|
|
10
|
|
|
|
10
|
|
|
|
10
|
|
|
|
10
|
|
|
Expected life (years)
|
|
|
5
|
|
|
|
5
|
|
|
|
5
|
|
|
|
5
|
|
|
|
5
|
|
|
|
5
|
|
|
Risk free rate
|
|
|
3.75
|
%
|
|
|
3.75
|
%
|
|
|
4.64
|
%
|
|
|
4.64
|
%
|
|
|
4.74
|
%
|
|
|
4.12
|
%
|
|
Performance criteria
|
|
|
(1
|
)
|
|
|
(1
|
)
|
|
|
(2
|
)
|
|
|
(3
|
)
|
|
|
(2
|
)
|
|
|
(4
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21 Dec
|
|
|
16 Feb
|
|
|
12 Jun
|
|
|
11 July
|
|
|
15 Dec
|
|
|
5 Jan
|
|
|
Grant date
|
|
2005
|
|
|
2006
|
|
|
2006
|
|
|
2006
|
|
|
2006
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share price at grant date (p)
|
|
|
78.50
|
|
|
|
93.50
|
|
|
|
85.00
|
|
|
|
78.50
|
|
|
|
73.75
|
|
|
|
72.25
|
|
|
Exercise price (p)
|
|
|
78.50
|
|
|
|
93.50
|
|
|
|
85.00
|
|
|
|
78.50
|
|
|
|
73.75
|
|
|
|
72.25
|
|
|
Number of employees
|
|
|
5
|
|
|
|
1
|
|
|
|
1
|
|
|
|
1
|
|
|
|
1
|
|
|
|
35
|
|
|
Shares under option
|
|
|
85,000
|
|
|
|
25,401
|
|
|
|
10,000
|
|
|
|
50,000
|
|
|
|
50,000
|
|
|
|
740,000
|
|
|
Fair value (p)
|
|
|
31.38
|
|
|
|
45.41
|
|
|
|
31.54
|
|
|
|
31.50
|
|
|
|
31.76
|
|
|
|
35.85
|
|
|
Dividends yield
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Vesting period (years)
|
|
|
3
|
|
|
|
3
|
|
|
|
3
|
|
|
|
3
|
|
|
|
3
|
|
|
|
3
|
|
|
Expected volatility
|
|
|
41.0
|
%
|
|
|
41.2
|
%
|
|
|
41.2
|
%
|
|
|
41.2
|
%
|
|
|
41.5
|
%
|
|
|
41.6
|
%
|
|
Option life (years)
|
|
|
10
|
|
|
|
10
|
|
|
|
10
|
|
|
|
10
|
|
|
|
10
|
|
|
|
10
|
|
|
Expected life (years)
|
|
|
5
|
|
|
|
5
|
|
|
|
5
|
|
|
|
5
|
|
|
|
5
|
|
|
|
5
|
|
|
Risk free rate
|
|
|
4.68
|
%
|
|
|
4.68
|
%
|
|
|
4.59
|
%
|
|
|
4.68
|
%
|
|
|
4.63
|
%
|
|
|
4.68
|
%
|
|
Performance criteria
|
|
|
(4
|
)
|
|
|
(4
|
)
|
|
|
(4
|
)
|
|
None
|
|
None
|
|
|
(4
|
)
|
F-52
LTIP awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
28 Feb
|
|
|
19 July
|
|
|
21 Dec
|
|
|
12 Jun
|
|
|
1 Aug
|
|
|
22 Aug
|
|
|
15 Dec
|
|
|
Grant date
|
|
2005
|
|
|
2005
|
|
|
2005
|
|
|
2006
|
|
|
2006
|
|
|
2006
|
|
|
2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share price at grant date (p)
|
|
|
54.75
|
|
|
|
57.00
|
|
|
|
78.50
|
|
|
|
85.00
|
|
|
|
80.00
|
|
|
|
79.25
|
|
|
|
73.75
|
|
|
Exercise price (p)
|
|
|
2.00
|
|
|
|
2.00
|
|
|
|
2.00
|
|
|
|
2.00
|
|
|
|
2.00
|
|
|
|
2.00
|
|
|
|
2.00
|
|
|
Number of employees
|
|
|
22
|
|
|
|
2
|
|
|
|
16
|
|
|
|
34
|
|
|
|
1
|
|
|
|
1
|
|
|
|
16
|
|
|
Shares under option
|
|
|
741,669
|
|
|
|
113,785
|
|
|
|
775,887
|
|
|
|
953,820
|
|
|
|
9,284
|
|
|
|
6,383
|
|
|
|
970,615
|
|
|
Fair value (p)
|
|
|
33.71
|
|
|
|
38.22
|
|
|
|
60.86
|
|
|
|
52.89
|
|
|
|
53.94
|
|
|
|
52.66
|
|
|
|
55.65
|
|
|
Dividends yield
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Vesting period (years)
|
|
|
3
|
|
|
|
3
|
|
|
|
3
|
|
|
|
3
|
|
|
|
3
|
|
|
|
3
|
|
|
|
3
|
|
|
Expected volatility
|
|
|
41.8
|
%
|
|
|
39.0
|
%
|
|
|
41.0
|
%
|
|
|
41.2
|
%
|
|
|
40.9
|
%
|
|
|
40.9
|
%
|
|
|
41.5
|
%
|
|
Option life (years)
|
|
|
10
|
|
|
|
10
|
|
|
|
10
|
|
|
|
10
|
|
|
|
10
|
|
|
|
10
|
|
|
|
10
|
|
|
Expected life (years)
|
|
|
5
|
|
|
|
5
|
|
|
|
5
|
|
|
|
5
|
|
|
|
5
|
|
|
|
5
|
|
|
|
5
|
|
|
Risk free rate
|
|
|
4.68
|
%
|
|
|
4.18
|
%
|
|
|
4.68
|
%
|
|
|
4.59
|
%
|
|
|
4.68
|
%
|
|
|
4.68
|
%
|
|
|
4.63
|
%
|
|
Performance criteria
|
|
|
(4
|
)
|
|
|
(4
|
)
|
|
|
(4
|
)
|
|
|
(4
|
)
|
|
|
(4
|
)
|
|
|
(4
|
)
|
|
|
(4
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11 Jun
|
|
|
17 July
|
|
|
31 July
|
|
|
10 Aug
|
|
|
28 Sep
|
|
|
23 Nov
|
|
|
3 Dec
|
|
|
Grant date
|
|
2007
|
|
|
2007
|
|
|
2007
|
|
|
2007
|
|
|
2007
|
|
|
2007
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share price at grant date (p)
|
|
|
58.75
|
|
|
|
58.75
|
|
|
|
47.75
|
|
|
|
52.00
|
|
|
|
49.00
|
|
|
|
53.75
|
|
|
|
54.75
|
|
|
Exercise price (p)
|
|
|
2.00
|
|
|
|
2.00
|
|
|
|
2.00
|
|
|
|
2.00
|
|
|
|
2.00
|
|
|
|
2.00
|
|
|
|
2.00
|
|
|
Number of employees
|
|
|
43
|
|
|
|
1
|
|
|
|
1
|
|
|
|
1
|
|
|
|
1
|
|
|
|
23
|
|
|
|
1
|
|
|
Shares under option
|
|
|
1,620,901
|
|
|
|
8,510
|
|
|
|
19,633
|
|
|
|
423,076
|
|
|
|
17,346
|
|
|
|
1,594,962
|
|
|
|
13,302
|
|
|
Fair value (p)
|
|
|
57.24
|
|
|
|
36.22
|
|
|
|
25.76
|
|
|
|
30.38
|
|
|
|
29.31
|
|
|
|
37.32
|
|
|
|
38.37
|
|
|
Dividends yield
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Vesting period (years)
|
|
|
3
|
|
|
|
3
|
|
|
|
3
|
|
|
|
3
|
|
|
|
3
|
|
|
|
3
|
|
|
|
3
|
|
|
Expected volatility
|
|
|
42.2
|
%
|
|
|
42.5
|
%
|
|
|
42.5
|
%
|
|
|
42.5
|
%
|
|
|
42.1
|
%
|
|
|
41.4
|
%
|
|
|
41.0
|
%
|
|
Option life (years)
|
|
|
10
|
|
|
|
10
|
|
|
|
10
|
|
|
|
10
|
|
|
|
10
|
|
|
|
10
|
|
|
|
10
|
|
|
Expected life (years)
|
|
|
5
|
|
|
|
5
|
|
|
|
5
|
|
|
|
5
|
|
|
|
5
|
|
|
|
5
|
|
|
|
5
|
|
|
Risk free rate
|
|
|
5.56
|
%
|
|
|
5.65
|
%
|
|
|
5.35
|
%
|
|
|
5.35
|
%
|
|
|
5.04
|
%
|
|
|
5.18
|
%
|
|
|
5.18
|
%
|
|
Performance criteria
|
|
|
(4
|
)
|
|
|
(4
|
)
|
|
|
(4
|
)
|
|
|
(4
|
)
|
|
|
(4
|
)
|
|
|
(4
|
)
|
|
|
(4
|
)
|
F-53
Other awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11 Jan
|
|
|
11 Jan
|
|
|
12 Jan
|
|
|
12 Jan
|
|
|
19 Dec
|
|
|
19 Dec
|
|
|
|
|
2006
|
|
|
2006
|
|
|
2007
|
|
|
2007
|
|
|
2007
|
|
|
2007
|
|
|
|
|
Share-
|
|
|
Share-
|
|
|
Share-
|
|
|
Share-
|
|
|
Share-
|
|
|
Share-
|
|
|
Grant date
|
|
save
|
|
|
save
|
|
|
save
|
|
|
save
|
|
|
save
|
|
|
save
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share price at grant date (p)
|
|
|
86.00
|
|
|
|
86.00
|
|
|
|
75.50
|
|
|
|
75.50
|
|
|
|
50.25
|
|
|
|
50.25
|
|
|
Exercise price (p)
|
|
|
65.00
|
|
|
|
65.00
|
|
|
|
58.00
|
|
|
|
58.00
|
|
|
|
43.00
|
|
|
|
43.00
|
|
|
Number of employees
|
|
|
38
|
|
|
|
35
|
|
|
|
14
|
|
|
|
9
|
|
|
|
29
|
|
|
|
16
|
|
|
Shares under option
|
|
|
270,118
|
|
|
|
401,738
|
|
|
|
68,424
|
|
|
|
115,749
|
|
|
|
285,759
|
|
|
|
379,746
|
|
|
Fair value (p)
|
|
|
37.20
|
|
|
|
44.09
|
|
|
|
32.59
|
|
|
|
39.81
|
|
|
|
21.26
|
|
|
|
25.43
|
|
|
Dividends yield
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Vesting period (years)
|
|
|
3
|
|
|
|
5
|
|
|
|
3
|
|
|
|
5
|
|
|
|
3
|
|
|
|
5
|
|
|
Expected volatility
|
|
|
41.2
|
%
|
|
|
40.9
|
%
|
|
|
39.6
|
%
|
|
|
41.8
|
%
|
|
|
42.5
|
%
|
|
|
40.5
|
%
|
|
Option life (years)
|
|
|
3.5
|
|
|
|
5.5
|
|
|
|
3.5
|
|
|
|
5.5
|
|
|
|
3.5
|
|
|
|
5.5
|
|
|
Expected life (years)
|
|
|
3.0
|
|
|
|
5.0
|
|
|
|
3.0
|
|
|
|
5.0
|
|
|
|
3.0
|
|
|
|
5.0
|
|
|
Risk free rate
|
|
|
4.10
|
%
|
|
|
4.10
|
%
|
|
|
5.18
|
%
|
|
|
5.04
|
%
|
|
|
4.52
|
%
|
|
|
4.61
|
%
|
|
Performance criteria
|
|
None
|
|
None
|
|
None
|
|
None
|
|
None
|
|
None
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Grant
date
|
|
12 Jun
2006
Deferred
Bonus
|
|
|
11 Jun
2007
Deferred
Bonus
|
|
|
12 Jun
2006
Individual
|
|
|
12 Jun
2006
Individual
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share price at grant date (p)
|
|
|
85.00
|
|
|
|
58.75
|
|
|
|
85.00
|
|
|
|
85.00
|
|
|
Exercise price (p)
|
|
|
2.00
|
|
|
|
2.00
|
|
|
|
85.00
|
|
|
|
85.00
|
|
|
Number of employees
|
|
|
8
|
|
|
|
7
|
|
|
|
(5
|
)
|
|
|
(5
|
)
|
|
Shares under option
|
|
|
109,806
|
|
|
|
184,317
|
|
|
|
40,000
|
|
|
|
40,000
|
|
|
Fair value (p)
|
|
|
83.18
|
|
|
|
57.24
|
|
|
|
26.16
|
|
|
|
28.8
|
|
|
Dividends yield
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Vesting period (years)
|
|
|
2
|
|
|
|
2
|
|
|
|
1.5
|
|
|
|
2.0
|
|
|
Expected volatility
|
|
|
42.7
|
%
|
|
|
42.2
|
%
|
|
|
42.7
|
%
|
|
|
42.7
|
%
|
|
Option life (years)
|
|
|
10.0
|
|
|
|
10.0
|
|
|
|
2.5
|
|
|
|
3.0
|
|
|
Expected life (years)
|
|
|
5.0
|
|
|
|
5.0
|
|
|
|
2.5
|
|
|
|
3.0
|
|
|
Risk free rate
|
|
|
4.59
|
%
|
|
|
5.56
|
%
|
|
|
4.59
|
%
|
|
|
4.59
|
%
|
|
Performance criteria
|
|
None
|
|
None
|
|
None
|
|
None
|
|
|
(1)
|
|
To vest, the Company’s share price is required to outperform the average price of
shares in the FTSE All Share Pharmaceutical and Biotech Index in any three year period
commencing on or after the date of grant of the option.
|
|
|
|
|
(2)
|
|
Company performance will be measured once only after three years from the date of
grant of the option. If the Total Shareholder Return of the Company reaches the median of
the FTSE All Share Pharmaceutical and Biotech Index, one third of the shares under option
become exercisable, rising on a sliding scale such that all the shares under option become
exercisable if the Company’s performance is at or above the upper quartile. The
Remuneration Committee must also be satisfied that there has been an improvement in the
Company’s underlying financial performance over the period.
|
|
|
|
|
(3)
|
|
As (2) except that company performance measured after five years.
|
|
|
|
|
(4)
|
|
Provided the Remuneration Committee is satisfied that the Company has achieved sound
underlying performance, awards will vest based on the Company’s Total Shareholder Return
(TSR). Company performance will be measured after three years from grant by measuring the
TSR of the Company against a comparator group consisting of the primary listed components
of the FTSE All Share Pharmaceutical and Biotech Index but excluding those companies in
the FTSE 100 (currently AstraZeneca PLC, GlaxoSmithKline PLC and Shire plc). TSR will
normally be averaged across a period of three months before the date of the reward and
three months before the date on which the performance period ends, although the Committee
may determine that a different averaging period is appropriate and properly reflective of
management performance but in any event this will not be more than six months or less than
one month. No award will vest if the Company’s TSR is below the median of the comparator
group, 30% will vest if the Company’s TSR is at the median position, 80% if the Company’s
TSR is at the upper quartile and 100% if at the upper decile. Awards will vest on a
sliding scale between each step.
|
F-54
|
|
(5)
|
|
Granted to non-employee.
|
The expected volatility is based on historical volatility over the expected life, being the average
expected period to exercise, of the option as at the date of grant. The risk free rate of return is
the yield on zero-coupon UK government bonds of a term consistent with the expected life at the
date of grant.
A reconciliation of the option movements over the year to 31 March 2008 is shown below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
|
|
|
|
2007
|
|
|
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
|
|
average
|
|
|
|
|
|
|
Average
|
|
|
|
|
|
|
|
|
option
|
|
|
|
|
|
|
option
|
|
|
|
|
|
|
|
|
price
|
|
|
|
|
|
|
price
|
|
|
|
|
Number
|
|
|
pence
|
|
|
Number
|
|
|
pence
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at 1 April
|
|
|
13,112,217
|
|
|
|
36.17
|
|
|
|
10,912,449
|
|
|
|
57.53
|
|
|
Granted
|
|
|
4,597,552
|
|
|
|
8.55
|
|
|
|
3,164,081
|
|
|
|
26.39
|
|
|
Exercised
|
|
|
(238,751
|
)
|
|
|
22.49
|
|
|
|
(231,321
|
)
|
|
|
42.63
|
|
|
Cancelled or expired
|
|
|
(1,668,024
|
)
|
|
|
38.74
|
|
|
|
(732,992
|
)
|
|
|
309.93
|
|
|
|
|
Outstanding at 31 March
|
|
|
15,802,994
|
|
|
|
28.07
|
|
|
|
13,112,217
|
|
|
|
36.17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable at 31 March
|
|
|
6,846,853
|
|
|
|
41.93
|
|
|
|
6,994,677
|
|
|
|
43.54
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
2007
|
|
|
|
Weighted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
|
|
|
average
|
|
|
|
|
|
Weighted average
|
|
average
|
|
|
|
|
|
Weighted average
|
|
Range of
|
|
option
|
|
Number
|
|
remaining life
|
|
option
|
|
|
|
|
|
remaining life
|
|
exercise
|
|
price
|
|
of
|
|
Expected
|
|
Contractual
|
|
price
|
|
Number of
|
|
Expected
|
|
Contractual
|
|
prices
|
|
pence
|
|
shares
|
|
years
|
|
years
|
|
pence
|
|
shares
|
|
years
|
|
years
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Below 20p
|
|
|
2.0
|
|
|
|
6,579,008
|
|
|
|
3.9
|
|
|
|
9.0
|
|
|
|
2.0
|
|
|
|
3,625,088
|
|
|
|
4.0
|
|
|
|
9.0
|
|
|
20p — 40p
|
|
|
34.7
|
|
|
|
4,428,798
|
|
|
|
0.1
|
|
|
|
3.6
|
|
|
|
34.9
|
|
|
|
4,593,929
|
|
|
|
0.3
|
|
|
|
4.6
|
|
|
40p — 60p
|
|
|
48.8
|
|
|
|
3,411,855
|
|
|
|
1.0
|
|
|
|
4.1
|
|
|
|
50.2
|
|
|
|
3,053,833
|
|
|
|
0.9
|
|
|
|
5.0
|
|
|
60p — 80p
|
|
|
69.9
|
|
|
|
1,182,364
|
|
|
|
3.0
|
|
|
|
6.9
|
|
|
|
68.9
|
|
|
|
1,557,878
|
|
|
|
3.9
|
|
|
|
7.0
|
|
|
80p — 100p
|
|
|
85.0
|
|
|
|
84,669
|
|
|
|
2.0
|
|
|
|
2.3
|
|
|
|
86.9
|
|
|
|
115,401
|
|
|
|
3.3
|
|
|
|
4.8
|
|
|
Above 100p
|
|
|
175.0
|
|
|
|
116,300
|
|
|
|
—
|
|
|
|
0.3
|
|
|
|
216.8
|
|
|
|
166,088
|
|
|
|
—
|
|
|
|
1.2
|
|
The weighted average share price for options exercised over the year was 53.2p (2007: 83.7p). The
total charge for the year relating to employee share-based payment plans was £1,208,000 (2007:
£713,000), all of which related to equity-settled share-based payment transactions.
31 Retirement Benefit Schemes
The Company operates a defined contribution retirement benefit scheme for all qualifying UK based
employees. The assets of the scheme are held separately from those of the Company in funds under
the control of the trustees. Where there are employees who leave the schemes prior to the
contributions made by the Company fully vesting, the contributions payable by the Company are
reduced by the amount of the forfeited contributions.
Eligible employees of the Company’s overseas subsidiaries are members of externally operated
defined contribution schemes. The only obligation of the Company with respect to these schemes is
to make the specified contributions.
F-55
32 Notes to the Consolidated Cash Flow Statements
Reconciliation of operating loss to net cash flow from operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
|
|
£’000
|
|
|
£’000
|
|
|
£’000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss for the year
|
|
|
(16,742
|
)
|
|
|
(3,357
|
)
|
|
|
(9,488
|
)
|
|
Tax
|
|
|
(509
|
)
|
|
|
(259
|
)
|
|
|
(75
|
)
|
|
Finance costs
|
|
|
415
|
|
|
|
417
|
|
|
|
431
|
|
|
Finance income
|
|
|
(2,382
|
)
|
|
|
(1,155
|
)
|
|
|
(401
|
)
|
|
|
|
Operating loss
|
|
|
(19,218
|
)
|
|
|
(4,354
|
)
|
|
|
(9,533
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments for:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in fair value of derivatives
|
|
|
284
|
|
|
|
(250
|
)
|
|
|
531
|
|
|
Deferred grant income
|
|
|
(104
|
)
|
|
|
(111
|
)
|
|
|
(78
|
)
|
|
Share-based payment costs
|
|
|
1,240
|
|
|
|
703
|
|
|
|
311
|
|
|
Depreciation of property, plant and equipment
|
|
|
2,076
|
|
|
|
1,373
|
|
|
|
1,391
|
|
|
Amortisation of intangible fixed assets
|
|
|
498
|
|
|
|
135
|
|
|
|
114
|
|
|
Loss on disposal of property, plant and equipment
|
|
|
134
|
|
|
|
634
|
|
|
|
108
|
|
|
|
|
Operating cash flows before movements in working capital
|
|
|
(15,090
|
)
|
|
|
(1,870
|
)
|
|
|
(7,156
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Decrease in inventories
|
|
|
686
|
|
|
|
131
|
|
|
|
1,903
|
|
|
Decrease / (increase) in receivables
|
|
|
11,054
|
|
|
|
(10,575
|
)
|
|
|
(1,135
|
)
|
|
Increase / (decrease) in payables
|
|
|
3,224
|
|
|
|
(3,737
|
)
|
|
|
18,997
|
|
|
|
|
Net cash (outflow) / inflow from operating activities
|
|
|
(126
|
)
|
|
|
(16,051
|
)
|
|
|
12,609
|
|
|
|
The decrease in receivables for the year ended 31 March 2008 is primarily a result of the receipt
of the £10 million milestone payment from AstraZeneca UK Ltd in April 2007.
Additions to the Company’s plant and equipment during the year amounting to £403,000 (2007:
£2,252,000) were financed by new finance leases.
Cash and cash equivalents (which are presented as a single class of assets on the face of the
balance sheet) comprise cash at bank and other short-term highly liquid investments with a maturity
of three months or less.
33 Related Party Transactions
Transactions between the Company and its subsidiaries, which are related parties, have been
eliminated on consolidation and are not disclosed in this note.
Details of consultancy fees earned by Directors during the year and fees paid to third parties for
Directors’ consultancy services are disclosed in note 7. No amounts were outstanding at 31 March
2008 (2007: £nil, 2006: £nil).
F-56
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