22 Apr 2014 10:49
22 April 2014
Plethora Solutions Holdings PLC
("Plethora" or the "Company")
Preliminary Results for the year ended 31 December 2013
The Company announces its unaudited preliminary results for the year ended 31 December 2013.
Business Review
PSD502 for the treatment of Premature Ejaculation
Plethora (the "Group") was founded in 2004 to develop a number of pharmaceutical products in the area of urology and sexual health; at the centre of this development portfolio was PSD502, a treatment for premature ejaculation (PE).
In 2009, Plethora successfully developed PSD502 and completed two phase III clinical trials in Europe and the US, following which the global rights were licensed to Shionogi Inc ("Shionogi"). In 2011 Plethora regained operational and economic control of PSD502 in Europe and the Rest of the World (defined to exclude the Shionogi Territory which encompassed North America, South America, Japan, Korea, Taiwan and China).
In August 2013 the Group entered into an agreement with Shionogi to take assignment of the operational and economic control of PSD502 for the Shionogi Territory. This meant that the rights to exploit the global commercial and economic rights of PSD502 had been consolidated and placed under the control of the Group. This was a significant development in terms of the Group's ability to engage with potential manufacturing and commercial partners as the exclusive custodian of these rights throughout the world.
In November 2013, the Group announced that the European Commission had granted a marketing authorisation for PSD502 for the treatment of premature ejaculation under the name of 'Prilocaine Lidocaine Plethora' through the European Medicines Agency (EMA). This was a significant event in the development of the business following many years of research, investment in clinical studies and the preparation of regulatory dossiers. This marketing authorisation enabled the Group to commence negotiations with potential partners for the commercial exploitation of PSD502 in the European Union.
Following the award of the marketing authorisation by the EMA, the Group engaged specialist legal advice to ascertain what steps should be taken to protect its intellectual property rights. A key barrier to entry relates to the Group's rights to prevent the disclosure of technical data from Plethora's submitted regulatory dossier which would facilitate products being introduced by generic competitors at a later date. The Group has been advised that it will benefit from data exclusivity in relation to its dossier until November 2021 with an additional marketing exclusivity period (which prevents a generic from using Plethora's data and launching a product) up to 2023.
In relation to the Group's patent rights, PSD502 patents remain effective in the largest European countries until March 2016. Applications have been submitted for Special Protection Certificates in each of the relevant countries which will provide an additional five years of patent protection up to March 2021.
As part of the disciplined approach to increasing shareholder value, the strategy of the Group is to bring PSD502 to market with specialist partners in the fields of manufacturing, marketing and distribution. During 2013, in anticipation of the award of regulatory approval in the European Union, Plethora retained the services of a number of consultants and specialists to begin the process of exploiting the commercial rights from manufacturing and marketing through to end use.
In consultation with the Group's preferred manufacturing partner, the process has begun to redesign the dispensing canister to provide an optimal number of 6 doses per unit. This was in accordance with the advice provided by external marketing consultants to meet optimum price and gross margin points for the end sale of the product. The Group is making good progress with its preferred manufacturing partner to begin the process of establishing a production facility to meet the anticipated needs of the Group over the foreseeable future.
In anticipation of the completion of the consolidation of the global rights with Shionogi, the Group began the process to appoint specialist regulatory consultants during 2013 to begin preparations for a New Drug Application ('NDA') to the United States Food and Drug Administration ('FDA'). In the first quarter of 2014, the Group and its consultants had an initial guidance meeting with the FDA to discuss the proposed NDA. Following receipt of the feedback from this meeting the Group is now able to confirm that it has an unambiguous defined path for a successful submission of an NDA for PSD502. During these consultations, the FDA confirmed that premature ejaculation is an area of high medical need with a requirement for effective therapy and recognises the importance of the initiatives that Plethora has made towards this goal.
The Group has identified the EU and USA territories as key target markets. The Group estimates that there are in excess of 200 million men aged between 20-69 years old in the EU and USA. With the estimated incidence of PE of 26% of men, this implies that the estimated population of men in these territories with the disorder is approximately 52 million. Based on internal modelling drawing on the results of externally prepared marketing studies, the Group forecasts end user annual sales to be in excess of $1 billion in these two markets alone.
Good progress has been made regarding negotiations with the Group's potential commercial partners in relation to a number of territories which will be responsible for the marketing distribution and sale of the treatment. By their nature these are complex negotiations drawing on the Group's manufacturing and regulatory initiatives and have to be managed in a structured manner over time. It is not possible to determine with accuracy the timing of completing these negotiations.
The Urology Co
In 2009 the Group formed a new subsidiary, The Urology Company Limited ("The Urology Co"), which was intended to create a revenue earning, profit and cash flow generative specialty pharmaceutical company via the marketing and distribution of prescription pharmaceuticals, CE marked medical devices and OTC healthcare products for the treatment and management of urological disorders.
This business became operationally effective in 2010 and earned its first material revenues in 2011. However, this business remained loss making. In February 2013 the Directors conducted a strategic review and reached the conclusion that the business was unlikely to achieve profitability and begin to make a financial contribution within an acceptable timeframe. On the basis that the Group was no longer prepared to continue providing financial support, and the fact that the subsidiary was unable to meet its financial obligations as they fell due, the decision was taken to place the business into administration on 25 February 2013. On 18 September 2013 a notice was signed to appoint a liquidator to wind up the company via a creditors voluntary liquidation.
Financial results for 2013
The 2013 financial results need to be considered in light of certain events that occurred in 2013, particularly the cessation of The Urology Co, and the financing completed on 5 April 2013.
The operations at The Urology Co ceased trading in February 2013. It is considered as a "discontinued operation" at 31 December 2013 under IFRS 5 "Non-current assets held for sale and discontinued operations". The financial results for 2013 are presented on a consolidated basis showing the results of The Urology Co as a discontinued operation of the Group.
Readers are advised to review the segmental reporting of results, showing the Group's operations in three parts - the Plethora Development business dealing with PSD502, The Urology Co under discontinued operations and "Corporate/Unallocated", which accounts for central overheads, in order to gain a full understanding of the trading results.
Plethora Development
During 2013, the Group incurred R&D costs of £1,312,000 (2012: £611,000). These costs relate solely to the regulatory approval work for PSD502. The increased costs incurred in 2013 are in connection with the engagement of consultants to progress the manufacturing, marketing and regulatory needs of the business in anticipation of the marketing approval announced in November 2013.
Looking forward to 2014, the Group anticipates that development costs will increase in pursuit of its strategic objectives. The effect of this is expected to be mitigated by any up-front payments and receipts anticipated in relation to the current process of securing strategic marketing partners for the exploitation of PSD502.
The Urology Co
The Urology Co earned revenue of £91,000 (2012: £582,000) for the year.
On 25 February 2013, The Urology Co was placed into administration. There was no distribution or recovery made available for the Group through the administration process. The results of The Urology Co have been disclosed as a discontinued operation.
The effect of ceasing this operation will be to reduce cash outflow of this operation and ensure that the Group's resources are focused entirely on the commercial development of PSD502.
Corporate/unallocated
The Group incurred total Central Operating Costs of £1,586,000 (2012: £908,000) an increase of 75% compared to the prior year. A major cause of the increase relates to termination payments to the Group's previous CEO and increased legal and professional costs associated with the repatriation of PSD502 global rights from Shionogi and the restructuring of existing debt facilities.
The Group continues to review its operating cost base to determine if there are further savings which can be made. In May 2013, the Group closed its London office and relocated to Oxfordshire. This has reduced costs further and brought operational efficiencies being co-located in the same office building as Plethora's European regulatory consultants. Following the restructuring of the board and a rationalisation of the Group's central administration function, corporate costs are expected to fall significantly in 2014.
The Group recorded total finance costs of £6,152,000 (2012: £1,308,000) for the year. A large component of this (£5,233,000 (2012: £314,000)) relates to accounting for fair value adjustments of the warrant instruments which do not have a cash effect on the Group but are necessary for compliance with IFRS. Further details of these costs are set out in the Note 8.
Balance sheet
The assets of the Group relating to Plethora Solutions Limited and Plethora Solutions Holdings plc at 31 December 2013 were: cash £3,117,000 (2012: £31,000), and trade and other receivables £496,000 (2012: £157,000). In addition the Group had trade creditors of £193,000 (2012: £769,000) and accruals of £576,000 (2012: £619,000). The Group had net liabilities of £6,812,000 (2012: 5,747,000).
Over the course of 2013, the Group has reduced its creditor position and at 31 December 2013 Trade and Other Payables were £1,158,000 (2012: £1,566,000). Trade Receivables reduced to £nil (2012: £157,000) and Inventories was £nil (2012: £43,000) both as a result of closure of The Urology Co.
Borrowings
At 31 December 2013, the Group had total borrowings of £9,267,000 (2012: £4,413,000), full details of which are set out in Note 19 of the financial statements. A significant part of the amount disclosed as borrowings relates to the need to account for certain warrant instruments over equity shares associated with the Group's indebtedness. The principal value of the loan instruments themselves is £3,000,000 (2012: £3,200,000).
On 18 March 2013, the Group announced a restructuring of its borrowings, as described further in Note 19, to remedy a number of breaches that had taken place in relation to its loan note obligations. This restructuring was subject to completion of the associated equity financing and this was completed on 5 April 2013. Part of the restructuring was to waive all prior defaults and as at that date all facilities were brought back into full compliance with their terms. In addition, it has been agreed that the maturity of these facilities be extended to 31 December 2014 and beyond. As a result of this, the facilities which mature after 31 December 2014 will no longer be classified as being current liabilities.
2014 Outlook
Following the closure of The Urology Co in 2013, the operating cost base of the Group has been reduced substantially. Over the course of 2013, the Group has achieved further savings in General and Administrative expenses. At the same time the debt restructuring provides for all future interest to accrue to the point of maturity or repayment. These changes have enabled the Group to maximize its investment in the commercial development of PSD502.
In 2013, the Group incurred £1,312,000 in R&D costs related to the regulatory filing processes. It is expected that R&D costs will increase significantly in 2014 in relation to the establishment of a manufacturing solution and planned activities in relation to the submission of a New Drug Application with the FDA in relation to PSD502 in the USA.
The Group has stated that it intends to partner PSD502 with strategic marketing partners to exploit fully the product's potential in Europe, the United States (subject to regulatory approval) and other territories. It has previously been announced that negotiations have commenced with a number of strategic marketing partners. The Directors believe that the consummation of these negotiations into an agreement will provide for the payment of upfront, milestone and royalties and that these have the potential, based on previous negotiations and comparable transactions, to provide significant cash flow to the Group.
On 26 March 2014 the Group announced that it had entered into an agreement with Pharmaserve (North West) Limited to develop a new 6 dose canister and establish a production line for the manufacture of PSD502 which will allow the Group to achieve optimum price points per unit sold in accordance with the advice provided by specialist marketing consultants. This is a key development in terms of bringing the product to market in the EU and assisting in the submission of an NDA to the FDA in the USA.
In summary, 2013 has been a significant year of progress in terms of securing regulatory approval in the EU, commencing the process of securing regulatory approval in the USA, putting into place a manufacturing solution to meet future demand and engaging with potential commercial partners to bring PSD502 to market. The Group is now well placed to meet an established medical need and deliver growth and value to its shareholders over the next few years.
PLETHORA SOLUTIONS HOLDINGS PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Note | 2013 | 2012 | |
For the year ended 31 December 2013 | £'000 | £'000 | |
restated | |||
Revenue | - | - | |
Operating Costs: | |||
- research and development expenses | (1,312) | (611) | |
- general and administrative expenses | (1,586) | (908) | |
Total Net Operating Costs | (2,898) | (1,519) | |
Operating loss | 5 | (2,898) | (1,519) |
Exceptional item | 4 | 293 | - |
Finance costs | 8 | (6,152) | (1,308) |
Finance income | 8 | 2 | 1 |
Loss from continuing operations for the year before taxation |
(8,755) |
(2,826) | |
Income tax | 9 | - | - |
Loss from continuing operations for the year after taxation |
(8,755) |
(2,826) | |
Profit/(loss) for the year from discontinued operations |
18 |
255 |
(1,046) |
Loss for the year and total comprehensive loss attributable to the owners of the parent |
(8,500) |
(3,872) | |
(Loss)/profit per ordinary share | |||
Basic and diluted loss per share from continuing operations | 10 | (2.7)p | (1.4)p |
Basic and diluted profit/(loss) per share from discontinued operations | 10 | 0.1p | (0.5)p |
Basic and diluted loss per share from total operations | 10 | (2.6)p | (1.9)p |
PLETHORA SOLUTIONS HOLDINGS PLC
CONSOLIDATED BALANCE SHEET
Note | 2013 | 2012 | |
For the year ended 31 December 2013 | £'000 | £'000 | |
ASSETS | |||
Non current | |||
Property, plant and equipment | 11 | - | 1 |
Current | |||
Inventories | 14 | - | 43 |
Trade and other receivables | 13 | 496 | 157 |
Cash and cash equivalents | 15 | 3,117 | 31 |
3,613 | 231 | ||
Total assets | 3,613 | 232 | |
LIABILITIES | |||
Current | |||
Trade and other payables | 17 | (1,158) | (1,566) |
Borrowings | 19 | (6,694) | (3,806) |
Non-current | |||
Borrowings | 19 | (2,573) | (607) |
Total liabilities | (10,425) | (5,979) | |
Net liabilities | (6,812) | (5,747) | |
EQUITY | |||
Share capital | 22 | 4,153 | 2,089 |
Share premium | 30,256 | 25,083 | |
Other reserves | 4,908 | 4,908 | |
Convertible loan note reserve | 216 | 137 | |
Share based payment reserve | 1,233 | 1,964 | |
Accumulated losses | (47,578) | (39,928) | |
Total shareholders' deficit | (6,812) | (5,747) | |
PLETHORA SOLUTIONS HOLDINGS PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share capital | Share premium | Other reserves | Convertible loan note reserve | Share based payment reserve | Accumulated losses | Total | ||
For the year ended 31 December 2013 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |
Balance at 1 January 2012 | 2,008 | 24,782 | 4,908 | 112 | 1,922 | (36,056) | (2,324) |
|
Loss and total comprehensive loss for the year Transactions with owners: |
- |
- |
- |
- |
- |
(3,872) |
(3,872) | |
Equity component of Mellon Bridge Loans | - | - | - | 25 | - | - | 25 | |
Issue of new shares | 81 | 301 | - | - | - | - | 382 | |
Employee share based compensation | - | - | - | - | 42 |
| 42 | |
Balance at 31 December 2012 | 2,089 | 25,083 | 4,908 | 137 | 1,964 | (39,928) | (5,747) | |
Loss and total comprehensive loss for the year Transactions with owners: |
- |
- |
- |
- |
- |
(8,500) |
(8,500) | |
Gain on loan extinguishments taken to equity |
- |
- |
- |
- |
- |
28 |
28 | |
Equity component of Convertible Loans notes |
- |
- |
- |
79 |
- |
- |
79 | |
Issue of new shares | 2,064 | 5,485 | - | - | - | - | 7,549 | |
Cost of issue of new shares | (312) | (312) | ||||||
Employee share based compensation | - | - | - | - | 91 | - | 91 | |
Transfer for exercised/lapsed share options |
|
|
|
| (822) | 822 | - | |
Balance at 31 December 2013 | 4,153 | 30,256 | 4,908 | 216 | 1,233 | (47,578) | (6,812) | |
PLETHORA SOLUTIONS HOLDINGS PLC
CONSOLIDATED CASH FLOW STATEMENT
| For the year ended 31 December 2013 | Note | 2013 | 2012 |
| £'000 | £'000 restated | ||
| ||||
Cash flows from operating activities | ||||
Loss before taxation | (8,755) | (2,826) | ||
Finance income 8 | (2) | (1) | ||
Gain on extinguishment of debt instruments 4 | (293) | - | ||
Finance costs 8 | 6,152 | 1,308 | ||
Share-based payment charge 7 | 91 | 42 | ||
Depreciation of property, plant and equipment 5 | 1 | 3 | ||
Change in inventories | - | - | ||
Change in trade and other receivables | (478) | 200 | ||
Change in trade and other payables | 253 | (440) | ||
|
| |||
Cash utilised by operations - continuing operations | (3,031) | (1,714) | ||
Cash utilised by operations - discontinued operations 18 | (106) | (42) | ||
Total cash utilised by operations | (3,137) | (1,756) | ||
Interest paid | - | (99) | ||
|
| |||
Net cash outflow from operating activities | (3,137) | (1,855) | ||
Cash flows from investing activities | ||||
Interest received | 2 | 1 | ||
|
| |||
Net cash generated from investing activities | 2 | 1 | ||
Cash flows from financing activities | ||||
Proceeds from issue of shares | 21 | 6,533 | 350 | |
Share issue costs | (312) | - | ||
Proceeds from receipt of Bridge Loan | 19 | 200 | 550 | |
Repayment of Bridge Loan | (200) | - | ||
|
| |||
Net cash generated from financing activities | 6,221 | 900 | ||
|
| |||
Net increase/(decrease) in cash and cash equivalents | 3,086 | (954) | ||
Cash and cash equivalents at the beginning of year | 31 | 985 | ||
|
| |||
Cash and cash equivalents at end of year | 15 | 3,117 | 31 | |
|
| |||
Notes to the Consolidated Financial Statements
1 general information
Plethora Solutions Holdings plc (the "Company") and its subsidiaries' ("Plethora" or the "Group") principal activities are the development and commercialisation of a pharmaceutical treatment of premature ejaculation in the area of men's sexual health.
Plethora Solutions Holdings plc, a public limited company, is incorporated and domiciled in the United Kingdom. Its shares are registered on the Alternative Investment Market (AIM) at the London Stock Exchange.
The financial statements for the year ended 31 December 2013 (including the comparative information for the year ended 31 December 2012) were approved by the board of directors on [ ] April 2014. Amendments to the financial statements are not permitted after they have been approved.
2 accounting policies
Basis of preparation
These consolidated financial statements have been prepared under the historical cost convention as modified by financial liabilities at fair value through profit or loss using the required measurement bases specified under International Financial Reporting Standards (IFRS) and in accordance with applicable IFRS as adopted by the European Union, IFRIC interpretations and with those parts of the Companies Act 2006 applicable to Companies reporting under IFRS. Accounting policies have been applied consistently other than where new policies have been adopted.
Overall considerations
The significant accounting policies that have been used in the preparation of these consolidated financial statements are summarised below.
The consolidated financial statements have been prepared using the measurement bases specified by IFRS for each type of asset, liabilities, income and expense. The measurement bases are more fully described in the accounting policies below.
The accounting estimates and assumptions are consistent with the Group's latest approved budget forecast where applicable. Judgements are based on the information available at each balance sheet date. All estimates are based on the best information available to management.
The Group can classify as discontinued operations only those operations which meet the criteria set out in IFRS 5 as at the Balance Sheet date. The Urology Company Limited, which was placed into administration in February 2013, is shown as a discontinued operation. The comparative figures in the Consolidated statement of comprehensive income have been restated so that disclosures relate to all operations that are continuing as at the end of the latest period presented.
Exceptional items, namely items that are material either because of their size or their nature, and which are non-recurring, are presented within their relevant Statement of Comprehensive Income category, but highlighted through separate disclosure. The separate reporting of exceptional items helps provide a full understanding of the Group's underlying performance.
Going concern
In considering the appropriate basis on which to prepare the financial statements, the Directors are required to consider whether the Group can continue in operational existence for the foreseeable future.
As at 31 December 2013, the Group had £3,117,000 of cash and cash equivalents and net liabilities of £6,812,000.
Given the current stage in the development of PSD502, the Group did not generate any revenues during the year. The Group has no senior bank facilities and remains dependent on the support of its shareholders and investors to ensure sufficient funds are made available to secure the successful commercialisation of the treatment. The Directors place a high priority in managing the Company's relationship with its investors and shareholders. Recent progress in terms of the regulatory and commercial development has had a positive impact on these relationships and the support available to the business. The Directors have prepared detailed cash flow forecasts through to the end of the second quarter of 2015that show that the Group has adequate working capital to meet its immediate needs. Whether further funding will be required will be dependent on the conclusion of the discussions which are taking place with a number of potential commercial partners and the timing of any milestone payments which may arise from these negotiations. The board has formed a reasonable expectation of being able to count on the support of its stakeholders and the investment community should any further financing be required to complete the process of commercialising PSD502.
Consequently, the Directors have concluded that it is appropriate to prepare the Group's financial statements on the going concern basis, which assumes that the Group will continue in operational existence for the foreseeable future. Nevertheless, there is material uncertainty in relation to the ability of the Group to raise sufficient funds at the necessary time, which may cast significant doubt on the Group's ability to continue as a going concern. In the event that the above fails to occur as expected, the Group may be unable to realise its assets and discharge its liabilities in the normal course of business.
Consolidation and investments in subsidiaries
Consistent accounting policies have been adopted across the Group and where necessary the accounting policy for the subsidiaries has been changed to ensure consistency within the Group.
Subsidiaries are all entities over which the Group has the power to control the financial and operating policies. The Group obtains and exercises control through voting rights. The consolidated financial statements of the Group incorporate the financial statements of the parent company as well as those entities controlled by the Group by full consolidation.
The Group applies the acquisition method of accounting to account for business combinations. The consideration transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred and the equity interests issued by the group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date.
Intra-group balances and transactions, and any unrealised gains or losses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements.
Adoption of new or amended standards and interpretations in the current year
In the current year, the following new or amended standards have been adopted. Their adoption has not had a significant impact on the amounts reported or the disclosure and presentation in these financial statements, but may impact the accounting or the disclosure and presentation for future transactions and arrangements.
IFRS 13 "Fair value measurement" is effective for annual periods beginning on or after 1 January 2013. This standard applies to IFRSs that require or permit fair value measurements or disclosures and provides a single IFRS framework for measuring fair value and requires disclosures about fair value measurement.
New or amended standards and interpretations in issue but not yet effective
The following new standards, amendments to standards and interpretations that are expected to impact the Group, which have not been applied in these financial statements, were in issue, but are not yet effective:
IFRS 10 "Consolidated financial statements" is effective and has been endorsed by the EU for annual reporting periods beginning on or after 1 January 2014. This standard builds on existing principles by identifying the concept of control as the determining factor in whether an entity should be included within consolidated financial statements.
IAS 27 (revised) "Separate financial statements" is effective and has been endorsed by the EU for annual reporting periods beginning on or after 1 January 2014. This standard includes the provisions on separate financial statements that are left after the control provisions of IAS 27 have been included in the new IFRS 10.
IAS 32 "Offsetting financial assets and liabilities" is effective for annual periods beginning on or after 1 January 2014, and provides clarification on the application of offsetting rules. This standard has not yet been endorsed by the EU.
IFRS 9 "Financial Instruments" is effective for annual reporting periods commencing on or after 1 January 2018. The standard will eventually replace IAS 39 and details the amended requirements for recognition and measurement of financial assets and liabilities. This standard has not yet been endorsed by the EU.
Management is currently assessing the impact of adopting these new or amended standards and interpretations.
Property, plant and equipment
Computer equipment and fixtures and fittings are carried at acquisition cost less subsequent depreciation and impairment losses. Depreciation is charged on these assets on a straight line basis over the estimated useful economic life of each asset. Gains/losses on disposal are determined by comparing proceeds with carrying value and are recognised within other (losses)/gains in the Consolidated Statement of Comprehensive Income.
The useful lives of computer equipment and fixtures and fittings can be summarised as follows:
Computer equipment 3 years
Fixtures and fittings 3 to 5 years
Residual asset values and useful lives are reviewed and adjusted annually where necessary.
Impairment
The carrying value of non-current assets is reviewed whenever events or changes in circumstances indicate that the carrying value may not be recoverable to determine whether there is any indication of impairment. If any such indication exists, the asset's recoverable amount is estimated.An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount of property, plant and equipment is the greater of their fair value less costs to sell and value in use.
Furthermore, non-financial assets other than goodwill which have suffered impairment are reviewed for possible reversal of the impairment at each reporting date.
Financial assets
The Group's financial assets include cash and cash equivalents and trade and other receivables.
All financial assets are recognised when the entity becomes party to the contractual provisions of an instrument. All financial assets are de-recognised on their settlement date. All financial assets are initially recognised at fair value, plus transaction costs, and are subsequently measured at amortised cost using the effective interest rate.
Interest and other cash flows resulting from holding financial assets are recognised in profit or loss when receivable, regardless of how the related carrying amount of financial assets is measured.
Trade receivables are provided against when objective evidence is received that the Group will not be able to collect all amounts due to it in accordance with the original terms of the receivables. The amount of the write-down is determined as the difference between the asset's carrying amount and the present value of estimated future cash flows. No general provisions are made against trade receivables.
Inventories
Inventories are stated at the lower of cost and net realisable value, being the estimated selling prices in the ordinary course of business less applicable variable selling costs. In general, cost is determined on a first in first out basis and includes transport and handling costs. Where necessary, provision is made for obsolete, slow moving, defective inventory and impaired as a result of wind down as was the case during the prior year in regard to The Urology Company Limited.The Group currently owns no inventory.
Cash and cash equivalents
Cash and cash equivalents include cash at bank and in hand and overdrafts as well as short term highly liquid investments such as money market instruments and bank deposits.
Financial liabilities
The Group's financial liabilities include convertible third party loans, warrants and trade and other payables.
Financial liabilities are recognised when the Group becomes a party to the contractual agreements of the instrument. All interest related charges are recognised as an expense in "finance costs" in the Consolidated Statement of Comprehensive Income. Financial liabilities, excluding warrants, are initially recognised at fair value and subsequently measured at amortised costs using the effective interest rate method. Warrants are accounted for as an embedded derivative and accounted for in line with the policy disclosed below.
Convertible loan notes are recorded at fair value, fair value being proceeds less transaction costs. Finance charges, including premiums payable on settlement or redemption and direct issue costs, are charged to the Consolidated Statement of Comprehensive Income on an accruals basis using the effective interest method and are added to the carrying amount of the instrument to the extent that they are not settled in the period in which they arise. They subsequently follow the accounting policy for Compound financial instruments as disclosed below.
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the end of the reporting period.
Compound financial instruments
Compound financial instruments issued by the Group comprise convertible notes that can be converted to share capital at the option of the holder, and the number of shares to be issued does not vary with changes in their fair value.
The liability component of a compound financial instrument is recognised initially at the fair value of a similar liability that does not have an equity conversion option. The equity component is recognised initially at the difference between the fair value of the compound financial instrument as a whole and the fair value of the liability component. Any directly attributable transaction costs are allocated to the liability and equity components in proportion to their initial carrying amounts.
Subsequent to initial recognition, the liability component of a compound financial instrument is measured at amortised cost using the effective interest method. The equity component of a compound financial instrument is not re-measured subsequent to initial recognition except on conversion or expiry.
Embedded derivatives
Embedded derivatives identified in host contracts are separated from the host contract when they are not closely linked to the contract and are valued at fair value through the Consolidated Statement of Comprehensive Income where they meet the definition of a financial liability. The embedded derivative is revalued to fair value at each reporting period with the Consolidated Statement of Comprehensive Income any charge or credit is disclosed in finance income/costs and the corresponding asset/liability is separately shown in the notes to the balance sheet.
Where the embedded derivative meets the definition of equity, this is recognised initially at its fair value and not subsequently remeasured.
Equity
Share capital is determined using the nominal value of shares that have been issued.
The share premium account represents premiums received on the initial issuing of the share capital. Any transaction costs associated with the issuing of shares are deducted from share premium, net of any related income tax benefits.
The other reserve is a reserve arising on merger accounting.
Accumulated losses include all current and prior period results as disclosed in the statement of comprehensive income.
Revenue recognition
Revenue is measured by reference to the fair value of consideration received or receivable by the Group for goods supplied excluding VAT. Revenue is recognised upon the performance of services or transfer of risk to the customer.
The recognition of income received, such as licence fees, up front payments and milestone payments is dependent on the terms of the related arrangement, having regard to the ongoing risks and rewards of the arrangement, and the existence of any performance or repayment obligations with any third party.
Licence fees are recognised as revenue when all substantial obligations to the licensee have been fulfilled.
Income isonlyrecognised as revenue whenthe following conditions have been met:
· The stage of completion of the transaction at the end of the reporting period can be measured reliably;
· The amount of the revenue can be measured reliably;
· It is probable that the economic benefits associated with the transaction will flow to the entity; and
· The costs incurred for the transaction and the costs to complete the transaction can be measured reliably.
Segmental reporting
The chief operating decision-maker has been identified as the board of directors. The board reviews the Group's internal reporting in order to assess performance and allocate resources. Management has determined the operating segments based on these reports.
The board considers the business primarily from an activity perspective, assessing the performance of product development referred to as "Plethora Development" and the sales and marketing of pharmaceutical and healthcare products in the UK and continental Europe referred to as "The Urology Co", which has now been liquidated. This has been re-presented as "Discontinued Operations".
The board assesses the performance of the operating segments based on a measure of income and directly attributable expenses. Finance income is also included in the result for each operating segment that is reviewed by the board. Other information provided to the board is measured in a manner consistent with that in the financial statements.
Research and Development costs
Expenditure on research (or the research phase of an internal project) is recognised as an expense in the period in which it is incurred.
Development costs do not currently meet the criteria for capitalisation in accordance with IFRS and are expensed as incurred.
Employee benefits
(i) Defined contribution pension schemePensions to employees are provided through contributions to individual personal pension plans. A defined contribution plan is a pension plan under which the Group pays fixed contributions into an independent entity. The Group has no legal or constructive obligations to pay further contributions after payment of the fixed contribution.
The contributions recognised in respect of personal pension plans are expensed as they fall due. Liabilities and assets may be recognised if underpayment or prepayment has occurred and are included in current liabilities or current assets as they are normally of a short term nature.
(ii) Other employee benefits
Short-term employee benefits, including holiday entitlement, are included in current pension and other employee obligations at the undiscounted amount that the Group expects to pay as a result of the unused entitlement.
Share based employee remuneration
The Company issues equity-settled, share-based payments to certain employees of subsidiary undertakings, detailed in the Remuneration Report and in note 7 to the consolidated financial statements.
Equity-settled, share-based payments are measured at fair value at the date of grant and are recognised as an expense. The total amount to be expensed is determined by reference to the fair value of the options granted:
· including any market performance conditions; (for example, an entity's share price);
· excluding the impact of any service and non-market performance vesting conditions (for example, profitability, sales growth targets and remaining an employee of the entity over a specified time period); and
· including the impact of any non-vesting conditions (for example, the requirement for employees to save).
Non-market performance and service conditions are included in assumptions about the number of options that are expected to vest. The total expense is recognised over the vesting period, which is the period over which all of the specified vesting conditions are to be satisfied.
At the end of each reporting period, the group revises its estimates of the number of options that are expected to vest based on the non-market vesting conditions. It recognises the impact of the revision to original estimates, if any, in Consolidated Statement of Comprehensive Income, with a corresponding adjustment to equity.
Foreign currencies
These financial statements are presented in UK Sterling which is the functional currency of the Company.
Transactions in foreign currencies are translated at the exchange rate ruling at the date of the transaction. Monetary assets and liabilities in foreign currencies are translated at the rates of exchange ruling at the balance sheet date. Exchange differences are dealt with through the Consolidated Statement of Comprehensive Income.
Taxation
Current income tax assets and/or liabilities comprise those obligations to, or claims from, fiscal authorities relating to the current or prior reporting period, that are unpaid at the balance sheet date. They are calculated according to the tax rates and tax laws applicable to the fiscal periods to which they relate, based on the taxable profit for the year.
Deferred income taxes are calculated using the liability method on temporary differences. This involves the comparison of the carrying amounts of assets and liabilities in the consolidated financial statements with their respective tax bases. However, in accordance with the rules set out in IAS 12, no deferred taxes are recognised in conjunction with the initial recognition of goodwill on acquisitions. In addition, tax losses available to be carried forward as well as other income tax credits to the Group are assessed for recognition as deferred tax assets.
Deferred tax liabilities are always provided for in full. Deferred tax assets are recognised to the extent that it is probable that they will be able to be offset against future taxable income. Deferred tax assets and liabilities are calculated at tax rates that are expected to apply to their respective period of realisation, provided they are enacted or substantively enacted at the balance sheet date.
Most changes in deferred tax assets or liabilities are recognised as a component of tax expense in the Consolidated Statement of Comprehensive Income. Only changes in deferred tax assets or liabilities that relate to a change in value of assets or liabilities that is charged directly to equity are charged or credited directly to equity.
Leases
All of the Group's leases have the characteristics of operating leases. Payments on operating lease agreements are recognised as an expense on a straight-line basis in the Consolidated Statement of Comprehensive Income. Associated costs, such as maintenance and insurance, are expensed as incurred.
Significant accounting estimates and judgements
Certain estimates and judgments need to be made by the Directors of the Group which affect the results and position of the Group as reported in the financial statements. Estimates and judgments are required for example, as at the reporting date, as not all liabilities have been settled and certain assets/ liabilities are recorded at fair value which requires a number of estimates and assumptions to be made.
The major areas for judgments within the financial statements are as follows:
• preparing the financial statements on a going concern basis;
· probability of certain performance criteria being met in relation to newly issued LTIPs.
• calculation of fair value of restructured debts and extinguishment of loans; and
• fair value revaluation of warrant instruments and other debt instruments.
The reasons that the Directors believe it is appropriate to prepare the financial statements on a going concern basis are detailed on page 6.
In calculating the fair value of the restructured debts in note 19, management used information from analysis reports on the business to determine the discount rates
There are no other major areas of estimation.
3 segmental reporting
The Group was organised into two main business segments: the development of new pharmaceutical products known as "Plethora Development" and the sale and marketing of pharmaceutical and healthcare products in the UK and continental Europe known as "The Urology Co". Following the closure of The Urology Company Limited, formerly one of two segments within the Group, the subsidiary has been reclassified as "Discontinued Operations" throughout this report. Unallocated costs represent shared property costs, in addition to background support services, such as finance, IT and marketing, and corporate expenses which cannot be directly attributed to either business segment. Unallocated assets and liabilities represent assets and liabilities of the corporate arm of the Group which cannot be directly allocated to any of the segments.
The Group operates from a single geographical area, namely the United Kingdom.
Continuing activities | ||||
Year ended 31 December 2013 | Plethora Development £'000 | Corporate / Unallocated £'000 |
Discontinued Operations £'000 |
Group £'000 |
| ||||
Revenue - external customers | - | - | - | - |
Depreciation | (1) | - | - | (1) |
Other operating (costs) / income | (1,311) | (1,586) | - | (2,897) |
Finance costs | - | (6,152) | - | (6,152) |
Exceptional item - debt restructuring | - | 293 | - | 293 |
Finance income | - | 2 | - | 2 |
Profit from discontinued operations | - | - | 255 | 255 |
Loss before tax including discontinued operations | (1,312) | (7,443) | 255 | (8,500) |
Taxation | - | - | - | - |
Loss for the year including discontinued operations | (1,312) | (7,443) | 255 | (8,500) |
Inventories | - | - | - | - | ||||||||
Other segment assets | - | 381 | - | 381 | ||||||||
Unallocated assets | ||||||||||||
- Current assets | 26 | 3,206 | - | 3,232 | ||||||||
Total assets | 26 | 3,587 | - | 3,613 | ||||||||
Other segment liabilities | (216) | (942) | - | (1,158) | ||||||||
Unallocated liabilities | ||||||||||||
- Borrowings | - | (9,267) | - | (9,267) | ||||||||
Total liabilities | (216) | (10,209) | - | (10,425) | ||||||||
Net liabilities | (190) | (6,622) | - | (6,812) | ||||||||
Continuing activities |
| |||||||||||
Year ended 31 December 2012 (restated) | Plethora Development £'000 | Corporate / Unallocated £'000 | Discontinued Operations £'000 |
Group £'000 |
| |||||||
|
| |||||||||||
Revenue - external customers | - | - | - | - |
| |||||||
Depreciation | (3) | - | - | (3) |
| |||||||
Other operating costs | (611) | (905) | - | (1,516) |
| |||||||
Finance costs | - | (1,308) | - | (1,308) |
| |||||||
Finance income | - | 1 | - | 1 |
| |||||||
Loss from discontinued operations | - | - | (1,046) | (1,046) |
| |||||||
Loss before tax including discontinued operations | (614) | (2,212) | (1,046) | (3,872) |
| |||||||
Taxation | - | - | - | - |
| |||||||
Loss for the year including discontinued operations | (614) | (2,212) | (1,046) | (3,872) |
| |||||||
| ||||||||||||
Inventories | - | - | 43 | 43 |
| |||||||
Other segment assets | - | 1 | 160 | 161 |
| |||||||
Unallocated assets |
| |||||||||||
- Current assets | - | 28 | - | 28 |
| |||||||
Total assets | - | 29 | 203 | 232 |
| |||||||
Other segment liabilities | (611) | (446) | (509) | (1,566) |
| |||||||
Unallocated liabilities |
| |||||||||||
- Borrowings | - | (4,413) | - | (4,413) |
| |||||||
Total liabilities | (611) | (4,859) | (509) | (5,979) |
| |||||||
| ||||||||||||
Net liabilities | (611) | (4,830) | (306) | (5,747) |
| |||||||
Revenues of approximately £32,000 of the turnover for the year (2012: £311,000) are derived from a single external customer. These revenues are attributable to Discontinued Operations/The Urology Co segment. All revenues are derived from the UK market.
4 Exceptional items - continuing operations
Following the debt restructuring (see note 19), the Group has reclassified all its borrowings as convertible debt in line with the revised loan agreements. As a result of these changes, the Group recognised a gain of £293,000 in the Consolidated Statement of Comprehensive Income, which related to the extinguishment of the existing loans in exchange for the new loans. There is no tax impact owing to the losses in the Group.
There were no exceptional items in 2012.
5 OPERATING loss
The operating loss is stated after charging:
2013 | 2012 | |||
£'000 | £'000 | |||
Auditors' remuneration: | ||||
- Company | 41 | 40 | ||
Other services: | ||||
- audit of subsidiary undertakings | 5 | 10 | ||
- other assurance-related services | 8 | 7 | ||
- corporate taxation compliance | 15 | 11 | ||
Operating lease charges: | ||||
Land and buildings | 18 | 64 | ||
Depreciation: | ||||
Property, plant and equipment - owned | 1 | 3 | ||
|
| |||
6 DIRECTORS AND EMPLOYEES
2013 | 2012 | ||
Number | Number restated | ||
The average monthly number of persons (including Directors) | |||
employed by the Group during the year was: | |||
Administration and management staff | 3 | 3 | |
Other employees | 2 | 1 | |
5 | 4 | ||
Staff costs during the year were as follows: | £'000 | £'000 restated | |
Wages and salaries including termination benefits | 603 | 380 | |
Social security costs | 142 | 33 | |
Other pension costs | 26 | 12 | |
Share based compensation | 91 | 42 | |
862 | 467 |
Remuneration in respect of directors, including the highest paid director, is disclosed in the Remuneration Reporton pages 13 to 15. No other employees were considered to be key management personnel.
7 SHARE BASED EMPLOYEE REMUNERATION
Share options have been granted to directors and employees under the ESOP and The LTIP:
i. Executive Share Option Scheme (ESOP)
The Executive Share Option scheme (ESOP) is available to all employees and directors of the Group subject to the discretion of the Remuneration Committee of Plethora Solutions Holdings plc and subject to the rules of the scheme, the key points of which are as follows:
§ options are granted for the shares of Plethora Solutions Holdings plc to employees of subsidiary companies;
§ options are exercisable between three and ten years of being granted;
§ options vest on the third anniversary of the date of grant;
§ except in certain limited circumstances, all options lapse if an employee leaves the Group; and
§ exercise of options is not subject to any specific performance criteria.
All share based employee remuneration will be settled in equity. The Group has no other legal or constructive obligation to repurchase or settle the options in cash.
| |||||
31 December 2013 | 31 December 2012 | ||||
Number of options | Weighted average exercise price (pence) | Number of options | Weighted average exercise price (pence) | ||
At 1 January | 2,118,658 | 90 | 2,118,658 | 90 | |
Lapsed | (1,555,555) | 77 | - | - | |
At 31 December | 563,103 | 124 | 2,118,658 | 90 | |
The Outstanding options may be analysed as follows:
| |||||
31 December 2013 | 31 December 2012 | ||||
Number of options | Weighted average exercise price (pence) | Number of options | Weighted average exercise price (pence) | ||
Vested and exercisable | 563,103 | 124 | 2,118,658 | 90 | |
Share options outstanding at each reporting date have the following expiry date and exercise prices.
Vesting/(Expiry) date | Exercise price in Pence per share | 2013 Number | 2012 Number |
2008 (up to 2013) | 77 | - | 1,555,555 |
2009 (up to 2014) | 202 | 100,000 | 100,000 |
2010 (up to 2015) | 175 | 192,857 | 192,857 |
2011 (up to 2016) | 59 | 270,246 | 270,246 |
563,103 | 2,118,658 |
The weighted average remaining contractual life of the outstanding options was 4 years and 2 months (2012: 5 years and 2 months).
ii. Long Term Incentive Plan (LTIP)
The Long Term Incentive Plan (LTIP) is available to all employees and directors of the Group subject to the discretion of the Remuneration Committee of Plethora Solutions Holdings plc, with awards recommended by the board of directors for key employees. Related options will vest in the event that certain performance targets are met.
Awards are made subject to the following rules:
the price per share at which a Participant acquires shares subject to an award is nil and no consideration
shall be payable at any time in respect of Allocated Shares.
awards granted to Senior Employees shall be subject to performance conditions specified by the
Remuneration Committee in the Award certificate.
Awards vest on the third anniversary of the Award Date (or the end of the Performance Period, if later);
New awards under the LTIP were made on 17 November, 27 November and 10 December 2013.
The fair value of services received in return for share options granted are measured by reference to the fair value of share options granted. The estimate of the fair value of services received is measured based on the Black-Scholes valuation Model. The significant inputs into the model for each grant during the year and the prior year were:
Date of grant | 2013 LTIP17 November 2013 | 2013 LTIP 27 November 2013 | 2013 LTIP 10 December 2013 |
Share price at grant date | 16.29p | 13.75p | 12.25p |
Exercise price | - | - | - |
Number of employees | 1 | 1 | 2 |
Shares under option | 100,000 | 16,000,000 | 1,000,000 |
Vesting period (months) | 12 | 36 | 12 |
Expected volatility (expressed as standard deviation of expected share price returns) |
81% | 81% |
81% |
Expected option life (months) | 120 | 120 | 120 |
Risk free interest rate (based on national Government bonds) | 3.0% | 3.0% | 3.0% |
Dividend yield | 0% | 0% | 0% |
Fair value per option | 16p | 14p | 12p |
Movements in the total number of share options outstanding under the LTIP scheme at the year end were as follows:
| ||
31 December 2013 Number of options | 31 December 2012 Number of options | |
At 1 January | 1,343,600 | 1,343,600 |
Granted | 17,160,000 | - |
Exercised | (1,355,975) | - |
Lapsed | (47,625) | - |
At 31 December | 17,100,000 | 1,343,600 |
During the year, the defining criteria of the LTIP award for one employee were waived by the board resulting in a 100% vesting of their LTIP award, hence the additional grant noted for the 2010 awards.
The outstanding awards may be analysed as follows:
Date of Award | At 1 January 2013 | Lapsed | Grant | Exercised | At 31 December 2013 | Market Price at date of award (p) | Market price on vesting (p) |
| ||||
30 June 2010 | 770,750 | - | 30,000 | (800,750) | - | 12.75 | 1.875 | |||||
20 December 2010 | 572,850 | (47,625) | 30,000 | (555,225) | - | 10.12 | 13.625 | |||||
17 November 2013 | - | - | 100,000 | - | 100,000 | 16.29 | - | |||||
27 November 2013 | - | - | 16,000,000 | - | 16,000,000 | 13.75 | - | |||||
10 December 2013 | - | - | 1,000,000 | - | 1,000,000 | 12.25 | - | |||||
1,343,600 | (47,625) | 17,160,000 | (1,355,975) | 17,100,000 | ||||||||
There were no share option grants during 2012.
For those options granted in prior years, volatility was estimated based on the historical volatility of the Company's share price. Share options are granted under a service condition. Such conditions are not taken into account in the fair value measurement of the services received. There are no market conditions associated with the share option grants.
In total, £91,000 of employee remuneration expense has been included in the Consolidated Statement of Comprehensive Income for the year ended 31 December 2013 (31 December 2012: £42,000) which was recorded in the share based payment reserve. No liabilities were recognised due to share based payment transactions (2012: £nil).
8 finance income and COSTS
2013 | 2012 | ||
£'000 | £'000 | ||
Bank interest receivable | 2 | 1 | |
Finance income from continuing activities | 2 | 1 | |
Effective interest charge on borrowings | (919) | (994) | |
Fair value loss on revaluation of loan warrants | (5,233) | (314) | |
Finance costs from continuing activities | (6,152) | (1,308) |
9 INCOME tax
The tax is based on the loss for the year and represents:
2013 | 2012 | ||
£'000 | £'000 | ||
UK corporation tax: | |||
Current tax credit for the year | - | - | |
Deferred taxation (note 16) | - | - | |
Tax on loss on continuing operations | - | - |
The tax assessed differs from the effective rate of corporation tax in the UK of 23.25% (2012: 24.5%). The differences are explained as follows:
2013 | 2012 | |
£'000 | £'000 restated | |
Loss for the year from continuing operations before taxation | (8,755) | (2,826) |
Loss on ordinary activities multiplied by the effective rate of corporation tax during the year in the UK of 23.25% (2012: 24.5%) | (2,036) | (692) |
Effect of: | ||
Expenses not deductible for tax purposes | 22 | 227 |
Depreciation in excess of capital allowances | - | 5 |
Unutilised tax losses | 2,014 | 460 |
- | - |
At 31 December 2013 the Group had tax losses of £33,820,000(2012: £29,670,000) to offset against future profits within the United Kingdom.
The standard rate of Corporation tax in the UK changed from 24% to 23% with effect from 1 April 2013. Accordingly, the Group's losses for this accounting year are taxed at an effective rate of 23.25%.
A further reduction in the main rate of Corporation Tax in the UK by 2% to 21% by 1st April 2014 and by 1% to 20% by 1st April 2015 has also been enacted separately during the year. These changes have not had a material impact on these financial statements.
10 LOSS PER ORDINARY SHARE
The calculation of the basic and diluted loss per share is based on the loss for the year and on the weighted average number of ordinary shares in issue during the year. The losses and weighted average number of shares used in the calculations are set out below:
2013 Loss £'000 | 2013 Loss per share pence | 2012 Loss £'000 | 2012 Loss per share pence | |
Loss on continuing operations | (8,755) | (2.7)p | (2,826) | (1.4)p |
Gain from Discontinued operations | 255 | 0.1p | (1,046) | (0.5)p |
Basic and total loss per share | (8,500) | (2.6)p | (3,872) | (1.9)p |
| ||||
Diluted and total loss per share | (8,500) | (2.6)p | (3,872) | (1.9)p |
Basic loss per share is calculated based on a weighted average number of shares in issue of 320,551,106 (2012: 205,702,249). Diluted loss per share takes into account the dilutive effect of share options to the extent they are in the money and convertible loan notes. The dilutive effect on the loss per share in 2013 and 2012 is not shown as the effect on the loss per share of share options and convertible loans is anti-dilutive on the loss.
11 Property, plant and equipment
Fixtures, fittings, computers and equipment | ||
£'000 | ||
Cost | ||
At 1 January 2012 | 94 | |
Disposals | (46) | |
At 31 December 2012 and 31 December 2013 | 48 | |
Accumulated depreciation | ||
At 1 January 2012 | 90 | |
Charge for the year | 3 | |
Disposals | (46) | |
At 31 December 2012 | 47 | |
Charge for the year | 1 | |
At 31 December 2013 | 48 | |
Net book value | ||
At 1 January 2012 | 4 | |
At 31 December 2012 | 1 | |
At 31 December 2013 | - | |
During 2012, the board reviewed its property, plant and equipment and treated as a disposal assets with a cost of £46,000 which were obsolete and/or no longer in use within the Group. The assets had been fully depreciated prior to 2012 and there was no effect on the net book value of Property, Plant and Equipment.
12 Principal SUBSIDIARIES
At 31 December 2013 the subsidiaries of the Group were as follows:
Name of subsidiary undertaking | Country of incorporation | Description of shares held | % of nominal value of shares held | Principal business activity |
Plethora Solutions Limited | United Kingdom | 1p Ordinary | 100 | Development of pharmaceutical drugs |
Plethora Therapeutics Limited | United Kingdom | £1 Ordinary | 100 | Dormant |
The Urology Company Holdings Limited | United Kingdom | £1 Ordinary | 100 | Intermediate holding company and dormant |
During the year, the Group put one of its subsidiaries, The Urology Company Limited into administration.
Post year end, an application has been made to strike off The Urology Company Holdings Limited.
13 Trade and other RECEIVABLES
2013 | 2012 | ||
£'000 | £'000 | ||
Trade receivables | - | 154 | |
Less: provision for impairment of trade receivables | - | (38) | |
Trade receivables - net | - | 116 | |
Other receivables | 429 | - | |
Prepayments and accrued income | 67 | 41 | |
Total | 496 | 157 | |
At 31 December 2012, some of the unimpaired trade receivables werepast their due date. The age of financial assets past due but not impaired, is as follows:
2013 | 2012 | ||
£'000 | £'000 | ||
Not more than one month | - | 30 | |
- | 30 |
Trade and other receivables are usually due between 30 - 90 days and do not bear any effective interest rate. The trade receivables consist of amounts due from product sales. The Directors consider that prior to the administration of The Urology Company Limited the credit risk in relation to these receivables was low.
The fair value of these short term financial assets is not individually determined as the carrying amount is a reasonable approximation of fair value.
2013 | 2012 | ||
Movement in allowances for doubtful trade receivables | £'000 | £'000 | |
At beginning of the year | 38 | - | |
(Utilised)/Increase in provision | (38) | 38 | |
- | 38 |
The other classes within trade and other receivables do not contain impaired assets. The age of all impaired trade receivables were within 3 monthsin the prior year. Trade receivables were considered to be impaired as they had not been settled on the date that The Urology Company Limited was placed into administration.
14 INventorIES
2013 | 2012 | ||
£'000 | £'000 | ||
Finished goods for resale | - | 43 |
In 2012, a provision against inventory for £217,000 was recognised in respect of inventory within Cost of Sales. Furthermore, £300,000 was recognised as expense in 2012 and included in Cost of Sales in respect of inventory during that year.
15 cash and cash equivalents
2013 | 2012 | ||
£'000 | £'000 | ||
Cash and cash equivalents | 3,117 | 31 |
Cash and cash equivalents consist of cash on hand and balances with banks only.
The fair value of these short term financial assets is not individually determined as the carrying amount is a reasonable approximation of fair value.
16 DEFERRED TAXATION
At 31 December 2013, the Group had an unrecognised deferred tax asset relating to losses carried forward of £6,880,000 (2012: £6,230,000). The asset has not been recognised as the Directors have insufficient certainty over theutilisation of these losses in the foreseeable future.
Other deferred tax assets and liabilities arising from other temporary differences are considered to be insignificant.
17 trade and other payables
| 2013 | 2012 | ||||||
| £'000 | £'000 | ||||||
| Less than 3 months | |||||||
| Trade and other payables | 193 | 769 | |||||
Social security and other taxes | 389 | 178 |
| |||||
Accrued expenses | 258 | 370 |
| |||||
| ||||||||
Between 3 and 12 months |
| |||||||
Accrued expenses | 318 | 249 |
| |||||
| 1,158 | 1,566 | ||||||
| ||||||||
Due to the short term duration of trade and other payables the carrying value in the balance sheet represents the fair value of the liabilities.
18 Discontinued Operations
The assets and liabilities of The Urology Company Limited have been presented as discontinued operations following the Group's decision to put the company into administration on 25 February 2013. An analysis of its results are shown below:
Profit and loss of the discontinued operations.
31 December 2013 | 31 December 2012 | |
£'000 | £'000 | |
Revenue | 91 | 582 |
Cost of Sales | (41) | (517) |
Gross Profit | 50 | 65 |
Operating Cost | ||
- selling and distributions expenses | (102) | (890) |
- general and administrative expenses | (58) | (221) |
Total operating costs | (160) | (1,111) |
Loss before tax of discontinued operations | (110) | (1,046) |
Tax | - | - |
Loss for the year from discontinued operations | (110) | (1,046) |
Pre-tax gain arising from the re-measurement of the net liabilities of the discontinued operation | 365
| -
|
Tax | - | - |
Profit /(loss) before tax of discontinued operations | 255 | (1,046) |
Cash flows from the discontinued operations
31 December 2013 | 31 December 2012 | ||
£'000 | £'000 | ||
Cash flows from operating activities | |||
Loss before taxation | (110) | (1,046) | |
Change in inventories | 42 | 138 | |
Change in trade and other receivables | 5 | (22) | |
Change in trade and other payables | (43) | 888 | |
Cash utilised by operations | (106) | (42) | |
Cash flows from investing activities | - | - | |
Cash flows from financing activities | - | - | |
Net decrease in cash and cash equivalents | (106) | (42) |
19 borrowings
2013 | 2012 | ||
£'000 | £'000 | ||
Current borrowings | |||
Convertible Loan Notes Due 2014 (2012: due 2012) | 760 | 800 | |
Interest accrued on Convertible Loan Notes Due 2014 (2012: due 2012) | 94 | 335 | |
CfE Loan Due 2015 | - | 901 | |
CfE loan warrant instrument | 2,220 | - | |
Interest on CfE Loan Due 2015 | - | 108 | |
Galloway Loan Due 2015 | - | 756 | |
Galloway Loan warrant instrument | 3,620 | - | |
Interest on Galloway Loan Due 2015 | - | 91 | |
Mellon Bridge Loans | - | 804 | |
Interest accrued on Mellon Bridge Loans | - | 11 | |
6,694 | 3,806 | ||
Non-current borrowings | |||
CfE Loan Due 2015 | 818 | - | |
CfE loan warrant instrument | - | 238 | |
Interest on CfE Loan Due 2015 | 94 | - | |
Galloway Loan Due 2015 | 897 | - | |
Galloway Loan Warrant instrument | - | 369 | |
Interest on Galloway Loan Due 2015 | 100 | - | |
Mellon Bridge Loans | 614 | - | |
Interest accrued on Mellon Bridge Loans | 50 | - | |
2,573 | 607 | ||
Total Borrowings | 9,267 | 4,413 |
On 18th March 2013, the Company entered into agreements with its lenders in relation to a Debt Restructuring, further details are set out below:
(i) Convertible Loan Notes Due 2014
Prior to the debt restructuring the terms of the outstanding Convertible Loan Notes Due 2012 were: maturity 31 December 2012; coupon interest 13% per annum, accrued until maturity; convertible into new ordinary shares at 12.5p per share; secured by first charge over the Company's assets; repayable by the Company at any point post issuance; convertible by the Group after 31 December 2010 provided the Group's share price is 25% greater than the conversion price for the preceding 60 days prior to conversion. This facility was not repaid on maturity and was in default as at 31 December 2012.
Under IFRS £112,000 of the Convertible Loan Notes Due 2012 was regarded as equity and was recorded in the convertible loan note reserve.
As part of the Debt Restructuring, the Group agreed with the holders of £800,000 Convertible Loan Notes, which had maturity of 31 December 2012, to extend the maturity to 31 December 2014. In addition, interest accrued on the Convertible Loan Notes to 28 February 2013 being £351,707 was paid through the issue of 17,585,342 New Ordinary Shares at 2p per share. Furthermore, the interest rate from 1 March 2013 has been increased to 14 per cent. per annum and will accrue to maturity. Finally, the conversion price of the Convertible Loan Notes has been changed to 2p per share from 12.5p per share.
Following the modification of the terms of the Convertible Loan notes, the Group recognised a gain of £99,000 on the extinguishment of the existing loan notes. The existing loan notes are deemed to have been replaced by new convertible loan notes. The Group applied a competitive market discount rate in calculating the fair value of the loan notes in compliance with IAS 32.
(ii) CfE Loan Due 2015
On 29 June 2010 the Group entered into a £1,000,000, five year secured term loan ("CfE Loan") with Capital For Enterprise Fund A L.P. ("CfE Fund"), which is managed by Maven Capital Partners (UK) LLP. The CfE Loan was repayable by 29 June 2015. However, the Group could have, at its option, repaid part, or all, of the loan ahead of the maturity date. Prior to the Debt Restructuring, the terms were: Interest accrued on the loan at 10% per annum. The loan agreement provided for the Group to pay a premium on repayment of the loan. This premium was fixed at either 20% of any amounts repaid in the first 3 years or 25% in years 4 or 5 or at maturity. The CfE Fund was also granted a warrant to acquire new ordinary shares in the Group at nominal value. The number of shares issuable under the warrant was the lower of 3% of the Group's fully diluted share capital, or such number of shares as equals £500,000 at the then prevailing market price. The warrant was only exercisable at an Exit Event, as defined in the loan agreement.
The CfE Loan, which was repayable on 30 June 2015, will now be repayable on 31 March 2015 as part of the Debt Restructuring agreements. As with the Convertible Loan Notes, interest accrued to 28 February 2013, being £128,384 was settled through the issue of 6,419,190 New Ordinary Shares. The interest rate from 1 March 2013 to maturity has been reset to 14% per annum and will accrue to maturity. The CfE loan carries a redemption premium of 25%. It has been agreed that the loan and the accrued interest are convertible into New Ordinary Shares at 2p per share at the option of the Lender. As part of the arrangements regarding the CfE Loan, CfE Fund was granted a warrant to subscribe, at a price of 1p per Ordinary Share, for Ordinary Shares representing up to 3% of the fully diluted ordinary share capital of the Company. This warrant was subject to certain restrictions which have been modified as part of the Debt Restructuring. The warrant was subject to a cap (Ordinary Shares having a market value at the date of subscription of £500,000) - this cap has been removed; the expiry date of the warrant has been extended to 31 March 2023; and the warrant is now exercisable at any time at the discretion of CfE Fund having previously only been exercisable by reference to an Exit Event. Consequently, the warrant is now presented as a current liability.
The Group recognised a loss of £67,000 on the extinguishment of CfE Loan in connection with the Debt Restructuring. The Group applied a discount rate in calculating the fair value of the Loan and deemed 85% of the existing loan to be extinguished by the inclusion of the conversion option. The resultant loss is included within the Exceptional item - debt restructuring on the face of the Consolidated Statement of Comprehensive Income.
On 3 December 2013, Maven Capital Partner (UK) LLP, manager of the Capital for Enterprise Fund LP ("CfE") completed the conversion of £200,000 in principal of its £1 million loan note to ordinary shares. Interest on the loan note was accrued in accordance with the restructuring announced on 18 March 2013 and the amount of £21,326 had accrued to that date and was converted to new ordinary shares. In addition, the loan carried a redemption premium of 25% of the principal value and consequently a redemption premium of £50,000 arose on conversion. This was paid by the issue of new ordinary shares. In total 13,566,300 new ordinary shares were issued at 2p per share to satisfy the aggregate of £271,326 arising on the conversion.
(iii) Galloway Loan Due 2015
On 20 October 2011, the Group entered into a £850,000 secured term loan ("Galloway Loan") with Galloway Limited, a company in which Jim Mellon has an interest. The Galloway Loan was repayable on 30 June 2015. However, the Group could, at its option, repay part, or all, of the loan ahead of the maturity date. Interest accrued on the loan at 10% per annum. The loan agreement provided for the Group to pay a fixed redemption premium of 25%. Galloway Limited had also been granted a warrant to acquire new ordinary shares in the Group at nominal value. The number of shares issuable under the warrant is the lower of 5% of the Group's fully diluted share capital, or such number of shares as equals £1,500,000 at the then prevailing market price. The warrant was only exercisable at an Exit Event, as defined in the loan agreement.
It was agreed as part of the Debt Restructuring that maturity on the Galloway Loan facility of £850,000 will be amended to 31 March 2015. In addition, the interest accrued on the loan to 28 February 2013, being £78,014 was paid through the issue of 3,900,685 New Ordinary Shares at 2p per share. The interest rate from 1 March 2013 to maturity will be reset at 14% per annum and will accrue to maturity. The Galloway Loan carries a redemption premium of 25%. It has been agreed that the Galloway Loan and the accrued interest are convertible into New Ordinary Shares at 2p per share at the option of the Lender. As part of the arrangements regarding the Galloway Loan, Galloway was granted a warrant to subscribe, at a price of 1.25p per Ordinary Share, for Ordinary Shares representing up to 5% of the fully diluted ordinary share capital of the Company. This warrant was subject to certain restrictions which have been modified as part of the Debt Restructuring. The warrant was subject to a cap (Ordinary Shares having a market value at the date of subscription of £1,500,000) - this cap has been removed; the expiry date of the warrant has been extended to 31 March 2023; and the warrant is now exercisable at any time at the discretion of Galloway having previously only been exercisable by reference to an Exit Event. Consequently, the warrant instrument is now presented as a current liability.
The Group recognised a loss of £68,000 on the extinguishment of the Galloway Loan in connection with the debt restructuring. The Group applied a discount rate in calculating the fair value of the Loan and deemed 95% of the existing loan to be extinguished by the inclusion of the conversion option. The resultant loss is included within the Exceptional item - debt restructuring on the face of the Consolidated Statement of Comprehensive Income.
(iv) Mellon Bridge Loans
During 2012, Jim Mellon provided additional working capital by way of two bridging loans of £350,000 and £200,000 on the 20 September 2012 and 11 December 2012 respectively.
Mellon Bridge Loan 1
On 20 September 2012, the Group secured a £350,000 bridge loan from Jim Mellon for the purpose of providing working capital for the Group and funding for the regulatory submission of PSD502 dossier to EMA. This was repayable on 20 days notice and has an interest rate of 10 per cent per annum. This facility also carries a redemption premium of 75%.
As part of the Debt Restructuring, it was agreed that the maturity on this loan will become 31 March 2015. In addition, the interest accrued on the loan to 28 February 2013, being £15,342 was paid through the issue of 767,123 New Ordinary Shares at 2p per share. The interest rate from 1 March 2013 to maturity will remain unchanged at 10% per annum and will accrue to maturity. The Mellon Bridge Loan I carries a redemption premium of 75% which remains unchanged. It has been agreed that the loan and the accrued interest are convertible into New Ordinary Shares at 2p per share at the option of the Lender. If this loan is repaid at maturity this will, with the accrued interest and the redemption premium, give rise to a repayment of £667,877 and consequently if converted will give rise to the issue of 33,393,836 New Ordinary Shares.
The Group recognised a gain of £295,000 on the extinguishment of the Loan in connection with the debt restructuring. In calculating the fair value of the Loan, the Group applied a discount rate taking into account that the facility carries 10% interest and a higher than usual 75% redemption premium. The resultant gain is included within the Exceptional item - debt restructuring on the face of the Consolidated Statement of Comprehensive Income.
Mellon Bridge Loan 2:
On 11 December 2012, the Group secured a further £200,000 bridge loan from Jim Mellon for provision of working capital. Interest accrued on this facility at 10% per annum and has applicable redemption premium of 33% per annum. This facility is convertible to ordinary shares at 5p per share at the Group's option within the first year and at the lender's option after the first anniversary of the loan. The conversion option was fair valued at £25,000.
It was agreed as part of the Debt Restructuring that this loan together with the interest accrued and the applicable 33% redemption premium on the loan will be rolled up to 31 March 2015 and may be payable, at the option of Jim Mellon, in New Ordinary Shares at 2p per share.
The Group recognised a gain of £34,000 on the extinguishment of the Loan in connection with the debt restructuring. In calculating the fair value of the Loan, the Group applied a discount rate taking into account that the facility carries 10% interest, 33% redemption premium and the conversion price of 2p per share. The resultant gain is included within the Exceptional item - debt restructuring on the face of the Consolidated Statement of Comprehensive Income.
The future contractual payments of principal for convertible loan notes and third party borrowings are as follows:
2013 | 2012 | |
£'000 | £'000 | |
Within one year: | ||
Convertible Loan Notes Due 2012 | 800 | 800 |
CfE Loan Due 2015 | - | 1,000 |
Galloway Loan Due 2015 | - | 850 |
Mellon Bridge Loans | - | 550 |
In more than one year but not more than two years: | ||
CfE Loan Due 2015 | 800 | - |
Galloway Loan Due 2015 | 850 | |
Mellon Bridge Loans | 550 | - |
3,000 | 3,200 |
20 FINANCIAL INSTRUMENTS
The Group uses financial instruments comprising cash and short-term deposits, a third party loan and convertible debt instruments. It had issued warrant instruments in relation to loan and convertible debt arrangements. It does not enter into derivative transactions such as interest rate swaps, forward rate agreements or forward currency contracts. The Group has items such as trade payables and, in the prior year, trade receivables that arise directly from its operations.
Credit risk
The Group manages its trade receivables to ensure that credit risk is minimised by avoiding concentration with any one customer. All trade receivables have set credit terms which are monitored. Details of the age of outstanding amounts and credit risk are set out in note 13. The Group works to ensure that it receives acceptable trading terms from its suppliers. Cash is held with UK high street banks.
Liquidity risk
The Group seeks to manage financial risk by ensuring it has adequate liquid resource to meet its obligations as they fall due. The Group uses share issues and loans to raise finance for the Group's activities. The Directors prepare detailed cash flow forecasts which are monitored frequently to ensure that all obligations can be settled as they fall due.
Interest rate risk
All interest rates on the Group's borrowings are fixed. Interest is paid at 14% on the Convertible Loan Notes Due 2014, the CfE Loan and the Galloway Loan and at 10% on the Mellon Bridge Loans (see Note 19). A sensitivity analysis of interest has not been performed as all rates are fixed, therefore there is no interest rate sensitivity.
Financial assets and liabilities
The IAS 39 categories of financial assets included in the balance sheet and the headings in which they are included are as follows:
2013 | 2012 | ||||
£'000 | £'000 | ||||
Loans and other receivables | 3,546 | 147 | |||
The financial assets are included in the balance sheet in the following headings: |
| ||||
| |||||
Current assets |
| ||||
Trade and other receivables excluding prepayments | 429 | 116 |
| ||
Cash and cash equivalents | 3,117 | 31 |
| ||
3,546 | 147 |
| |||
| |||||
The IAS 39 categories of financial liabilities included in the balance sheet and the headings in which they are included are as follows: |
| ||||
2013 | 2012 |
| |||
£'000 | £'000 |
| |||
| |||||
Financial liabilities at amortised cost | 4,585 | 5,372 |
| ||
Financial liabilities at fair value through profit and loss | 5,840 | 607 |
| ||
10,425 | 5,979 |
| |||
| |||||
The financial liabilities are included in the balance sheet in the following headings: |
| ||||
| |||||
2013 | 2012 |
| |||
£'000 | £'000 |
| |||
Current liabilities |
| ||||
Trade and other payables | 1,158 | 1,566 |
| ||
Borrowings | 6,694 | 3,806 |
| ||
Non-current liabilities |
| ||||
Borrowings | 2,573 | 607 |
| ||
10,425 | 5,979 |
| |||
Trade and other payables are measured at amortised cost and borrowings are initially measured at their fair values and subsequently at amortised cost. Loan warrants are fair valued at each year end with the gain/loss posted through profit or loss.
Fair value hierarchy
The fair value of the Group's financial instruments is disclosed in hierarchy levels depending on the valuation method applied. The different methods are defined as follows:
Level 1: valued using unadjusted quoted prices in active markets for identical financial instruments;
Level 2: valued using techniques based on information that can be obtained from observable market data; and
Level 3: valued using techniques incorporating information other than observable market data as at least one input to the valuation cannot be based on observable market data.
The fair value of the Group's financial assets and liabilities at 31 December 2013 are set out below:
Level 1 £'000 | Level 2 £'000 | Level 3 £'000 | Total £'000 | |
Financial liabilities | ||||
Warrant instruments | 5,840 | - | - | 5,840 |
At 31 December 2013 | 5,840 | - | - | 5,840 |
The fair value of the Group's financial assets and liabilities at 31 December 2012 are set out below:
Level 1 £'000 | Level 2 £'000 | Level 3 £'000 | Total £'000 | |
Financial liabilities | ||||
Warrant instruments | 607 | - | - | 607 |
At 31 December 2012 | 607 | - | - | 607 |
21 capital management policies and procedures
The Group's capital management objectives are to ensure that it can continue as a going concern and has adequate capital to fund marketing and distribution activities. The Group regularly reviews its capital requirements to ensure it is a going concern and is in compliance with all by-laws and restrictions imposed by its lenders. During the year, the Group incurred some technical breaches on existing facilities which were resolved as part of the Debt Restructuring.
The Group's capital equals total equity less cash and cash equivalents. The Group's financing includes total equity plus borrowings. The borrowings have been taken out to support previous research activities of the Group and provide working capital for the Group.
22 share capital
2013 | 2012 | |
£000 | £000 | |
Allotted, issued and fully paid | ||
415,274,578 (2012: 208,941,531) ordinary shares of 1 penny each | 4,153 | 2,089 |
All 1 penny ordinary share capital carry the same voting rights and rights to discretionary dividends.
On 18 March 2013, the Company raised £2.124 million, before expenses, through the Placing of 106,200,000 New Ordinary Shares at a price of 2p per share.
At the same time, the Company issued of 28,672,340 New Ordinary Shares at 2p per share as part of the Debt Restructuring for interest accrued to 28 February 2013 on its borrowings (see note 19) being:
· 17,585,342 New Ordinary Shares at 2p per share for £351,707 of interest accrued on the Convertible Loan Notes to 28 February 2013.
· 6,419,190 New Ordinary Shares at 2p per share for £128,384 of interest accrued on the Capital for Enterprise Loan to 28 February 2013.
· 3,900,685 New Ordinary Shares at 2p per share for £78,014 of interest accrued to 28 February 2013 on the Galloway loan facility of £850,000.
· 767,123 New Ordinary Shares at 2p per share for £15,342 of interest accrued to 28 February 2013 on the Mellon Bridge Loan 1 of £350,000.
In addition to the above, the Company issued 2,205,000 New Ordinary Shares at 2p per share to certain directors in lieu of historic salary payments.
On 15 October 2013, the Company announced it had received notice from warrant holder to subscribe for 410,000 shares at 10p per share to exercise the warrant.
On 1 November 2013, The Company raised £4.4 million before expenses through the placing of 49,000,000 new Ordinary Shares at a price of 9p per share.
On 29 November 2013, The Company also announced that it has allotted 6,279,407 new ordinary shares of 1p each ("New Shares"), fully paid conditional only upon admission, to trading on AIM in relation to:
· the issuance of 1,355,975 New Shares in connection with awards made in 2010 which have now matured under the Company's LTIP;
· the issuance of 923,432 New Shares in settlement of directors' fees due in relation to Jim Mellon and Mike Collis; and
· the issuance of 4,000,000 New Shares as an award to Ronald Openshaw that would otherwise have accrued under the company's LTIP.
Finally, The Company received notice from Maven Capital Partner (UK) LLP, manager of the Capital for Enterprise Fund LP ("CfE") to convert £200,000 in principal of its £1 million loan note to ordinary shares. The Conversion was completed at the close of business on 3 December 2013. Interest on the loan note was being accrued in accordance with the restructuring announced on 18 March 2013 and the amount of £21,326 had accrued to that date and was converted to new ordinary shares. In addition, the loan carried a redemption premium of 25% of the principal value and consequently a redemption premium of £50,000 arose on conversion. This was paid by the issue of new ordinary shares. In total 13,566,300 new ordinary shares were issued at 2p per share to satisfy the aggregate of £271,326 arising on the conversion.
23 leasing commitments
The Group's aggregate minimum operating lease payments for the remaining lives of the leases are as follows:
2013 Land and buildings | 2012 Land and buildings | |||
£'000 | £'000 | |||
Expiring in less than one year |
7 |
12 |
The lease recorded in the financial statements is in respect of the Group's office premises.
24 transactions with directors and other related parties
During the year, the Group transacted with certain related parties:
Value of services acquired | Amounts due at 31 December | ||||||
2013 | 2012 | 2013 | 2012 |
| |||
£'000 | £'000 | £'000 | £'000 |
| |||
| |||||||
Arc Portfolio Management | 8 | - | 4 | - |
| ||
Culminant Capital Inc | 12 | - | 12 | - |
| ||
Galloway Limited | 134 | 108 | 1,031 | 847 |
| ||
High Lees Consulting | 9 | 24 | - | 12 |
| ||
Jim Mellon | 88 | 550 | 664 | 550 |
| ||
Lucia Capital LLP | 5 | - | - | - |
| ||
Maven Capital Partners (UK) LLP | 136 | 128 | 928 | 1,025 |
| ||
Mens Health Limited | 118 | 110 | 2 | 62 |
| ||
Regent Pacific Group Limited | 3 | - | - | - |
| ||
|
|
|
|
| |||
During 2013, £8,000 (2012: £nil) was paid to Arc Portfolio Management Limited for M Collis's services as CFO. Mr Collis is a director and sole shareholder of Arc Portfolio Management Limited.
During 2013, £12,000 (2012: £nil) of the fees paid to G Bailey, were paid to Culminant Capital Inc. G Bailey is a director and shareholder of Culminant Capital Inc.
£118,000 (2012: £110,000) of the fees and expenses owed to M G Wyllie, were paid to Mens Health Limited. Dr Wyllie is a director and majority shareholder of Mens Health Limited.
During 2013, £5,000 was paid to Lucia Capital LLP for J R Openshaw's services as CFO and CEO to the Group (2012: £nil). Mr Openshaw is a partner in Lucia Capital LLP.
During 2013, £17,000 (2012: £17,000) was paid to Galloway Limited in respect of loan fees. Galloway Limited is wholly owned by a trust in which Jim Mellon, Chairman of the Company, has a life tenancy.
During 2013, £9,000 (2012: 24,000) of the fees paid to R J Horsman were paid to High Lees Consulting Limited.
During 2012, Jim Mellon provided additional working capital to the Group by way of two short term loans of £350,000 and £200,000 as set out in note 19.
During 2013, £3,000 (2012: £nil) was paid to Regent Pacific Group Limited for J Gibson's services - a company in which Jim Mellon has an interest.
During 2013, £42,000 (2012: £20,000) was paid to Maven Capital Partners (UK) LLP in respect of loan fees and board fees for Mr Collis representation of Maven Capital Partners (UK) LLP's interest on the board.