Annual Report Medical Chemicals plc

Transcription

1 Medical Chemicals plc Annual Report 2007 Ivy Medical Chemicals Development Limited Registered Office 54 Sun Street, Waltham Abbey, Essex EN9 1EJ Registered in England No

2 Contents Page Notice of annual general meeting 1 Chairman s review of results, current activities and future prospects 2 Directors, advisors and biographical information 4 Report of the directors 5 Report of the independent auditors 7 Consolidated profit and loss account 9 Consolidated balance sheet 10 Consolidated cash flow statement 11 Company balance sheet 12 Notes on the financial statements 13 Ivy Medical Chemicals Development Limited Registered Office: 54 Sun Street, Waltham Abbey, Essex EN9 1EJ Registered in England No Printed by Park Communications Limited 59892

3 Notice of annual general meeting Notice is hereby given that the Annual General Meeting of Ivy Medical Chemicals plc will be held at the offices of Finncap, 4 Coleman Street, London EC2R 5TA at 11am on Thursday 31 July 2008 for the following purposes: Ordinary Business 1 To receive the Director s report and the audited accounts for the year ended 31 December To re-appoint MacIntyre Hudson LLP as auditors of the Company and to authorise the Directors to fix their remuneration. Special Business As special business to consider, and if thought fit, pass the following resolution as a special resolution. Special Resolution 3 To renew the power conferred on the Directors by Article 5(c) of the Company s Articles of Association for the period ending on the date of the Annual General Meeting of the Company in 2009 or a period of 15 months after the date of the passing of this resolution, whichever is the earlier, and for such period the Section 89 amount shall be 17, By order of the Board John Heywood Company Secretary 30 June 2008 Registered Office: 54 Sun Street Waltham Abbey Essex EN9 1EJ Annual Report and Accounts

4 Chairman s review of results, current activities and future prospects Results for the year The company made a pre-tax loss of 256,000 compared with a loss of 247,000 in the year to 31 December Turnover was nil (2006: nil). The loss is attributable to administrative expenses and the creation of a charge required by FRS 20 in relation to the EMI share option incentive scheme introduced in February The requirements of FRS 20, in respect of share based payments, have been placed on the company as an Accounting Standard to which the company must adhere. This has resulted in a charge to its profit and loss account of 71,000 which is about 22% of the company s overall loss.the intention of this Accounting Standard is to attempt to reflect the cost to the shareholders of the share options granted, the logic being that the take up of share options will result in dilution for those shareholders of the company who were shareholders at the point in time when the share options were granted. The directors of the company are satisfied that the charge to the profit and loss account has been properly calculated, but at the same time the directors fail to comprehend the relevance of the charge for the company and more particularly shareholders, many of whom struggle to understand the logic of the charge given that the exercise price of the options of 25p is well in excess of both the current share price and the share price at the year end.the directors feel that the consequences of the issue of share options would be much better dealt with in a note to the accounts and not as presented in conforming with FRS 20. John Carter It was with great sadness that we announced in November that John Carter, the inventor of CV247 and the founder of the company, died suddenly on 10 November John s great desire was to see that his invention was used to improve the quality of life in both animals and humans and it is sad that he did not live to see its widespread use. He would be pleased that the company continues in its efforts to make CV247 available as a treatment for cancer patients. Operations As was announced in December 2007, a potential licensing initiative in Hungary was made possible by Professor Andor Sebesteny. Progress has been made on this project to the extent that the company is concentrating the majority of its current efforts on what is required to obtain the necessary licence to commercialise CV247 in Hungary. To this end, the company has reduced its UK activities. The company has provisionally agreed heads of terms for a 50:50 joint venture with a Hungarian company called Ad Astra Sztráda Kft. whereby CV247 is intended to be sold for dogs in Hungary based upon the necessary regulatory approval. Grant of licence will depend in part on the results of a trial being undertaken on dogs in Hungary.This trial, which will initially comprise a maximum of 50 dogs, is in the recruitment stage. It has the following aims: The gathering of evidence on the efficacy of CV 247 in dogs suffering from inoperable and/or metastasising malignant tumours which would not respond to other therapies, or alternatively where the already removed tumour has regrown or the chances of this is high. 2 Ivy Medical Chemicals plc

5 The study seeks answers to the question whether CV 247 applied as an adjuvant therapy proves to be effective, i.e. primarily whether it reliably improves the well-being and quality of life, and secondarily whether it also may decrease the rate of growth and spread of the malignant tumour or the chances of the expected regrowth of the malignant tumour. We understand that licensing of CV247 in Hungary may be possible following completion of a preliminary report concerning the primary objective of the study on well-being and quality of life. The clinical data already accumulated in the UK should greatly assist in the licensing of CV247 in Hungary. With a view to being capable of marketing CV247 in Hungary, the company is, through its joint venture partner, designing a Hungarian version of its website with an ordering facility and is also in the process of planning for a production capability in Budapest. The clinical study in Hungary has also been designed to support UK licencing activities. Outlook for 2008 The Board believes that the Hungarian joint venture is worthy of the full concentration of the company and its resources. It is regarded by the Board as very important that all efforts be made to try and make CV247 available in the market. The future of CV247 as a treatment for cancer patients should then obtain the necessary momentum to lead to more widespread use. The Board and its advisors remain of the view that the data accumulated to date suggests that this product is of significant value and it is hoped that 2008/2009 will be the years in which a promising commercial phase begins. A Duffield Chairman Annual Report and Accounts

6 Directors Advisors Dr Andrew Duffield Dr Roger Oakes John Heywood David Morris Joseph Marffy Chairman Scientific Director Finance Director Non-Executive Director Director Financial Advisor Ruegg & Co Limited 39 Cheval Place Knightsbridge London SW7 1EW Biographical Information Dr Andrew Duffield Chairman Dr Duffield s role as executive chairman is to chair Board meetings and co-ordinate its activities in addition to overseeing the technical development of CV247. Dr Roger Oakes Scientific Director Dr Oakes is responsible for progressing the approval process for CV247 and has taken charge of clinical development. John Heywood Finance Director and Company Secretary Mr Heywood is responsible for the Group s accountancy systems and for all of the Group s financial affairs. As company secretary he is also responsible for co-ordinating legal aspects of the Group s operation. Joseph Marffy Director Mr Marffy was appointed to the Board on 6 December 2007 to assist the Company in its corporate development. David Morris (Non-Executive Director) Stockbroker Finncap 4 Coleman Street London EC2R 5TA Auditors MacIntyre Hudson LLP New Bridge Street House New Bridge Street London EC4V 6BJ Registrars Capita Registrars The Registry 34 Beckenham Road Beckenham Kent BR3 4TU Solicitors Charles Russell LLP 8-10 New Fetter Lane London EC4A 1RS Secretary and Registered Office John Heywood 54 Sun Street Waltham Abbey Essex EN9 1EJ Registered Number Ivy Medical Chemicals plc

7 Report of the directors for the year ended 31 December 2007 The Directors have pleasure in presenting their report together with audited financial statements for the year to 31 December Principal activities The principal activity of the Group is the development of a new treatment for cancer in animals and human patients and to undertake the necessary procedures of licensing, manufacturing and sales. Business review and future development A review of the Group s business and future developments is contained in the Chairman s review of results, current activities and future prospects on pages 2 and 3. Results and dividends The loss for the year amounted to 237,333. No dividends will be distributed for the year ended 31 December Research and development The Group carries out research and development as part of its day-to-day activities in relation to products according to the markets in which it operates. It is the Group s policy to write off research and development expenditure to the profit and loss account as it is incurred. Principal risks and uncertainties The management of the business and the execution of the company s strategy are subject to a number of risks. The key business risks affecting the company are set out below: enforceability of patents granted there are some risks that the validity of the patent is open to challenge in court. Furthermore there certain patents pending which, although unlikely, may not be granted. delays and costs in obtaining regulatory consents may take longer than planned which could have a detrimental impact on future cash flows. effects of competition it is possible other therapies also efficacious and without detrimental side effects will become available before CV 247. loss of key personnel could have an adverse effect on CV 247 s progress towards licensing, manufacturing and sales. market acceptance of CV 247 the directors believe that the potential demand for CV 247 is likely to remain high, there is no guarantee that the group will attract sufficient customers or generate sufficient sales to ensure its viability. Risks are formally reviewed by the board and appropriate processes put in place to monitor and mitigate them. If more than one event occurs, it is possible that the overall effect of such events compound the possible adverse effects on the company. Annual Report and Accounts

8 Report of the directors continued Supplier payment policy It is the Company s normal practice to pay suppliers promptly provided that the suppliers meet their obligations. At the year end there were no trade creditors which represented a payment period of nil days (2006: nil days) which is in accordance with the Company s payment policy. Directors The directors during the period under review were : John Carter Chairman deceased 10 November 2007 Dr Andrew Duffield Chairman appointed 6 December 2007 Anant Pandya Managing Director resigned 6 December 2007 Dr Roger Oakes Scientific Director John Heywood Finance Director David Morris Non-Executive Director Joseph Marffy Director appointed 6 December 2007 Directors responsibilities The directors are responsible for preparing the financial statements in accordance with applicable law and United Kingdom Generally Accepted Accounting Practice. Company law requires the directors to prepare financial statements for each financial year which give a true and fair view of the state of affairs of the Company and Group and of the profit or loss and cash flows of the Group for that period. In preparing those financial statements the directors are required to: select suitable accounting policies and then apply them consistently; make judgements and estimates that are reasonable and prudent; prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group will continue in business. The directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the Company and Group and enable them to ensure that the financial statements comply with the Companies Act They are also responsible for safeguarding the assets of the Company and Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. Statement as to disclosure of information to auditors So far as the directors are aware, there is no relevant audit information (as defined by Section 234ZA of the Companies Act 1985) of which the group s auditors are unaware and each director has taken all the steps that he ought to have taken as a director in order to make himself aware of any relevant audit information and to establish that the group s auditors are aware of that information. Auditors A resolution to re-appoint MacIntyre Hudson LLP as auditors and to authorise the directors to fix their remuneration will be proposed at the annual general meeting on 31 July By Order of the Board John Heywood Secretary 30 June Ivy Medical Chemicals plc

9 Report of the independent auditors to the Shareholders of Ivy Medical Chemicals plc We have audited the financial statements of Ivy Medical Chemicals plc for the year ended 31 December 2007 on pages 9 to 20 which have been prepared under the historical cost convention and the accounting policies set out on page 13. This report is made solely to the Company s members, as a body, in accordance with Section 235 of the Companies Act Our audit work has been undertaken so that we might state to the Company s members those matters we are required to state to them in an auditor s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company s members as a body, for audit work, for this report, or for the opinions we have formed. Respective responsibilities of the Directors and Auditors As described on page 6, the Company s Directors are responsible for the preparation of financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice). Our responsibility is to audit the financial statements in accordance with relevant legal and regulatory requirements and International Standards on Auditing ( UK and Ireland ). We report to you our opinion as to whether the financial statements give a true and fair view and are properly prepared in accordance with the Companies Act We also report to you if, in our opinion, the report of the directors is consistent with the financial statements, if the Company has not kept proper accounting records, if we have not received all the information and explanations we require for our audit, or if information specified by law regarding directors remuneration and transactions with the Company is disclosed. We read the Chairman s statement and the Report of the Directors and consider the implications for our report if we become aware of any apparent misstatements or material inconsistencies within the financial statements. Basis of audit opinion We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) issued by the Auditing Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It also includes an assessment of the significant estimates and judgements made by the Directors in the preparation of the financial statements and of whether the accounting policies are appropriate to the Company s circumstances, consistently applied and adequately disclosed. We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the financial statements. Annual Report and Accounts

10 Report of the independent auditors continued Opinions In our opinion: the financial statements give a true and fair view, in accordance with United Kingdom Generally Accepted Accounting Practice, of the state of affairs of the Company and of the Group as at 31 December 2007 and of its loss for the year then ended; and the financial statements have been properly prepared in accordance with the Companies Act the information given in the report of the directors is consistent with the financial statements. MacIntyre Hudson LLP New Bridge Street House New Bridge Street London EC4V 6BJ 30 June Ivy Medical Chemicals plc

11 Consolidated profit and loss account for the year ended 31 December 2007 Notes Turnover Cost of sales Gross loss Distribution costs Administrative expenses (329) (234) Exceptional operating income (2) 70 Operating loss (3) (259) (234) Interest receivable and similar income 9 2 Interest payable and similar charges (4) (6) (15) Loss on ordinary activities before taxation (256) (247) Taxation (5) Loss on ordinary activities after taxation (237) (234) Loss for the financial year (237) (234) Loss per share Basic (6) (2.01p) (2.74p) Loss per sh are Diluted (2.01p) (2.74p) The operating loss for the year is attributable to the continuing operations of the group in the year. There was no difference between the reported loss and the historical cost loss. The Company has no recognised gains or losses other than the profits for the current and previous years. The notes on pages 13 to 20 form part of these financial statements. Annual Report and Accounts

12 Consolidated balance sheet as at 31 December 2007 Notes Intangible fixed assets (9) Tangible fixed assets (10) Current assets Debtors (12) Cash at bank Creditors: amounts falling due within one year (13) (48) (44) Net current assets Total liabilities less current assets Creditors: amounts falling due after more than one year (14) (140) (210) Capital and reserves Called up share capital (15) Share premium account (16) 2,239 2,235 Revaluation Reserve (16) Profit and loss account (16) (2,435) (2,198) Share based payments (16) 71 Shareholders funds equity (17) The financial statements were approved by the board of directors on 30 June 2008 and signed on its behalf by: Andrew Duffield John Heywood Directors The notes on pages 13 to 20 form part of these financial statements. 10 Ivy Medical Chemicals plc

13 Consolidated cash flow statement for the year ended 31 December 2007 Notes Net cash outflow from operating activities (18) (220) (249) Returns on investments and servicing of finance (19) 9 (13) Cash outflow before use of liquid resources and financing (211) (262) Taxation (19) 13 6 Financing (19) Increase/(Decrease) in cash in the year (194) 341 Reconciliation of net cash flow to movement in net debt Increase/(Decrease) in cash in the year (20) (194) 341 Cash outflow from decrease in debt (20) 150 Change in net funds resulting from cashflows (194) 491 Net funds at 1 January (227) Net funds at 31 December 2007 (20) The notes on pages 13 to 20 form part of these financial statements. Annual Report and Accounts

14 Company balance sheet as at 31 December 2007 Notes Fixed assets Investments (11) Current assets Debtors (12) 2,150 2,159 Cash at bank ,190 2,212 Creditors: amounts falling due within one year (13) (21) (6) Net current assets 2,169 2,206 Total assets less current liabilities 2,312 2,278 Capital and reserves Called up share capital (15) Share premium account (16) 2,239 2,235 Profit and loss account (16) (175) (134) Share based payments reserve (16) 71 Shareholders funds equity (17) 2,312 2,278 The financial statements were approved by the board of directors on 30 June 2008 and signed on its behalf by: Andrew Duffield John Heywood Directors The notes on pages 13 to 20 form part of these financial statements. 12 Ivy Medical Chemicals plc

15 Notes on the financial statements for the year ended 31 December 2007 I. Accounting policies Basis of Accounting The financial statements are prepared under the historical cost convention and in accordance with applicable Accounting Standards. Going concern The directors believe the group has adequate cash resources to continue in operational existence for the forseeable future. For this reason, it is appropriate to adopt the going concern basis in preparing the group s financial statements. Basis of consolidation The Group accounts incorporate the financial statements of the Company and of its subsidiary undertaking in accordance with Financial Reporting Standard No. 6, Acquisitions and Mergers. The Holding Company s accounting policies are consistently applied throughout the Group. Inter company balances and transactions have been eliminated. Fixed asset investments Investments are stated at cost less any permanent diminution in value. Intangible fixed assets Amortisation is provided on intangible fixed assets at annual rates calculated to write off the cost of the assets over their anticipated useful lives. The useful economic life is the period over which the Group expects to derive economic benefits from the assets. The rates used are as follows: Licence agreement 20 per cent per annum on cost commencing on the sale of the first treatment. Depreciation Depreciation is provided on tangible fixed assets at annual rates calculated to write off the cost of the assets over their anticipated useful lives. The rates used are as follows: Computer Equipment 25 per cent on cost or over the lease term. Research and development expenditure Research expenditure is written off to the profit and loss account as incurred. Share based payments The cost of granting share options to employees and directors is recognised through the profit and loss account.these are equity settled and therefore the cost is measured at grant date.the group has used the black scholes option valuation model to establish the relevant costs. The resulting values are amortised through the profit and loss account over the vesting period of the options. The charge is reversed if it appears probable that the applicable performance criteria will not be met although the performance criteria are not market related. The group has taken advantage of the transitional provisions of FRS 20 in respect of equity settled awards, so as to apply FRS 20 only to those equity settled awards granted after 7 November 2002 that had not vested before 1 January For awards granted before 7 November 2002, the group recognises only the intrinsic value of these potential awards as an expense. Annual Report and Accounts

16 Notes on the financial statements continued 2. Exceptional operating income In 2003 the Company entered into a finance agreement with Cambridge Industries, granting them exclusive rights to develop, market and sell CV-247 to human patients within certain markets. As part of this agreement Cambridge were obliged to pay the Company royalties as future income they generated using this licence. Although no royalties have been generated to date, under the terms of the agreement Cambridge, since 2003 have advanced Ivy 70k on account of the future royalty stream. On 7 November 2007 the finance agreement was terminated by Cambridge and as a consequence, their advanced royalties receipts have been released to the profit and loss account as they were not refundable. 3. Operating loss This is stated after charging: Directors emoluments Auditors remuneration statutory audit Auditors remuneration other services Research and development expenditure written off current year Interest payable and similar charges Other Taxation Research and development tax credit Loss per share The loss per share has been calculated on the loss attributable to the members of the Company and on 11,787,750 (2006: 8,531,647) ordinary shares being the weighted average number of ordinary shares in issue throughout the year. No adjustment is required to the basic loss per share as the outstanding share options and arranger warrants are not dilutive. 14 Ivy Medical Chemicals plc

17 7. Staff costs including Directors Wages and salaries Social security costs Average monthly number of persons employed (including directors): Number Production and operations 3 3 Administration Loss of parent undertaking As permitted by Section 230 of the Companies Act 1985, the profit and loss account of the parent undertaking is not presented as part of these financial statements. The consolidated loss for the financial period includes a loss after tax and before dividends of 41,472 (2006: loss 28,546) which is dealt with in the financial statements of the parent undertaking. 9. Intangible fixed assets The Group Licence Agreement 000 Valuation As at 1 January 2007 and at 31 December Depreciation Charge for the year and at 31 December 2007 Net book value At 31 December Nil On 22 January 1999, Ivy Medical Chemicals Development Limited was gifted a licence by the late John Carter, one of the Company s Directors.This licence was revalued by the Directors on the basis of the costs incurred by the John Carter. No amortisation has been charged to the profit and loss account in line with the Company s accounting policy to amortise the licence over five years from the date of the first prescription sale. Annual Report and Accounts

18 Notes on the financial statements continued 10. Tangible fixed assets The Group Computer equipment 000 Cost At 1 January 2007 and 31 December Depreciation At 1 January Charge for year At 31 December Written down value At 31 December 2007 At 31 December Investments Company 000 Cost of shares in subsidiary undertaking 72 Fair value of share based payments The Company has a 100% interest in the equity share capital of Ivy Medical Chemicals Development Limited, a Company incorporated in England and Wales. The principal activity of the subsidiary is the development of cancer treatments. 12. Debtors Amounts falling due within one year Group Company Group Company Amounts owed by group undertakings 2,145 2,151 Other debtors Prepayments and accrued income , ,159 Included in Other debtors is a balance of 3,707 (2006: 3,707) due from the late John Carter, a director of the Company.The loan is interest free and has no fixed terms of repayment 16 Ivy Medical Chemicals plc

19 13. Creditors Amounts falling due within one year Group Company Group Company Accruals Creditors: amounts falling due after more than one year Loan from a Director Accruals and deferred income The above loan from a former director was provided by the late John Carter to the Group.The loan is unsecured and is earning interest at 5% per annum.the loan will be repaid once a royalty stream is being earned by the Group. 15. Share capital Authorised 50,000,000 Ordinary Shares of 1.5p each Issued and fully paid 11,787,750 Ordinary Shares of 1.5p each On 3 March 1999, the company granted an arranger warrant to Ruegg & Co Limited, giving them the option to acquire up to 7.5% of the then issued ordinary share capital in the three years up to 27 January 2002, at 48p per share.this has been extended to 3 March At 31 December 2007, 295,381 arranger warrants remained unexercised. On 22 December 2006 Ruegg & Co Limited were issued with 287,506 ordinary shares of 1.5p each as part of the placing. In 2006 it was envisaged that these shares would form part of their arrangement fee, however these shares were actually fully paid for in cash in 2007 and therefore the share premium account has been corrected accordingly this year. Note 22 provides details of share options in existence. Annual Report and Accounts

20 Notes on the financial statements continued 16. Movements on reserves Share Profit based and loss Revaluation Share payments account reserve premium Group Balance at 1 January 2007 (2,198) 72 2,235 Loss for the year (237) Issue of ordinary shares net of expenses 4 Fair value of share based payments 71 Balance at 31 December (2,435) 72 2,239 Company Balance at 1 January 2007 (134) 2,235 Loss for the year (41) Issue of ordinary shares net of expenses 4 Fair value of share based payments 71 Balance at 31 December (175) 2, Reconciliation of movements in shareholders funds Group Company Group Company (Loss) for the financial period (237) (41) (234) (28) Issue of ordinary shares net of expenses Fair value of share based payments Net (reduction in)/addition to shareholders funds (162) Opening shareholders funds 286 2,278 (227) 1,559 Closing shareholders funds 124 2, , Reconciliation of operating loss to operating cash flows Group Group Operating loss (259) (234) (Increase)/Decrease in debtors 40 (27) Increase/(Decrease) in creditors (72) 11 Depreciation charge 1 Share based payments charge 71 Net cash outflow from operating activities (220) (249) 18 Ivy Medical Chemicals plc

21 19. Analysis of gross cash flows Group Group Returns on investments and servicing of finance Interest received 9 2 Interest paid (15) 9 (13) Taxation Research and development tax credit received 13 6 Financing Issue of ordinary share capital 800 Expenses paid in connection of share issues 4 (53) Repayment of long term loan (150) 20. Analysis of changes in net funds At 1 Jan Cash At 31 Dec 2007 Flows Cash at bank 404 (194) 210 Debt due after one year (140) (140) Total 264 (194) Transactions with Directors During the year, the Company s subsidiary undertaking transacted with the following entities in which the Company Directors of Ivy Medical Chemicals plc had a material share interest: Director Fees Paid in Name of Company having material Type of providing service share interest service provided ( ) ( ) Daramed Limited Dr A Duffield Consultancy 51,750 John Heywood Associates Limited J Heywood Consultancy 10,000 41,000 Cresta Heath Limited D Morris Consultancy 29,187 Ruegg & Co Limited J Marffy Consultancy 10,000 In addition Dr R Oakes was paid consultancy fees of 1,000 for the year Annual Report and Accounts

22 Notes on the financial statements continued 22. Share based payments The group s share based payments are all equity settled and comprise an employment management incentive scheme and an executive share option scheme. In accordance with FRS 20 share based payment the fair value of equity settled share based payments to employees and directors is determined at the date of grant and is expensed on a straight line basis over the vesting period based on the group s estimate of options that will eventually vest. Employment management incentive scheme On 27 February 2007 the group set up an employment management incentive scheme. Under this scheme 600,000 share options were granted with 150,000 of these vesting immediately. The remaining 450,000 share options will vest when certain non market performance conditions have been met. The estimated fair value of each share option is 27.8p.This was calculated using the Black Scholes Merton option pricing model. The model inputs were: Share price at date of grant 37.5p Exercise price 25p Expected volatility 65% No expected dividends Risk free interest rate of 4.84% Expected option life of 7 years Expected volatility was based on the average of share price volatility in 2007 of 93% and in 2006 of 35%. The expected option life has been determined, based upon management s best estimate, for the effects of non-transferability, exercise restrictions and behaviour considerations Executive Share Option Scheme The directors were granted options to subscribe for ordinary shares in the company pursuant to the share option deeds dated 22 January 1999.These options are exercisable at a price of 48p per share and are to be exercised between the third and tenth anniversary of the date of the option deeds. Details of the share options outstanding during the year are as follows: Type of scheme EMI Scheme 1999 Executive option plan At beginning of year 229,639 Granted 600,000 Exercised Forfeited (175,000) (44,702) At end of year 425, ,937 Exercisable at end of year 218, ,937 During the year, the group recognised an expense of 71,000 relating to the employment management incentive scheme. No expense was recognised in respect of the 1999 executive option plan as the intrinsic value of those options was nil. 23. Control No one party owns control of the Company. At the date of his death in November 2007, the late John Carter owned 36.07% of the issued share capital of the Company and was the largest single shareholder. 20 Ivy Medical Chemicals plc