31    Related party transactions

Group
The following transactions were carried out with related parties:

a) Purchases of goods and services

1. An agreement was made on 5 April 2001 between Sinclair Pharmaceuticals Ltd (“Sinclair”) and Axcan Pharma (Ireland) Ltd (“Axcan”) to appoint Sinclair as exclusive distributor of Axcan to supply and distribute Photofrin® in Europe. Sinclair shall also provide the following services to Axcan:

•  Reception of products, sampling, labelling, quarantine, services and organization and delivery of the samples for bio‑assembly to a person designated by Axcan from time to time.
• Warehousing of products for the benefit of Axcan and shipping of such products to independent distributors pursuant to Directors given by Axcan from time to time.

During the year, the Company paid £151,000 (2008: £500,074) to Axcan for the cost of Photofrin® sold in the year less reimbursable costs. At 30 June 2009 there were no amounts owing to Axcan (2008: £269,940).

 
Dr MJ Flynn, Chief Executive Officer is a remunerated Non Executive Director as disclosed in the Directors’ Remuneration Report of Axcan Pharma (Ireland) Ltd.

 
The distribution agreement with Axcan was terminated in October 2008 as this had become a non core activity for the Group.

b) Key management compensation

The compensation paid to key management for employee services is set out in note 7.

c) Directors

Refer to the Directors’ Remuneration Report for further details of remuneration of Directors employed by the Company.

d) Loans from related parties

Loans from Directors to the Group:

2009

£’000

2008

£’000

At 1 July

–

–

Loans advanced during the year

355

–

Loan converted into equity

(64)

–

At 30 June

291

–

During the year the following Directors made loans to the Group as set out in the table above: Dr MJ Flynn, Mr JAP Randall, and Mr J‑C Tschudin. The loans from Directors attract interest at 5% above Barclays’ base rate, are unsecured, and are repayable on 31 October 2009. During the year interest of £12,000 was charged on these loans.

Company: Transaction with subsidiaries
The Company is responsible for financing, of the Group, managing Group funds, and setting Group strategy. Finance is then provided to operating subsidiary undertakings, details of intercompany loans are set out in note 15.

The Company has been charged for expenses paid by subsidiaries of £780,000 (2008: £857,205).

In addition, options over the Company’s shares have been awarded to employees of subsidiary companies. In accordance with IFRIC 11, the Company has treated the awards as a capital contribution to the subsidiaries, resulting in an increase in the cost of investment of £324,000 (2008: £560,000).