Imperial Innovations Group Regulatory News (IVO)

THIS ANNOUNCEMENT (AND THE INFORMATION CONTAINED HEREIN) IS NOT FOR FORWARDING, RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO OR FROM THE UNITED STATES, CANADA, AUSTRALIA, JAPAN OR SOUTH AFRICA OR ANY OTHER JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION

7 December 2010

Imperial Innovations Group plc

£140m raised to expand investment scope and scale in new technology companies based on university scientific research

Imperial Innovations Group plc (AIM: IVO, "Imperial Innovations", "the Group"), a leading technology commercialisation and investment group, proposes to raise £140 million to accelerate the making of, and increase the size of, investments in companies established under its existing intellectual property pipeline agreement with Imperial College London.

The Group also intends to invest in companies founded by or based on technology from the University of Oxford, the University of Cambridge and University College London.

Highlights

• £140m (gross) Equity Raise

− to accelerate and increase investment in selected companies from its existing pipeline with Imperial College London

− to invest in companies founded by or based on technology from the universities of Oxford and Cambridge, and University College London

• These four universities are UK's leading research universities measured by research income

• Building on existing collaborations with Cambridge Enterprise, Oxford Spin-out Equity Management and UCL Business

• Rights Issue: two new shares for three existing shares at 350p per share

− Issue price represents 26.7 per cent. discount to closing middle-market price of 477.5 pence per ordinary share on 6 December 2010 (being last business day prior to date of announcement) and 17.9 per cent. discount to theoretical ex-rights price of 426.5 pence based on this closing middle-market price

• Major Shareholders have agreed to subscribe for New Convertible B Shares on a two for three basis, in lieu of Rights

− Convert into Ordinary Shares on one for one basis upon payment of three instalments: 150p during the Rights issue period and two subsequent 100p instalments

− New Convertible B Shares will be unquoted and non-transferable

• The Rights Issue is underwritten by J.P. Morgan Cazenove (save in respect of those Rights which Major Shareholders have undertaken not to take-up).

Martin Knight, Chairman of Imperial Innovations, said:

"We have an excellent track record and operating model for establishing, funding, building and exiting growth businesses, based on intellectual property emanating from Imperial College London.

"Our proposed fund raising of £140m will enable us to accelerate and increase the size of our investments in our portfolio companies. This will assist these companies to achieve their commercial goals more quickly and allow us to maintain or increase our equity holdings in such companies.

"The funds will also enable us, through enhanced collaboration, to make investments in companies founded by or based on technologies from the universities of Oxford and Cambridge and University College London, using the successful platform we have built to commercialise intellectual property from Imperial College London.

"There is an acknowledged gap in the UK between scientific research and successful commercialisation. We believe that working with the four leading UK research intensive universities and with additional funding, we can help to close this gap and deliver good returns for our shareholders."

Documentation

The Prospectus, containing details of the Rights Issue and Notice of the General meeting, is expected to be posted to Shareholders and made available on the Company's website (www.imperialinnovations.co.uk) shortly.

Enquiries:

This announcement is an advertisement and not a prospectus and investors should not subscribe for or purchase any Nil Paid Rights, Fully Paid Rights, New Ordinary Shares, Warrants or New Convertible B Shares referred to in this announcement except on the basis of information to be contained in the Prospectus which is expected to be published by the Company today in connection with the Equity Raise. Copies of the Prospectus will, following publication, be available on the Company's website (www.imperialinnovations.co.uk).

This announcement does not constitute or form part of any offer or invitation to purchase, otherwise acquire, subscribe for, sell, otherwise dispose of or issue, or any solicitation of any offer to sell, otherwise dispose of, issue, purchase, otherwise acquire or subscribe for any Provisional Allotment Letters, Nil Paid Rights, Fully Paid Rights, the New Ordinary Shares, the Warrants or the New Convertible B Shares offered by any person in any jurisdiction. Any decision to purchase, otherwise acquire, subscribe for, sell or otherwise dispose of any Provisional Allotment Letter, Nil Paid Rights, Fully Paid Rights, New Ordinary Shares, Warrants or New Convertible B Shares should only be made on the basis of information to be contained in the Prospectus which will contain further details relating to the Company in general as well as a summary of the risk factors to which an investment in the New Ordinary Shares, Warrants and/or New Convertible B Shares is subject. Nothing in this announcement should be interpreted as a term or condition of the Rights Issue or the Equity Raise. The Prospectus will not be available to Shareholders located in the United States or, subject to certain exceptions, any of the other Restricted Territories. This announcement is not directed to, or intended for distribution or use by, any person or entity that is a citizen or resident or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation or which would require any registration or licensing within such jurisdiction. 

The Provisional Allotment Letters, the Nil Paid Rights, the Fully Paid Rights and the New Ordinary Shares offered in the Rights Issue and the Warrants and the New Convertible B Shares have not been and will not be registered under the U.S. Securities Act of 1933 (the "Securities Act") or under any securities laws of any state or other jurisdiction of the United States and may not be offered, sold, resold, taken up, exercised, renounced, transferred or delivered, directly or indirectly, in or into the United States. There will be no offer of the Provisional Allotment Letters, the Nil Paid Rights, the Fully Paid Rights, the New Ordinary Shares, the Warrants or the New Convertible B Shares in the United States.

This announcement does not constitute or form, and will not form, part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase or acquire Nil Paid Rights, Fully Paid Rights, New Ordinary Shares, the Warrants and/or the New Convertible B Shares to any person with a registered address, or who is located, in the United States, or to any person with a registered address, or who is located or resident in any of the Restricted Territories. The Nil Paid Rights, the Fully Paid Rights, the New Ordinary Shares, the Warrants and the New Convertible B Shares are being offered outside the United States in reliance on Regulation S under the Securities Act and J.P. Morgan Cazenove may arrange for the offer of New Ordinary Shares not taken up in the Rights Issue only outside the United States in reliance on Regulation S under the Securities Act. 

The distribution of this announcement into jurisdictions other than the UK may be restricted by law. Persons into whose possession this announcement come should inform themselves about and observe any such restrictions.

J.P. Morgan Cazenove which is authorised and regulated in the UK by the Financial Services Authority, is acting as Nominated Adviser, broker, bookrunner and (in respect of the Rights Issue only) underwriter exclusively to the Company and, save in regards the Relevant Major Shareholders in respect of the Warrant Placing, no one else in connection with the Equity Raise and will not regard any other person (whether or not a recipient of this announcement) as its client in relation to the Equity Raise and will not be responsible to anyone other than the Company and the Relevant Major Shareholders for providing the protections afforded to clients of J.P. Morgan Cazenove, or for providing advice in relation to the Equity Raise or any transaction or arrangement referred to in this announcement.

J.P. Morgan Cazenove may, in accordance with applicable legal and regulatory provisions, engage in transactions in relation to the Nil Paid Rights, the Fully Paid Rights, the New Ordinary Shares and/or related instruments for their own account for the purpose of hedging their underwriting exposure or otherwise. Except as required by applicable law or regulation, J.P. Morgan Cazenove does not propose to make any public disclosure in relation to such transactions.

This announcement includes statements that are, or may be deemed to be, "forward-looking statements". These forward-looking statements can be identified by the use of the forward-looking terminology, including the terms "believes", "estimates", "forecasts", "plans", "prepares", "anticipates", "projects", "expects", "intends", "may", "will", "seeks", or "should" or, in each case, their negative or other variations or comparable terminology, or by discussions of strategy, plans, objectives, goals, future events or intentions. These forward-looking statements include all matters that are not historical facts. They appear in a number of places throughout this announcement and include statements regarding the Company's and the Directors' intentions, beliefs or current expectations concerning, amongst other things, the Company's prospects, target return, growth and strategies.

By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. Forward-looking statements are not guarantees of future performance. The Company's actual performance (including, without limitation, attainment of the target return), achievements and financial condition may differ materially from those expressed or implied by the forward-looking statements in this announcement. In addition, even if the Company's results of operations, performance, achievements and financial condition are consistent with the forward-looking statements in this announcement, those results or development may not be indicative of results or developments in subsequent periods.

Prospective investors are advised, when published, to read, in particular, the part of the Prospectus entitled "Risk Factors", for a more complete discussion of the factors that could affect the Company's future performance. In light of these risks, uncertainties and assumptions, the events described in the forward-looking statements in this announcement may not occur. Forward-looking statements in this announcement speak only as of the date of this announcement. Other than in accordance with the Company's obligations under the AIM Rules, the Disclosure Rules and Transparency Rules and/or the Prospectus Rules, the Company undertakes no obligation to update or revise publicly after the time of the announcement any forward-looking statements, whether as a result of new information, future events or otherwise. 

No statement in this announcement is intended as a profit forecast or a profit estimate and no statement in this announcement should be interpreted to mean that earnings per Ordinary Share or New Convertible B Share for the current or future financial years would necessarily match or exceed the historical published earnings per Ordinary Share. Prices and values of, and income from, shares may go down as well as up and an investor may not get back the amount invested. It should be noted that past performance is no guide to future performance. Persons needing advice should consult an independent financial adviser.

This announcement should not be considered a recommendation by J.P. Morgan Cazenove or any of its directors, officers, employees, advisers or any of its affiliates in relation to any purchase of or subscription for securities. No representation or warranty, expressed or implied, is given by or on behalf of J.P. Morgan Cazenove or any of its directors, officers, employees, advisers or any of their respective affiliates or any other person as so to the accuracy, fairness, sufficiency or completeness of the information or the opinions or the beliefs contained in this announcement (or any part hereof). None of the information contained in this announcement has been independently verified or approved by J.P. Morgan Cazenove or any of its directors, officers, employees, advisers or any of its affiliates or their respective directors, officers, employers and advisors. Save in the case of fraud, no liability is accepted by J.P. Morgan Cazenove or any of its directors, officers, employees, advisers or any of their respective affiliates or their respective directors, officers, employers and advisers for any errors, omissions or inaccuracies in such information or opinions or for any loss, cost or damage suffered or incurred howsoever arising, directly or indirectly, from any use of this announcement or its contents or otherwise in connection with this announcement. No person has been authorised to give any information or to make any representations other than those contained in this announcement and, if given or made, such information or representations must not be relied on as having been authorised by the Company or J.P. Morgan Cazenove. Subject to the AIM Rules, the Prospectus Rules and the Disclosure Rules and Transparency Rules, the issue of this announcement shall not, in any circumstances, create any implication that there has been no change in the affairs of the Group since the date of this announcement or that the information in it is correct as at any subsequent date.

Neither the content of the Company's website (or any other website) nor the content of any website accessible from hyperlinks on the Company's website (or any other website) is incorporated into, or forms part of, this announcement.

The contents of this announcement are not to be construed as legal, business, financial or tax advice. Each prospective investor should consult his, her or its own legal adviser, business adviser, financial adviser or tax adviser for legal, financial, business or tax advice.

This announcement has been prepared for the purposes of complying with applicable law and regulation in the United Kingdom and the information disclosed may not be the same as that which would have been disclosed if this announcement had been prepared in accordance with the laws and regulations of any jurisdiction outside of the United Kingdom.

Imperial Innovations Group plc

£140m raised to expand investment scope and scale in new technologies

1. Introduction

Today, Imperial Innovations announces the raising of funds comprising (1) a rights issue (the "Rights Issue") and (2) a provisional allotment and issue of Warrants giving rights to subscribe for New Convertible B Shares (the "Warrant Issue") to Imperial College London, Invesco, Lansdowne, the Employee Trust, Sand Aire and Sussex Research (the "Major Shareholders"), to raise gross proceeds of approximately £140 million (the "Equity Raise"). The Major Shareholders will not take part in the Rights Issue, but will instead take part in the Warrant Issue.

The Rights Issue will be made on the basis of 2 New Ordinary Shares for every 3 Existing Ordinary Shares held by Qualifying Shareholders (being holders of Ordinary Shares on the register of members of the Company at the close of business on the Record Date). Qualifying Shareholders wishing to take up their Rights are required to pay the 350 pence per New Ordinary Share.

The terms of and conditions to the Rights Issue and Notice of the General Meeting will be set out in the Prospectus which is expected to be posted to shareholders and made available on the Company's website (www.imperialinnovations.co.uk ) shortly.

The Issue Price for the Rights Issue of 350 pence per New Ordinary Share represents a 26.7 per cent. discount to the closing middle-market price of 477.5 pence per Ordinary Share on 6 December 2010, being the latest practicable date prior to the publication of this announcement, and a 17.9 per cent. discount to the theoretical ex-rights price based on this closing middle-market price.

The Warrant Issue will be made on the basis of Warrants to subscribe for 2 New Convertible B Shares for every 3 Existing Ordinary Shares held at the close of business on the Record Date. The Warrant Issue gives the right to the Major Shareholders to subscribe for New Convertible B Shares at 350 pence each. The Issue Price of the New Convertible B Shares of 350 pence each will be payable in 3 instalments comprising 150 pence during the period of the Rights Issue, 100 pence on the first anniversary of closing of the Rights Issue and 100 pence on the second anniversary of closing of the Rights Issue.

Invesco, Lansdowne, Sand Aire and Sussex Research have irrevocably undertaken not to take up their Rights and to exercise their respective Warrants and subscribe for New Convertible B Shares. Imperial College London and the Employee Trust have, pursuant to the terms of the Renunciation and Warrant Placing Agreement, irrevocably agreed to renounce the issue of Warrants to them once they are provisionally allotted and J.P. Morgan Cazenove has conditionally placed these Warrants, on behalf of Imperial College London and the Employee Trust, with Invesco at a price of 30 pence per Warrant.

Invesco has, subject to satisfaction of the conditions to the Equity Raise, irrevocably undertaken to accept the Warrants conditionally renounced by Imperial College London and the Employee Trust. This staged receipt of funds from persons who subscribe for New Convertible B Shares will avoid the Company holding too much cash at any one time whilst giving the Company committed funds.

The undertakings or agreements from the Major Shareholders referred to above, represent in aggregate 92.8 per cent. of the Equity Raise and the whole of the Warrant Issue. Those Rights not subject to the undertakings or agreements from the Major Shareholders referred to above, representing 7.2 per cent. of the Equity Raise is being underwritten by J.P. Morgan Cazenove.

The Equity Raise is conditional, amongst other things, on the passing without amendment of the Resolutions to be proposed at the General Meeting expected to be held on 6 January 2011 at 12.00 p.m.

2. Information on Imperial Innovations

Imperial Innovations was established in 1986 by Imperial College London to protect and exploit commercial opportunities arising from the research base of Imperial College London, primarily in the fields of science, engineering and medicine. Imperial Innovations has a technology pipeline agreement with Imperial College London signed in 2005 which expires in 2020.

Since 2005, the Group has raised approximately £62.4 million in net proceeds from investors, which have enabled it to invest in opportunities within its portfolio of Spin-out companies based on technology from Imperial College London that the Directors believe have significant commercial potential and to build and invest in new Spin-out companies.

Since its IPO in 2006, Imperial Innovations has invested approximately £47.9 million in Spin-out companies out of a total raised by those Spin-out companies of £211 million. As at 6 December 2010, Imperial Innovations had equity holdings in 79 Spin-out companies, of which 31 are classified by the Directors as accelerated growth companies where the Group typically has a board seat and takes an active board role.

The balance consists of 22 lighter touch companies, where the Group gives support to promote organic growth and revenue generation, and 26 low involvement companies, in which no investment by the Group is currently intended to be made but which may grow without investment by the Group.

Successful realisations of equity holdings by Imperial Innovations have included the sale in 2010 of Respivert Limited, a small molecule drug discovery company, which resulted in Imperial Innovations realising £9.5 million of gross cash proceeds and Ceres Power Holdings plc, a fuel cell company, which has realised £4.8 million to date for the Group from an initial investment of £0.65 million. Also the Group's £1.5 million investment in obesity drug developer Thiakis Limited could return £16.1 million plus a royalty stream on product sales if the product is launched, following its sale to Wyeth, now part of Pfizer, for £99.4 million in December 2008.

Imperial Innovations is active in marketing itself within Imperial College London to promote awareness of Imperial Innovations' activities, to access potential intellectual property and to minimise the occurrences of academic researchers publishing inventions prematurely before Imperial Innovations has had the opportunity to assess and, if appropriate, to protect the intellectual property.

3. Background to and reasons for the Equity Raise and use of proceeds

Imperial Innovations has established a platform for building, funding and exiting technology businesses based on technology from Imperial College London.

Based on its model of identifying high-growth technologies, providing early capital for proof of concept, recruiting experienced management teams and accelerating commercial development through investment, the Board believes that the Group is well placed to expand the depth and scope of its technology business building and its investment activities.

The Board believes that such expansion is the logical next step in the development of the Group. Having developed a strong track record of successful operational and financial development of its existing portfolio, and recognising that the UK has a major gap between scientific research and successful commercialisation, the Board believes that combined with a significant fund raising this presents an excellent time to embark on the expansion of Imperial Innovations' platform.

In addition to working with Imperial College London, the Group intends to work more closely than at present with other Research Intensive Universities, to comprise initially the University of Cambridge, the University of Oxford, and University College London. This is with a view to applying the Group's core platform of skills of building and investing in technology businesses emanating from those universities, in a way similar to that currently applied to technology from Imperial College London. The Board's view is that this will increase value to Shareholders over the longer-term, using the platform of building and investing in Spin-out companies from Imperial College London across a wider field and providing more prospects for growth than would otherwise be the case.

The Group has a history of co-operation with the University of Cambridge, the University of Oxford and University College London through its collaborations with Cambridge Enterprise Limited, Oxford Spin-out Equity Management and UCL Business PLC respectively (the "Collaborations"), and intends to build on those relationships. These organisations are responsible for managing equity in spin-out companies from their respective universities. Imperial Innovations has received non-binding letters of support from each of these organisations to explore opportunities to increase co-operation on an operational basis in the incubation of, and investment in, technology companies emanating from each of those universities. Together, those letters of support highlight the demand for the type of funding offered by Imperial Innovations and future investment by Imperial Innovations in university spin-outs, and an opportunity both to increase co-operation on an operational basis and to exploit research synergies and cross-fertilisation of research. The Board believes that such support, together with the enlarged balance sheet following the Equity Raise, will serve to provide the Group with a platform for the growth of the business over the longer-term.

To this end, Imperial Innovations proposes the Equity Raise to raise proceeds of approximately £140 million. Of these proceeds, approximately £10.0 million is being raised by the Rights Issue, £55.5 million by the First Instalment of New Convertible B Shares, £37.0 million by the Second Instalment and £37.0 million by the Third Instalment. No consideration is being received by the Company on the issue of the Warrants, as the Warrants are being issued or provisionally allotted to the Major Shareholders in consideration for them agreeing to not take up their Rights. The proceeds of the Equity Raise will be used to:

·; accelerate the making, and increase the size, of its investments in portfolio companies from its existing pipeline with Imperial College London, seeking to enable those companies to achieve their commercial goals more quickly and effectively and to allow the Group to maintain its participation in or increase its equity holdings in such companies and to develop more such opportunities. It is currently anticipated that approximately 40 per cent. of the net proceeds will be utilised for this purpose; and

·; to make investments in companies founded by or based on technology from a number of other universities or research establishments that in the Group's view are carrying out intensive scientific research. The Group currently considers that the University of Cambridge, the University of Oxford and University College London (together with Imperial College London) fall into this category of Research Intensive Universities, but may choose in the future to make investments emanating from other universities and research establishments that it considers to fall into this category. It is currently anticipated that approximately 60 per cent. of the net proceeds will be utilised for this purpose.

The majority of the proceeds of the Equity Raise will result from the Warrant Issue. However, the Board, with the principles of pre-emption in mind, is aware that the Warrant Issue would, on its own (and assuming payment in full of the Second Instalment and the Third Instalment), be dilutive to non-participating Shareholders. In the context of a significant increase in capital, the Board believes that all Shareholders should have the opportunity to participate in the issue pro rata to their existing holding and is offering all Qualifying Shareholders the opportunity to acquire New Ordinary Shares at the same price of 350 pence per New Ordinary Share by way of the Rights Issue. For reasons imposed by the Consumer Credit Act, the Warrant Issue cannot be offered to all Shareholders. Qualifying Shareholders who take up all their Rights will not be diluted and will receive fully transferable fully paid New Ordinary Shares on closing of the Rights Issue.

Major Shareholders will, instead of participating in the Rights Issue, be issued or provisionally allotted Warrants as part of the Warrant Issue (comprising 93.5 per cent. of the Equity Raise) which give the right to subscribe for New Convertible B Shares at 350 pence each payable in 3 instalments comprising 150 pence payable during the period of the Rights Issue, 100 pence on the first anniversary of the closing of the Rights Issue and 100 pence on the second anniversary of the closing of the Rights Issue.

Immediately following the Equity Raise, Imperial Innovations will have minimum cash and other short-term fund reserves of £61.0 million and will have commitments, from the New Convertible B Shares, of £37.0 million to be paid no later than one year after the Rights Issue and a further £37.0 million to be paid no later than two years after the Rights Issue.

The Directors of Imperial Innovations believe that the Equity Raise will provide the Group with the capital required for investment whilst enabling the Group to demonstrate its financial strength and ability to deploy capital on behalf of technology businesses and their management teams. The New Convertible B Share structure will also reduce the amount of surplus cash held by the Group and maintain an efficient balance sheet, whilst the Rights Issue will allow shareholders to participate in the Equity Raise and retain their percentage stake in the Group following completion of the Equity Raise. The Directors also believe that the delayed receipt of the Second Instalment and the Third Instalment in respect of the New Convertible B Shares will not affect opportunities available to the Group to build and invest in new technology businesses emanating from Imperial College and the other Research Intensive Universities.

Following the Equity Raise, the Directors believe that the increased balance sheet capacity will improve Imperial Innovations' ability to take leading roles in investment rounds throughout the development of its portfolio companies and accelerate the development of its more capital intensive opportunities. In turn, the Board believes this will be advantageous in the building of new technology businesses especially in the early recruitment of experienced management teams and that increased balance sheet capacity will also be beneficial in procuring new opportunities.

The IP commercialisation approach that will be adopted by Imperial Innovations will include the following:

·; continuation of the building of, and investment in, technology businesses across a portfolio at all stages of development; and

·; seeking opportunities for technology business building and investment at all Research Intensive Universities by applying the same processes for building and investing in technology businesses currently applied to Imperial College London sourced businesses, save that during an initial phase, the Group intends to invest selectively in a small number of established technology businesses from Research Intensive Universities (in addition to Imperial College London) where the Group has not been involved in the building of those businesses but where the Group has evaluated the opportunity for investment over a period of months and has tracked progress and established working relationships with the management teams prior to investing.

The Directors believe that participation in the Equity Raise offers investors the opportunity to participate in the future of one of the leading UK technology investment companies focused on investing in UK technologies emanating from Research Intensive Universities.

The initial Research Intensive Universities identified are the top four universities by publication and citation in Europe. In combination their academics have been awarded 136 Nobel Prizes. They are also the top four universities in the UK by research income totalling £1.1 billion per annum, being a quarter of all UK research income of UK universities.

A comparison of metrics (2008/09) in respect of the Research Intensive Universities is set out below:

1. Submissions to RAE 2008. The Full Time Equivalent Category A staff submitted does not necessarily constitute the total FTE of staff who were active in research in that Research Intensive University on the census date.

2. Data for 2010.

3. This comprises investments by the Group.

Sources: Research Assessments Exercise profile 2008 (RAE), Higher Education Statistics Agency returns 2008/9 (HESA), ISIS Innovation annual report 2009 (Technology from the University of Oxford) (ISIS), Higher Education - Business and Community Interaction Survey 2008/9 (HE-BCI) conducted via the Higher Education Information Database for Institutions (HEIDI), Patbase list of Cambridge patents with priority filing in 2008/9, University College of London Business annual report 2008/9 (UCLB), Oxford Spin-Out Equity Management presentation 2010 (OSEM) and University Challenge Seed Fund (UCSF) as detailed in the ISIS Innovation 2009 annual report (in reference to source of funds for Oxford).

4. Details of the Equity Raise

(a) Structure

As a result of the Group's intention to use the proceeds from the Equity Raise principally to invest further in its existing portfolio from Imperial College London and to take advantage of the future flow of intellectual property from Imperial College London and resulting from the Collaborations, the Company is now seeking to raise £140 million (before fees and expenses) by means of the Equity Raise. The Company is proposing to offer Qualifying Shareholders (other than Qualifying Shareholders with a registered address or who are resident or located in the United States or, subject to certain exceptions that may apply, any of other Restricted Territories):

2 New Ordinary Shares for every 3 Existing Ordinary Shares registered in the name of Qualifying Shareholders on the Record Date

(and so on in proportion for any other number of Existing Ordinary Shares then held)

The Issue Price of 350 pence represents a discount of approximately 26.7 per cent. to the middle market closing price for an Existing Ordinary Share of 477.5 pence on 6 December 2010 (being the latest practicable date prior to this announcement). The discount is considered appropriate, taking into consideration the likely participation of Shareholders and the dilution effect on non-participating Shareholders.

Application will be made to the London Stock Exchange for the New Ordinary Shares (nil paid and fully paid) to be admitted to trading on AIM.

The Major Shareholders have irrevocably undertaken with the Company neither to take up nor sell their Rights (other than in respect of any Existing Ordinary Shares which may be placed on behalf of the Employee Trust as part of the Placing) and the Warrants will be issued or provisionally allotted to the Major Shareholders on the following basis:

Warrants giving the right to subscribe for 2 New Convertible B Shares for every three Existing Ordinary Shares registered in the name of Major Shareholders on the Record Date

(and so on in proportion for any other number of Existing Ordinary Shares then held)

Neither the Warrants nor the New Convertible B Shares are transferable, nor will they be admitted to trading on AIM or eligible for holding in CREST.

The New Ordinary Shares to be issued pursuant to the Rights Issue will, when issued and fully paid, rank pari passu in all respects with the Existing Ordinary Shares and will carry the right to receive all dividends and distributions declared, made or paid on or in respect of the Ordinary Shares after the date of their issue.

The Nil Paid Rights (also described as New Ordinary Shares, (nil paid)) are entitlements to acquire the New Ordinary Shares subject to payment of the Issue Price. The Fully Paid Rights are entitlements to receive the New Ordinary Shares, for which a subscription payment has already been made.

Holdings of Existing Ordinary Shares in certificated and uncertificated form will be treated as separate holdings for the purpose of calculating entitlements under the Rights Issue. Entitlements to New Ordinary Shares will be rounded down to the next lowest whole number and fractions of New Ordinary Shares will not be allotted to Qualifying Shareholders. Such fractions will be aggregated and, if possible, sold as soon as practicable after the commencement of dealings in the New Ordinary Shares (nil paid). The net proceeds of such sales (after deduction of expenses) will be aggregated and will ultimately accrue for the benefit of the Company.

The New Ordinary Shares and the Existing Ordinary Shares are in registered form and can be held in certificated form or uncertificated form via CREST. No application will be made to the London Stock Exchange for either the Warrants or the New Convertible B Shares to be admitted to trading on AIM or any other stock exchange, but application will be made to the London Stock Exchange for the Ordinary Shares to be issued on conversion of the New Convertible B Shares to be admitted to trading on AIM.

The Company and J.P. Morgan Cazenove have entered into the Underwriting Agreement, pursuant to which J.P. Morgan Cazenove has agreed to procure subscribers for any New Ordinary Shares in respect of which Qualifying Shareholders (other than the Major Shareholders, with the exception of the Employee Trust in respect of any Existing Ordinary Shares which may form part of the Placing) do not take up their Rights under the Rights Issue, failing which J.P. Morgan Cazenove has agreed to subscribe for such New Ordinary Shares.

(b) Commitments

The Board has received irrevocable undertakings from the Major Shareholders neither to take up nor to sell their Rights under the Rights Issue, representing an aggregate of 36,990,086 New Ordinary Shares. Accordingly, these Rights will lapse on completion of the Rights Issue. As these Rights are not being underwritten by J.P. Morgan Cazenove no premium will be payable to the Major Shareholders. Instead, Imperial Innovations will issue to Invesco, Lansdowne, Sand Aire and Sussex Research and provisionally allot to Imperial College London and the Employee Trust, Warrants to subscribe for 2 New Convertible B Shares for every 3 Ordinary Shares held at the close of business on the Record Date. The aggregate number of New Convertible B Shares represents 37.1 per cent. of the Enlarged Issued Share Capital.

Further to these arrangements, Invesco, Lansdowne, Sand Aire and Sussex Research have irrevocably undertaken not to take up their Rights and to exercise their respective Warrants and subscribe for New Convertible B Shares. Imperial College London and the Employee Trust have, pursuant to the terms of the Renunciation and Warrant Placing Agreement, irrevocably agreed to renounce the issue of Warrants to them once they are provisionally allotted and J.P. Morgan Cazenove has conditionally placed these 21,308,767 Warrants on behalf of Imperial College London and the Employee Trust with Invesco at a price of 30 pence per Warrant. Invesco has, subject to satisfaction of the conditions to the Equity Raise, irrevocably undertaken to accept and exercise the Warrants conditionally renounced by Imperial College London and the Employee Trust.

As a result of the above arrangements, Invesco will increase its percentage holding in the Enlarged Issued Share Capital to 45.6 per cent. and the percentage holding of Imperial College London in the Enlarged Issued Share Capital will decrease to 30.3 per cent.

The Major Shareholders have also given irrevocable undertakings to vote their Existing Ordinary Shares in favour of the Resolutions at the General Meeting (other than in relation to any Existing Ordinary Shares which may be placed by J.P. Morgan Cazenove on behalf of the Employee Trust following this announcement), representing in aggregate 92.8 per cent. of the Existing Issued Share Capital.

The undertakings from the Major Shareholders to exercise Warrants referred to above, represent in aggregate 92.8 per cent. of the Equity Raise and the whole of the Warrant Issue. Those Rights not subject to the undertakings or agreements from the Major Shareholders referred to above, representing 7.2 per cent. of the Equity Raise is being underwritten by J.P. Morgan Cazenove.

(c) Conditionality

The Equity Raise is conditional upon, amongst other things, the following:

·; the passing without amendment of the Resolutions to be proposed at the General Meeting of the Company to be held on 6 January 2011;

·; the Underwriting Agreement having become unconditional in all respects (save for the condition relating to Admission) and not having been terminated in accordance with its terms prior to Admission;

·; the Renunciation and Warrant Placing Agreement having become unconditional in all respects (save for the condition relating to Admission) and not having been terminated in accordance with its terms prior to Admission; and

·; Admission of the New Ordinary Shares (nil paid) becoming effective by not later than 8.00 a.m. on 7 January 2011 (or such later date (not being later than 31 January 2011) as the Company and J.P. Morgan Cazenove may agree).

Accordingly, if any of these conditions is not satisfied or J.P. Morgan Cazenove exercises a termination right prior to Admission, the Equity Raise will not proceed.

On or around the date of this announcement an aggregate of 500,000 Existing Ordinary Shares will be placed, cum-rights, by J.P. Morgan Cazenove on behalf of the Employee Trust, Chairman, Executive Directors and certain other employees, for personal financial planning reasons.

5. Takeover Code Waiver

The terms of the Equity Raise give rise to certain considerations under the Takeover Code. Brief details of the Panel, the Takeover Code and the protection they afford are given below.

The Takeover Code is issued and administered by the Panel. The Company is a company to which theTakeover Code applies and, as such, its Shareholders are entitled to the protections afforded by the Takeover Code. The Takeover Code and the Panel operate principally to ensure that shareholders are treated fairly and are not denied an opportunity to decide on the merits of a takeover. The Takeover Code also provides an orderly framework in which takeovers are conducted.

Under Rule 9 of the Takeover Code, where any person acquires an interest in shares which (taken together with shares in which he is already interested and in which persons acting in concert with him are interested) carry 30 per cent., or more of the voting rights of a company which is subject to the Takeover Code, that person, and any person acting in concert with him, is normally required by the Panel to make a general offer in cash to the shareholders for the remaining shares in that company not held by him and his concert party.

Rule 9 further provides that where any person, together with persons acting in concert with him, is interested in shares which in aggregate carry not less than 30 per cent., of the voting rights of a company but does not hold shares carrying more than 50 per cent., of such voting rights, a general offer would normally be required if any further interests in shares are acquired by any such person.

An offer under Rule 9 must be made in cash and at the highest price paid by the person required to make the offer or any person acting in concert with him for any interest in shares of the company, within the 12 months preceding the date of the announcement of such offer.

Under the Takeover Code, a concert party arises when persons who, pursuant to an agreement or

understanding (whether formal or informal), co-operate, to obtain or consolidate control of a company subject to the Takeover Code.

Following the Equity Raise, Imperial College London will reduce its holding of voting shares from 50.4 per cent. to 30.3 per cent. of the Enlarged Issued Share Capital and Invesco will increase its holding of voting shares from 24.2 per cent. to 45.6 per cent..

Following certain confirmations given by Imperial College London to the Panel, including confirmation that Imperial College London, as a shareholder holding more than 50 per cent. of the shares in the Company capable of being voted at a meeting of shareholders, agrees to the waiver, the Panel has approved a waiver of the obligations on Invesco to make a Rule 9 offer without the requirement for the waiver to be approved by independent shareholders at a general meeting.

6. Terms of the New Convertible B Shares

The New Convertible B Shares represent a separate class of shares but, save as expressly provided for in the New Articles of Association which will be summarised in the Prospectus, will rank pari passu in all respects with the Ordinary Shares. The New Convertible B Shares have a nominal value of 350p but will not be transferable other than in connection with a general offer in accordance with the Takeover Code. The New Convertible B Shares will carry no right to dividends and other distributions declared, made or paid during the period of their issue. Imperial Innovations has resolved not to pay dividends or make other distributions until the earlier of conversion of all New Convertible B Shares into Ordinary Shares and the second anniversary of the closing of the Rights Issue.

Once the Company has received all payments in respect of the Issue Price of all New Convertible B Shares held by a holder, all New Convertible B Shares held by that holder will be converted into fully paid Ordinary Shares on the basis set out below in such manner as may be authorised by law and as the Directors from time to time may determine.

Persons who subscribe for New Convertible B Shares pursuant to the Warrants will be able to convert their New Convertible B Shares into Ordinary Shares in advance of the due date for the Third Instalment by paying the remaining amount of the Issue Price at any time of their choosing. Upon payment in full of the Issue Price (at any time) by a holder the New Convertible B Shares of that holder will convert into fully paid Ordinary Shares on the basis set out below.

On conversion of the New Convertible B Shares, a holder shall be entitled to one Ordinary Share for each New Convertible B Share held and the Ordinary Shares resulting from the conversion will in all respects rank as one uniform class with the issued and fully paid Ordinary Shares then in issue.

No application will be made to the London Stock Exchange for either the Warrants or the New Convertible B Shares to be admitted to trading on AIM or any other stock exchange, but application will be made to the London Stock Exchange for the Ordinary Shares to be issued on conversion of the New Convertible B Shares to be admitted to trading on AIM.

If a holder of New Convertible B Shares fails to meet its obligations with respect to payment of either the Second Instalment or the Third Instalment as and when due, its New Convertible B Shares will be liable to forfeiture in accordance with the procedures to be set out in the New Articles of Association. If a holder's New Convertible B Shares are forfeited, those shares will become the property of the Company and will be subject to disposal by the Company or cancellation. Notwithstanding forfeiture, the holder will remain liable to pay the Company all monies which at the date of forfeiture were then payable by it to the Company in respect of the forfeited shares, with interest, and will remain liable to satisfy any instalments of the Issue Price for those shares falling due after the date of forfeiture.

7. Effect of the Equity Raise

Upon completion of the Equity Raise, the New Ordinary Shares and the New Convertible B Shares will represent approximately 40.0 per cent. of the Enlarged Issued Share Capital. The New Ordinary Shares and New Convertible B Shares will be issued pursuant to authorities to be sought at the General Meeting. Following the issue of the New Ordinary Shares and New Convertible B Shares pursuant to the Equity Raise, a Qualifying Shareholder who takes up their Rights in full in respect of the Rights Issue (and in the case of a Major Shareholder who exercises their Warrants in full and subscribes for New Convertible B Shares and subsequently pays the Second Instalment and the Third Instalment as and when due (whether on the relevant anniversary of the closing of the Rights Issue or at such earlier date as the Directors may call in accordance with the New Articles of Association in the event of a general offer pursuant to the Takeover Code)) will not suffer a dilution to their interests in the Group. A Qualifying Shareholder who does not take up any of their Rights (or in the case of a Major Shareholder who does not exercise its Warrants in full or who subscribes for New Convertible B Shares, but does not pay either the Second Instalment or the Third Instalment and therefore forfeits their New Convertible B Shares without compensation) will suffer a dilution of 40.0 per cent. to their interests in the Group.

The Equity Raise will result in an increase in cash and other short-term funds of £61.0 million with a corresponding increase in net assets of £132.3 million. Had the Net Initial Proceeds of the Equity Raise been received on 31 July 2010, it would have increased the Group's net assets for the 12 month period ended 31 July 2010 and would have led to an increase in cash and cash equivalents and an increase in and net assets of £132.3 million as at 31 July 2010.

8. Current trading and prospects

The Group continues to make good progress as shown by the level of investment in 2010, where the Group invested £14.0 million in its portfolio which raised £75 million in total and growth in realisations to £9.9 million (net of revenue share).

Of particular note was the sale of Respivert, raising £9.5 million of gross cash proceeds. The Group made a profit after tax of £5.5 million with a similar increase in net asset value.

Imperial College London remains a source of valuable intellectual property to be exploited by the Group. Over the course of the year, 344 inventions were disclosed, 48 patents were filed, the uncommercialised patent portfolio stands at 207 and three businesses were formed with initial funding and management, making a total of 79 companies in the portfolio as a whole. It is anticipated that the opportunities to invest larger sums in businesses emanating from Imperial College London will continue to increase.

9. Dividend policy

Imperial Innovations does not currently pay a dividend. It is the current intention of the Directors to re-invest the net proceeds of any realisations in the Group's current and future portfolio companies. However, the Directors may consider the payment of dividends in the future when, in their view, the Group has sufficient distributable profits after taking into account the working capital position of the Group.

Imperial Innovations has resolved not to pay dividends or make other distributions until the earlier of conversion of all New Convertible B Shares into Ordinary Shares and the second anniversary of the closing of the Rights Issue.

10. Senior independent Non-Executive Directors

Historically, the Company has not appointed a senior independent Non-Executive Director as the Board did not believe it was appropriate to make such an appointment given the Company's size and development. Following completion of the Equity Raise, and in recognition of the Company's increased size, the Company has decided to appoint a senior independent Non-Executive Director. The first senior independent Non-Executive Director will be Dr. David Allen.

11. General Meeting

As noted above, completion of the Equity Raise is subject to a number of conditions, including the approval by Shareholders of the Resolutions being obtained at the General Meeting. The Prospectus will contain a notice convening a General Meeting to be held at the Group's registered office at 52 Princes Gate, Exhibition Road London SW7 2PG at 12.00 p.m. on 6 January 2011 at which the Resolutions in connection with the Equity Raise will be proposed

The first Resolution is a special resolution and proposes to remove the Company's authorised share capital limitations following their abolition by the 2006 Act. The Directors will still be limited as to the number of shares they can allot at any time because the allotment authority continues to be required under the 2006 Act, save in respect of employee share schemes. The first Resolution also removes restrictions on the Company's objects, as permitted by the 2006 Act and proposes the adoption of the New Articles of Association.

The second Resolution, which is conditional on the passing of Resolution 1 and is also a special resolution proposes to:

(i) authorise the Directors under s551 of the 2006 Act to allot shares in the Company or grant rights to subscribe for or to convert any security into shares in the Company ("Relevant Securities") up to a maximum aggregate nominal amount of £1,207,891.3 for the purposes of the Rights Issue and up to a maximum nominal amount of £129,465,301.0 for the purposes of the Warrant Issue. If given, this authority will expire on the conclusion of the Company's 2011 annual general meeting. The total authority of the Directors to allot relevant securities will relate to approximately 128.5 per cent. of the Existing Issued Share Capital. The purpose of the authority is to enable the Directors to allot 39,860,414 New Ordinary Shares and 36,990,086 Warrants in connection with the Equity Raise; and

(ii) disapply the pre-emption rights provisions in the New Articles of Association in respect of the allotment of equity securities (as defined in s560 of the 2006 Act) pursuant to the Equity Raise. Article 4.7(a)(ii) of the New Articles of Association gives all Shareholders the right to participate on a pro rata basis in all issues of equity securities for cash, unless they agree that this right should be set aside. Pursuant to this resolution pre-emption rights will be disapplied up to an aggregate nominal amount of £1,207,891.3 in connection with the Rights Issue and up to an aggregate nominal amount of £129,465,301.0 in connection with the Warrant Issue. If given, this authority will expire at the same time as the authority referred to in paragraph (i) will expire.

The Directors have no present intention to exercise any of the powers sought under the Resolutions except in relation to the Equity Raise.

12. Intentions of Directors

The Directors are fully supportive of the Equity Raise but, for personal financial planning reasons, on release of this announcement, J.P. Morgan Cazenove has agreed to use its reasonable endeavours to place 8.6 per cent. of the Executive Directors respective holdings, and 17.3per cent. of the Chairman's holding of Ordinary Shares, in part from their beneficial holdings and in part from those Ordinary Shares notionally allocated for their benefit in the Employee Trust. This placing is not being underwritten. The Chairman, the Executive Directors and Mark Rowan intend not to take up their Rights. The remainder of the Non-Executive Directors, who are shareholders, each intend to take up their Rights in full under the Rights Issue.

Each of the Directors who is a Shareholder on the Record Date intends to vote in favour of the Resolutions.

13. Related party transactions

By virtue of their holdings of Existing Ordinary Shares, the irrevocable undertakings from, and participation in the Warrant Issue by, each of Imperial College London, Invesco and Lansdowne is a related party transaction for the purpose of the AIM Rules, as is the entry into of the College Side Letter. The Directors, (with the exception in relation to the transaction with Imperial College London only, of Dr. Martin Knight and Professor Stephen Richardson who are involved as a related party due to their positions within Imperial College), consider, having consulted with its nominated adviser, J.P. Morgan Cazenove, that the terms of the transactions are fair and reasonable insofar as its shareholders are concerned.

Expected timetable of principal events for the Equity Raise

Each of the dates in the above timetable is subject to change without further notice. References to times and dates in this announcement are to London times unless otherwise stated.

Definitions

 "Admission" the admission of the New Ordinary Shares (nil paid) to trading on AIM becoming effective in accordance with Rule 6 of the AIM Rules

"AIM" the market of that name operated by the London Stock Exchange

"AIM Rules" the rules and guidance for companies whose shares are admitted to trading on AIM and their nominated advisers entitled "AIM Rules for Companies" published by the London Stock Exchange, as amended from time to time

"Board" the Board of directors of the Company

"Collaborations" the collaborations between Imperial Innovations and each of Cambridge Enterprise Limited, Oxford Spin-out Equity Management and UCL Business PLC

"Company" or "Imperial Innovations" Imperial Innovations Group plc, a company registered in England and Wales with registered number 05796766

"CREST" the relevant system (as defined in the CREST Regulations) operated by Euroclear in accordance with which securities may be held or transferred in uncertificated form

"Directors" the directors of the Company and "Director" shall mean any one of them

"Disclosure and Transparency Rules" the disclosure rules and transparency rules issued by the FSA acting in its capacity as the competent authority pursuant to section 73A of FSMA

"Employee Trust" the Imperial Innovations Limited employee benefit trust of which the trustee is RBC cees Trustee Limited

"Enlarged Issued Share Capital" the 62,660,949 Ordinary Shares and the 36,990,086 New Convertible B Shares which will be in issue following completion of the Equity Raise (assuming that no further options are exercised between 6 December 2010 2010, being the latest practicable date prior to the date of the Prospectus, and closing of the Rights Issue)

"Equity Raise" the Rights Issue and the Warrant Issue

"Executive Directors" Susan Searle, Julian Smith and Russ Cummings

"Existing Ordinary Shares" Ordinary Shares in issue as at the Record Date

"Existing Issued Share Capital" the Existing Ordinary Shares

"First Instalment" 150 pence payable in respect of each New Convertible B Share on exercise of the Warrants

"Form of Proxy" the form of proxy for use at the General Meeting

"Fully Paid Rights" rights to acquire the New Ordinary Shares, fully paid

"General Meeting" the general meeting of Shareholders proposed to be held at the Group's registered office at 52 Princes Gate, Exhibition Road, London SW7 2PG at 12 p.m. on 6 January 2011, notice of which will be set out in the Prospectus, and any adjournment thereof

"Group" the Company and its subsidiaries and subsidiary undertakings and "member of the Group" shall be construed accordingly

"Invesco" Invesco Asset Management Limited (incorporated in England and Wales, registered with number 00949417) whose registered office is at 30 Finsbury Square, London EC2A 1AG, one of the Major Sharholders

"Investee company" a company established for exploiting intellectual property created by a Research Intensive University in which company the Group has an equity interest as a result of the transfer or license intellectual property or monetary investment (and, for the avoidance of doubt, "Investee company" includes the Spin-out companies)

"Issue Price" 350 pence per New Ordinary Share or 350 pence per New Convertible B Share, in the latter case comprising the First Instalment, the Second Instalment and the Third Instalment

"Imperial College London" Imperial College London of Science, Technology and Medicine of Sheffield Building, Imperial College London, London SW7 2AZ incorporated by Royal Charter, registered with number RC00023 1

"Lansdowne" Lansdowne Partners Limited (incorporated in England and Wales, registered with number 03514088) whose registered office is at 15 Davies Street, London W1K 3AG as being the General Partner of Landsdowne Partners Limited Partnership, the duly authorised agent for Lansdowne UK Equity Fund Limited & Landsdowne UK Equity Fund LP, one of the Major Shareholders;

"London Stock Exchange" London Stock Exchange plc

"Major Shareholders" Imperial College London, Invesco, Lansdowne, the Employee Trust, Sand Aire and Sussex Research

"Net Initial Proceeds" approximately £61.0 million, being the net underwritten proceeds from the Rights Issue and the First Instalment of the New Convertible B Shares

"New Articles of Association" the new Articles of Association proposed to be adopted at the General Meeting, details of which will be set out in the Prospectus

"New Convertible B Shares" convertible B shares of 350 pence each in the capital of the Company proposed to be issued by the Company pursuant to the exercise of the Warrants

"New Ordinary Shares" new Ordinary Shares proposed to be issued by the Company pursuant to the Rights Issue

"Nil Paid Rights" rights to acquire the New Ordinary Shares, nil paid

"Non-Executive Directors" Dr. Martin Knight, Dr. Paul Atherton, Mark Rowan, Dr. David Allen, Professor Stephen Richardson

"Ordinary Shares" ordinary shares of 31⁄33 pence each in the capital of the Company

"Panel" the Panel on Takeovers and Mergers

"Prospectus" the prospectus to be published in connection with the Equity Raise

"Prospectus Rules" prospectus rules made by the FSA under section 73A of FSMA

"Provisional Allotment Letter" or "PAL" the renounceable provisional allotment letter expected to be sent to Qualifying Non-CREST Shareholders (other than Qualifying Shareholders with a registered address in the United States or any other Restricted Territory), in respect of the New Ordinary Shares to be provisionally allotted to them pursuant to the Rights Issue

"Qualifying CREST Shareholders" Qualifying Shareholders holding Ordinary Shares in uncertificated form in CREST

"Qualifying Non-CREST Shareholders" Qualifying Shareholders holding Ordinary Shares in certificated form

"Qualifying Shareholders" holders of Ordinary Shares on the register of members of the Company at the Record Date

"Record Date" close of business on 4 January 2011

"Regulation S" Regulation S under the Securities Act

"Relevant Major Shareholders" means Imperial College London and the trustees of the Imperial Innovations Employee Benefit Trust

"Renunciation and Warrant Placing Agreement" the renunciation and placing agreement dated 6 December 2010 and made between (1) Imperial College London, (2) the RBC cees Trustee Limited (being the trustees of the Imperial Innovations Employee Benefit Trust), (3) the Company and (4) J.P. Morgan Cazenove

"Research Intensive Universities" those universities and research establishments that in the Group's view from time to time are carrying out intensive scientific research including University of Cambridge, the University of Oxford and University College London (together with Imperial College London) (and "Research Intensive University" means any one of them)

"Restricted Territories" and each a "Restricted Territory" United States, Australia, Canada, Japan, South Africa and any other jurisdiction where the extension or availability of the Rights Issue (or any transaction contemplated thereby and any activity carried out in connection therewith) would breach applicable law

"Resolutions" the resolutions to be proposed at the General Meeting, as set out in the notice of General Meeting to be contained in the Prospectus

"Rights" the Nil Paid Rights and the Fully Paid Rights

"Rights Issue" the proposed issue by way of rights of New Ordinary Shares to Qualifying Shareholders on the terms and subject to conditions to be set out in the Prospectus and, in the case of Qualifying Non-CREST Shareholders in the Provisional Allotment Letter

"Sand Aire" Sand Aire Limited (incorporated in England and Wales, registered with number 3066958) whose registered office is at 101 Wigmore Street, London W1U 1QU, one of the Major Shareholders

"Second Instalment" 100 pence payable in respect of each New Convertible B Share on the first anniversary of closing of the Rights Issue

"Securities Act" the United States Securities Act of 1933, as amended

"Shareholders" holders of Ordinary Shares, and additionally following completion of the Equity Raise holders of New Convertible B Shares, each individually being a "Shareholder"

"Spin-out companies" Investee companies established for exploiting intellectual property created by Imperial College London

"Sussex Research" Sussex Research Limited (incorporated in England and Wales, registered with number 04265494) whose registered office is at Brookfield House, Green Lane, Ivinghoe, Leighton Buzzard, Bedforshire LU7 9ES, one of the Major Shareholders

"Takeover Code" the City Code on Takeovers and Mergers, as amended from time to time

"Third Instalment" 100 pence payable in respect of each New Convertible B Share on the second anniversary of closing of the Rights Issue

"Underwriting Agreement" the conditional agreement dated 7 December 2010 between the Company and J.P. Morgan Cazenove in relation to the Rights Issue

"Warrants" the warrants giving right to subscribe for New Convertible B Shares to be created pursuant to a warrant instrument to be executed by the Company

"Warrant Issue" the issue and provisional allotment of Warrants giving the right to subscribe for New Convertible B Shares