7 Oct 2009 07:00
7 October 2009
Imperial Innovations Group plc
Gaining momentum and portfolio maturing as profits reported
Imperial Innovations Group plc (AIM: IVO, "Imperial Innovations", "the Group"), a leading technology commercialisation and investment group, has published audited results for the year to 31 July 2009.
Operational highlights
Refocused investment strategy on fewer, higher-quality opportunities
First major exit has potential to generate £16.1m from £1.5m investment, plus royalty stream.
£14.4m invested in 20 companies
Six new businesses funded and launched
Strong pipeline: 50 patents filed, 328 inventions appraised
Financial highlights
Pre-tax profits £5.3m (2008: loss £6.7m)
Net proceeds from sale of investments £3.9m (2008: £3.3m)
Royalty revenues up 33% to £1.2m (2008: £0.9m)
Net asset value £85.6m (2008: £80.3m)
Cash and short term liquidity investments at year end £30.7m (2008: £43.1m)
Martin Knight, Chairman of Imperial Innovations, said:
"We are uniquely positioned to be able to create, build and invest in ground-breaking technology opportunities addressing large international markets. Our focus is on companies and IP that address the great global challenges: energy usage, healthcare, communications. Breakthrough technologies in these fields are of great potential value.
"Having built a portfolio of pioneering technologies and companies through our collaboration with, and proprietary access to the IP emanating from Imperial College London, 2009 was a year in which we began to realise substantial value from our investments. We achieved a creditable financial performance with the first major disposal and a notable increase in net asset value, all at a time of great economic uncertainty.
"Our approach is now proven and we are building a long term sustainable position supported by a strong balance sheet. We are well positioned to deliver further exits from an array of impressive and well-managed companies in the portfolio; and the pipeline of attractive investment and licence opportunities remains strong.
"The Board remains confident that the momentum and good progress achieved last year will be maintained in the current financial year."
Enquiries:
| Imperial Innovations | 020 7594 6589 |
| Martin Knight, Chairman | |
| Susan Searle, Chief Executive Officer | |
| Julian Smith, Finance Director | |
| College Hill | 020 7457 2020 |
| Adrian Duffield/Sue Charles | |
| J.P. Morgan Cazenove | 020 7588 2828 |
| Steve Baldwin |
Note to Editors - www.imperialinnovations.co.uk
Imperial Innovations is one of the UK's leading technology commercialisation and investment companies. Founded in 1986 and admitted to the AIM in 2006, Imperial Innovations' access to early stage technology and intellectual property is unparalleled.
Imperial Innovations' integrated commercialisation approach encompasses the identification of ideas, the protection of intellectual property, the development and licensing of technology and the formation, incubation and funding, through investment, of technology businesses.
Based at Imperial College London, Imperial Innovations' portfolio of equity holdings in more than 80 companies spans its three core areas of energy usage, healthcare, communications.
Companies in the portfolio of Imperial Innovations include: Circassia (allergy therapeutics), Evo Electric (electric motor and generator solutions), Nexeon (lithium ion battery technology), Polytherics (drug development), Quantasol (solar concentrators) and Respivert (respiratory drug development).
A complete copy of the Annual Report and Accounts for the year ended 31 July 2009 can be found at http://www.imperialinnovations.co.uk/annualreport2009.pdf
Strategic Overview
The Group has made good progress towards the fulfilment of its business objectives to generate attractive and sustainable financial returns from the commercialisation of early stage technology based intellectual property.
In the course of the year ended 31 July 2009, Innovations invested £14.4 million in 20 companies while the portfolio of businesses raised in total over £41 million. Four businesses were sold; six new technology businesses were funded with launch management teams; 328 inventions were disclosed; and 50 patents were filed.
The Group reported a pre-tax profit of £5.3 million (2008: loss £5.9 million) and a 7% increase in net asset value. The Group realised £3.9 million net cash from the sale of equity holdings and closed the year with cash and short term liquidity investments of £30.7 million (2008: £43.1 million). Net assets at the year end were up by £5.3 million to £85.6 million (2008: £80.3 million), reflecting the Group's performance including the upward revaluation of its portfolio.
There were also a number of developments which are significant pointers for the Group's future prospects: the first major exit; the disposal of three non core holdings and that most of the £14.4 million invested went into later stage funding rounds, which demonstrated the maturing of the Group's portfolio.
The Group aims to complete at least one large exit every year as well as a number of smaller ones.
In October 2008, following the rapid change in the economic climate, the Board implemented a detailed review of the Group's portfolio and business activity. This resulted in the Group modifying its strategy to focus its resources on a smaller group of companies, where the combination of management, technology and market opportunity, matched with both Innovations' and third party funding can ensure the optimum chance of success.
The Group is now making fewer but larger investments in companies and focusing on areas where higher returns are more likely. It is also increasingly active in managing the key portfolio companies, leading investment rounds and working closely with founders.
As a result of this focus, the top six companies have made great progress. Furthermore, in the next 10 companies there are some promising developments and a combination of great technology and management teams. The Group considers that the quality of each company's management is pivotal to success and this year has attracted eight new chairman and six chief executives into the businesses.
Throughout the year the Group continued to create new companies and secure seed funding, developing them in a capital efficient manner using the resources of the Imperial Incubator. The Group has maintained its high quality threshold level before fully supporting new businesses.
The intellectual property pipeline is still very strong. The expenditure on patents, the number of invention disclosures and the 213 as yet commercially unexploited patents are evidence of a rich pool of intellectual property (IP) available to the Group.
Innovation's licensing activity has continued with the same focus on technologies that have the potential for scale and are clearly meeting industrial needs.
As part of the strategic review, the Group's cost base was cut by an annualised amount of £0.8 million.
Financial review
Revenues, cost of sales and operating costs
Total revenues were £4.3 million (2008: £5.3 million). The decline mostly reflects the reduced up-front fees on licensing and technology transfer and partially offset by increased royalty income and corporate finance fees.
Royalty revenue from IP licences increased to £1.2m (2008: £0.9 million). Income from initial licence payments was £0.8 million (2008: £1.7 million), reflecting in part the wider economic climate and the reduction in up-front fees.
IP management consultancy fees from Imperial College London and others was £1.3 million (2008: £1.6 million). This expected decrease reflects Imperial College taking on more of the administrative burden of the IP due diligence and management under the terms of the Technology Pipeline Agreement. However, this was offset by a £0.2 million increase in corporate finance fees to £0.5 million (2008: £0.3 million) and other income was £0.5 million (2008: £0.8 million).
The cost of sales, arising largely from the revenue-sharing arrangement with Imperial College London, decreased by 27% to £1.1 million (2008: £1.5 million), principally reflecting the decreased licensing activity. Also higher prior year costs reflect the higher revenue share on the development phase of a particular significant licence contract during 2008.
Operating costs, excluding the share based payment charge, increased to £6.8 million (2008: £6.7 million). Of this, £1.3 million (2008: £1.3 million) was expenditure incurred filing patents and protecting the Group's as-yet unexploited IP.
The Group's cost base was reduced by £0.8 million per annum, although the associated redundancy and reorganisation costs resulted in a one off charge of £0.3 million this year. The full financial benefit of this reorganisation should be felt in the current financial year. The Group has also implemented a tight cost control and cash management approach in its portfolio companies.
Interest income was £2.0 million (2008: £2.3 million), reflecting the scale of the Group's cash balance.
The Group reported a pre-tax profit of £5.3 million (2008: loss £5.9 million) with earnings per share of 9.23p (2008: loss per share 10.63p). The Board is not recommending the payment of a dividend.
Cash
The Group ended the year with total cash reserves of £30.7 million, comprising £1.4 million of cash and £29.3 million of short-term liquid resources. This is a decrease of £12.4 million from the opening balance of £43.1 million on 1 August 2008 and can be analysed as follows.
| 2009 £m | 2008 £m | |
| Net cash used in operating activities | (3.7) | (4.8) |
| Purchase of trade investments | (14.0) | (6.2) |
| Net proceeds from sale of trade investments | 3.4 | 3.3 |
| Net cash used from other investing activities | 8.6 | (34.0) |
| Financing activities (issue of net equity) | - | 29.3 |
| Movement during year | (5.7) | (12.4) |
| Adjustment for short term liquidity investments | (6.7) | 36.0 |
| Movement in net cash reserves | (12.4) | 23.6 |
The Group invests cash surplus to working capital requirements in short-term deposits, classified as short term liquidity investments, across a number of banks with a focus on capital preservation rather than interest earned. The Group has no foreign currency deposits.
Investment portfolio performance
The investment portfolio grew from £50.9 million spread across 89 companies, to £55.8 million across 80 companies. Portfolio companies raised more than £41 million from all sources of investment during the year.
The fair value of the holdings increased by £3.3 million (2008: loss £7.1 million), before taking into account associated revenue sharing obligations, and by £6.9 million (2008: loss £3.0 million) after these obligations.
| Portfolio movements excluding cash invested | 2009 £m | 2008 £m |
| Gains on the revaluation of investments | 12.3 | 4.0 |
| Losses on the revaluation of investments | (9.0) | (11.1) |
| Fair value gains / (losses) | 3.3 | (7.1) |
| Movement in associated revenue sharing obligations | 3.6 | 4.1 |
| Net fair value gain / (loss) | 6.9 | (3.0) |
Investment and divestment
The Group made £14.4 million of investments to fund 20 technology companies in its portfolio. The early stage nature of many of the technology companies is such that investments are made on a milestone/tranche basis that matches the companies' need for cash with the achievement of agreed milestones. This provides investment security for the companies and more control over the Group's cash payments to the portfolio.
Additional investment commitments undrawn at the year end amounted to £3.1 million. Additionally, some investments are made as convertible loans and at the year end there was a total of £7.5 million outstanding, which is included in fixed-asset investments.
The Group realised net cash proceeds after revenue sharing obligations of £3.9 million (2008: £3.3 million) from the partial realisation of four investment assets. Total net investment after net cash disposals in the year was £10.6 million (2008: £3.0 million).
Portfolio company creation
A total of 20 companies in the portfolio achieved successful follow-on funding rounds during the year. Equity acquired relates to equity stakes acquired in companies in consideration for licences granted or services rendered.
As a result of the focus on fewer start ups of higher quality, the Group formed four companies compared to 11 during the last financial year, although the number of propositions remained at a healthy 31. The Group seed funded, with launch management teams, six companies (2008: four companies).
Portfolio company overview
The table below sets out the top 10 technology companies, by value, in the portfolio including contingent deferred consideration, to illustrate the spread of the investments held and their relative carrying value. All of the carrying values listed below reflect the net fair value of the investment, being the gross value of the holding less the attributable revenue-sharing obligations associated with each investment. The percentage of issued share capital represents the absolute percentage of the shares held, without reflecting any revenue-sharing obligations.
| Company | Net investment carrying value at 31 July 2008 | Cash invested / (cash divested) 12 months to 31 July 2009 | Net movement in carrying value 12 months to 31 July 2009 | Net investment carrying value at 31 July 2009 | % of Issued share capital held 31 July 2009 |
| Company | Net investment carrying value at 31 July 2008 | Cash invested / (cash divested) 12 months to 31 July 2009 | Net movement in carrying value 12 months to 31 July 2009 | Net investment carrying value at 31 July 2009 | % of Issued share capital held 31 July 2009 |
| £'000 | £'000 | £'000 | £000 | ||
| Ceres Power | 4,454 | - | 629 | 5,083 | 3.6% |
| Circassia | 7,267 | - | - | 7,267 | 14.2% |
| EVO Electric | 744 | 1,000 | - | 1,744 | 37.6% |
| Molecular Vision | 300 | 1,000 | 107 | 1,407 | 57.2% |
| Nexeon | 3,196 | 4,000 | 4,131 | 11,327 | 35.0% |
| Osspray | 441 | 950 | - | 1,391 | 40.0% |
| Process Systems Enterprise | 1,280 | - | - | 1,280 | 25.4% |
| Respivert | 1,120 | 923 | - | 2,043 | 13.4% |
| Thiakis | 2,642 | (2,856) | 6,211 | 5,997 | - |
| Veryan Medical | 3,217 | 2,500 | - | 5,717 | 37.6% |
In July 2009 the Group sold its stake in InforSense to IDBS for £0.9 million in cash at completion, with a further deferred performance-related payment estimated to be about £0.1 million.
Deferred payment obligations
Non current liabilities decreased from £12.7 million to £5.7 million. This reflects the decrease in the revenue-sharing obligations to Imperial College London and other parties arising on the revaluation of investments and the transfer of £1.8 million of shares in Ceres Power to Imperial College London in satisfaction of the revenue sharing obligation.
Operational review
Realisations
The Group's largest single transaction was the disposal of its 23.7% holding in Thiakis. This business was sold to Wyeth Pharmaceuticals in December 2008 for a potential price of £99.4 million, subject to achieving certain milestones. The initial payment was £19.6 million, of which the Group received £2.9 million, net of revenue-sharing payments to Imperial College London.
If Thiakis meets its performance targets, the deal could generate up to £16.1 million for the Group and £6.1 million in revenue share for Imperial College London and other contributors to the IP.
Thiakis is developing treatments for obesity, including the amelioration of diseases associated with excess weight such as type 2 diabetes and cardiovascular disease. It is a good example of Innovations' business model, the Group having helped founders Professor Stephen Bloom and Dr John Burt to create the company, and then supporting it with £1.5m investment as well as licensing certain IP rights to it.
Other notable transactions included the sale of Heliswirl tubing technology and the trade sale of Inforsense. The latter realised £0.9 million for the Group.
Licensing
Innovations generated £1.2 million (2008: £0.9 million) of royalties, a 33% increase from the portfolio of licences and IP agreements.
Although the economic climate has slowed down licensing activity, with many partners being unwilling to pay substantial up-front fees, the subsequent royalty component from licence agreements has a much greater impact than the receipt of up-front payments. The priority is to find the right partners for our technologies and conclude agreements with them.
The Group has been successful in securing, in partnership with Imperial College London, proof-of-concept and development funding from a variety of grant and government sources including Wellcome Trust, MRC and WRAP. This funding has helped to progress a number of ideas closer to commercialisation, so enhancing the chance of successful licensing.
New intellectual property transactions signed included those to:
Astellas - the second largest Japanese pharmaceutical company for software code used for modelling how drug molecules bind to receptors inside the body
Servier - a clinical trials database for high blood pressure in the elderly to Servier, the second largest French pharmaceuticals company. High blood pressure is very common, especially in elderly people
PSE - a virtual modelling tool allowing engineers to predict the properties of liquids and gases to considerably speed up the design of new process plants
Syngene - a strain of bacteria for development of a novel class of antibacterial substances that do not kill the bacteria but disarm them and render them harmless
Novartis Institutes for Biomedical Research - a kidney disease related research tool
A major chemical company for the separation of single-walled carbon nanotubes (SWNTs) based on their electrical properties and
An option agreement with an oil and gas company for tube risers used for field exploration.
There have also been a number of additional IP related transactions with a number of the Group's companies including BioCeramic Therapeutics, Membrane Extraction Technology, MyAction, CVIS, Photobiotics, Navion, Cortexica, Deltadot, Medermica and Novacem.
Innovations' royalty income is expected to be modest in the medium term. However, royalty income could increase substantially, if for example a major therapeutic product such as the Thiakis obesity drug should prove a notable success. The Thiakis programme could result in royalties in 2014.
Investments
Innovations invested £14.4m across 20 companies, including:
In September 2008, investing £1 million in Evo Electric. The Group's stake is 37.6%. Evo Electric develops and manufactures advanced electric machines, hybrid drive trains and generators for a wide range of transportation and power.
In February 2009, leading on a £10.0 million fund raising for Nexeon with the Group investing £4 million alongside Invesco Perpetual and Partnerships UK, resulting in a 35.0% stake. Nexeon develops high-performance silicon anodes for lithium-ion batteries.
In June 2009, making a further investment of £0.9 million in Respivert, which is developing a new generation of inhaled drugs for treatment of lung disease. The Group's stake is 13.4%. In total, Respivert raised £6 million of second-tranche funding, with Advent, Fidelity and Schroder Life Science Ventures also investing.
In January and July 2009, increasing its stake in OSspray to 40.0% by investing a further £1.0 million, alongside NESTA and The Capital Fund. OSspray has developed a new dental technology application, using bioactive glass as a desensitising and cleaning agent for air polishing teeth.
In April and July 2009, investing a further £2.5 million in Veryan Medical to increase its stake to 37.6%. The additional investment will fund pivotal trials of Veryan's stent technology which is designed to reduce the formation of disease in arteries and be stronger than existing stents.
Other companies with significant funding rounds supported by the Group included Acrobot (the Group invested £0.2 million taking its stake to 19.6%), CellMedica (£0.4 million and 32.1%), Quantasol (£1.0 million and 37.8%), Myotec (£0.6 million and 38.8%), and Molecular Vision (£1.0 million and 57.2%).
Management of portfolio
There are 80 companies in the Group's portfolio. It is well segmented and appropriately resourced with three types of companies: accelerated growth, organic growth and smaller investments.
There are 31 companies termed "accelerated growth", of which 20 are post-Series A funding (12 life science and eight engineering) and 11 are pre-Series A funding (five life science and six engineering). These are businesses expected to follow an equity funded/venture capital type of financing strategy with a start up phase of investment losses whilst development work is carried out, but with the potential for significant upside. The Group plays an active role in these companies, often being represented on the Board, and particularly encourages the development of a high-calibre management team.
At the start of the year, facing the impact on co-investors of the global recession and liquidity restrictions, the investment policy for these "accelerated growth" companies was reviewed. The portfolio was segmented based on the stage of development of the company, its financing requirements, strength of the management team, the technology and market potential and likely time to break-even or exit. Significant time has been invested in ensuring that those companies reaching a more mature stage, albeit still pre-revenue, have top quality boards and management teams and are funded to deliver.
Seventeen company holdings are termed "organic growth", growing from their own resources, with a flexible approach to funding and preferring to generate revenue from customers (often through a mixed product and service business model) than to raise external equity capital. They may also secure commercial partners and grants to keep external capital to a minimum. These companies may adapt their funding strategy at a later stage. The Group provides the organic growth companies with access to its industrial network and an efficient company formation process.
Thirty-two holdings are termed "smaller assets" and represent investments that are small and/or in established businesses where no further investment is expected.
Portfolio Update
Several portfolio companies in the accelerated growth segment made significant operational progress during the year. These companies are now well funded, with quality management teams in place, and are rapidly maturing as standalone businesses.
The following notable events occurred during the year:
CellMedica, a cell therapy company working on new techniques harnessing and enhancing the power of the immune system to fight human disease, commenced its Cytomegalovirus impact clinical study, a large clinical trial funded by the Wellcome Trust.
Circassia, a biopharmaceutical company developing medicines to control immune system responses, initiated three Phase-2 trials, two for its cat allergy product and one for ragweed allergy.
Molecular Vision, a company developing a low-cost diagnostic device for use in the doctor's surgery and in the home, appointed Peter Woodford as non-executive chairman. Peter was previously at Roche Diagnostics.
Nexeon proved the viability of its battery technology in terms of capacity and cycle life. It also established a fully operational pilot plant producing sufficient material to produce high daily volumes of cells. Following a round of funding in February (see above), the company recruited Scott Brown as CEO with assistance from Innovations. Scott previously held senior management roles at Cambridge Display Technology and Sumation.
OSspray signed distribution arrangements for its Sylc dental whitening product with Optident for the UK and with White Cross GmbH in Germany.
Polytherics, a precision chemistry company for optimisation of proteins as biopharmaceutical products, signed an exclusive licence with Celtic Pharma to develop and commercialise its first novel biotherapeutic, and achieved a European patent grant for its core technology platform.
Incubation
The Group continues to refine and enhance its approach to the creation of New Ventures. In addition to being offered facilities in the Group's "incubator", New Ventures are actively managed as "start up projects", typically for a 12-18 month period.
The Technology team investigates the technology and IP opportunities for new companies, while the New Ventures team looks at routes to market, competitive positioning and sustainability. The formal launch of a new company occurs only when the Group is confident that seed funding will be available and that the right management team is in place.
The effect of this more thorough approach is to reduce the number of newly formed companies but significantly increase their probability of success. The Group is capital efficient with its New Ventures, using grants to get through proof of concept stage, stretching seed funding by managing costs and leveraging grant funding sources. However, when businesses are ready for accelerated growth then the Group does not hold back from fully capitalising them.
This year six companies were seed funded: Cortexica Vision Systems, Myotec, Navion, Novacem, Plaxica and Smart Surgical Appliances. The New Ventures team has concentrated on de-risking and building value in these companies, working towards demonstration of technologies, product development and marketing to customers and partners. For example:
Novacem, a company aiming to combat global warming with carbon-negative cement, closed a £1 million funding round with the London Technology Fund and the Royal Society as co-investors.
Cortexica, which is developing technology to replicate human vision, launched its first product, BrandTrack, to monitor the appearance of logos and brands on television and video streams.
During the year, 31 company projects were incubated. These projects were selected from three sources: invention disclosures during the year (328 inventions were identified), entrepreneurs in residence, and identification of market opportunities through our industrial and management network.
Pipeline development
The Group continues to develop and commercialise a pipeline of promising technologies and to support them with managerial and commercial expertise. Imperial College London, led by Sir Roy Anderson, has provided a unique and steady source of quality deal flow. The support the Group receives from the College's senior management and departments is one of its unique strengths.
The Group has also successfully identified and developed technologies emanating from Imperial College Healthcare NHS Trust (combining Charing Cross, St Marys and Hammersmith hospitals) which together with Imperial College's Medical School combines to form one of the UK's first 5 Academic Health Science Centres. The close association between the Group, Imperial College London and the Trust enables the Group to accelerate the adoption of new technologies by the healthcare system.
Beyond the College, the Group's Commercialisation Services team manages an incubation contract for the Waste Resources and Action Programme (WRAP), and contracts with the National Physical Laboratories and Cranfield University on the commercialisation of inventions. This provides a focus for engaging with partners and brokering technologies.
Internationally, I2india, co-founded with management, Chairman Chris Mathias, business angels and TATA group has established operations in Bangalore. It has entered into a number of agreements with Indian research organisations and has begun to commercialise various technologies. It is now establishing its pipeline of technologies from various Indian research organisations. This gives the Group exposure and access to the Indian market as potential customers and partners for its technologies.
Outlook
The year was one of good performance and real progress substantiating the business model. At the same time the portfolio efforts have been focused on more efficient commercialisation of high-value technologies.
The external challenges that will be posed in 2009/10 will remain intense. Customers, financial partners and licensees will all be faced with a continuation of economic uncertainty. However, last year showed that traction is being achieved in the application of the Group's business model.
The Board is confident that the Group has the right combination of management, financial resource and exploitable intellectual property to build on its achievements in the last financial years. The Group is well positioned to deliver further exits from the portfolio.
Consolidated Income Statement
For the year ended 31 July 2009
| Note | 2009 £000 | 2008 £000 | |
| Continuing operations | |||
| Revenue | 3 | 4,320 | 5,336 |
| Cost of sales | (1,139) | (1,453) | |
| Gross profit | 3,181 | 3,883 | |
| Net change in fair value of investments held at fair value through profit and loss | 6 | 6,960 | (2,989) |
| Administrative expenses: | |||
| - Other administrative expenses | (6,772) | (6,698) | |
| - Share-based payments | - | (3,202) | |
| Operating profit / (loss) | 3,369 | (9,006) | |
| Interest receivable | 1,953 | 2,293 | |
| Interest payable | - | (11) | |
| Profit / (loss) before taxation | 5,322 | (6,724) | |
| Taxation | - | 863 | |
| Profit / (loss) for the financial year | 5,322 | (5,861) | |
| Basic earnings / (losses) per Ordinary Share (pence) | 7 | 9.23 | (10.63) |
| Diluted earnings / (losses) per Ordinary Share (pence) | 7 | 9.20 | (10.63) |
Consolidated Balance Sheet
As at 31 July 2009
| Note | 2009 £000 | 2008 £000 | |
| Assets | |||
| Non-current assets | |||
| Property, plant and equipment | 28 | 44 | |
| Investments | 54,954 | 49,369 | |
| University Challenge Seed Fund (UCSF): | |||
| - Investments | 763 | 800 | |
| - Loans | 42 | 758 | |
| Low Carbon Seed Fund (LCSF) | - | 234 | |
| Total non-current assets | 55,787 | 51,205 | |
| Current assets | |||
| Trade and other receivables | 7,524 | 1,488 | |
| Short term liquidity investments | 8 | 29,300 | 36,000 |
| Cash and cash equivalents | 8 | 1,401 | 7,077 |
| Total current assets | 38,225 | 44,565 | |
| Total assets | 94,012 | 95,770 | |
| Equity and liabilities | |||
| Equity attributable to equity holders | |||
| Issued share capital | 1,746 | 1,746 | |
| Share premium | 51,748 | 51,748 | |
| Retained earnings | 5,903 | 581 | |
| Share-based payments | 8,097 | 8,097 | |
| Other reserves | 18,096 | 18,096 | |
| Total equity | 85,590 | 80,268 | |
| Liabilities | |||
| Non-current liabilities | |||
| University Challenge Seed Fund (UCSF) | 805 | 1,590 | |
| Provisions for liabilities and charges | 5 | 4,883 | 10,863 |
| Low Carbon Seed Fund (LCSF) | - | 234 | |
| Total non-current liabilities | 5,688 | 12,687 | |
| Current liabilities | |||
| Trade and other payables | 2,734 | 2,815 | |
| Total liabilities | 8,422 | 15,502 | |
| Total equity and liabilities | 94,012 | 95,770 |
Consolidated Cash Flow Statement
For the year ended 31 July 2009
| Note | 2009 £000 | 2008 £000 | ||
| Cash inflows / (outflows) from operating activities | ||||
| Operating profit / (loss) | 3,369 | (9,006) | ||
| Adjustments to reconcile operating profit / (loss) to net cash flows from operating activities | ||||
| Depreciation of property, plant and equipment | 21 | 21 | ||
| Fair value movement in investments | (6,960) | 2,989 | ||
| Share based payments | - | 3,202 | ||
| UCSF management fee | (32) | (60) | ||
| Working capital adjustments: | ||||
| Increase in trade and other receivables | (109) | (139) | ||
| Increase / (decrease) in trade and other payables | 11 | (1,847) | ||
| Net cash used in operating activities | (3,700) | (4,840) | ||
| Cash flows from investing activities | ||||
| Purchase of trade investments | 8 | (14,000) | (6,149) | |
| Proceeds from sale of trade investments | 8 | 3,939 | 3,600 | |
| Revenue share paid on asset realisations in trade investments | 8 | (512) | (332) | |
| Net cash flows from investments in trade investments | (10,573) | (2,881) | ||
| Purchase of property, plant and equipment | (5) | (11) | ||
| Interest paid | - | (25) | ||
| Interest received | 1,902 | 2,079 | ||
| Short term liquidity investments | 6,700 | (36,000) | ||
| Net cash flows from other investing activities | 8,597 | (33,957) | ||
| Net cash used in investing activities | (1,976) | (36,838) | ||
| Cash flows from financing activities | ||||
| Proceeds from share issues | - | 30,000 | ||
| Transaction cost of issue of shares | - | (720) | ||
| Income from UCSF fund | - | 6 | ||
| Net cash generated from financing activities | - | 29,286 | ||
| Net decrease in cash and cash equivalents | (5,676) | (12,392) | ||
| Cash and cash equivalents at beginning of the year | 7,077 | 19,469 | ||
| Cash and cash equivalents at end of the year | 1,401 | 7,077 | ||
Consolidated Statement of Changes in Equity Attributable to equity holders of the group
| Share Capital | Share Premium | Retained Earnings | Share-based Payments | Other Reserves | Total | |
| £000 | £000 | £000 | £000 | £000 | £000 | |
| At 1 August 2007 | 1,501 | 22,713 | 6,442 | 4,895 | 18,096 | 53,647 |
| Consolidated loss for the year to 31 July 2008 | - | - | (5,861) | - | - | (5,861) |
| Issue of share capital | 245 | 29,035 | - | - | - | 29,280 |
| Share-based payments | - | - | - | 3,202 | - | 3,202 |
| At 31 July 2008 | 1,746 | 51,748 | 581 | 8,097 | 18,096 | 80,268 |
| Consolidated profit for the year to 31 July 2009 | - | - | 5,322 | - | - | 5,322 |
| At 31 July 2009 | 1,746 | 51,748 | 5,903 | 8,097 | 18,096 | 85,590 |
1. Basis of preparation
The preliminary announcement for the year ended 31 July 2009 has been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union as at 31 July 2009. The financial information contained in this preliminary announcement does not constitute statutory accounts as defined in Section 434 of the Companies Act 2006. The financial information has been extracted from the financial statements for the year ended 31 July 2009, which have been approved by the Board of Directors and on which the auditors have reported without qualification. The financial statements will be delivered to the Registrar of Companies after the Annual General Meeting. The financial statements for the year ended 31 July 2008, upon which the auditors reported without qualification, have been delivered to the Registrar of Companies.
2. Accounting policies
Imperial Innovations Group plc is a Public Limited Company incorporated and domiciled in the United Kingdom whose shares are listed on the Alternative Investment Market of the London Stock Exchange (AIM). The address of the registered office is Imperial Innovations Group plc, Level 12, Electrical and Electronic Engineering Building, Imperial College, London SW7 2AZ. Imperial Innovations Group plc's shares were admitted to the AIM market of the London Stock Exchange on 31 July 2006.
The consolidated Financial Statements comprise a consolidation of amounts included in the financial statements of the following companies:
| Company | Nature of operations | Country of Incorporation | ||
| Imperial Innovations Limited | Technology licensing and investment holding company | England | ||
| Imperial Innovations LLP | Investment holding company | England | ||
| Imperial Innovations Investments Limited | Investment holding company | England | ||
| Imperial Innovations Businesses LLP | Investment holding company | England | ||
| Imperial Innovations Investment Management Limited | Investment services company | England | ||
| Imperial College Company Maker Limited | Investment holding company | England | ||
| Chembecell Limited | Inactive | England | ||
| Octam Limited | Inactive | England | ||
| Eostre Energy Systems Limited | Inactive | England | ||
| Jointanalysis Limited | Inactive | England | ||
All the principal subsidiaries of the Group have only Ordinary Share capital, are 100% owned within the Group and have been included in the consolidated Financial Statements.
The consolidated Financial Statements have been prepared under the historical cost convention, as modified by the revaluation of certain financial assets and financial liabilities at fair value through profit and loss, as required by International Accounting Standard (IAS) 39 'Financial Instruments: Recognition and Measurement'.
The consolidated Financial Statements of Imperial Innovations Group plc (the Group) have been prepared in accordance with European Union Endorsed International Financial Reporting Standards (IFRSs), International Financial Reporting Interpretations Committee (IFRIC) interpretations and the Companies Act 2006 applicable to companies reporting under IFRS. The Group has elected to prepare its entity accounts in accordance with United Kingdom Generally Accepted Accounting Practice (UK GAAP).
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated Financial Statements are disclosed in note 24 to the consolidated financial statements.
Basis of Consolidation
The Group's consolidated Financial Statements consist of Imperial Innovations Group plc and all of its subsidiaries. The consolidated financial statements exclude intra-group transactions.
Subsidiaries are consolidated from the date of their acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases. Control comprises the power to govern the financial and operating policies of the investee so as to obtain benefit from its activities and is achieved through direct or indirect ownership of more than half of the voting rights, (currently exercisable or convertible potential voting rights) or by way of contractual agreement.
The cost of acquisition is measured at fair value of assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange plus costs directly attributable to the transaction. Identifiable assets acquired, and liabilities assumed, in a business combination are initially measured at their fair values at acquisition date, irrespective of the extent of any minority interest. The excess of the cost of acquisition over the fair value of the Group's share of the identifiable net assets is recorded as goodwill.
The Group has elected not to apply IFRS 3, 'Business Combinations', retrospectively to business combinations that took place before 1 August 2005.
Associates
Associates are entities which the Group does not control, accompanied by a shareholding of between 20% to 50% of the equity or voting rights.
Investments that are held as part of the Group's investment portfolio are carried in the balance sheet at fair value even though the Group may have significant influence over these companies. This treatment is permitted by IAS 28 'Investments in Associates', which requires such investments to be excluded from its scope where those investments are designated, upon initial recognition, as at fair value through profit or loss and accounted for in accordance with IAS 39, with changes in fair value recognised in the period of change.
Segmental Reporting
Activities are allocated to one business segment. A business segment is a group of assets and operations engaged in providing products or services that are subject to risks and returns that are different from those of other business segments. A geographical segment is engaged in providing products or services within a particular economic environment that is subject to risks and returns which are different from those segments operating in other economic environments.
Foreign Currency Translation
The consolidated Financial Statements are presented in pounds sterling, which is the Group's functional and presentational currency. The Group determines the functional currency of each entity and items included in the Financial Statements of each entity are measured using that functional currency. Transactions denominated in foreign currencies are translated into sterling at the actual rate of exchange ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated at rates ruling at the Balance Sheet date. Exchange differences are included in the Income Statement.
Property, plant and equipment
All property, plant and equipment are stated at historical cost, together with any incidental costs of acquisition. Depreciation is provided on all property, plant and equipment at rates calculated to write each asset down to its estimated residual value on a straight line basis over its expected useful life, as follows:
| Office equipment | - over four years |
| Computers | - over four years |
Intangible fixed assets
Intangible fixed assets, which include acquired patent rights, are stated at recoverable amount (fair value) and are tested annually for any impairment and whenever circumstances indicate that the carrying amount may not be recoverable. Patent costs incurred on internally generated intellectual property are written off to the income statement in the period in which they are incurred.
Goodwill
Goodwill arising on the acquisition of a subsidiary represents the excess of the fair value of the consideration given over the fair value of the identifiable net assets acquired. Goodwill is recognised as an asset and is reviewed annually for impairment and is carried at cost less accumulated impairment. On disposal of a subsidiary, the attributable amount of goodwill is included in the determination of the profit or loss on disposal.
Equity investments and other financial assets
Financial assets within the scope of IAS 39 are classified as either financial assets at fair value through the profit and loss, loans or receivables, held to maturity investments or available for sale financial assets except in the case of University Challenge Seed Fund (UCSF) and Low Carbon Seed Fund (LCSF) investments. When financial assets are recognised initially they are measured at fair value, plus, in the case of investments not at fair value through profit and loss, directly attributable transaction cost. Changes in the fair value of the UCSF and LCSF investments are set against the value of the UCSF and LCSF funds respectively and not through the profit or loss. This is in recognition that the value of the fund has to increase threefold before any repayments or disbursements can be made to the Group in the case of the UCSF and that the fund has to exceed a hurdle amount (the lower of £2 million and the total amount of capital contributions drawn down by the partnership) before any distributions can be made in the case of the LCSF.
Financial Assets at Fair Value through Profit or Loss
The Group classifies all its equity investments as financial assets at fair value through profit and loss. Investments in associated undertakings that are held by the Group with a view to the ultimate realisation of capital gains are designated as financial assets at fair value through profit and loss. Investments in undertakings that do not meet the definition of an associate undertaking are also designated as financial assets at fair value through profit and loss on initial recognition. The fair value movement is net of revenue share.
Treatment of gains and losses arising on fair value
Realised and unrealised gains and losses on financial assets at fair value through profit or loss are included in the Income Statement in the period in which they arise.
Valuation of investments
The fair values of quoted investments are based on bid prices at the Balance Sheet date.
The fair value of unlisted securities is established using International Private Equity and Venture Capital Valuation Guidelines (IPEVCVG). The valuation methodology used most commonly by the Group is the 'price of recent investment' contained in the IPEVCVG. The following considerations are used when calculating the fair value using the 'price of recent investment' guidelines:
where the investment being valued was itself made recently, its cost will generally provide a good indication of fair value;
where there has been any recent investment by third parties, the price of that investment will provide a basis of the valuation;
if there is no readily ascertainable value from following the 'price of recent investment' methodology, the Group considers alternative methodologies in the IPEVCVG guidelines, being principally discounted cash flows and price-earnings multiples requiring management to make assumptions over the timing and nature of future earnings and cash flows when calculating fair value;
where a fair value cannot be estimated reliably, the investment is reported at the carrying value at the previous reporting date unless there is evidence that the investment has since been impaired; and
all recorded values of investments are regularly reviewed for any indication of impairment and adjusted accordingly.
Recognition of financial assets
The purchase or sale of financial assets is recognised using trade date accounting for all assets held at fair value through profit and loss. The recognition of an asset and the liability to pay for it or the de-recognition of an asset, recognition of any gain or loss on disposal and the recognition of a receivable from a buyer occur on the date that an irrevocable commitment is made to purchase or to sell the asset.
Pensions
The Group makes payments to a defined contribution scheme. The assets of the scheme are held separately from the Group in independently administered funds. Contributions made by the Group are charged to the income statement in the period to which they relate.
Share-based payments
Equity settled transactions
Employees (and Directors) receive remuneration in the form of share-based payments, whereby employees render services in exchange for shares or for rights over shares. The fair value of the employee services received in exchange for the grant of options or shares is recognised as an expense. The total amount to be expensed on a straight line basis over the vesting period is determined by reference to the fair value of the options or shares determined at the grant date, excluding the impact of any non-market based vesting conditions (for example, continuation of employment and performance targets). The share options are valued using the binomial option pricing model. Non-market based vesting conditions are included in assumptions about the number of options that are expected to become exercisable or the number of shares that the employee will ultimately receive. This estimate is revised at each Balance Sheet date to allow for forecast leaving employees and the difference is charged or credited to the income statement, with a corresponding adjustment to equity.
Revenue recognition and cost of sales
Revenue, which excludes value added tax, represents the income generated by the Group from licensing activities, from intellectual property management services provided by the Group to Imperial College and other parties. Revenue is stated gross of any revenue share due to Imperial College with any revenue share included in cost of sales.
When granting a licence, an initial up-front fee is receivable on signing followed by subsequent payments when milestone conditions are met. In addition, sales royalties may also be due under licence agreements. The initial up-front fee receivable on the execution of a licence is generally recognised in full on signing as long as all the Group's obligations under the licence have been completed and the fees are not refundable. Milestone payments are recognised at the date all the conditions are satisfied for the particular milestone payment and all the Group's obligations have been completed and the fees are not refundable. Sales royalties receivable under a licence are generally recognised on receipt of a royalty statement unless accurate sales information is available to accrue revenue for royalty over the financial period.
Income received in the form of quoted or unquoted investments from licensing activities is recognised as licensing income for those investments that have either a market value or a value attributed to them by other independent third parties. Income from intellectual property management services is recognised on a straight line basis over the period to which the services relate. Grant and investment awards are recognised on an accruals basis.
Commercial Proof of Concept type awards are recognised in the Income Statement and matched to related expenditure. Technical Proof of Concept type awards are recognised in the Balance Sheet, under creditors and matched to related expenditure.
Trade receivables
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. A provision for impairment of trade receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of receivables. The amount of the provision is the difference between the asset's carrying amount and the present value of the estimated future cash flows, discounted at the effective interest rate. The amount of the provision is recognised in the Income Statement within administrative expenses.
Trade payables
Trade Payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.
Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held with banks, bank overdrafts and other short-term highly liquid investments with original maturities of three months or less. Short term liquid investments with a maturity of over three months are included in a separate category 'Short term liquidity investments'.
Deferred tax
Deferred tax arises from temporary timing differences as a result of the different treatment for accounts and taxation purposes of transactions and events recognised in the Financial Statements of the current period and previous periods. Net deferred tax assets are not currently recognised in the accounts because of the uncertainty of future taxable profits against which they may be recovered.
Provisions (revenue sharing)
Technology Pipeline Agreement
The Group provides for liabilities in respect of revenue sharing with Imperial College London, arising under the Technology Pipeline Agreement (TPA), and other parties. Provision for revenue share, based on fair value, on the future realisation of listed stock and unlisted stock is recognised.
Appointee Director Pool
Imperial Innovations LLP, whose ultimate parent company is Imperial Innovations Group plc, has entered into a Carry Plan Agreement with members of the Appointee Director Network. Upon a sale by Imperial Innovations LLP of all or part of a shareholding in one of the specified companies, an 'allocated amount' (based on a fixed percentage of net proceeds) will be paid to the Appointee Directors. The provision is based on fair value.
Operating leases
Costs in respect of operating leases are charged to the Income Statement on a straight line basis over the lease term.
Carried Interest Plan
The Group operates a Carried Interest Plan for Executive Directors and employees to invest their own money in the investment part of the business. Before any payment to a participant becomes due under the carried interest plan, the Group must first have received back the amount of their investment in the relevant class together with a hurdle rate of 8% per annum compound on their investment. At the point at which the hurdle rate has been exceeded a provision is included for the unrealised gain due to members of the carried interest plan.
3. Segmental reporting
Primary business segment
For the year ended 31 July 2009 and the year ended 31 July 2008 the Group's revenue and profit / (loss) was derived from its principal activity, within the United Kingdom. For management purposes, the Group is organised into one business segment, which encompasses technology transfer, company incubation and early stage venture capital.
Secondary format geographical segments
The Group operates exclusively in the United Kingdom and therefore no additional disclosures are given.
4. Investments - Designated at fair value through profit or loss
| Quoted Companies1 £000 | Unquoted Companies £000 | Total £000 | |
| At 1 August 2007 | 20,508 | 33,218 | 53,726 |
| Gains on the revaluation of investments | - | 3,970 | 3,970 |
| Losses on the revaluation of investments | (7,262) | (3,822) | (11,084) |
| Fair value (losses) / gains | (7,262) | 148 | (7,114) |
| Investments during the period | - | 6,357 | 6,357 |
| Proceeds from the sale on investments | (3,557) | (43) | (3,600) |
| Net investments / (net proceeds from disposals) | (3,557) | 6,314 | 2,757 |
| At 31 July 2008 | 9,689 | 39,680 | 49,369 |
| Quoted Companies1 £000 | Unquoted Companies £000 | Total £000 | |
| At 1 August 2008 | 9,689 | 39,680 | 49,369 |
| Gains on the revaluation of investments | 652 | 11,696 | 12,348 |
| Losses on the revaluation of investments | (2,531) | (6,566) | (9,097) |
| Fair value (losses) / gains | (1,879) | 5,130 | 3,251 |
| Investments during the period | - | 14,427 | 14,427 |
| Proceeds from the sale on investments | (1,848) | (10,245) | (12,093) |
| Net investments / (net proceeds from disposals) | (1,848) | 4,182 | 2,334 |
| At 31 July 2009 | 5,962 | 48,992 | 54,954 |
1 All quoted companies are listed on AIM.
5. Provisions for liabilities and charges
| Quoted Companies £000 | Unquoted Companies £000 | Total £000 | |
| At 1 August 2007 | 8,425 | 6,757 | 15,182 |
| Increase of liability arising from gains on the revaluation of investments | - | 55 | 55 |
| Decrease of liability arising from losses on the revaluation of investments | (3,389) | (791) | (4,180) |
| Changes in fair value during the period | (3,389) | (736) | (4,125) |
| Realisations during the period | (194) | - | (194) |
| At 31 July 2008 | 4,842 | 6,021 | 10,863 |
| Quoted Companies £000 | Unquoted Companies £000 | Total £000 | |
| At 1 August 2008 | 4,842 | 6,021 | 10,863 |
| Increase of liability arising from gains on the revaluation of investments | 93 | 275 | 368 |
| Decrease of liability arising from losses on the revaluation of investments | (2,447) | (1,543) | (3,990) |
| Changes in fair value during the period | (2,354) | (1,268) | (3,622) |
| Provisions utilised in the period | (69) | - | (69) |
| Realisations during the period | (1,848) | (441) | (2,289) |
| At 31 July 2009 | 571 | 4,312 | 4,883 |
Analysed by obligation:
| Revenue Sharing Imperial College £000 | Revenue Sharing Other £000 | Deferred Consideration £000 | Total £000 | |
| At 31 July 2008 | 9,476 | 908 | 479 | 10,863 |
| Settlements and provisions utilised | (2,232) | (126) | - | (2,358) |
| Changes in fair value attributable to revenue share | (3,164) | (183) | (275) | (3,622) |
| At 31 July 2009 | 4,080 | 599 | 204 | 4,883 |
The revenue sharing provision represents monies due to Imperial College London upon the eventual realisation of investments held by the Group under the revenue sharing arrangements of the Technology and Pipeline Agreement (TPA) and in recognition of Imperial College London's right to call for a transfer of its share of the Group's holding in investments. The timing and amount of the realisation of the provision is dependent on the timing of the disposal of investments, which is uncertain as this is determined by the investment strategy.
The other revenue share represents monies due to other third parties in the Appointee Directors' Pool in respect of the Imperial Innovations LLP assets acquired as part of the stepped acquisition in 2005. The timing and amount of the realisation of the provision is dependent on the timing of the disposal of investments, which is uncertain.
Deferred consideration represents monies due to Imperial College upon the eventual realisation of the Imperial Innovations LLP assets acquired from Imperial College as part of the private share placement in 2005. The deferred consideration at the date of acquisition (April 2005) was £554,000. At each Balance Sheet date a fair value adjustment is made until the eventual realisation of the assets. The timing of the realisation of the provision is dependent on the realisation of the Imperial Innovations LLP assets acquired from Imperial College, which is uncertain.
6. Net change in fair value of investments held at fair value through profit or loss
| Quoted Companies £000 | Unquoted Companies £000 | Total £000 | |
| At 1 August 2007 | 12,083 | 26,461 | 38,544 |
| Gains on the revaluation of investments | - | 3,915 | 3,915 |
| Losses on the revaluation of investments | (3,873) | (3,031) | (6,904) |
| Fair value (losses) / gains | (3,873) | 884 | (2,989) |
| Investments during the period | - | 6,357 | 6,357 |
| Proceeds from the sale on investments | (3,363) | (43) | (3,406) |
| Net investments / (net proceeds from disposals) | (3,363) | 6,314 | 2,951 |
| At 31 July 2008 | 4,847 | 33,659 | 38,506 |
| Quoted Companies £000 | Unquoted Companies £000 | Total £000 | |
| At 1 August 2008 | 4,847 | 33,659 | 38,506 |
| Gains on the revaluation of investments | 559 | 11,421 | 11,980 |
| Losses on the revaluation of investments | (84) | (5,023) | (5,107) |
| Fair value / gains | 475 | 6,398 | 6,873 |
| Investments during the period | - | 14,427 | 14,427 |
| Provisions utilised in the period | 69 | - | 69 |
| Proceeds from the sale on investments | - | (9,804) | (9,804) |
| Net investments / (net proceeds from disposals) | 69 | 4,623 | 4,692 |
| At 31 July 2009 | 5,391 | 44,680 | 50,071 |
Net change in fair value for the period represents the changes in fair value (disclosed in note 4) less the revenue share charge on these fair value movements (disclosed in note 5). Net change in fair value of investments of £6,960,000 as set out on the face of the Income Statement represents the change in net fair value of £6,873,000 (above table) plus £87,000 to reflect final adjustments on realisations before revenue share with third parties as summarised below.
| 2009 £000 | 2008 £000 | ||
| Net fair value gain / (losses) on portfolio | 6,873 | (2,989) | |
| Changes in fair value realised during the period | 87 | - | |
| Net fair value movement recognised in consolidated income statement | 6,960 | (2,989) |
7. Earnings / (Losses) per share
Basic earnings / (losses) per share is calculated by dividing the profit / (loss) for the financial year by the weighted average number of Ordinary Shares in issue during the period.
The profits / (losses) and weighted average number of shares used in the calculations are set out below:
| 2009 | 2008 | |
| Earnings / losses per Ordinary Share | ||
| Profit / (loss) for the financial year (£000) | 5,322 | (5,861) |
| Weighted average number of Ordinary Shares (basic) (thousands) | 57,630 | 55,130 |
| Effect of dilutive potential Ordinary Shares 1 | 205 | - |
| Weighted average number of Ordinary Shares for the purposes of diluted earnings / (losses) per share (thousands) | 57,835 | 55,130 |
| Earnings / (losses) per Ordinary Share basic (pence) | 9.23 | (10.63) |
| Earnings / (losses) per Ordinary Share diluted (pence) | 9.20 | (10.63) |
1 Prior year Diluted EPS is the same as EPS as the Group was loss making for the period.
8. Short term liquidity investments and cash and cash equivalents
| 2009 £000 | 2008 £000 | |
| Cash at bank and in hand | 1,401 | 7,045 |
| UCSF cash | - | 32 |
| Total cash and cash equivalents | 1,401 | 7,077 |
| Total short term liquidity investments (3 to 12 months) | 29,300 | 36,000 |
Reconciliation of amounts invested to Trade Investments:
| 2009 £000 | 2008 £000 | |
| Investments in period | 14,427 | 6,357 |
| Debt to equity conversions | (427) | (208) |
| Net cash invested in trade investments in the year | 14,000 | 6,149 |
Reconciliation of cash flows arising from sale of Trade Investments:
| 2009 £000 | 2008 £000 | |
| Disposals of trade investments | 12,093 | 3,600 |
| Shares transferred to satisfy revenue sharing obligations | (1,846) | - |
| Deferred revenue on disposal of trade investments | (6,308) | - |
| Cash flow arising on the proceeds from sale of investment in trade investments | 3,939 | 3,600 |
Reconciliation of cash flows arising on the sale of trade investments to provisions for liabilities and charges:
| 2009 £000 | 2008 £000 | |
| Movement in revenue sharing liability arising from disposal of trade investments | 2,289 | 194 |
| Previous year accrued revenue share paid | - | 138 |
| Shares transferred to satisfy revenue sharing obligations | (1,846) | - |
| Provisions utilised in the period | 69 | - |
| Cash flow arising on the settlement of revenue sharing liabilities on sale of trade investments | 512 | 332 |