Imperial Innovations Group Regulatory News (IVO)

16 Nov 2006 07:01

Imperial Innovations Group plc16 November 2006 Imperial Innovations Group plc Preliminary results for the 12 months ended 31 July 2006 Imperial Innovations Group plc (AIM: IVO), the intellectual propertycommercialisation and investment company, today announces its preliminaryresults for the year ended 31 July 2006. A PDF version of this is available athttp://www.imperialinnovations.co.uk/PreliminaryAnnouncement2006.pdf HIGHLIGHTS Highlights • IPO completed 31 July 2006 raising gross £26.0 million.• Net asset value rising from £19.5m to £46.4m.• Invention disclosures made: 284 (2005: 158).• Businesses formed: 10 (2005: 9 companies).• Technology businesses (spin-outs) at 31 July: 66 (2005: 64).• Value of shares in spin-outs at 31 July 2006: £27.2 million (2005: £16.9 million).• Cash at bank and in hand: £32.5 million (2005: £9.8 million).• Patents filed: 61 (2005: 47 patents filed).• Licences completed: 20 (2005: 21 licences).• Total Licence portfolio: 90 (2005: 70 licences). Post year end highlights • Russell Cummings appointed as Chief Investment Officer.• Bio incubator opened on South Kensington Campus with 9 companies already in occupation.• Investment of £2.1 million in technology companies Thiakis, Inforsense, Midaz, NanoBioDesign and Lontra.• Establishment of The Consensus Imperial Innovations Commercialisation Centre.• Establishment of Shell Carbon Trust Low Carbon Seed Fund.• Establishment of a commercialisation program with BAE systems. Martin Knight, Chairman commented: "This has been an exciting and transformational year for the company. It now has the resources to deliver strong growth and to accelerate the development of its assets over the year ahead." For further information please contact: Martin Knight, Chairman +44 20 7594 1403Susan Searle, Chief Executive Officer +44 20 7594 6591Julian Smith, Chief Financial & Operations Officer +44 20 7594 6505Russ Cummings, Chief Investment Officer +44 20 7594 1331 M:Communications Patrick d'Ancona / Eleanor Williamson +44 20 7153 1539 Imperial Innovations Group plc CHAIRMAN'S STATEMENT FOR THE YEAR ENDED 31 JULY 2006 On 31 July 2006, Imperial Innovations was successfully admitted to trading onthe Alternative Investment Market ("AIM") of the London Stock Exchange, thuscompleting its transformation from a department of Imperial College into acommercially driven organisation focused on the delivery of shareholder value. Imperial Innovations now has in excess of 300 shareholders, with some 40% of itsshareholding owned by non Imperial College parties. It is a tribute to theresourcefulness and entrepreneurial instincts of the staff of the Company thatthis transformation has been so successfully achieved. Imperial Innovations now faces a very exciting future. It can build on a numberof particular and special attributes: - Through its long-term Technology Pipeline Agreement with Imperial College, it has direct access to a vibrant source of Intellectual Property, covering the full spectrum of Engineering, Science and Medicine. 284 invention disclosures in the past 12 months alone are testament to the inherent dynamism of this pipeline; - Because Imperial College has an explicitly industry-focused research agenda, Imperial Innovations can leverage a set of top quality relationships with major international companies and organisations. The establishment of the Shell Carbon Trust Seed Fund; the creation of the Consensus Imperial Innovations Commercialisation Centre; and the Proof of Concept Fund with Johnson & Johnson are recent examples of this; - To the depth of technology transfer skills that have been developed in Imperial Innovations over the last decade, there have been added key individuals with strongly relevant commercial experience. In particular, Julian Smith and Russ Cummings have joined as Finance and Investment Director respectively. The broadening of the expertise and experience of the management team is welcome and positive for the future; - Imperial Innovations now has significant capital resources of its own to deploy across all elements of its business model, from funding proof of concept projects, to early stage investment, through to later stage financings to drive optimum exploitation of Imperial Innovations' technology businesses. In short, the developments of the last twelve months have put ImperialInnovations in a position where it now has the resources to move its performanceto another level of achievement. Faced with this opportunity, the tasks ahead for Imperial Innovations are clear: - To accelerate the process of technology based IP exploitation; - To broaden the IP base into sources complementary to those arising from Imperial College; - To build on the growing industrial and international relationships of Imperial Innovations; - To fine tune decision-making process and the provision of comprehensive management information; and - To invest skilfully and cleverly to optimise returns for shareholders. Of course, it is clear that Imperial Innovations is not in a business wheretoday's activities translate immediately into recognisable profit or cash flow.But the successful fulfilment of the above tasks will provide the evidence toshareholders that Imperial Innovations is on the path to delivering strongshareholder value - which is the driving force in the work of the incentivisedmanagement team and the Board of the Company. Dr Martin Knight Chairman Imperial Innovations Group plc CHIEF EXECUTIVE OFFICER'S REPORT Imperial Innovations' aim is to be the pre-eminent early stage technologycommercialisation and investment organisation. Core to the business is apipeline agreement with Imperial College until 2020 which is augmented by othercommercial sources of Intellectual Property providing us with a strongtechnology base. Introduction Our integrated business model combines the activities of a technology transferoffice with a company incubator and an early stage investor. We bring together askill-base ranging across intellectual property management, product development,licensing, business planning, recruitment to build management teams, investmentand fund raising. This ensures the optimal route for rapid commercialisation. Weexploit technologies by working closely with industry to develop products whichare either licensed or developed through technology businesses ("spin-outs"). Wewill develop further relationships with industry, external investors andpartners under four themes which are: health, environment, energy and emergingtechnology trends. Matching these areas we have a number of core competences:therapeutics and medical devices, sensors and imaging, software andcomputational models, materials and nanotechnology. Our aim is to accelerate our business using our partners, financial resourcesand securing involvement of experienced entrepreneurs. The Company is organisedinto four commercial areas: Two technology transfer teams specialising inEngineering and Technology, and Bioscience; New Ventures; Asset Management andInvestment; and Business Support. The technology transfer teams generateopportunities and identify technologies that meet market needs. The teams act asthe contact for Imperial College inventors, commercially assess ideas andprotect Intellectual Property. They negotiate and conclude licence deals andidentify provisional opportunities for setting up technology businesses. Thisyear 284 invention disclosures were assessed (2005: 158), 61 patents were filed (2005: 47) and 20 licences were signed (2005: 21). The teams generated £1.8 million in licence and royalty revenue (2005: £1.7 million). We held equity holdings in 66 (2005: 64) companies at year end with 26 companiesin New Ventures and 40 under Asset Management. New Ventures form new technologybusinesses and acquire stakes in existing businesses through providing anincubation service. In the year, 10 (2005: 9) new technology businesses wereformed. The team manages a support network focused on attracting good qualitymanagement including chairman, commercial management and Non-Executives withindustry backgrounds, who can put business acumen, management and exitexperience into our companies. New Ventures also manages a physical incubatorfacility located in the heart of Imperial College's South Kensington campus.Companies that have already moved in include: Advanced Tissue Therapies,Deltadot, Hydroventuri, Molecular Vision, Midaz, Nexeon and Thiakis. Regularinvestment events and meetings with industry are also held in the incubator. The Asset Management team manages our shareholdings in companies post-incubationand prepares proposals for investment at first round funding and beyond. Itworks with our technology businesses to identify suitable investors and to raisefunding. Russ Cummings joined in September, as our Chief Investment Officer,formerly with 3i and Scottish Equity Partners. In the year ended 31 July 2006,we invested or committed to invest £3.1 million (2005: £1.6 million) andrealised £1.4 million (2005: £2.1 million). We aim to accelerate and increaseour investment activities. Four of our companies are listed on AIM on the LondonStock Exchange including Ceres Power which continues to play a significant rolein putting fuel cells and micro-power generators onto the UK's energy agenda.This year it signed a deal with British Gas and secured a third contract withBOC. We continue to hold a 9% stake in the company, which at 31 July had a valueof £14.9 million. Imperial Innovations employs 41 people (2005: 37). The quality of our people,together with the quality of inventors and entrepreneurs we work with, has amajor impact on our business. We are fortunate to have access to ImperialCollege's network of (3,500) academics with a range of technical backgrounds -this provides a source of both inventors and technical expertise. Everything we do is geared towards delivering technologies and products thatmeet existing and future industry needs. We work with industry partners,research organisations and other universities to source Intellectual Propertythat is complementary to the technical skills of Imperial College within ourcore areas. We believe our strength is in efficient and effectivecommercialisation of technology and that the incremental value we add to ourtechnologies as part of our process differentiates us from comparableorganisations. Information on key partnerships and themes. This year an agreement was concluded with Johnson & Johnson to provide proof ofconcept funding for medical devices and materials and with Eli Lilly anEntrepreneur in Residence programme was established. Together with our existingrelationship with GlaxoSmithKline, these partnerships add to our marketknowledge of the healthcare sector. We have entered into an agreement withHammersmith and St Mary's NHS Trusts to provide technology transfer andincubation services providing us with a new source of healthcare ideas. Ourprogramme with the Royal College of Art enables us to design and prototypemedical device products. Turning to our other sector themes, in the Environment we established aRecycling Commercialisation Centre sponsored by the Waste Resources and ActionProgramme ("WRAP"). This provides us with routes to a range of industrialcustomers, particularly in the Engineering sector and a source of ideas inrecycling. In Energy we work closely with the Carbon Trust and provide incubation servicesto companies based on technologies from within and external to Imperial College.We have agreed to provide services to a new seed fund for low carbontechnologies funded by Shell and the Carbon Trust. This provides new sources ofIntellectual Property and access to expertise. This year we invested in ourfirst non-Imperial company, Lontra. Our fourth theme, emerging technologytrends, is focusing on the areas of demand that we identify in discussions withindustry. Examples, include nanotechnology, metamaterials and plasticelectronics. We have also established an initiative to provide Intelligent TechnologySourcing to corporate and government - the Consensus Imperial InnovationsCommercialisation Centre. This will provide access to a new group of customersand involves packaging technology to meet industry requirements. We have worked with a range of co-investors including Advent, Consensus BusinessGroup, Esmee Fairbairn Foundation, Fleming Family and Partners, Nikko PrincipalInvestments, Novo and The Carbon Trust Venture Fund. We are looking for partnerswho provide access to specific markets, global knowledge of the sector and ashared philosophy to the investment. Outlook This year the value of the Group will be demonstrated through the quality of ourtechnologies, licences and businesses and the progress we are making with theseunderlying assets. We will use the funds we have raised to continue theimplementation of our strategy: - Focusing on our areas of strength: health, environment, energy and emerging technology trends; - Sourcing complementary intellectual property from industry, government organisations and universities; - Investing in technology businesses across all stages: proof of concept, seed, first round and beyond; - Building on industrial relationships using the Imperial College base; - Building international links with IP sources, industry and investors. We believe our strategy will accelerate our business thereby increasing valuefor our shareholders. Susan Searle Chief Executive Officer Imperial Innovations Group plc FINANCIAL REVIEW FOR THE YEAR ENDED 31st JULY 2006 The Group ended the year with net assets of £46.4 million up by £26.9 million onthe prior year largely as a result of the net funds raised in the IPO of £23.3million, an increase of £10.3 million of the value of the investment portfoliofrom £16.9 million to £27.2 million at the end of the year with a resultingincrease in provisions for revenue sharing obligations of £4.4 million. Cashresources at 31 July 2006 were strong at £32.5 million (2005: £9.8 million). Thegroup made a trading loss of £1.2 million (loss in 2005: £3.0 million). Overview The Group's finances were strengthened by the issue of new equity capital on 31July 2006 as a result of the successful completion of the initial publicoffering which raised £23.3 million net of expenses. This completed the processof capitalising the Group on a stand-alone basis. This process had commenced in2005 with the private placement. As part of the IPO, the Group's operations and finances were restructured withthe insertion of a new holding company, Imperial Innovations Group plc, togetherwith a share split. These are described in detail in note 19 of the FinancialStatements in the Annual Report. Investment Activities During the year, the Group entered into £3.1 million of investment commitmentsto fund 12 technology companies in its portfolio and at the end of the year hada total of £1.3 million of outstanding commitments. The early stage of many ofthe technology companies is such that investments are made on a milestonetranche- based method which matches their need for cash with delivery of milestones whilst providing certainty of investment to ensure their security.Additionally, investments are made as convertible loans. Accordingly, although atotal of £3.1 million is therefore allocated and effectively being put to workwithin the portfolio, the actual cash invested in technology companies was £1.8million in the year. Portfolio Performance During the year the Group's investment portfolio grew in value by 61% from £16.9million spread over 64 companies to £27.2 million over 66 companies. Theportfolio as a whole raised in excess of £30 million during the year. A total of£1.4 million was realised from 8 companies generating a total of £0.5 millionprofit. The growth in value was largely attributable to the investment held inCeres Power ("CWR.L"). Many of the companies are at a very early stage with 4companies listed on AIM (2005: 5 companies) as at the end of the year. Under the valuation technique based on BVCA guidelines, at the end of July 2006,the value of the Group's technology company holdings increased by £12.7 millionto £32.5 million. Revenues, cost of sales and operating costs Total revenues at £4.4 million increased 13% from £3.9 million in 2004/5 due toincreased revenues earned from licensing and technology transfer activities.Cost of sales increased from £680,000 to £873,000, a 28% increase, as a resultof the revenue share arrangement with Imperial College. As a result of anincrease in activity, operating costs (excluding exceptional items) increased40% from £4.0 million to £5.6 million. The increase was due to increasedstaffing costs as the Group attracted and resourced external contracts such asthe Waste Resources and Action Programme ("WRAP"), geared up for operations as alisted company and incurred costs during the preparation for the IPO. WRAP staffcosts will be covered in due course. IPO costs totalled £3.0 million reflectedin the movement in share premium account. University Challenge Seed Fund The University Challenge Seed Fund ("UCSF") reflects an award made by the UKgovernment and third parties and must be deployed according to the conditions ofthat award. The purpose of the fund covers seed investment and funds for proofof concept awards. These terms include a restriction on distribution of moniesfrom UCSF investments until the fund size has reached a multiple of three timesthe original investment of £4.15 million, excluding donations from industryparties. The corresponding creditor balance is reflected on the balance sheetunder "amounts falling due after one year". The decline in the value of thisasset arises mainly as a result of write downs in equity and loan balances inaddition to the costs of running the fund. Deferred payment obligations Provisions for liabilities and charges increased from £4.8 million at the end of2005 to £9.2 million at the end of 2006 reflecting the increase in the revenueshare obligations to Imperial College and other parties arising on therevaluation of the shareholding in technology companies. Revaluation reserve The increase to £8.9 million from £3.9 million in the revaluation reserve arisesas a result of the revaluation of the value in quoted securities net of therevenue share obligation which is reflected in the provisions for liabilitiesand charges. Cash The year-end cash balance of £32.5 million represents an increase of £22.7million from the opening balance. The increase principally arises from the IPO,which generated £23 million after expenses with net cash outflows from tradingactivities and interest (excluding investments and realisations) of £80,000(2004/5: £1.8 million). It is the Group's current policy to place cash surplusto working capital requirements with reputable cash fund managers. The Group hasno foreign currency deposits. Presentation of Results This year is the Group's first year producing public company accounts. These arepresented in accordance with United Kingdom's Generally Accepted AccountingPractice ("UK GAAP"). However, the Group is considering presenting financialinformation for the first time under IFRS for the period up to and including 31July 2007. The Group's transition date to IFRS would therefore be 1 August 2005with the first financial statements complying with IFRS being the year ended 31July 2007 (with full IFRS comparative figures for the year ended 31 July 2006).Areas where differences are anticipated upon change of accounting policy coverfixed asset investments carrying values, treatment of revaluations and therevaluations reserve, deferred taxation and share based payments. Julian Smith Chief Financial & Operating Officer Imperial Innovations Group plcCONSOLIDATED PROFIT AND LOSS ACCOUNTFor the year ended 31 July 2006 2006 2005 Unaudited Audited Note £000 £000 Turnover 4,364 3,935Cost of sales (873) (680)Gross profit 3,491 3,255Administrative expenses:- normal operations (5,617) (4,039)- exceptional items - (3,011)Gain on disposal of investments 519 1,403Group operating (loss) (1,607) (2,392)Net interest receivable 453 152(Loss) on ordinary activities before taxation (1,154) (2,240)Tax on (loss) on ordinary activities - - (Loss) on ordinary activities after taxation (1,154) (2,240)Minority interests - (746)(Loss) for the financial year 5 (1,154) (2,986)Loss per £0.0303 ordinary share - basic and diluted 4 (2.8) (8.5) All amounts included in the profit and loss account relate to continuingactivities. CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSESFor the year ended 31 July 2006 2006 2005 Unaudited Restated Audited Note £000 £000 (Loss) attributable to shareholders (1,154) (2,986)Unrealised surpluses on revaluation of trade investments 5,080 3,941Total recognised gains for the year 3,926 955Prior year adjustment 2 (224)Total gains recognised since last annual report 3,702 Note of Consolidated Historical Cost Profits and LossesFor the year ended 31 July 2006 2006 2005 Unaudited Audited £000 £000 (Loss) on ordinary activities before taxation (1,154) (2,240)Realisation of investment revaluation gains of previous years 146 -Historical cost (loss) on ordinary activities before taxation (1,008) (2,240)Historical cost (loss) for the period after taxation and minority interests (1,008) (2,986) Imperial Innovations Group plcConsolidated Balance SheetAs at 31 July 2006 2006 2005 Unaudited Restated Audited Note £000 £000Fixed assetsIntangible assets - -Tangible assets 24 18 24 18InvestmentsInvestments in companies 25,694 15,412University Challenge Seed Fund:- Investments 679 341- Loans 808 1,159 27,205 16,930Current assetsDebtors 1,135 1,034Cash at bank and in hand 32,547 9,814 33,682 10,848 Creditors - Amounts falling due within one year (3,891) (1,945) Net current assets 29,791 8,903 Total assets less current liabilities 56,996 25,833Creditors - Amounts falling due after morethan one year:- University Challenge Seed Fund (1,493) (1,577) Provisions for liabilities and charges (9,150) (4,792)Net assets 46,353 19,464 Capital and reservesCalled up share capital 1,501 1,251Share premium account 22,713 -Merger reserve 18,096 18,096Revaluation reserve 8,875 3,941Profit and loss account (4,832) (3,824)Shareholders' funds 5 46,353 19,464 Imperial Innovations Group plcConsolidated Cash Flow StatementFor the year ended 31 July 2006 2006 2005 Unaudited Audited £000 £000 Net cash (outflow) from operating activities (543) (1,096)Returns on investments and servicing of financeInterest received 463 123Interest paid - (15)Distribution paid to minority interests - (763)Net cash inflow/(outflow) from returns on 463 (655)investments and servicing of financeTaxation - -Capital expenditure and financial investmentPurchase of tangible fixed assets (24) (10)Purchase of investments (1,788) (711)Proceeds from sale of investments 1,373 2,053Purchase of UCSF investments (23) (50)Net cash (outflow)/inflow for capital expenditure and financial investment (462) 1,282Net cash (outflow) before financing (542) (469)FinancingIssue of ordinary share capital 25,983 12,000Expenses of share issue (2,658) (1,588)Issue of "B" ordinary share capital - 2Capital contribution by minority interests - 26Repayments of UCSF fund (50) (40)Loans repaid to Imperial College - (650)Net cash inflow from financing 23,275 9,750Increase in net cash 22,733 9,281Reconciliation to net cashNet cash at beginning of period 9,814 533Increase in net cash 22,733 9,281Net cash at end of period 32,547 9,814 Reconciliation to net fundsCash held directly 32,541 9,737UCSF 6 77Total cash held 32,547 9,814 Imperial Innovations Group plcNotes to the Preliminary AnnouncementFor the year ended 31 July 2006 1. Basis of preparation These preliminary results do not constitute statutory financial statementswithin the meaning of Section 240 of the Companies Act 1985. The results for theyear ended 31 July 2005 have been extracted from the statutory financialstatements of Imperial Innovations Limited for that year, that have been filedwith the Registrar of Companies and upon which the auditors have reportedwithout qualification. The statutory accounts and auditors report for the yearended 31 July 2006 have not yet been signed by the directors or the auditorsrespectively. The financial statements will be delivered to the Registrar ofCompanies following the Annual General Meeting. 2. Principal Accounting policies The preliminary results for the year ended 31 July 2006 have been prepared inaccordance with the accounting policies set out in the statutory financialstatements of Imperial Innovations Limited for the year ended 31 July 2005except as set out below: (a) Basis of consolidation The Group's consolidated Financial Statements consist of Imperial InnovationsGroup plc, and all of its subsidiaries. The Consolidated Financial Statementsexclude intra-group transactions. The consolidated Financial Statements of Imperial Innovations Group plc havebeen presented under merger accounting rules. This means that the FinancialStatements of Imperial Innovations Group plc and its wholly owned subsidiary,Imperial Innovations Limited, have been aggregated and presented as if the twocompanies have always formed a group. Accordingly, although Imperial InnovationsGroup plc acquired the entire issued share capital of Imperial InnovationsLimited on 19 May 2006, the results for both companies are reflected in theGroup Financial Statements for the whole of the year ended 31 July 2006 and thecomparative amounts are presented on the same basis. The Group's equity investments are held with a view to realisation of capitalgains and for this reason the directors consider that equity accounting wouldnot give a true and fair view of the Group's financial position and as suchthese are held as fixed asset investments given the long term nature of theseinvestments. The accounting treatment adopted is in line with FinancialReporting Standard 9, "Associates and Joint Ventures", with respect toInvestment Funds. (b) Fixed asset investments Fixed asset investments which are traded on a stock exchange are included in thebalance sheet at market value. This policy is in accordance with the alternativeaccounting rules. Listed investments are regarded as those quoted in an activemarket where quoted prices are readily and regularly available from a recognisedstock exchange and those prices represent actual and regularly occurring markettransactions on an arm's length basis. Unlisted investments are held at costless any provision for impairment. Where listed investments are subject to Technology Pipeline Agreement ("TPA")terms, a provision for revenue sharing is created to recognise ImperialCollege's right to call for a transfer of its share of the Group's holding inthat listed investment. No such rights exist for unlisted investments althoughprovision has still been made on the unlisted investments that were fair valuedfollowing the stepped acquisition (the purchase of the 37.5% of ImperialInnovations LLP not already owned by Imperial Innovations Limited) in April 2005in accordance with FRS 7, "Fair values in acquisition accounting". For unlistedinvestments this represents a change in accounting policy from previous periodswhere such provision was offset against the fixed asset investment. The effectin the current year has been to increase the cost of fixed asset investments by £1,796,336 with anequal increase in provisions for liabilities and charges. The comparatives havealso been restated to increase fixed asset investments by £2,573,000 with anequal increase in provisions for liabilities and charges. These adjustments donot impact net assets and the directors consider that this treatment is moreappropriate and consistent with the treatment of listed investments. The investment portfolio is reviewed at least annually at the balance sheet datefor any impairment, or on a trigger event in accordance with FRS 11, "Impairmentof Fixed Assets and Goodwill". The impairment review consists of a review of thespin-out companies' prospects and a judgement made on the valuation usingappropriate methodologies. Various economic factors are considered, including the risk profile of thecompany, in order to determine the extent of any impairment. Changes in valuearising on the revaluation of listed fixed asset investments are taken to therevaluation reserve. A diminution in value is taken to the profit and loss account to the extent thatit is not covered by previous revaluation surpluses. No value is ascribed toshares acquired on the injection of intellectual property into spin-outcompanies on incorporation. Realised gains/losses on disposals of investments are taken to the profit andloss account, being the difference between the disposal proceeds and thecarrying value of the investments. Any revaluation/impairment previously takento the revaluation reserve is transferred to the profit and loss account on thedate of disposal. University Challenge Seed Fund ("UCSF") investments and loans have been valuedat the lower of cost or recoverable amount as appropriate. (c) Provisions for liabilities and charges The Group provides for liabilities in respect of revenue sharing with ImperialCollege, arising under the TPA, and other third parties. Provision for revenueshare on the future realisation of listed stock, and unlisted stock uplifted tofair value as a result of the stepped acquisition in April 2005, is recognisedas a separate provision. The Group does not discount such provisions due to theuncertainty of timing of reversal. During the period, the Directors became awareof an additional provision relating to the Appointee Director's Pool (ADP). TheADP represents a revenue sharing arrangement with certain individuals and isincluded in the category 'Revenue Sharing - other'. The effect in the currentyear has been to include a provision of £838,000 for the ADP with acorresponding decrease of £262,000 in the revenue sharing provision withImperial College (as the amount provided for the ADP will necessarily reduce theamount due to Imperial College). The comparatives have also been restated toinclude a provision of £326,000 for the ADP, with a corresponding decrease of£102,000 in the revenue sharing provision with Imperial College. The ADP doesnot impact periods prior to the year ended 31 July 2005. 3. Availability of this announcement and the Group's Annual Report Copies of this announcement are available at http://www.imperialinnovations.co.uk/PreliminaryAnnouncement2006.pdf. The Group'sAnnual Report will be available when it is despatched to shareholders in, oraround, the first week in December 2006 from the registered office at Level 12,Electrical and Electronic Engineering Building, Imperial College, LondonSW7 2AZ. 4. Basic and diluted loss per ordinary share The basic and diluted loss per £0.0303 ordinary share is based on lossesattributable to ordinary shareholders for the year of £1,154,000 (2005:£2,986,000). The basic loss per share is based on the weighted average number ofordinary shares of 41,224,000 in issue during the year (2005: 35,147,000restated). 5. Consolidated Reconciliation of Movements in Shareholders' Funds For the year ended 31 July 2006 2006 2005 Unaudited Audited £000 £000 Opening shareholders' funds as previously reported 19,688 162Prior year adjustment (224) -Opening shareholders funds as restated 19,464 162(Loss) for the financial year (1,154) (2,986)Other recognised gains and losses relating to the period 5,080 3,941Proceeds of ordinary shares issued (nominal value) 250 251Premium (net of issue expenses and paying up fully paid bonus shares) on ordinary shares issued 22,713 18,096Closing shareholders' funds 46,353 19,464 Opening shareholders' funds of £19,464,000 relate to Imperial InnovationsLimited and its subsidiaries and are included in the Group's reserves undermerger accounting principles. 6. Fair values of financial assets and financial liabilities The fair value of cash deposits is not materially different from book value. Thefair values of quoted equities are based on open market values and are carriedat this amount according to the Group's accounting policy. The directors believethat the carrying values of the remaining unlisted spin-out companies,categorised as unlisted investments, are best estimated by the lower of cost andnet realisable value. However, the directors have estimated the fair value ofthe unlisted equity investments using an approach based on BVCA valuationguidelines in the following table, which includes the fair value of listedinvestments for reference. 2006 2005 Unaudited Audited £000 £000 Unlisted investments 14,152 13,009Listed investments 16,914 5,845Convertible loan 428 82Total fair value 31,494 18,936UCSF listed 66 -UCSF unlisted investments 920 863UCSF total 986 863 6. Fair values of financial assets and financial liabilities ...continued In the event that the value of the unlisted investments was to be reported atfair value, there would be a consequential provision for revenue share arisingas a result of the increase in the revenue share as follows: Revenue share arising from : 2006 2005 Unaudited Audited £000 £000 Unlisted investments (5,031) (4,793)Listed investments (6,972) (2,002) (12,003) (6,795) There is no revenue share in respect of UCSF unlisted investments. Notice of AGM The Annual General Meeting will be held at 11:30 am on Thursday 25 January 2007at Tanaka Business School, Imperial College, South Kensington, London SW7 2AZ This information is provided by RNS The company news service from the London Stock Exchange