Imperial Innovations Group Regulatory News (IVO)

14 October 2015

Imperial Innovations Group plc

Near doubling of investment rate and gains in unquoted portfolio drive net portfolio value up by £75.2 million to £327.2 million

Imperial Innovations Group plc (AIM: IVO, "Innovations" or "the Group"), a leading technology commercialisation and investment group, has published its results for the year ended 31 July 2015.

Investment highlights 

· £60.8 million invested across 30 portfolio companies (2014: £32.8 million across 25) 

o 85% invested into existing portfolio companies 

· Led three substantial private rounds - Cell Medica (£50 million), Veryan (£18 million) and PsiOxus (£25 million) 

· Net portfolio value up by £75.2 million to £327.2 million (2014: £252.0 million)

· Six accelerated growth companies added to investment portfolio

· £479.9 million raised by portfolio companies in the year

· £1.3 billion raised by portfolio companies to date (including £236.8 million invested by Group since its IPO in 2006)

Financial highlights 

· Pre-tax profit of £15.1 million (2014: £27.4 million)

o Net fair value gains £21.3 million 

· Net assets £420.1 million (2014: £404.8 million) 

· Total realisations were £6.9 million

· £178.1 million available to invest, including £50.0 million second EIB loan

· Revenues of £5.1 million (2014: £3.6 million), result of strong licence and royalty income streams 

Martin Knight, Chairman of Imperial Innovations, said:

"We have had another year of good progress, producing a healthy profit and delivering on our promise to increase substantially our rate of investment. In fact we have almost doubled it, investing £60.8 million across 30 companies.

"A key highlight of the year, was the transformation of Circassia into a FTSE 250 specialty biopharmaceutical company, following its completion of two acquisitions and £275.0 million placing. The successful nurturing of Circassia from an original £2.0 million seed funding round in 2007, provides an excellent illustration of our ability to build substantial, high quality businesses in which we retain a meaningful stake.

"The business model is proven beyond doubt. We have created a strong platform, based on access to the UK's finest science-driven intellectual property, a highly professional investment capability and an executive team with a deep understanding of both the academic mind set and know-how to commercialise early-stage technology.

"We also have a strong balance sheet and the support of an impressive group of like-minded shareholders and co-investors.

"All the key ingredients are in place for us to back our winners, particularly as there are a significant number of companies in our portfolio with the potential to replicate Circassia's success." 

A pdf copy of the results is available at http://www.imperialinnovations.co.uk

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Overview

Innovations reported another year of good progress as it continued to develop its increasingly mature portfolio and lay the foundations for future value creation.

The Group's overall net portfolio value increased by £75.2 million to £327.2 million (2014: £252.0 million), driven by a combination of increased investment and broad-based net gains in its unquoted portfolio.

The Group's net assets increased to £420.1 million (2014: £404.8 million).

Key features of the year included:

o increasing the rate of investment to accelerate the development of the portfolio;

o broadening the Group's relationships within the 'Golden Triangle' in order to attract new high-quality opportunities, both from its existing university partners and extensive network in the region; and

o continuing to attract top-quality talent to the Group, and individual portfolio companies.

The Group closed the year with £128.1 million in cash and increased its capital resources further at the end of the year, by securing a £50.0 million facility from the European Investment Bank (EIB). This is the second EIB facility (following a £30.0 million loan agreed in July 2013) and is a clear endorsement of the quality, maturity and breadth of the Group's portfolio, as well as its expertise in investing in and nurturing both early-stage and developing businesses.

The performance of the portfolio has been good, with many of the companies making significant technical, clinical and commercial progress. In addition, the Group continued to source outstanding IP from within the 'Golden Triangle', the region broadly bounded by London, Oxford and Cambridge.

Outlook

The sector in which the Group operates is flourishing, with new capital and increased investor interest in all the key players in the sector. The Group welcomes these developments and believes it is well equipped to deal with any new challenges that may arise.

Ultimately, the Group's success rests on three core capabilities:

· its expertise in evaluating the likely success, both technical and commercial, of new scientific ideas; 

· its ability to attract high-calibre management teams and co-investors to its businesses; and the

· provision of continuity of funding to portfolio companies. 

In the year ahead, Innovations will continue to consolidate its position, which will be facilitated by the recent loan from the EIB and the new hires identified in the second half of the year.

The average age of Innovations' six largest unlisted portfolio companies (Nexeon, PsiOxus Therapeutics, Veryan Medical, Cell Medica, Yoyo Wallet and Plaxica respectively) is 8.2 years. This is a diverse and maturing portfolio of substantial, well-managed and well-capitalised businesses that have raised average funding (including commitments) of £39.3 million. They are also good examples of companies in the portfolio that could trigger significant value creation events as they mature.

Beyond this leading cohort, there is a very strong and well-funded follow-on pipeline of exciting businesses, as well as new investments, which provide the feedstock for future value creation.

The Board is increasingly confident that from within this portfolio there is the potential for a number of companies to join the public markets over the next few years, with others generating significant exits through trade sales.

This confidence for the future also extends beyond the existing portfolio. The quality of the intellectual property the Group is seeing from the academic, research and entrepreneurial community within the world-class scientific cluster of the 'Golden Triangle' bodes well for the future. The Board expects to maintain or increase its current rate of investment in the next financial year

The Board remains confident that Innovations' business model and key principles of attracting world class management, building stakes in selected portfolio companies alongside appropriate co-investors, and having the patience and capital resources to hold for the long-term, will generate attractive returns for shareholders.

Operational review

Putting capital to work

Innovations invested £60.8 million into its portfolio during the financial year, almost doubling the investment rate of the previous year. This included leading major funding rounds for Cell Medica (£50.0 million), Veryan Medical (£18.0 million) and PsiOxus Therapeutics (£25.0 million). The Group committed £30.4 million across those rounds of which £14.4 million was invested in cash in the year. In the case of Cell Medica and PsiOxus these new investment rounds drove gains in the fair value of these companies (£5.6 million and £8.5 million) respectively.

The Group also made a number of follow-on investments across its portfolio, committing funds into a number of its most promising healthcare companies, including MISSION Therapeutics (£3.0 million), Crescendo Biologics (£3.3 million) and Autifony Therapeutics (£2.5 million) in addition to investments in a number of technology companies, including Yoyo Wallet (£5.0 million), Cortexica (£2.3 million), Featurespace (£1.5 million) and Impression Technologies (£1.4 million).

Including the six new accelerated growth companies added to the portfolio, Innovations invested £60.8 million across 30 portfolio companies (2014: £32.8 million invested in 25). 85% of this money was invested into existing portfolio companies.

The Group's overall net portfolio value increased by £75.2 million to £327.2 million (2014: £252.0 million) driven by a combination of investment and portfolio uplifts from fair value gains, reflecting strong progress across the portfolio offset by some fair value losses.

As a result of the four public transactions that took place last year (FY14), the Group now has a quoted portfolio of four companies (Circassia Pharmaceuticals, Oxford Immunotec, Abzena and IXICO) which as of 31 July 2015 had a net investment carrying value of £106.8 million (32.6% of total portfolio values) (2014: £104.9 million) and an unquoted portfolio valued at £220.4 million (67.4% of total portfolio value) (2014: £147.1 million) at the same date.

Of this £20.9 million was attributable to the unquoted portfolio and £0.4 million to movements in the value of the quoted portfolio.

The aggregate movement, including both unquoted and quoted portfolios, represents a £21.3 million net fair value increase, which includes impairments of £8.4 million (comprising £1.0 million from the quoted portfolio and £7.4 million from the unquoted portfolio) and represents an 8% increase over the portfolio value at the start of the year.

Total realisations for the year were £6.9 million. In the first half of the year, the Group completed the sale of a data analytics business to a leading US consumer electronics company. The transaction realised £4.1 million, representing an IRR of 65% and a 2.4x multiple on cash invested in an investment made in January 2013.

In addition, the Group completed the sale of Epigeum, a member of the organic portfolio delivering e-learning modules for universities. Epigeum was an Imperial College, London spinout supported by the Technology Transfer Office (TTO). The Group made no investment in the business, but acquired founding equity due to its instrumental role in supporting its formation and early development. The sale generated proceeds of £1.9 million. This was subject to a 50% revenue share with Imperial College, resulting in a net profit of £0.8 million for Innovations. The balance of realisations is made up of other disposals.

Trading performance was strong, with the Group reporting revenues of £5.1 million (2014: £3.6 million). This was largely due to the positive performance of the TTO and increased royalty and licensing income this year.

The pipeline of IP remains strong and this includes prospects for new licence deals, as well as new ventures. Costs remain well controlled, and the net cost of operating the business was below budget.

The Group ended the financial year with total cash and short-term liquidity investments of £128.1 million (2014: £176.5 million), comprising £108.1 million of cash (2014: £106.5 million) and £20.0 million (2014: £70.0 million) of short-term liquidity investments. The Group drew down the £15.0 million second tranche of the EIB facility during June 2015 and completed a new EIB facility of £50.0 million, which is yet to be drawn down.

Net assets were £420.1 million (FY 2014: £404.8 million).

Portfolio highlights

Full details are included in the Portfolio update section, but notable highlights include:

· Circassia Pharmaceuticals - one of the key highlights of the year was Circassia's acquisitions of both Aerocrine and Prosonix with associated £275 million fund raising, transforming the enlarged Circassia into a leading specialty biopharmaceutical company focused on the diagnosis, treatment and management of allergy, asthma and chronic obstructive pulmonary disease (COPD). Circassia now has a market capitalisation of circa £0.8 billion and moved into the FTSE 250 in September 2015;

· Veryan Medical: £18.0 million funding round, distribution deal with BioSensors and enrolment of the first subject in its MIMICS-2 study. The latter has been designed to support a Premarket Approval Application (PMA) of the company's BioMimics 3D Stent System in the USA;

· Nexeon: start of sampling programme of materials to customers and partners. Further development is required to improve cycle life, but the gap between current material performance and customer requirements has been significantly reduced

· Cell Medica: £50.0 million funding round, initiation of Phase II CITADEL study, start of commercial cell therapy manufacturing at its facility in Berlin and grant of Orphan Drug Designation to CMD-003 by the U.S. Food and Drug Administration (FDA) for the treatment of EBV-positive non-Hodgkin lymphomas;

· PsiOxus Therapeutics: £25.0 million funding round, grant of orphan medicinal product designation for its oncolytic vaccine, enadenotucirev (EnAd), by the European Medicines Agency (EMA) for the treatment of platinum-resistant epithelial ovarian cancer;

· Autifony Therapeutics: £8.0 million extension to Series A funding. Initiation of two Phase II clinical studies for its lead product AUT00063 in age-related hearing loss and tinnitus. Securing non-dilutive funding for second product to enter clinical trials for the treatment of schizophrenia;

· TopiVert: initiation of a Phase I study with its lead compound (TOP1288) in ulcerative colitis;

· Plaxica: collaboration agreement with INVISTA which will see the two companies collaborate to accelerate the commercialisation of Plaxica's bio-derived lactic acid technology;

· Cortexica: launch of its findSimilarTM visual search technology, with leading online retailers Macy's, Zalando and Net a Porter adopting it for their online platforms. The company also moved to new premises in response to its growth; and

· Yoyo Wallet: since implementation at its first beta site at Imperial College London in early 2014, Yoyo has now signed 21 universities as customers and has deployed its solution at 34 head office corporate catering locations.

Not all companies performed to expectations. The Group took a £7.4 million impairment on the net value of its unquoted portfolio. This represents 2.9 % of the opening portfolio value and is to be expected as part of the early-stage investment activity. The increasing scale and maturity of the Group's portfolio continues to reduce the Group-level risk of individual assets.

As reported in the first half of the year, a component of this was the write down of £3.1 million in Stanmore Implants, taken in the wake of the orthopaedic device manufacturer facing regulatory challenges in the USA. In addition, the Group reported a write down in its investment in EVO Electric, following the sale of its interests in the JV between GKN and EVO Electric.

Building a pipeline for future value creation

During the year the Group added six new companies to the accelerated growth portfolio, comprising three therapeutics companies (Enterprise Therapeutics, Iceni Therapeutics and Auspherix), one diagnostics company (Inivata), one Engineering & Materials company (Inflowmatix) and one ICT company (Concirrus).

The number of new additions to the portfolio is consistent with recent years and reflects the continued focus on quality over quantity.

Inflowmatix (Imperial College London), Iceni Therapeutics (Gurdon Institute, Cambridge and Cambridge Enterprise) and Inivata (Cancer Research Institute, Cambridge and Cambridge Enterprise) and Auspherix (iThree Institute University of Technology Sydney UTS) are specifically linked to academic research.

In the case of Enterprise Therapeutics and Concirrus, Innovations is essentially backing entrepreneurial management teams. Enterprise Therapeutics is based outside of the 'Golden Triangle' at the Sussex Innovation Centre, University of Sussex, but still within easy reach. The decision to invest in Concirrus arose from the creation of an investment thesis around the Internet of Things (IoT) which was developed in consultation with leading academics in the field.

The Group's accelerated growth portfolio now comprises 39 companies (2014: 36 companies) which collectively account for 98% of the portfolio by value.

The TTO's company formation unit, Co.Create, also contributed to the pipeline of future opportunities, forming seven new businesses. Co.Create works with academics at Imperial College to form businesses, which will either grow organically or seek funding from Angel or VC investors (including the Group's own Ventures team).

Matching world-class management to world-class science

A number of experienced professionals joined the boards of Innovation's portfolio companies. These include the appointment of Andrea Ponti, former Co-Head of Global Healthcare Investment Banking at J.P. Morgan, as a non-executive director of Cell Medica; Gordon Hurst, formerly Group Finance Director of Capita plc, as non-executive Chairman of Featurespace; and Richard Longdon, CEO of Aveva plc, as Chairman of Process Systems Enterprise (PSE).

Nexeon continues to build its commercial expertise in both consumer electronics and electric vehicles, and appointed three non-executive directors during the year; Dr Antti Vasara (formerly Vice President of Nokia's corporate strategy unit), Tony Posawatz (well known in the automotive industry for leading the team that brought the award-winning Chevrolet Volt from concept to production) and Ian Jenks (formerly General Partner with Crescendo Ventures and previously Chairman of Oplink Communications Inc., and President of the Laser and Fibre Optic groups of Uniphase Inc. (now JDS Uniphase)).

Dr Anker Lundemose (formerly CEO of Norwegian vaccine company Bionor Pharma ASA) was appointed as the new Chief Executive Officer of MISSION Therapeutics; Tim Wright (former co-founder of specialty pharma company Solent Pharma Ltd) joined Aqdot as CEO; and Chris Yates (formerly CFO of Immunodiagnostic Systems Holdings PLC and Cozart plc) moved from a non-executive role to become CEO of Abingdon Health.

The Group also enhanced its own in-house capabilities through the appointment of five new Venture Partners to the Ventures team, who act for the Group on a consultancy basis. These are seasoned professionals who bring their many years of industry experience as advisers to the Group, helping the investment team to evaluate new opportunities as well as advising existing portfolio businesses. 

New Venture Partners in the Healthcare team include Dr Roberto Solari (previously Vice President in GSK's Respiratory Therapy Area) and Dr Peter Charlton (who recently ran the UK operations for Vertex Pharma). Former Venture Partner Simon Cartmell (formerly CEO of ApaTech), who has been an adviser to the Group since April 2012 and is also Chairman of Veryan Medical, took on a new role as Operating Partner from 1 January 2015.

New Venture Partners in the Technology team include Chris Gomersall (most recently CEO of Innovations portfolio company Acunu), Dr David Parker (who has a long career in senior management in leading technology companies such as HP, Agilent Technologies, Marconi, SPI and TRUMPF) and Graham O'Keeffe (Executive Chairman of DisplayLink and previously a Senior Investment Partner at Atlas Ventures).

Innovations is steadily expanding its licensing portfolio in order to create sustainable future revenue streams from milestone payments and royalties. 39 licensing deals were signed during the year, and licensing income and royalty fee income increased by 77% to £2.8 million.

Plans for FY16

The Group is seeking to make a number of changes to reinforce its position. These include increasing its capacity by adding further experience in the Ventures team and positioning itself as a collaborative partner for TTO's and dedicated university funds.

Innovations is also working to re-balance its investment portfolio, by building up its activities in non-therapeutics sectors. In particular, the Group plans to build on its success in the ICT sector, where Innovations has a proven track record of identifying new opportunities and securing attractive cash realisations.

Currently this only represents 9.9% of the value of the total value of the portfolio, but this figure is more a reflection of the relatively low capital demands of the sector and the successful execution of three trade sales over the last two years.

The Group significantly scaled its investment in both Featurespace and Yoyo Wallet during the year and also added one new ICT company to its portfolio. In the coming year, Innovations plans to put increasing focus behind this sector and to extend the investment scope to more overtly include London's TechCity and non-academic sources of new ventures. These are businesses that are likely to hire talent from the country's leading universities.

The existing networks and domain expertise will continue to draw the Group towards computer science and engineering solutions as opposed to consumer, social media and digital media. By extending its activities to include cluster companies in the Internet and mobile sectors, Innovations will substantially expand its addressable market.

At the end of the financial year, Innovations led a £3.0 million funding round in Concirrus, a leading Internet of Things (IoT) solution provider based in London, which provides a clear example of the intentions in the sector. The Group is backing a proven management team, with a revenue generating business, in a substantial and growing market.

The IoT is an area in which the Group has a specific interest, having developed an investment thesis based on extensive consultation with leading academics and opinion-formers over a two-year period.

Concirrus also highlights the fact that, unlike in the other sectors in which Innovations operates, investment opportunities in the ICT sector are more likely to be founded by market facing entrepreneurs and teams, rather than around university IP or patents.

Post year-end, a further three companies were added to the non-therapeutic portfolio; Garrison Technology, Import.IO and Silicon Microgravity. The first two of these are entrepreneur led, whereas the latter is a classic University of Cambridge spin-out formed in partnership with Cambridge Enterprise.

Portfolio update

Innovations has built particular expertise in the key sectors of Therapeutics, Medtech & Diagnostics, Engineering & Materials, and ICT & Digital. These four sectors reflect the strengths of the UK science base and the technological heritage of the four universities that we work with.

As at 31 July 2015, the Group had a portfolio of 98 companies. Of these, there are 39 accelerated growth companies in which it actively invests and takes a seat on the Board. Collectively these 39 companies account for just over 98% of the portfolio by value.

The balance is represented by 38 'lighter-touch' companies, in which the Group gives support to promote organic growth and revenue generation and some 21 low-involvement companies where Innovations has a historical holding or has acquired shares through IP transactions.

The total net portfolio value at the end of the financial year was £327.2 million (2014: £252.0 million) with the Group's top 20 investments by net fair value representing a carrying value of £292.3 million.

Of this total, 60.9% is represented by companies in the therapeutics sector, including the Group's largest asset, Circassia. 18.1% of the Group's top 20 assets are in the Engineering & Materials sector. The Group's Medtech & Diagnostics companies represent 12.8% of the value of its top 20 companies. The ICT & Digital sector is a small and growing part of the Group's top 20 portfolio companies, currently representing 8.2% of the total value. This should increase in the year ahead as the Group puts an increasing focus on this sector.

With four public company transactions during FY14, the Group now has a quoted portfolio of four companies which as of 31 July 2015 had a net investment carrying value of £106.8 million (32.6% of total portfolio value) (2014: £104.9 million) and an unquoted portfolio with a net investment carrying value of £220.4 million (67.4% of total portfolio value) (2014: £147.1 million) as of the same date.

Therapeutics

· £186.4 million value of our therapeutic assets within portfolio

· £32.6 million invested in therapeutics companies during the year

· £375.7 million raised by therapeutics companies during the year

· Three new therapeutics companies added to the portfolio (Auspherix, Enterprise Therapeutics and Iceni Therapeutics)

Circassia Pharmaceuticals plc

At 31 July 2015, the Group had a 9.3% interest in the issued share capital of Circassia with a net fair value of £79.8 million.

Circassia's lead product, Cat-SPIRE (a new treatment for cat allergy), is currently in a pivotal Phase III registration study. The trial is fully recruited and is due to report out in H1 2016. A positive outcome of this trial is likely to represent a substantial value inflection point for the business. Three other products developed to treat a broad range of seasonal and perennial allergies (house dust mites, grass and ragweed) have completed clinical proof-of-concept Phase IIb studies.

On 15 May 2015, Circassia announced the acquisitions of Swedish public company Aerocrine and UK private company Prosonix, with these acquisitions funded by a £275.0 million placing.

These acquisitions transformed the enlarged Circassia into a leading specialty biopharmaceutical company focused on the diagnosis, treatment and management of allergy, asthma and chronic obstructive pulmonary disease (COPD). Crucially, the acquisition of Aerocrine provides an opportunity to leverage its existing sales structure in US and Germany, which will form the basis of Circassia's own commercialisation strategy ahead of the planned launch of its own SPIRE products in 2017.

In addition, the much expanded product portfolio offers significant potential for further growth. The acquisition of Aerocrine brought with it NIOX asthma diagnostic products which are already generating revenues (sales of £9.1m in 1H15) whilst Prosonix has provided Circassia with a pipeline of asthma products. Its most advanced product - a generic version of GSK's Flixotide, which is partnered with Mylan - is currently under review by the MHRA in the UK and expected to be approved later this calendar year.

During the year ended 31 July 2015, a net fair value gain of £1.4 million was recognised by Innovations to reflect the closing share price of the company at the year end.

Abzena plc

At 31 July 2015, the Group had a 23.4% interest in the issued share capital of Abzena with a net fair value of £17.8 million.

Abzena offers a suite of complementary services and technologies (through its subsidiaries, PolyTherics and Antitope) to enable the development of better biopharmaceuticals, which will have a greater chance of reaching the market. These include immunogenicity assessment, proprietary protein engineering and bioconjugation technologies. The company has built a global customer base over the past decade, including the majority of the top 20 biopharmaceutical companies, as well as large and small biotech companies and academic groups.

On 9 February, Abzena announced that two further antibodies that are being developed using Antitope's Composite Human Antibody™ technology have entered clinical development, bringing the number of antibodies currently in the clinic to eight. In addition to these Composite Human Antibodies™ entering clinical development, Gilead Sciences, Inc. initiated a Phase II trial with compound GS-5745 for the treatment of moderately to severely active Crohn's disease. Subsequently, in April, Gilead Sciences reported plans to move GS-5745 into a Phase III clinical study in gastric cancer in late 2015.

Abzena's PolyTherics subsidiary also made good progress with the development of its ThioBridge™ technology for attaching cytotoxic drugs to antibodies to create antibody drug conjugates (ADCs) for the treatment of cancer. Abzena has increased the number of collaborations it has with companies evaluating ThioBridge™ and is working with a range of different cytotoxic payloads for its partners.

During the year ended 31 July 2015, a net fair value loss of £0.2 million was recognised by Innovations to reflect the closing share price of the company at the year-end.

Cell Medica Limited

At 31 July 2015, the Group had a 27.0% interest in Cell Medica with a net fair value of £21.0 million.

Cell Medica is a cellular immunotherapy company, focused on the development, manufacture and marketing of cell-based therapeutics for the treatment of cancers related to oncogenic viruses and infections following bone marrow transplantations.

Cell Medica's lead cancer immunotherapy product is CMD-003, which comprises engineered T-cells targeted at malignant cells that express the oncogenic Epstein Barr virus (EBV).

On 25 November 2014, Innovations led a £50.0 million Series B funding round in Cell Medica alongside co-investors Invesco Asset Management and Woodford Investment Management. Cell Medica will use the investment capital to progress further the development of the company's cellular immunotherapy products. In addition to CMD-003, these include Cytovir™ CMV for the treatment of cytomegalovirus infections and Cytovir™ ADV for the treatment of adenovirus infections, both of which are aimed at treating and preventing infections in patients who are profoundly immunosuppressed following a bone marrow transplant.

On 16 February 2015, Cell Medica announced the start of commercial cell therapy manufacturing at its facility in Berlin, with its first product successfully manufactured and delivered for use in a patient. Manufacturing at this site will initially be focused on Cytovir™ CMV, which is available to treat patients in the UK, Ireland and Germany.

On 18 March 2015, Cell Medica announced that that the U.S. Food and Drug Administration (FDA) had granted Orphan Drug Designation to CMD-003. The designation was granted for the treatment of EBV-positive non-Hodgkin lymphomas. In addition, the company announced that it had treated the first patient in the CITADEL trial. This is a 35-patient Phase II clinical trial assessing CMD-003 in patients with aggressive/advanced EBV-positive extranodal NK/T-cell lymphoma (ENKTCL). All of this tumour cell type express EBV; there are no effective treatments available (beyond radiotherapy and chemotherapy) and overall survival is typically less than one year.

During the year ended 31 July 2015, the Group invested £7.5 million in Cell Medica as part of the £50.0 million funding round. The overall net fair value uplift of £5.6 million reflects both an uplift for last round price and also an uplift in respect of the achievement of milestones since the fundraising in November 2014. 

PsiOxus Therapeutics Limited

At 31 July 2015, the Group had a 27.9% interest in PsiOxus with a net fair value of £22.6 million.

PsiOxus is a biotechnology company that develops novel therapeutics for serious diseases, with a particular focus upon cancer.

The company's lead product is Enadenotucirev (EnAd), an oncolytic virus that is given intravenously and travels around the patient's body seeking out and killing cancer cells.

On 14 January 2015, PsiOxus was granted a positive opinion from the European Medicines Agency's (EMA) Committee for Orphan Medicinal Products (COMP) for an orphan medicinal product designation of EnAd for the treatment of platinum-resistant epithelial ovarian cancer.

On 16 April 2015, PsiOxus announced that it has expanded two of its ongoing Phase I studies involving EnAd. The company's Phase I Mechanism of Action study of EnAd in colon cancer patients, has now been expanded to include intravenous delivery to three additional tumour types (non-small cell lung, urothelial bladder and renal cell cancer), whilst the EVOLVE trial (which started in 2012) has also been expanded to include repeat intravenous dosing of EnAd in metastatic urothelial bladder cancer.

EVOLVE is a first in human Phase I/II study to determine the dose, safety, tolerability and potential efficacy of EnAd when delivered intravenously to patients with epithelial cancers. It is also the first clinical study to report that live replicating oncolytic virus has been recovered directly from the blood stream of cancer patients, suggesting that EnAd can target tumour cells following intravenous administration and then replicate.

In April 2015, PsiOxus presented data highlighting the progress of its next-generation 'Antibody Armed EnAd' (AbEnAd) anti-cancer therapeutic platform at the American Association for Cancer Research (AACR) Annual Meeting 2015 in Philadelphia. This preclinical programme is aimed at expanding the anti-cancer scope of EnAd through 'arming' - a process that involves the addition of new genes to EnAd, which makes possible the creation of a broad range of oncolytic immune therapeutics. This could enable the production of high concentrations of immunotherapeutics (such as checkpoint inhibitor antibodies) within the tumour microenvironment where they are needed. The ability to use systemic administration also means that armed EnAd particles can reach and express their therapeutic payloads in both the primary tumour, as well as its metastases within the patient's body.

On 19 May 2015, Innovations led a £25.0 million Series C funding round in PsiOxus, committing £7.0 million to the round alongside current investors Invesco, SROne, Lundbeckfond and Mercia Technologies. In addition, Woodford Investment Management joined the syndicate.

During the year ended 31 July 2015, the Group invested £6.2 million in PsiOxus. The investment, which was at last round price, resulted in a net fair value gain of £8.5 million.

Autifony Therapeutics Limited

At 31 July 2015, the Group had a 26.9% interest in Autifony Therapeutics with a net fair value of £8.6 million.

Autifony is pioneering the development of novel pharmaceutical treatments to treat hearing disorders and serious disorders of the central nervous system, such as schizophrenia.

Autifony's lead programme AUT00063 is a novel, first-in-class Kv3 potassium channel modulator in development for the treatment of age-related hearing loss and tinnitus. These are two very common problems for which the only solutions are hearing aids or cognitive therapy - no pharmacological treatments currently exist.

On 20 November 2014, Autifony initiated a Phase IIa study in tinnitus subjects with AUT00063.The study is being conducted in 12 key hospital sites across the UK and is co-funded by a UK government-backed Biomedical Catalyst award.

On 24 April 2015, Autifony announced that it had recruited the first subject in a Phase IIa study for treatment of age-related hearing loss. This study (called CLARITY-1 will be conducted in around 14 key sites across the USA.

On 10 July 2015, Autifony closed an £8.0 million extension to its Series A funding round with Innovations investing £2.5 million alongside similar amounts from SVLS and Pfizer Ventures. The additional funding will enable Autifony to carry out a pilot study of AUT00063 in patients with a cochlear implant, where preclinical data predict that Autifony's drug may improve speech perception.

In April 2015, Autifony announced a £3.3 million collaborative project to progress its new drug, AUT00206, which is being developed against the same Kv3 ion channel target, into clinical trials for the treatment of schizophrenia.

During the year ended 31 July 2015, the Group invested £2.5 million in Autifony. The investment, which was at last round price, did not result in a fair value gain or loss.

MISSION Therapeutics Limited

At 31 July 2015, the Group had a 21.2% interest in MISSION Therapeutics with a net fair value of £6.0 million.

Cambridge-based MISSION Therapeutics is a specialist pharmaceutical company developing cancer therapeutics based on new molecular understandings of human cell biology and the DNA damage response. The company is developing small molecule drugs that target deubiquitylating enzymes (DUBS) involved in the DNA damage response, with the aim of inducing synthetic lethality, a powerful mechanism to selectively kill specific tumour cells.

On 12 January, 2015 MISSION appointed Dr Anker Lundemose as its new Chief Executive Officer. Dr Lundemose brings extensive experience to MISSION, with his appointment representing his fourth CEO position. Recently, he was CEO of Norwegian vaccine company Bionor Pharma ASA, prior to which he co-founded and led Prosidion, the UK spin-out of OSI Pharmaceuticals' diabetes and obesity assets.

During the year ended 31 July 2015, the Group invested £3.0 million in MISSION as a result of the company completing key development milestones. The investment, which was at last round price, did not result in a fair value gain or loss.

TopiVert Pharma Limited

As at 31 July 2015, the Group had a 30.6% interest in the issued share capital of TopiVert Pharma Limited ('TopiVert'), with such interest having a net fair value of £7.5 million.

Founded in 2011, TopiVert is a spin-out from the London-based drug discovery company RespiVert (a former Inovations' portfolio company) following its acquisition by Centocor Ortho Biotech Inc. (now Janssen Biotech Inc.).

TopiVert is developing novel small molecule Narrow Spectrum Kinase Inhibitors (NSKIs) for local/topical use in gastrointestinal and ocular inflammatory diseases where there is significant unmet medical need.

On 14 May 2015, TopiVert initiated a Phase I study with its lead compound, TOP1288, in ulcerative colitis ('UC') a common inflammatory disease affecting the large bowel. This debilitating condition is commonly treated with corticosteroids. However, TopiVert is developing a novel topical treatment, which could provide a locally acting drug in the colon without systemic side effects. The Phase I study is being conducted at a specialist centre in London and will report in 2016.

During the year ended 31 July 2015, the Group invested £1.6 million in TopiVert. The investment, which was at last round price, did not result in a fair value gain or loss.

Kesios Therapeutics Limited

At 31 July 2015, the Group had a 51.4% interest in Kesios Therapeutics ('Kesios') with a net fair value of £4.6 million.

Kesios has been created to commercialise research led by Professor Guido Franzoso and his team from the Department of Medicine at Imperial College London, who have identified a novel drug target within a pathway that appears to be critical in promoting cancer cell survival in certain white blood cells of patients with multiple myeloma and other malignancies.

Kesios is developing novel drug candidates that disrupt this target and demonstrate the potential to specifically and selectively kill cancer cells, without causing toxicity to normal cells.

On 8 October 2014, Innovations completed the balance of the seed investment in Kesios. The development programme also benefited from a Biomedical Catalyst grant from the Medical Research Council (MRC) up to the value of £3.9 million.

On 29 May 2015, Kesios announced the appointment of Dr Paolo Paoletti as Executive Chairman. Dr Paoletti, was formerly the first appointed president of GSK Oncology, where he was responsible for championing an organisation of more than 2,000 professionals around the world dedicated to fighting the causes and impacts of cancer. Dr Paoletti is also non-executive director of PsiOxus Therapeutics.

The Group does not control Kesios (control as defined by IFRS 10), and therefore does not consolidate it.

During the year ended 31 July 2015, the Group invested £2.3 million in Kesios. The Group recognised a £1.8 million net fair value gain in Kesios as a result of progress in the business.

New Therapeutics companies

Auspherix Limited

At 31 July 2015, the Group had a 27.5% interest in Auspherix with a net fair value of £1.5 million.

On 3 June 2015, Innovations announced a £6.0 million Series A funding round in Auspherix Limited, an early-stage anti-infectives company based at the Stevenage Bioscience Catalyst site just outside of London. Innovations committed £3.0 million into the company alongside founding investor Brandon Capital. The investment will be used to fund the company's drug discovery programme and grow the business from its virtual base adding experienced management and recruiting a top-quality microbiology team. Auspherix aims to progress its novel class of anti-bacterials through lead optimisation to candidate selection within the next two years.

Dr Roberto Solari, a recently appointed Venture Partner at Imperial Innovations has joined the Board of Auspherix as its independent non-executive Chairman.

During the year ended 31 July 2015, the Group invested £1.5 million in Auspherix. This was a new investment in the year, which did not result in a fair value gain or loss.

Enterprise Therapeutics Ltd

At 31 July 2015, the Group had a 42.1% interest in Enterprise Therapeutics with a net fair value of £2.0 million.

On 20 May 2015, Innovations invested in a £4.0 million Series A funding round in new portfolio company Enterprise Therapeutics, which is focused on new therapeutics for respiratory diseases. Innovations invested £2.0 million in this drug discovery company alongside co-investors Epidarex.

Enterprise Therapeutics focuses on the discovery of novel disease modifying medications that target key drivers of respiratory disease pathology and progression in cystic fibrosis, chronic obstructive pulmonary disease (COPD) and severe asthma.

The company is based at the Sussex Innovation Centre, University of Sussex and was founded by a team that recently emerged from Novartis and is highly experienced in developing drugs in the respiratory area.

During the year ended 31 July 2015, the Group invested £2.0 million in Enterprise Therapeutics. This was a new investment in the year, which did not result in a fair value gain or loss.

Iceni Therapeutics

In May 2015, Innovations led a £0.5m seed-funding round in Iceni Therapeutics, a Cambridge spin-out in an exciting new area of cancer biology. Innovations and its co-investors are working alongside Iceni Therapeutics' founders, Prof. Tony Kouzarides and Prof. Eric Miska from the Gurdon Institute, Cambridge, to build a company addressing a novel target space, namely the modification of the activity of non-coding RNA by targeting RNA modifying enzymes with small molecules.

During the year ended 31 July 2015, the Group invested £0.2 million in ICENI Therapeutics. This was a new investment in the year, which did not result in a fair value gain or loss.

Medtech & Diagnostics

· £46.7 million value of our Medtech & Diagnostics assets within our portfolio

· £11.5 million invested in Medtech & Diagnostics companies during the year

· £55.1 million raised by Medtech & Diagnostics companies during the year

· One new Medtech & Diagnostics company added to the portfolio (Inivata)

Veryan Holdings Limited

At 31 July 2015, the Group had a 48.2% interest in Veryan with a net fair value of £20.9 million.

Veryan is a specialist company in vascular disease that has developed and patented a three-dimensional stent technology, BioMimics 3D™, the aim of which is to improve upon the biomechanical and flow characteristics of straight tubular stents, particularly those used in the arteries of the leg.

Veryan has already gained a CE Mark enabling sales of its BioMimics 3D stent within the European Economic Area (EEA). On 28 January 2015, the company announced that it had secured a major distribution agreement with Biosensors International for the distribution of the BioMimics 3D stent in the EU, Asia Pacific and other international markets but excluding the USA and Japan for which Veryan retains distribution rights.

On the 14 January 2015, Innovations led an £18.0 million Series B funding round in Veryan, alongside co-investors Invesco Asset Management, Seroba Kernel and Seven Mile. Innovations committed up to £8.4 million to the round.

On 1 July 2015, Veryan announced the enrolment of the first subject in its MIMICS-2 study. This study will enrol 280 subjects in up to 40 sites in the US and Germany, and has been designed to provide further evidence that the BioMimics 3D stent offers significant benefits in femoropopliteal use, ultimately leading to approval in the US, thereby expanding the market beyond its current European approval.

Simon Cartmell, an Operating Partner at Innovations, was appointed as Chairman of Veryan in January 2015.

During the year ended 31 July 2015, the Group invested £2.7 million in Veryan. The investment resulted in a £0.04 million net fair value gain.

Oxford Immunotec Global plc

At 31 July 2015, the Group had a 4.6% interest in the issued share capital of Oxford Immunotec Global plc (Oxford Immunotec) with a net fair value of £8.8 million.

Oxford Immunotec is a global, commercial-stage diagnostics company, focused on developing and commercialising proprietary tests for the management of immune-regulated conditions. The company's lead product is the T-SPOT®.TB test, which is used to test for latent tuberculosis infection and has been approved for sale in over 50 countries, including the United States, Europe, Japan and China. The company has an additional six products in various stages of development.

On 28 January 2015, Oxford Immunotec announced a $50.0 million underwritten share placing which completed on 4 February 2015. Innovations acquired 200,000 shares in the offer, at a cost of £1.6 million, thereby substantially maintaining the Group's holding in the company.

On 31 March 2015, Oxford Immunotec announced the availability in the United States of T-SPOT®.CMV a new test for cytomegalovirus (CMV). On the 27 April, the T-SPOT®.CMV test secured CE Mark approval allowing sales within the European Economic Area (EEA).

During the year ended 31 July 2015, a net fair value loss of £0.6 million was recognised by Innovations to reflect the closing share price of the company at year-end.

Abingdon Health Limited

At 31 July 2015 the Group had a 33.7% interest in Abingdon Health with a net fair value of £7.7 million.

Abingdon Health is a specialist medical diagnostics company, which is aiming to create a global, diversified healthcare business through a combination of selective acquisitions and the development of patent-protected, clinically relevant diagnostic products. During the year, the company furthered this strategy through the completion of two acquisitions.

On 13 October 2014, Abingdon Health strengthened its position in rapid diagnostic testing with the acquisition of Serascience Limited. In March 2015, Abingdon Health announced the launch of the first product from this new acquisition, Seralite®- FLC device, which is the world's first rapid diagnostic device in multiple myeloma. The assay provides an accurate picture of disease status in 10 minutes, allowing clinicians to monitor patients in real-time supporting faster decision-making.

On 8 January 2015, Abingdon Health announced the acquisition of 100% of the shares of Molecular Vision Limited (a company in which Imperial Innovations was a founding investor). Abingdon had previously held 55% of the shares of the optical detection company, which has developed a patent protected technology platform that allows for simultaneous testing of multiple diagnostic markers with application across the medical, veterinary, food safety, plant testing, and security sectors.

On 30 June 2015, Innovations led a £3.0 million investment in Abingdon Health with Innovations committing £2.5 million to the round. In conjunction with the investment round, Abingdon Health also appointed Chris Yates as CEO. Chris was previously CFO of AIM-listed Immunodiagnostic Systems Holdings PLC and AIM-listed Cozart plc.

The Group's investment in Molecular Vision was previously disclosed as part of the Abingdon Health investment following Abingdon Health's acquisition of 50% of the Molecular Vision equity. The Group's investment in Molecular Vision was acquired by Abingdon Health during the six month period ended 31 January 2015 for £0.9 million.

During the year ended 31 July 2015, the Group invested £4.1 million in Abingdon Health (net £3.3 million after allowing for the Molecular Vision disposal to Abingdon). The investment into Abingdon and disposal of Molecular Vision resulted in a net fair value gain of £0.5 million.

IXICO plc

At 31 July 2015, the Group had an 11.4% interest in the issued share capital of IXICO with a net fair value of £0.5 million.

IXICO is focused on brain health and uses its innovative and proprietary digital health technologies to help those involved in researching and treating serious diseases to make rapid, informed decisions targeted at improving patient outcomes. IXICO has significant experience working with global pharmaceutical and biotechnology companies supporting clinical studies in the field of neuro-degenerative disorders, including Alzheimer's disease, Huntington's disease, other causes of dementia and Multiple Sclerosis.

IXICO's alliance with VirtualScopics (signed in June 2014) continues to progress well as the two companies jointly bid to win business together.

In March 2015, IXICO and VirtualScopics announced an agreement with Micron, Inc. of Japan, a provider of imaging services for clinical trials in Asia, which expands the alliance's reach and capabilities internationally, and offers the opportunity to build on its existing client base in Japan, China and Korea. This was followed on 29 June 2015 by the announcement that the alliance had been awarded contracts with two top 15 pharmaceutical companies.

During the year ended 31 July 2015, a net fair value loss of £0.2 million was recognised by Innovations to reflect the closing share price of the company at year-end.

Puridify Limited

At 31 July 2015, the Group had a 37.2% interest in Puridify with a net fair value of £1.4 million.

Stevenage-based Puridify is a UK-based bioprocessing company formed in 2013 as a spin-out from University College London (UCL). Its proprietary nanofibre platform "FibroSelect" will create a step-change improvement in biotherapeutic manufacturing whilst reducing validation efforts through single-use operation. Puridify is working closely with leading biopharma companies to develop its products.

On 27 May 2015, Innovations completed a £0.9 million seed round in Puridify investing alongside SR One and UCLB. The company has received additional matched-funding awards totalling £4.9 million from the UK's innovation agency, Innovate UK, to support advancement of the technology. Existing investors completed a follow on funding round in July 2015.

During the year ended 31 July 2015, the Group invested £1.2 million in Puridify. The investment, which was at last round price, did not result in a fair value gain or loss.

New Medtech & Diagnostics companies

Inivata Limited

At 31 July 2015, the Group had a 27.3% interest in Inivata with a net fair value of £1.5 million.

On 23 September 2014, Innovations announced that it had led a £4.0 million funding round for Inivata, a new spin-out from Cancer Research UK. Inivata is focused on harnessing the potential of circulating tumour DNA (ct DNA) analysis to improve cancer testing and treatment through simple blood tests. Co-investors in Inivata include Cambridge Innovation Capital and Johnson & Johnson Development Corporation.

On 11 March 2015, Inivata announced a partnership with US molecular diagnostics company, Biodesix, to develop and commercialise Next Generation Sequencing (NGS)-blood based tests for clinical applications in lung cancer. The agreement will leverage Inivata's proprietary, enhanced TAm-Seq™ technology platform and Biodesix's development and commercialisation capabilities in the US market to provide new, clinically actionable tests to physicians.

During the year ended 31 July 2015, the Group invested £1.5 million in Inivata. This was a new investment in the year, which did not result in a fair value gain or loss.

Engineering & Materials

· £61.8 million value of our Engineering & Materials assets within our portfolio

· £4.9 million invested in Engineering & Materials companies during the year

· £11.1 million raised by Engineering & Materials companies during the year

· One new Engineering & Materials company added to the portfolio (Inflowmatix)

Nexeon Limited

At 31 July 2015, the Group had a 39.3% interest in Nexeon with a net fair value of £34.1 million.

Nexeon is developing a range of silicon anode materials that enable increased capacity lithium ion battery cells, offering the potential for lighter batteries with more power and a longer lifetime between charges.

Nexeon continued to optimise its silicon materials for the blended carbon/silicon anode applications currently being demanded by the battery industry. Further development is required to improve cycle life for use in consumer electronics and automotive applications but the gap between current material performance and customer requirements has been significantly reduced. The company is now engaged with niche applications such as defence where energy density is the priority.

The company made a number of strategic Board changes in the first half of the year, appointing seasoned non-executive directors with relevant experience in both the consumer electronics and automotive sectors.

As there was no valuation event during the year, the carrying value of the Group's holding in Nexeon remains unchanged.

Plaxica Limited

At 31 July 2015, the Group had a 45.7% interest in Plaxica with a net fair value of £9.4 million.

Plaxica's Versalac technology enables the production of low-cost lactic acid, a platform chemical for the production of a variety of bio-chemical products including polylactic acid (PLA) and propylene glycol. These are high value commodity chemicals with strong environmental credentials, offering the potential to replace traditional oil-based polymers such as PET (polyethylene terephthalate - also known as polyester) and nylon for example in packaging and textile manufacture or in the production of 'green' solvents.

In September 2014, Plaxica announced the appointment of its first two engineering partners; Foster Wheeler and Jacobs. Foster Wheeler AG is a global engineering and construction company and power equipment supplier employing 13,000 professionals worldwide, whereas Jacobs is one of the world's largest and most diverse providers of technical professional and construction services.

On 2 July 2015, Plaxica announced a collaboration agreement with INVISTA, which will see the two companies collaborate to accelerate the commercialisation of Plaxica's bio-derived lactic acid technology. INVISTA, based in the US, operates in more than 20 countries worldwide and is one of the world's largest integrated producers of chemical intermediates, polymers and fibres with leading brands including LYCRA®, COOLMAX®, CORDURA®, STAINMASTER® and ANTRON®.

As there was no valuation event during the year, the carrying value of the Group's holding in Plaxica remains unchanged.

Econic Technologies Limited

At 31 July 2015, the Group had a 56.1% interest in Econic with a net fair value of £6.1 million.

Econic is developing new patented catalysts that enable the incorporation of captured waste CO2 into various polymers: not only reducing CO2 emissions, but also using the captured CO2 to replace expensive petrochemical feedstocks.

Econic's technology is one of the few commercially viable ways to chemically utilise CO2, which although highly abundant and cheap, is very un-reactive and needs to be activated using a catalyst. The resulting polycarbonates can be used for many applications including the production of polyurethane products such as foams, plastics and polyesters.

On 22 August 2014, Econic was one of the winners of the RSC Emerging Technologies Competition, winning the category of 'Environment, Materials and Process Chemistry'.

The Group does not control Econic (control as defined by IFRS 10), and therefore does not consolidate it. The Group does not have, directly or indirectly, more than half of the voting power of Econic nor does it have power over more than half of the voting rights by virtue of any agreement with any other investor.

As there was no valuation event during the year, the value of this investment remains unchanged.

Oxford Biotrans Limited

As at 31 July 2015, the Group had a 41.0% interest in the issued share capital of Oxford Biotrans with a net fair value of £2.1 million.

Oxford Biotrans is a spin-out from the University of Oxford, which is pioneering the commercialisation of biocatalytic processes for the production of high-value specialty chemicals, based on its patented enzyme technology. Innovations first invested in Oxford Biotrans in 2013, making a seed investment of £0.6 million in the company, alongside the University of Oxford.

On 4 August 2015, Innovations announced that it had committed £1.3 million to a £2.5 million Series A funding round alongside existing investors IP Group and the University of Oxford, with new investors Oxford Innovations and Technology EIS fund and strategic partner De Monchy Aromatics. This investment was made prior to the year-end.

Oxford Biotrans' first product is a low-cost, natural grade nootkatone, the flavour and scent of grapefruit. Nootkatone, used in citrus soft drinks, confectionery and perfumes, is one of the most challenging ingredients to access in the world and costs around the same as beluga caviar. Oxford Biotrans' product has already created strong market interest and will be available in commercial quantities in the coming months.

During the year ended 31 July 2015 the Group invested £1.3 million in Oxford Biotrans. The investment resulted in a net fair value gain of £0.2 million.

Aqdot Limited

At 31 July 2015, the Group had a 34.5% interest in Aqdot with a net fair value of £1.6 million.

Aqdot is a University of Cambridge spin-out that has developed a proprietary chemical encapsulation technology that enables the production of small droplets that can carry 'active materials' such as cleaning enzymes used in domestic detergents, or agrochemicals for crop treatments.

In November 2013, Innovations announced a £1.0 million funding round for Aqdot alongside Cambridge Enterprise Limited, Parkwalk Advisers and Providence Investment Company. On 17 December 2014, Innovations announced a further a £2.6 million funding round, alongside the same investors. Due to the potentially significant environmental benefit of the technology, the company has also been supported by Climate-KIC, receiving approximately €135,000 through different Climate-KIC funded initiatives.

On the same day, the company also announced the appointment of Tim Wright as Chief Executive Officer. Prior to joining Aqdot, he co-founded Solent Pharma Ltd, a privately held speciality pharmaceutical company.

On the 8 January 2015, Professor Chris Abell, the founder of Aqdot, was announced as one of three new Pro Vice Chancellors of the University of Cambridge. He is Professor of Biological Chemistry in the Department of Chemistry and a Fellow of Christ's College.

During the year ended 31 July 2015, the Group invested £1.2 million in Aqdot. The investment resulted in a net fair value gain of £0.1 million.

Sub-Salt Solutions Limited

At 31 July 2015, the Group had a 37.9% interest in the issued share capital of Sub-Salt Solutions Limited ('Sub-Salt') with a net fair value of £0.3 million.

Sub-Salt is focused on developing novel seismic imaging techniques for the oil and gas industries. The company is developing techniques that will deliver substantial improvements in the quality of seismic imagery in areas affected by salt. Higher quality seismic imaging in such areas will reduce exploration risk, improve appraisal of oil and gas deposits, and enhance recovery. The business was spun out of Imperial College London and co-funded by Innovations and Intercontinental Ventures. The Group invested £0.3 million in March 2014.

As there was no valuation event during the year, the value of this investment remains unchanged.

Impression Technologies Limited

At 31 July 2015, the Group had a 59.1% interest in Impression Technologies with a net fair value of £3.3 million.

On 2 July 2015, Innovations led a £4.0 million funding round in Impression Technologies an aluminium forming technology business that specialises in developing technology for forming complex, high-strength, lightweight components for the transportation industry. The company's patented solution Heat treatment, Forming and in die Quenching (HFQ®) technology, allows a wide range of aluminium alloys, including ultra-high strength grades, to be formed in a fast pressing operation without compromising the strength or metallurgical properties of the material. The result is complex but lightweight components, which can be used in the manufacture of cars, trains and aeroplanes.

The Group does not control Impression Technologies (as defined by IFRS 10) and does not consolidate it.

During the year ended 31 July 2015, the Group invested £1.4 million in Impression Technologies. The investment, which was at last round price, resulted in a net fair value gain of £1.4 million.

New Engineering & Materials companies

Inflowmatix Limited

At 31 July 2015, the Group had a 14.4% interest in Inflowmatix with a net fair value of £1.0 million.

On 28 July 2015, Innovations announced it had competed a £1.0 million seed investment in Inflowmatix a water network data analytics company, spun out from Imperial College London.

Inflowmatix provides water flow and pipe health analytics to water utilities worldwide enabling network operators to continuously monitor, diagnose and manage hydraulic instabilities, leading to reduced bursts, leakage and operating costs, whilst also enabling prioritised network maintenance.

The company's first product is based on the research from Dr Ivan Stoianov's InfraSense Labs, in the Department of Civil & Environmental Engineering at Imperial College London. The team has developed a patent-protected prototype product InfraSense TS, which provides near real-time, continuous monitoring of the dynamic hydraulic conditions and water pipeline health. The seed funding will allow Inflowmatix to develop this product further.

Dr David Parker (FREng), a Venture Partner at Imperial Innovations, has joined the Board of Inflowmatix as Chairman.

During the year ended 31 July 2015, the Group invested £1.0 million in Inflowmatix. This was a new investment in the year, which did not result in a fair value gain or loss.

Post year-end

Silicon Microgravity Limited

Post year end on 2 September 2015, Innovations led a seed investment in the Cambridge University spin-out Silicon Microgravity, investing alongside a group of investors. The company was spun out of the Department of Engineering and will develop sensors to be used in the oil and gas industry, in reservoir management.

ICT & Digital

· £32.3 million value of our ICT & Digital assets within our portfolio

· £11.8 million invested in ICT & Digital companies during the year

· £12.7 million raised by ICT & Digital companies during the year

· One new ICT & Digital company added to the portfolio

Cortexica Vision Systems Limited

At 31 July 2015, the Group had a 30.0% interest in Cortexica with a net fair value of £7.7 million.

Cortexica, based in London, has developed image recognition, visual search and categorisation software for businesses with an online presence, based on original research from Imperial College London. Cortexica's leading product is findSimilar™ for fashion, which returns visually similar items from an online database or inventory when users take a photograph of a piece of clothing or an accessory with their mobile device.

During the year, the company made significant commercial progress, signing up a number of major traditional and online retailers.

In August 2014, German online fashion retailer Zalando announced that it had integrated Cortexica's technology into its Photo Search app for use in its home country. In October 2014, based on the success of the app in Germany, Zalando rolled out service to 15 additional countries and the Android platform. On 12 November 2014, Cortexica announced that Macy's, the US retailer, had launched an iOS App incorporating the company's mobile image recognition and findSimilar visual search software.

On 18 May 2015, Cortexica announced that its findSimilar technology had been selected by premier online fashion retailer Net-A-Porter to provide the technology that powers the visual search function of its recently unveiled Net Set app.

During the year ended 31 July 2015, the Group invested £2.3 million in Cortexica. As there was no valuation event during the year, the value of this investment remains unchanged.

Featurespace Limited

At 31 July 2015, the Group had a 37.5% interest in Featurespace with a net fair value of £6.8 million.

Featurespace is a predictive analytics company, pioneering a new form of data analysis called 'Adaptive Behavioural Analytics', a type of artificial intelligence that has the ability to predict what an individual or group will do next, based on an understanding of their normal patterns of behaviour.

Featurespace's Fraud Manager, for example, helps companies to spot new types of fraud as they occur, in real time, thereby allowing organisations to reduce risk and operational costs while improving the customer experience.

During the year the company secured a number of new customers. On 13 December 2014, Featurespace announced a collaboration with KPMG, which will see KPMG combine its data and analytics knowledge with Featurespace's analytics expertise, to provide clients in the financial services sector with a set of the tools to monitor employee activity and spot frauds before they happen.

On 25 June 2015, Featurespace announced that William Hill had selected the company as its analytics partner. The collaboration will see William Hill and Featurespace deploy a range of sophisticated machine learning analytics and technical expertise to interpret data, achieve greater insight and improve the customer experience.

Featurespace also strengthened its Board with the appointment of Gordon Hurst as non-executive Chairman. Hurst was formerly the Group Finance Director of Capita plc.

On 2 September 2015, Featurespace announced a five-year agreement with UK mobile payment innovator, Zapp, to provide real-time fraud protection for its mobile payment customers. Zapp will launch its 'pay by bank' app, paymark, in autumn 2015, enabling customers to make payments straight from their bank app on mobile devices.

During the year ended 31 July 2015, Innovations increased its shareholding by acquiring 1.1 million shares from seed investors for £1.5 million. This resulted in a net fair value gain of £2.7 million.

Yoyo Wallet Limited

At 31 July 2015, the Group had a 51.4% interest in Yoyo Wallet (formerly JustYoyo) with a net fair value of £9.5 million.

Yoyo was founded in 2013 at Innovations by a team of highly experienced entrepreneurs from the credit card and payments industry, led by Innovations' Venture Partner Alain Falys. The company has created an 'app' that offers a better experience for retail customers, simplifying and speeding up in-store transactions by combining payment and loyalty in one easy scan. It also provides a marketing platform for retailers that enables digital customer engagement in-store. Retailers gain access to a set of tools that enables them to better target their customers through loyalty rewards, offers and incentives.

The app was launched in early 2014 across 32 food and drink outlets at Imperial College London. Since then, Yoyo's experienced management team have made strong commercial progress and the team has signed 21 Universities as customers as well as 34 head office corporate catering locations. Yoyo has also signed up 5 High Street retailers, but is currently focusing on closed environments of Universities and corporate canteens which are driving larger transaction volumes.

On 15 April 2015, Innovations announced the completion of a £5.9 million Series A funding round for Yoyo. Innovations committed £5.0 million in this round, with the balance made up by a number of angel investors.

On 15 July 2015, Yoyo announced that users of Yoyo Wallet can now make a payment using Apple Pay as their preferred funding method.

The Group does not control Yoyo Wallet (as defined by IFRS 10) and does not consolidate it.

During the year ended 31 July 2015, the Group invested £5.0 million in Yoyo Wallet. The investment, which was at last round price, resulted in a net fair value gain of £1.7 million.

New ICT & Digital companies

Concirrus Limited

At 31 July 2015, the Group had a 28.6% interest in Concirrus with a net fair value of £3.0 million.

On 27 July 2015, Innovations completed a £3.0 million investment in Concirrus Ltd a leading Internet of Things (IoT) solution provider based in London.

Concirrus provides fully integrated business solutions based around connected product intelligence built on a scalable cloud-based platform, which enables customers to gather and analyse IoT data and use it to improve, disrupt and create innovative businesses and processes.

Last year Concirrus provided connected solutions in applications such as asset tracking, fleet management and vehicle insurance. The new investment will allow Concirrus to build out its suite of products for the vehicle insurance market and fund expansion of its sales team to capitalise on existing channel partnerships.

During the year ended 31 July 2015, the Group invested £3.0 million in Concirrus. This is a new investment, which did not result in a fair value gain or loss.

Post year-end

Garrison Technology Limited

Just after the year-end, on 25 August 2015, Innovations completed a £2.0 million seed funding round in Garrison Technology Limited ('Garrison' or the 'Company'), a recently formed cyber security company based in London. Innovations committed £1.6 million to the round alongside existing angel investors.

Garrison was founded by an experienced team of cyber-security professionals from Detica Group plc, the security focused technology group that was acquired by BAE Systems plc for £550.0 million in 2008.

Garrison is focused on developing a highly effective anti-malware solution for enterprise cyber defences, the details of which are currently confidential. Initial customer feedback has been very positive and suggests a dramatic increase in the success rate of preventing malware attacks. The new funding will help accelerate the company's product development and continue to progress trials with leading organisations.

Import.io

On 4 September 2015, Innovations led the first close of a Series A funding round in Import.io, a London-based machine learning start-up that is addressing the fast-growing data-as-a-service (DaaS) market.

Import.io was founded by an impressive team of data entrepreneurs, whose aim is to help businesses tap into the immense power of the machine-readable web. The company's software allows organisations to augment internal business intelligence with data sourced from the web in order to drive business decisions. Import.io has developed an automated platform, based on machine learning, which overcomes the scalability issues associated with existing web data extraction methods (manual and web scraping).

The business is staffed by a strong R&D team which includes a number of Cambridge graduates and top talent from around the world. The company plans to hire top-quality candidates from within the 'Golden Triangle'.

Financial review

Profit before tax for the Group for the year to 31 July 2015 was £15.1 million (2014: £27.4 million).

This result includes a £21.3 million net gain in the portfolio (2014: £40.5 million). Net assets at the year-end of £420.1 million (2014: £404.8 million) increased by £15.3 million from 31 July 2014. The increase primarily reflects the profit for the year.

Cash and short-term liquidity investments were £128.1 million (2014: £176.5 million) following the increase of the investment rate to £60.8 million (2014: £32.8 million), offset by the drawdown of the outstanding £15.0 million second tranche EIB loan.

The Group completed a new £50 million facility with the EIB. This facility has not been drawn upon, however it adds significant further investment capability.

The Group's rate of investment in its portfolio companies increased to £60.8 million across 30 companies (2014: £32.8 million across 25 companies). This takes the total invested since the IPO in July 2006 to £236.8 million and the total raised by the Group's portfolio companies to £1,302.4 million.

Statement of comprehensive income

Revenue

Total revenues rose by 42% to £5.1 million (2014: £3.6 million). The main driver of the increase in revenue is a rise in royalty income of £1.0 million and a £0.2 million increase in licence income.

The revenue split is: licence and royalty income £2.8 million (2014: £1.6 million), revenue from services £1.9 million (2014: £1.6 million) and corporate finance fees £0.4 million (2014: £0.4 million).

Cost of sales

Cost of sales, which mainly arises from the revenue-sharing arrangement with Imperial College London, increased to £1.8 million (2014: £1.0 million), reflecting the increased licence and royalty income.

Change in fair value of investments reflecting investment portfolio performance

Total net fair value gains were £21.3 million (2014: £40.5 million) and reflect gains in the net fair value of the Group's holdings of £29.7 million (2014: £45.3 million) across the portfolio, offset by impairments and losses of net fair value of £8.4 million (2014: £4.8 million).

Total net fair value gains were £29.7 million (2014: £45.3 million). This includes a net fair value gain of £8.5 million on PsiOxus Therapeutics following a recent investment round.

Additional gains of £2.3 million arose following the sale of a portfolio company. Other significant net fair value gains include Abingdon Health of £0.5 million (this includes a £0.4 million net fair value loss in Molecular Vision Limited, following the disposal of this holding in exchange for shares in its acquirer Abingdon Health Limited), Cell Medica of £5.6 million, Featurespace of £2.7 million, Impression Technologies of £1.4 million and Yoyo Wallet of £1.7 million, reflecting mechanistic movements based on the value of new investment rounds, and in the case of Cell Medica, milestone events in the year.

There was a net fair value gain on Circassia Pharmaceuticals plc of £1.4 million, which reflects the market price of this quoted stock at the end of July 2015.

The balance of the gain reflects smaller mechanistic uplifts.

The above gains were offset by net fair value impairments and losses of £8.4 million (2014: £4.8 million). These include a £3.1 million write-down in the first half of the year on the value of Stanmore Implants in the wake of the orthopaedic device manufacturer facing regulatory challenges in the USA, a £0.1 million write-down on Acublate, and a £0.9 million write-down on Cambridge Communication Systems.

The disposal of Evo Electric resulted in a net fair value loss of £2.9 million.

Net fair value losses on quoted stock comprise £0.2 million on IXICO, £0.6 million on Oxford Immunotec and £0.2 million on Abzena. These losses reflect the market price of this quoted stock at the end of July 2015.

Carried Interest Plan

The Group's Carried Interest Plan, which is a long-term employee incentive scheme, generated an accounting release of £1.2 million (2014: a charge of £4.8 million). This reflects the impact of the hurdle which must be exceeded by gains in the portfolio before an accounting charge arises. There is no cash payment due to members of the scheme until the Group has made substantial future cash realisations.

Other administrative expenses

Other administrative expenses increased as expected by 5% to £11.5 million (2014: £11.0 million). The increase reflects the increased activity across the Group.

Additionally, administrative expenses include costs of £1.4 million (2014: £1.4 million) incurred on filing patents and protecting the 'as yet' unexploited intellectual property emanating from Imperial College London.

Finance costs

Finance costs were £0.6 million (2014: £0.5 million) and mostly relate to the £15.0 million first tranche of the EIB loan, which was drawn down during July 2013. The outstanding second tranche of the EIB loan was drawn down during June 2015. There are no finance costs associated with the new £50 million facility as this has yet to be drawn down.

Finance income

Finance income was £1.4 million (2014: £0.6 million) mainly attributable to the higher cash balance due to the receipt of the equity raise proceeds towards the end of the prior year.

Earnings per share

Basic earnings per share was 11.1p (2014: 26.8p). The Board is not recommending the payment of a dividend.

Financial position and resources

Net assets at the year-end of £420.1 million (2014: £404.8 million) increased by £15.3 million from 31 July 2014. The increase reflects the profit for the year.

Investment portfolio and activity

The Group's investment portfolio grew to £332.9 million spread across 98 companies (2014: £257.7 million spread across 95 companies) and portfolio companies raised £479.9 million in cash (2014: £315.4 million) from all sources of investment.

As at 31 July 2015, the net value of the Group's portfolio rose to £327.2 million (2014: £252.0 million). The increase represents £60.8 million (2014: £32.8 million) of investments to fund 30 (2014: 25) companies in its portfolio, net disposals of £6.9 million (2014: £4.0 million) and net fair value gains of £21.3 million (2014: £40.5 million) which have been analysed below.

The Group has invested a total of £210.7 million in the portfolio of currently active technology companies; £181.5 million invested in the top 20 companies and £29.2 million in the remaining companies.

The table below separates out the top 20 portfolio companies, by net fair value, to illustrate the relative carrying value and the movement in value from 31 July 2014 to 31 July 2015.

All carrying values 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. The percentage holdings in these companies are increasing in line with the Group's strategy to hold larger stakes in its portfolio companies.

The early-stage nature of many of the portfolio companies is such that investments are made on a milestone/tranche basis that matches the companies' needs 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 £22.3 million (2014: £16.5 million).

Table of net fair value movement: top 20 portfolio companies

Cash and short-term liquid investments

The Group ended the financial year with total cash and short-term liquidity investments of £128.1 million (2014: £176.5 million), comprising £108.1 million of cash (2014: £106.5 million) and £20.0 million (2014: £70.0 million) of short-term liquidity investments.

The Group drew down the £15.0 million second tranche of the EIB facility during June 2015 and completed a new EIB facility of £50.0 million.

Cash and short-term liquidity investments decreased significantly from the prior year primarily because of the increased rate of investment.

The movement in the cash and short-term liquidity investments balance is shown below:

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.

Deferred payment obligations

The Group has a Technology Pipeline Agreement (TPA) with Imperial College London which stipulates the terms for sharing revenue generated from the commercialisation of Imperial College London intellectual property which is assigned to Imperial Innovations Limited (subsidiary company).

Non-current provisions for liabilities and charges relating to revenue-sharing obligations (including those due under the TPA and on HEIF and UCSF investments) rose to £6.7 million (2014: £5.8 million).

Going concern

After making enquiries, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. For this reason, they continue to adopt the going concern basis in preparing the financial statements.

Key Performance Indicators 

The key performance indicators (KPIs) below measure the Group's results of operations. 

1. Growth in value of the Group's interest in its portfolio of companies

This KPI monitors the strategic objective of maximising value through measuring progress in the value of the portfolio companies.

How measured: Measured in terms of the net value and net gain or loss arising in the value of the portfolio using established valuation methodologies based on International Private Equity and Venture Capital Guidelines (IPEVCVG). The value is net of revenue sharing obligations.

Progress: The Group has demonstrated growth in the value of its portfolio through fair value gains and investment activity.

2. Investments made in portfolio companies

This KPI monitors the strategic objective of providing continuity of funding through measuring investment made by the Group as well as total investment from external sources.

How measured: Measured in terms of total cash raised by the portfolio, together with the investments made by the Group, giving an indication of the appetite for funding within the portfolio.

Progress: The Group has substantially increased the rate of investment and the rate of investment from external sources has also continued to increase.

3. New companies added to the Group's portfolio

This KPI monitors the strategic objective of leveraging outstanding research.

How measured: Measured in terms of all new companies added to the Group's portfolio. New companies can be added through investments arising from relationships with, among others, Cambridge Enterprise Limited, Oxford Spin-out Equity Management and UCL Business plc, or technology transfer activities with Imperial College London.

Progress: The Group has continued to select a range of technology opportunities from the UK's four leading research-intensive universities as well as other research institutions and entrepreneurs.

Number of new companies added to the Group's portfolio

13 new companies during the year, comprising 6 accelerated growth and 7 lighter touch

4. Potential value available from the existing portfolio

This KPI monitors value creation, which will then flow through to realisations and provide funds for future investments.

How measured: A measure of the net increase in value in the accelerated growth portfolio calculated by the increases in the portfolio value during the year, less investments made.

Progress: The potential value available from the accelerated-growth portfolio has continued to increase.

Net increase in accelerated growth portfolio value £20.4m

5. Exits achieved

This KPI monitors the Group's strategy to grow its most valuable companies in order to optimise value.

How measured: Measured in terms of cash returned to sustain future investments.

Progress: Net realisations of £6.9 million were a substantial increase on prior year.

6. Health and quality of intellectual property pipeline from Imperial College London

This KPI monitors the success of the Group's commercialisation of intellectual property.

How measured: Measured by the number of opportunities flowing through the pipeline from Imperial College London, demonstrated by the number of inventions disclosed, patents filed, and new licenses.

Progress: The flow of opportunities has remained healthy. Of the 386 invention disclosures in the year ended 31 July 2015, 296 came from Imperial College London and the remainder came from other sources. The Group entered into 39 new IP agreements and generated £2.8 million in revenue from its portfolio of 214 licensing and royalty agreements.

Consolidated statement of comprehensive income

for the year ended 31 July 2015

Consolidated balance sheet

as at 31 July 2015

Consolidated cash flow statement

for the year ended 31 July 2015

Consolidated statement of changes in equity

attributable to equity holders of the Group

Treasury shares with a cost of £2,564,009 (2014: £2,564,009) have been netted against retained earnings representing shares held by the Employee Benefit Trust.

Notes

1. Basis of preparation

The preliminary announcement for the year ended 31 July 2015 has been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union as at 31 July 2015 and with the accounting policies disclosed in the Company's annual report for the year ended 31 July 2014. 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 2015, which have been approved by the Board of Directors. The report of the auditors on the financial statements for the year ended 31 July 2015 was unqualified, did not contain an emphasis of matter paragraph and did not contain any statement under section 498 of the Companies Act 2006. 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 2014, upon which the auditors reported without qualification, have been delivered to the Registrar of Companies.

2. Segmental reporting

For the year ended 31 July 2015 and the year ended 31 July 2014, the Group's revenue and profit was derived from its principal activity within the United Kingdom.

IFRS 8, 'Operating Segments' defines operating segments as those activities of an entity about which separate financial information is available and which are evaluated by the Chief Operating Decision Maker to assess performance and determine the allocation of resources. The Chief Operating Decision Maker has been identified as the Board of Directors. The Directors are of the opinion that under IFRS 8 the Group has only one operating segment, which commercialises academic research and uses it to build businesses.

Whilst the Chief Operating Decision Maker monitors all investments as one portfolio, the Group is reporting on the progress of its holdings in the financial statements by grouping them into the different sectors including Therapeutics, Medtech and Medical Devices, Engineering and ITC/digital/communications. This is to allow clearer understanding of the sectors in which the Group invests.

The Group has two customers of £1.5 million and £0.7 million respectively that account for £2.2 million (43%) of the Group's revenue (2014: two customers that account for £1.2 million (33%)).

Breakdown of the revenue from all sources is as follows:

3. Investments

Net change in fair value of investments held at fair value through profit or loss

Net change in fair value of investments for the year of £21,324,000 (2014: £40,549,000) represents the change in fair value taking into account the movement in the revenue-share charge on these fair value movements.

Included within the net fair value movement recognised in the consolidated statement of comprehensive income are provisions for liabilities and charges. These are made up of the revenue sharing provision which represents a fair value estimate of monies due to Imperial College London and other third parties such as co-funders of research work and the Appointee Directors' pool. The provision will be payable upon the eventual realisation of investments held by the Group under the revenue sharing arrangements of the Technology 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 following tables in this note set out how the net fair value recognised in the consolidated statement of comprehensive income for each of the periods is generated, along with the period end position with respect to the carrying value of investments.

The table below sets out the movement in the balance sheet value of the investments from the start to the end of the year, setting out the fair value gains and losses together with any investments and disposals.

1 Quoted companies are registered on AIM, NASDAQ and the Main Market of the London Stock Exchange.

The table below sets out the movement in the balance sheet value of the provision for liabilities and charges arising on revenue sharing obligations from the start to the end of the year, setting out any fair value gains and losses together with the impact arising as a result of disposals.

The table below sets out the movement in the net carrying value of investments from the start to the end of the year, setting out the net fair value gains and losses together with any investments and disposals.

Additionally, monies are due to parties in the Appointee Directors' Pool in respect of the Imperial Innovations LLP assets acquired as part of the stepped acquisition in 2005 and to other third parties. These are included in 'Revenue Sharing Other' in the table below. 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 following table analyses the provision by obligation:

4a Carried Interest Plan (release)/charge

The Group's Carried Interest Plan generated an accounting release of £1.2 million (2014: charge of £4.8 million) for the year ended 31 July 2015, with a corresponding liability of £4.7 million (2014: £5.9 million). An accounting liability is reflected as the fair value of the portfolio of companies has exceeded the investments made by the Group plus 8% interest compounded. Once future disposals are made they are distributed in the following order: retention by the Group of the original amount invested, retention by the Group of an 8% hurdle, then a catch up until the desired investor : executive ratio for the portfolio in question (which will be in the range from 85 : 15 to 89.5 : 10.5) has been achieved and then retention of any excess by the Group and distribution to the executives in that same ratio. Accordingly there is no cash payment due to the members of the scheme until the Group has ceased investment in the companies in the relevant portfolio and has made future realisations.

4b Other administrative expenses

5. Earnings per share

Basic earnings per share is calculated by dividing the profit for the financial year by the weighted average number of Ordinary Shares in issue during the year. Diluted earnings per share is computed by dividing the profit for the financial year, by the weighted-average number of Ordinary Shares outstanding and, when dilutive, adjusted for the effect of all potentially dilutive shares, including share options (and in the prior year the impact of the partly paid New Convertible B shares) on an as-if-converted basis. The potential dilutive shares are included in diluted earnings per share computations on a weighted average basis for the year. The profits and weighted average number of shares used in the calculations are set out below:

6. Short-term liquidity investments and cash and cash equivalents

Total cash and cash equivalents include restricted balances of £0.6 million (2014: nil). Pursuant to the amended and restated EIB facility agreement (see note 7) the Group is required to maintain a debt service reserve account pledged in favour of the lender. The account is available solely to pay any outstanding interest and principal payments owed under the EIB agreement for the following six months.

Reconciliation of amounts invested to trade investments:

Reconciliation of cash flows arising from sale of trade investments:

Reconciliation of cash flows arising on revenue-share paid on asset realisations of trade investments:

7. Borrowings

This note provides information about the contractual terms of the Group's interest-bearing borrowings, which are measured at amortised cost.

On 1 July 2013 the Group entered into a £30.0 million loan agreement with the European Investment Bank (EIB) available to draw down in two tranches of £15.0 million. The purpose of the loan is to provide funding towards Biotech and Therapeutics investments.

The first tranche of £15.0 million was drawn down on 30 July 2013. Transaction costs in the year ended 31 July 2013 of £186,000 were incurred to obtain the loan and were set against the loan amount. These costs are subsequently amortised over the life time of the loan. During the year ended 31 July 2015, £16,000 (2014: £16,000) was charged to the statement of comprehensive income. The loan is based on a floating interest rate related to LIBOR and is repayable in 10 equal annual instalments over a twelve year period with the first payment due on 25 July 2016. There was an uncapped cash sweep of 25% of all investment realisations used to prepay the loan. During the current year £944,000 (2014: £nil) was repaid. This cash sweep was removed with the signing of the new loan during the current year.

The second tranche of £15.0 million was drawn down on 30 June 2015. Transaction costs of £181,000 were incurred to obtain the loan and were set against the loan amount. These costs are subsequently amortised over the life time of the loan. During the year ended 31 July 2015, £2,000 (2014: £nil) was charged to the statement of comprehensive income. The loan is based on a fixed interest rate of 4.199% and is repayable in 9 equal annual instalments over a ten year period with the first payment due on 25 July 2017.

On 13 July 2015, the Group entered into a second loan agreement of £50.0 million with the European Investment Bank (EIB) available to draw down in up to four tranches with a minimum tranche value of £10.0 million. The purpose of the loan is to provide funding towards Biotech and Therapeutics investments. This loan has not been drawn down. There is a non-utilisation fee calculated on the daily undrawn, uncancelled balance of the loan from the date falling six months after the date of the agreement at a rate of 0.10% per annum.

The loans contain a debt covenant requiring that the ratio of the total fair value of investments plus cash and qualifying liquidity to debt should at no time fall below 4:1. The loan also stipulates that on any date, the aggregate of all amounts scheduled for payment to the EIB in the following six months should be kept in a separate bank account.

The Group closely monitors that the covenants are adhered to on an ongoing basis and has complied with these covenants throughout the year. The Company will continue to monitor the covenants position against forecasts and budgets to ensure that it operates within the prescribed limits.

8. Issued share capital

Share capital

Deferred shares are not transferable and do not entitle the holder to the payment of any dividend or otherwise participate in the profits of the Company or to receive notice of or attend or vote at any general meeting of the Company and on any reduction of capital in accordance with the Companies Act 2006 may be cancelled without payment of consideration. The Deferred Shares are not listed on any stock exchange. The Company may purchase the Deferred Shares for not more than the sum of £0.01 in aggregate for all the Deferred Shares and cancel the Deferred Shares so purchased, without any requirement to obtain the consent or sanction of the holders of the Deferred Shares.

On 26 June 2014, the Company's total issued voting share capital increased through the issue of 37,500,000 Ordinary Shares of 3 and 1/33 pence each (total nominal value of £1,136,000) at 400 pence each (total gross proceeds of £150,000,000 before issue costs) pursuant to a placing, taking the total number of Ordinary Shares admitted to trading on AIM to 137,151,035. Costs of £3.2 million directly associated with the transaction were taken to the share premium account. Marketing and other costs of £0.2 million were charged to the statement of comprehensive income.

The total issued voting share capital as at 31 July 2015 was 137,151,035 voting shares (31 July 2014: 137,151,035 voting shares). On 24 September 2015, after the financial year-end, the Company purchased the Deferred Shares for the total sum of £0.01 in aggregate and these shares were then cancelled.

On 17 August 2015, the Company's total issued voting capital increased through the issue of 523,677 Ordinary Shares of 3 and 1/33 pence each at an average price of approximately 312 pence per Ordinary Share pursuant to the exercise of share options held by two former Directors, taking the total number of Ordinary Shares admitted to trading on AIM to 137,674,712.

Employee Benefit Trust

As at 31 July 2015, the Employee Benefit Trust (EBT) held 971,080 (2014: 971,080) of the Group's Ordinary Shares, which have a cost of £2,564,009 (2014: £2,564,009). During the year the Employee Benefit Trust did not increase its holding (2014: no increase). These represent unallocated shares which are considered to be under the de-facto control of the Group and have therefore been consolidated in the financial statements.

It is the intention of the Group to use these shares to settle the option liabilities at the point of exercise and they represent a partial hedge on the cost of the exercise. No shares have been issued from the EBT during the year (2014: nil).

Company information

Directors

Company Secretary

William Rayner

Registered Office

52 Princes Gate

Exhibition Road

London SW7 2PG

Independent Auditors

PricewaterhouseCoopers LLP

Chartered Accountants and Statutory Auditors

Abacus House

Castle Park

Cambridge CB3 0AN

Principal Bankers

National Westminster Bank plc

PO Box No 592

18 Cromwell Place

London SW7 2LB

Joint Brokers

Cenkos Securities plc

6.7.8 Tokenhouse Yard

London EC2R 7AS

Company Registration Number

05796766

Solicitors

Mayer Brown International LLP

201 Bishopsgate

London EC2M 3AF

Financial Advisers, Joint Brokers and Nomad

J.P. Morgan Cazenove

25 Bank Street

Canary Wharf

London E14 5JP

Share Registrars

Equiniti Limited

Aspect House

Spencer Road

Lancing

West Sussex BN99 6DA

Imperial Innovations Group plc

52 Princes Gate

Exhibition Road

London SW7 2PG

+44 (0)20 3053 8850

www.imperialinnovations.co.uk