27 Sep 2007 07:00
Imperial Innovations Group plc Preliminary results for the year ended 31 July 2007
Imperial Innovations Group plc (AIM: IVO), the intellectual property commercialisation and investment company, today announces its preliminary results for the year ended 31 July 2007.
Martin Knight, Chairman, commented "The year has seen continued strength in the intellectual property pipeline from Imperial College and other sources. The Group has successfully stepped up its investment activity across the portfolio and has invested ‚£13.1 million leading or co-leading 12 investments putting to good use a proportion of the funds raised at the IPO in July 2006. Our portfolio of companies is progressing well. Our pipeline of technologies from Imperial College remains strong and our partnerships are providing complementary technologies and access to markets.
The Group ended the year with net assets of ‚£53.6 million up by ‚£5.3 million on the prior year. There was an increase of ‚£22.3 million of the value of the investment portfolio from ‚£33.5 million to ‚£55.8 million. The Group generated an adjusted profit of ‚£5.3 million (2006: ‚£4.6 million) after adjusting for the non cash share based payment charge and reported a profit of ‚£0.9 million (2006: ‚£4.1 million)."
Highlights for 2007
* Investments made: ‚£13.1 million (2006: ‚£1.9 million) * Gross fair value of investments: ‚£55.8 million (2006: ‚£33.5 million) * Net asset value rising from ‚£48.4 million to ‚£53.6 million * Adjusted profit: ‚£5.3 million (2006: ‚£4.6 million) calculated before share-based payment charge * Reported profit: ‚£0.9 million (2006: ‚£4.1 million) * Technology businesses (spin-outs) at 31 July: 74 (2006: 66) * Technology businesses added to portfolio: 13 (2006: 10) * Invention disclosures received: 366 (2006: 284) * Patents filed: 77 (2006: 61)
Formal notices of the second Annual General Meeting of Imperial Innovations Group plc will be circulated with the Annual Report on or before 16 November 2007. The AGM to be held at The Business School, Imperial College, Exhibition Road, London SW7 2AZ on10 December 2007 at 11.30 a.m.
A PDF version of this is available at http://www.imperialinnovations.co.uk/ prelim2007.pdf
For further information please contact:
Martin Knight, Chairman +44 20 7594 1403 Susan Searle, Chief Executive Officer +44 20 7594 6591 Julian Smith, Chief Financial & +44 20 7594 6505 Operations Officer M:Communications Patrick d'Ancona / Eleanor Williamson +44 20 7153 1539 JPMorgan Cazenove Steve Baldwin +44 20 7155 4515 CHAIRMAN'S STATEMENT
After the corporate intensity of the last two years - the pre-IPO funding in 2005, the flotation on AIM in 2006 - I am able to report that the past 12 months have been a satisfactory year of hard work in progress in the business. Three features stand out:
The quality and quantity of intellectual property being developed, sourced and exploited out of Imperial College, continues to be high. 366 inventions were disclosed in the year and 77 patent applications filed, covering a wide medical and technological field, illustrating the breadth and depth, and hence the value, of the intellectual property pipeline agreement with Imperial College.
On top of this, the growth of intellectual property being exploited from non Imperial College sources, and in particular from overseas sources, has been encouraging. For example, the relationship with the Waste & Resources Action Programme, where there have been three companies incubated, one of which has been already sold.
The successful completion of 24 financing rounds raised in excess of ‚£40 million for companies based on Imperial Innovations' intellectual property exploitation. Imperial Innovations invested ‚£13.1 million of this total figure. The investment team has been significantly bolstered in the year, with Russ Cummings joining as Chief Investment Officer, to enhance a professional, experienced capability. This has been reflected in the role of Imperial Innovations in leading or co-leading 12 funding rounds, with all that this implies for fee income generation and deal control.
A striking feature of the deal pattern in the year was the increased size of some of the funding rounds - and, notwithstanding this, the relatively larger share of the equity held by Imperial Innovations after such funding rounds. For example, for Veryan Medical Limited, the funding round was for ‚£3.2 million and Imperial Innovations still holds 38% of the diluted share capital. Retaining a larger proportion of the prospective value enhancement in the portfolio is a key objective and it is being achieved.
I noted last year that Imperial Innovations' business was not one where today's activities translate immediately into profit and cash flow. As a publicly quoted company, the pressure is clearly on the management team to deliver results, at the operating and the post-tax level. The financial performance for the year is an improvement on the previous year and maintains good progress. There is little doubt that the business is significantly closer to a real demonstration of the strength of the business model and the realisation of value for shareholders.
The quality of the businesses in which investments are being made, the management teams being backed and the breadth and depth of the intellectual property commercialisation opportunities open to Imperial Innovations all give confidence for the future. So, it would be short-sighted to drive for quick wins at the expense of longer term gains to shareholders.
Of course, the progress made in the past year has been achieved by hard work and a professional approach to business by the executive team, for which the Board is grateful. To reflect this - and in line with intentions laid out in the Group's flotation prospectus - during the year a long term incentive plan was devised and will be implemented in the near future. Aligning executive reward to shareholder interests is axiomatic in today's business world; but the details of the relevant scheme, particularly in a young, growing company, still need careful analysis and diligent attention. In this context I am grateful to the Non- Executive Directors for their hard work in this first year of the Company being publicly quoted.
As a last point, I wish to acknowledge, the long-term supportive nature of our core shareholders, none more so than Imperial College itself. We are grateful to all our shareholders for their support.
DR MARTIN KNIGHTCHAIRMANCHIEF EXECUTIVE'S REPORTIntroduction
This year we have confirmed our position as a global leader in early stage technology commercialisation and further established our position as an early stage venture investor. Our key partner, Imperial College London, provides a continuing flow of quality technology ideas, privileged access to industrial customers and a major source of technical validation and expertise. We continue to develop other sources of complementary intellectual property and our pipeline of opportunities has increased. We have achieved a step-change in our investment activity investing ‚£13.1million this year (2006: ‚£1.9 million) and moving our approach from co-investing to leading or co-leading investments.
Financial Results
At the end of the year we reported an adjusted pre-tax profit of ‚£5.3 million (2006: ‚£4.6 million) after removing the impact of the charge arising from ‚£4.4 million share based compensation, a reported profit of ‚£0.9 million (2006: ‚£4.1 million).
The equity portfolio had net gains of ‚£9.5 million comprising ‚£3.4 million (20% increase) in the quoted companies and ‚£6.2 million (42% increase) in privately held companies.
A total of ‚£13.1 million was invested in 24 companies. The Group also invested further in the technology pipeline spending ‚£1.2 million on 318 patent families. Costs were carefully controlled and we continue to seek ways of increasing trading income to minimise net expenses.
Our cash position remains strong at ‚£19.5 million cash at year end (2006: ‚£32.5 million) and the net assets increased by ‚£5.3 million from ‚£48.4 million to ‚£ 53.6 million at the end of the year.
Opportunity Pipeline
The pipeline of opportunities is growing. This year 366 invention disclosures were evaluated (2006: 284) of which 84% came from Imperial College, 77 patents were filed (2006: 61) and 47 commercial agreements were signed (2006: 20).
The Bioscience and Engineering Technology Transfer teams meet regularly with a range of industry partners to discuss emerging technology needs and it is against this background that new ideas are assessed. Having selected those inventions with significant commercial merit, the teams' focus is to get each of those shortlisted technologies through the proof of concept stage with input from customers so that they can be licensed to an existing company or transferred to a new technology business.
We have access to proof of concept funding and support through a variety of partners such as Johnson & Johnson and the London Development Agency. Imperial College continues to work closely with us to bridge the proof of concept gap through the establishment of initiatives such as the Drug Discovery Institute where Imperial College has provided ‚£1.2 million of funding to develop pre-clinical opportunities in therapeutics.
Licensing Activity
This year the revenue arising from licence, royalty and other commercial contracts increased to ‚£2.1 million (2006: ‚£1.8 million). New IP agreements span a range of products from drug discovery software, medical devices, software models for environmental management to mechanical devices.
Licensees ranged from large corporates to smaller growing technology businesses. While the nature and risk profiles of the deals vary, our approach is to establish the right partners to take each product to market.
Within our commercial agreement portfolio we have a number of therapeutic licences, including peptides licensed to Thiakis Limited for suppression of appetite and allergy therapeutics licensed to Circassia Holdings Limited. Both markets are in excess of US$5 billion and a small percentage return to us from these markets would result in a substantial annual income stream. However, we recognise the typical risk profile and timescales in development of therapeutics.
Incubation & Company Formation Activity
The New Ventures team has formed or taken an equity interest in 13 technology businesses. Of particular note are EVO Electric Limited and Quantasol Limited. EVO Electric Limited addresses the hybrid electric vehicle market and Quantasol Limited has developed highly efficient solar cell concentrator technology. Both businesses were formed in the year and raised funding of ‚£1.5 million and ‚£1.35 million respectively thereby jumping a "seed" funding round and moving straight to series A investment.
A total of eight companies managed by the New Ventures team raised ‚£5.7 million, of which we invested ‚£2.1 million.
The New Ventures team has continued to develop its pool of management and non-executive directors. To further accelerate and widen this they have put in place supply relationships with several recruitment agents.
The physical incubator, located in the heart of Imperial College's campus in South Kensington and managed by the New Ventures team, houses 11 companies, in which Imperial Innovations holds equity employing 91 people. These are BioCeramic Therapeutics Limited, deltaDOT Limited, EMcision Limited, Equinox Limited, EVO Electric Limited, NanoBioDesign Limited, Molecular Vision Limited, Midaz Lasers Limited, Nexeon Limited, Respivert Limited and Thiakis Limited. This facility enables our early companies to make rapid progress in a capital efficient manner.
The New Ventures process produces proprietary deal flow from which the Investment team can select investments.
Investment Activity
The Investment team is responsible for our investment and divestment processes. We have achieved a step-change in our investment activity in two ways; we have increased the investments made and we have moved from co-investing with other investors to leading or co-leading investments.
We have invested ‚£13.1 million (2006: ‚£1.9 million) across 24 investment rounds, 12 of these we led or co-led. This included commitments and investments in Circassia Holdings Limited (‚£2 million), InforSense Limited (‚£1.6 million), Nexeon Limited (‚£2 million), Veryan Medical Limited (‚£2.2 million) and Thiakis Limited (‚£1.5 million).
The portfolio as a whole raised in excess of ‚£40 million this year (2006: ‚£30 million).
The Investment team adopts a portfolio approach in order to manage the 50 companies with, at any one time, approximately ten high potential and involvement, 15 emerging high potential and 25 lower potential or smaller holdings with low involvement. The other 24 companies are managed by the New Ventures team. We continue to add experience to the team. Russ Cummings joined as Chief Investment Officer in September bringing 20 years venture capital experience and he was joined by John Holden as an investment director bringing a further 12 years experience.
We closed the year with equity holdings in 74 companies (2006: 66) and we formed 13 companies (2006: 10).
Indicators of Success
There are three main indicators of success for the Group's investment portfolio. The first is the value of the portfolio. This is monitored in two parts: the 70 unquoted portfolio holdings (2006: 62 companies) and the quoted portfolio holdings of 4 companies (2006: 4 companies). The net growth in the value of unquoted holdings is a particularly important metric as it is here we expect to invest.
The unquoted portfolio increased in value (net of revenue sharing obligations) from ‚£9.5 million to ‚£26.5 million comprising ‚£13.1 million investments, ‚£0.6 million disposals and ‚£4.5 million (47%) fair value gains.
The quoted portfolio increased by 21% over the year. Ceres Power Holdings plc, our largest quoted holding, represented 29% of the total portfolio at the end of the period (2006: 46%). During the year Ceres Power Holdings plc announced that it had designed and built an integrated wall mounted combined heat and power unit capable of generating electricity and meeting all the central heating requirements of a typical home avoiding the need for a separate boiler and addressing both new build and replacement markets.
The second indicator of progress in the portfolio is the people we are attracting into our technology businesses. We are regularly approached by successful entrepreneurs looking for their next business and have successfully utilised a number of entrepreneurs in residence. We are also attracting high calibre individuals for Chairman roles. For example, Sir Richard Sykes was appointed Chairman of Circassia Holdings Limited, and Andrew Carr, formerly the head of Amersham's life science division joined deltaDOT Limited.
The third indicator is third party validation. One measure is revenue from customers as businesses start to generate product sales. For example, InforSense Limited generated total revenues of ‚£3.5m this financial year and Polytherics Limited's development contracts brought in excess of ‚£1m turnover.
Another measure is evidence of industrial partnerships which will co-fund development and accelerate routes to market. Veryan Medical Limited's SwirlFlowTM stent programme is run in collaboration with two leading international vascular device manufacturers.
We continue to develop and build upon a series of partnerships across our thematic area which further strengthens our network of relationships with international customers. This also provides access to complementary technology and technical expertise. For example:
* BAE Systems our pilot programme is now underway with a number of promising technologies * Carbon Trust - low carbon incubator six companies supported * Carbon Trust Shell Seed Fund (LCSF) ‚£2 million seed fund established and first investment made in Ashe Morris * Waste & Resources Action Programme funded recycling commercialisation centre three companies incubated and one sold * NHS Trusts (Hammersmith & St Mary's) three technologies being commercialised * Consensus Imperial Innovations Centre technology service developed
Outlook
This year the value of the Group will continue to be demonstrated through the quality of the companies as they mature. Our investment activity will continue in leading deals where appropriate and seeking to accelerate the growth of our companies. We will continue to build links with a number of technology providers and customers. We are developing further our international activity and exploring options in the USA and India.
We have developed an integrated business model drawing on the combination of skills available across the team of 49 people. A key part of our success is due to our access to outstanding scientists at Imperial College and we are fortunate to work with so many.
SUSAN SEARLECHIEF EXECUTIVE OFFICERFINANCIAL REPORTINVESTMENT ACTIVITIES
During the year, the Group made ‚£13.1 million of investments to fund 24 technology companies in its portfolio and at the end of the year had agreed to make further investments of ‚£1.9 million.
The early stage of many of the technology companies is such that investments are made on a milestone tranche-based method which matches their need for cash with delivery of milestones whilst providing certainty of investment to ensure their security.
Additionally, some investments are made as convertible loans and at the year end there was a total of ‚£2.2 million outstanding as loans to five companies.
During the year ‚£0.6 million was realised through the disposal of three investments and one partial disposal. This means that the total net investment in the year was ‚£12.5 million.
PORTFOLIO PERFORMANCE
During the year the Group's investment portfolio grew in value by 66% from ‚£ 33.5 million spread over 66 companies to ‚£55.8 million over 74 companies. The portfolio as a whole raised in excess of ‚£40.0 million from all investors during the year. A total of ‚£0.6 million was realised by the Group from four companies generating a total of ‚£0.1 million profit and raised ‚£0.2 million for the University Challenge Seed Fund for further reinvestment.
Under the valuation technique based on International Private Equity and Venture Capital Valuation Guidelines (IPEVCVG) guidelines, at the end of July 2007, the value of the Group's technology company holdings increased by ‚£22.3 million to ‚£55.8 million.
Portfolio movements excluding cash invested 2007 2006 ‚£m ‚£m Gains on the revaluation of investments 13.3 15.8 Losses on the revaluation of investments (3.8) (3.8) Fair value gains 9.5 12.0 Movement in associated revenue sharing obligations (3.3) (5.2) Net fair value gain 6.2 6.8
The most significant element of the growth in value was the investment held in Ceres Power Holdings plc (CWR.L). Many of the companies are at a very early stage with four companies listed on AIM (2006: four companies) as at the end of the year.
SPIN-OUT CREATION
At 31 July 2007 the Group held equity stakes in 74 companies (2006: 66 companies). Seventeen companies in the portfolio achieved successful follow-on funding rounds during the year.
Unquoted Quoted Total spin-outs spin-outs At 1 August 2006 62 4 66 New spin-out businesses 13 - 13
Companies leaving portfolio during year (4) (1) (5)
Share exchange (1) 1 - At 31 July 2007 70 4 74 DEFERRED PAYMENT OBLIGATIONS
Provisions for revenue share increased from ‚£12.0 million at the end of 2006 to ‚£15.2 million at the end of 2007, reflecting the increase in the revenue share obligations to Imperial College and other parties (including deferred tax) arising on the revaluation of the shareholding in technology companies.
REVENUES, COST OF SALES AND OPERATING COSTS
Total revenues at ‚£5.1 million increased 16% from ‚£4.4 million in 2006 due to increased revenues earned from licensing, technology transfer and other activities despite the fees from Imperial College dropping from ‚£950,000 to ‚£ 725,000 during the year.
Cost of sales, largely arising from the revenue sharing arrangement with Imperial College, increased from ‚£0.9 million to ‚£1.1 million, a 22% increase, as a result of increased activity and higher revenue share on the development phase of a significant licence contract.
As a consequence of an increase in activity, operating costs (excluding share option charge) increased by 13% from ‚£5.5 million to ‚£6.2 million. A total of ‚£1.2 million (2006: ‚£1.2 million) was charged to operating costs reflecting expenditure incurred filing patents and protecting the as yet unexploited intellectual property.
UNIVERSITY CHALLENGE SEED FUND
The University Challenge Seed Fund (UCSF) reflects an award made by the United Kingdom government and third parties and must be deployed according to the conditions of that award. The purpose of the fund covers seed investment and funds for proof of concept awards. These terms include a restriction on distribution of monies from UCSF investments until the fund size has reached a multiple of three times the original investment of ‚£4.15 million, excluding donations from industry parties.
The corresponding creditor balance is reflected on the balance sheet under "non-current liabilities". The small decline in the value of this asset arises mainly as a result of write downs in equity and loan balances in addition to the costs of running the fund.
CASH
The year end cash balance of ‚£19.5 million represents a decrease of ‚£13.0million from the opening balance of ‚£32.5 million. This movement is largely aresult of: 2007 2006 ‚£m ‚£m Net cash used in operating activities (2.1) (0.5) Net cash outflow from investing activities (11.1) - Financing activities 0.2 23.2 Movement during year ended 31 July 2007 (13.0) 22.7
It is the Group's current policy to place cash surplus to working capital requirements on short term deposits. The Group has no foreign currency deposits.
SHARE-BASED PAYMENTS
Share-based payments made to Group Directors and staff are accounted for under International Financial Reporting Standard (IFRS) 2, ``Share-based Payment''.
During each of the years ended 31 July 2007, 31 July 2006 and 31 July 2005 there were share option awards and B share allotments made to Directors and to staff. The cost to staff was the nominal value of the shares awarded. In prior years, before the adoption of FRS 20, "Share Base Payments", no costs were incurred by Imperial Innovations as a result of these transactions and no charge was applicable to reserves or the profit and loss account under United Kingdom Generally Accepted Accounting Practice (UK GAAP) as the estimated market value of the shares underlying the options was below the exercise price.
However, IFRS 2 requires that for share option awards and share allotments to employees, the fair value of the employee services received should be measured by reference to the fair value of the share option (or shares allotted) at the grant date, with the charge being spread over the vesting period. As such, this results in additional charges to the Income Statement. The charge is ‚£4.4 million in the year (2006: ‚£0.5 million). As this is a non cash item the total amount charged is reflected in the "share-based payment reserve" and therefore does not impact on shareholders' equity.
TAXATION
The Group is eligible for Substantial Shareholder Relief as it is a member of a trading group whilst it is a subsidiary of Imperial College.
However, should the Group cease to be part of the Imperial College group of companies (i.e. Imperial College's holding falls below 50%) transitional rules apply, which are likely to preserve the exemption for a further two years. Therefore, it is likely that the Group would no longer be exempt from taxation on chargeable gains from disposals of substantial shareholdings.
PRESENTATION OF RESULTS
This year is the Group's first year producing public company accounts under IFRS. The Directors have decided to adopt IFRS for the year ended 31 July 2007, a year earlier than required. The Group's transition date to IFRS is 1 August 2005 with the first financial statements complying with IFRS being the year ended 31 July 2007. Areas where differences have arisen upon change of accounting policy are set out below.
Fixed Asset Investments
All equity investments held by Imperial Innovations are defined as financial assets under International Accounting Standard (IAS) 32: "Financial Statements Disclosure and Presentation" and are classified as financial assets held at fair value under IAS 39, ``Financial Instruments: Recognition and Measurement''. This includes all UCSF/LCSF equity investments.
Under IAS 39 the carrying value of all investments are at fair value with changes in fair value between accounting periods being charged or credited to the Income Statement. This differs substantially from Imperial Innovations' prior accounting policy under UK GAAP whereby only listed investments were shown at fair value and any difference in value between accounting periods was charged or credited to a revaluation reserve and where unlisted investments were accounted for at the lower of cost or net realisable value. The majority of these investments under the prior treatment were held at cost.
The change in basis of the valuation of unlisted investments has resulted in material carrying value changes to the Group and may make earnings more volatile.
Revaluation Reserve
Under IAS 39 the movements in values are charged or credited to the Income Statement and therefore there is no revaluation reserve in our IFRS Financial Statements.
Deferred Tax
Full provision for deferred tax under IFRS is made on all temporary differences resulting from the IFRS carrying value of fixed asset investments and its tax base. Deferred tax is determined using tax rates (and laws) that have been enacted by the Balance Sheet date and are expected to apply when the related deferred tax asset is realised or deferred tax liability is settled. However, deferred tax assets and liabilities are only recognised to the extent that it is probable that the deferred tax liability will be payable or the deferred tax asset will be utilised in the future. Any deferred tax charge or credit is applied through the Income Statement.
Summary Impact of IFRS Adoption
The increase to equity arising from the introduction of IFRS is ‚£1.4 million (as at 1 August 2005) rising to ‚£6.8 million as at 31 July 2007 (2006: ‚£2.0 million). The Group had already reflected an increase of ‚£1.2 million to the value of the portfolio as a result of a stepped acquisition of a minority stake in 2005. The impact of IFRS adoption on the current year deferred tax is ‚£0.1 million (2006: ‚£0.7 million).
JULIAN SMITHCHIEF FINANCIAL ANDOPERATIONS OFFICERCONSOLIDATED INCOME STATEMENTFOR THE YEAR ENDED 31 JULY 2007 Note 2007 2006 ‚£000 ‚£000 Continuing operations Revenue 5,110 4,364 Cost of sales (1,130) (873) Gross profit 3,980 3,491 Change in fair value of investments 6,240 6,790 Administrative expenses: - Other administrative expenses (6,174) (5,454) - Share-based payments (4,399) (496) Operating (loss) / profit (353) 4,331 Interest receivable 1,392 455 Interest payable (16) (2) Profit before taxation 1,023 4,784 Taxation (141) (722) Profit for the financial year 882 4,062 Basic earnings per Ordinary Share (pence) 3 1.78 9.58 Diluted earnings per Ordinary Share 3 1.72 9.58(pence) CONSOLIDATED BALANCE SHEETAS AT 31 JULY 2007 Note 2007 2006 ‚£000 ‚£000 Assets Non-current assets Property, plant and equipment 54 24 Investments 2 53,726 31,498 University Challenge Seed Fund (UCSF): - Investments 1,061 987 - Loans 758 1,046 Low Carbon Seed Fund (LCSF) 227 - Total non-current assets 55,826 33,555 Current assets Trade and other receivables 1,343 1,135 Cash and cash equivalents 19,469 32,547 Total current assets 20,812 33,682 Total assets 76,638 67,237 Equity and liabilities Equity attributable to equity holders Issued share capital 1,501 1,501 Share premium 22,713 22,713 Retained earnings 6,442 5,560 Share based payments 4,895 496 Other reserves 18,096 18,096 Total equity 53,647 48,366 Liabilities Non-current liabilities University Challenge Seed Fund (UCSF) 1,905 2,039 Provisions for liabilities and charges 15,182 12,003 Deferred taxation 863 722 Low Carbon Seed Fund (LCSF) 227 - Total non-current liabilities 18,177 14,764 Current liabilities Trade and other payables 4,814 4,107 Total liabilities 22,991 18,871 Total equity and liabilities 76,638 67,237 CONSOLIDATED CASH FLOW STATEMENTFOR THE YEAR ENDED 31 JULY 2007 Note 2007 2006 ‚£000 ‚£000 Cash outflows from operating activities Operating (loss) / profit (353) 4,331 Adjustments to reconcile operating (loss) / profit to net cash flows from operating activities Depreciation of property, plant 16 18 and equipment Fair value movement in investments (6,240) (6,790) Share based payments 4,399 496 Working capital adjustments (Increase) in trade and other (498) (191) receivables Increase in trade and other 485 1,593 payables Net cash used in operating (2,191) (543) activities Cash flows from investing activities Purchase of property, plant and (46) (24) equipment Purchase of investments (12,744) (1,788) Proceeds from sale of investments 426 1,373 Purchase of UCSF investments (19) (23) Interest received 1,326 463 Net cash (used in) / generated (11,057) 1 from investing activities Cash flows from financing activities Proceeds from share issues - 25,983 Transaction cost of issue of - (2,658) shares Income / (repayments) from / (to) 170 (50) UCSF fund Net cash generated from financing 170 23,275 activities Net (decrease) / increase in cash (13,078) 22,733 and cash equivalents Cash and cash equivalents at 32,547 9,814 beginning of the year Cash and cash equivalents at end 19,469 32,547 of the year
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Attributable to equity holders of the group
Share Share Retained Share-based Other Total Capital Premium Earnings Payments Reserves ‚£000 ‚£000 ‚£000 ‚£000 ‚£000 ‚£000 At 1 August 2005 1,251 18,096 1,498 - - 20,845 Consolidated profit for the - - 4,062 - - 4,062 year to 31 July 2006 Share-based payments - - - 496 - 496 Other reserves (merger - - - - 18,096 18,096reserve) Issued share capital 250 4,617 - - - 4,867 At 31 July 2006 1,501 22,713 5,560 496 18,096 48,366 Consolidated profit for the - - 882 - - 882 year to 31 July 2007 Share-based payments - - - 4,399 - 4,399 At 31 July 2007 1,501 22,713 6,442 4,895 18,096 53,647
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
GENERAL INFORMATION
Imperial Innovations Group plc is a Public Limited Company incorporated and domiciled in the United Kingdom. The address of the registered office is Imperial Innovations Group plc, EEE Building, Imperial College, London, SW7 2AZ. Imperial Innovations Group plc's shares were admitted to the AIM market of the London Stock Exchange on 31 July 2006.
1. ACCOUNTING POLICIES
Basis of preparation
The preliminary announcement for the year ended 31 July 2007 has been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union as at 31 July 2007 and in accordance with the accounting policies included in the IFRS transitional disclosure published by the Group on 24 April 2007. The financial information contained in this preliminary announcement does not constitute statutory accounts as defined in Section 240 of the Companies Act 1985. The financial information has been extracted from the financial statements for the year ended 31 July 2007, which have been approved by the Board of Directors and on which the auditors have reported without qualification. The financial statements will be delivered to the Registrar of Companies after the Annual General Meeting. The financial statements for the year ended 31 July 2006, upon which the auditors reported without qualification, have been prepared under United Kingdom Generally Accepted Accounting Principles (UK GAAP) and have been delivered to the Registrar of Companies.
The Directors have decided to adopt IFRS for the year ended 31 July 2007 as permitted by The Companies Act 1985, International Accounting Standards and Other Accounting Amendments and Regulations that became law on 11 November 2004. The date of transition to IFRS for the Group is therefore, 1 August 2005.
2. INVESTMENTS - DESIGNATED AT FAIR VALUE THROUGH PROFIT OR LOSS
Quoted Unquoted Total Companies1 Companies ‚£000 ‚£000 ‚£000 At 1 August 2005 5,628 13,226 18,854 Investments during the - 1,870 1,870period Reclassification during the 624 (624) -period Changes in fair value 11,880 120 12,000during the period Realisations during the (1,226) - (1,226)period At 31 July 2006 16,906 14,592 31,498 Quoted Unquoted Total Companies1 Companies ‚£000 ‚£000 ‚£000 At 1 August 2006 16,906 14,592 31,498 Investments during the - 13,144 13,144period Reclassification during the 250 (250) -period Changes in fair value 3,405 6,105 9,510during the period Realisations during the (53) (373) (426)period At 31 July 2007 20,508 33,218 53,726
1All quoted companies are listed on AIM.
Net change in fair value for the period after revenue share is ‚£6.24 million (2006: ‚£6.79 million).
3. 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 period.
The profits and weighted average number of shares used in the calculations areset out below. 2007 2006 Earnings per Ordinary Share Profit for the financial year (‚£000) 882 4,062
Weighted average number of Ordinary Shares (basic) (thousands) 49,522 42,405
Effect of dilutive potential Ordinary Shares; 1,724 6
Weighted average number of Ordinary Shares for the purposes of 51,246 42,411 diluted earnings per share (thousands)
Earnings per Ordinary Share basic (pence) 1.78 9.58 Earnings per Ordinary Share diluted (pence) 1.72 9.58
IMPERIAL INNOVATIONS GROUP PLC