Last checked at 28 Oct 2009 07:00
| For immediate release | 28 October 2009 |
NANOCO GROUP PLC
("Nanoco" or "the Company")
Final Results for the year ended 31 July 2009
Nanoco Group plc (AIM: NANO), a world leader in the development and manufacture of commercial quantities of quantum dots, is pleased to announce its final results for the year ended 31 July 2009.
Highlights
Successful flotation on AIM in May 2009
Distribution agreement signed with Japan-based Kisco Ltd, a major electronic materials supplier in Asia
Supply and licence agreement signed with major Japanese LED manufacturer active in the LCD backlight and general lighting markets - a further US$8 million in milestones expected by the end of December 2010
Manufacturing scale-up progressing well
Increase in cash and cash equivalents to £6.59 million at 31 July 2009 (2008: £2.53 million)
Joint development agreement signed in September 2009 with a major Japanese electronics company in connection with quantum dots for LEDs as the backlight in LCD TVs
Commenting on the results, Dr Peter Rowley, Nanoco's Chairman, said:
"The current financial year has started well, with a new joint development agreement with a major Japanese electronics company active in the LCD TV market being signed in September 2009.
"We are making substantial progress in the scale-up of manufacturing and are well on our way to producing our first kilograms of quantum dots. Our strategic relationships are also progressing well, and we anticipate the receipt of further milestone payments during the current half."
For further information please contact:
| Nanoco | + 44 (0) 161 603 7900 |
| Michael Edelman, Chief Executive Officer |
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| Michael Bretherton, Chief Financial Officer |
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| Zeus Capital | + 44 (0) 161 831 1512 |
| Alex Clarkson |
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| Nick Cowles |
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| Buchanan Communications | + 44 (0) 20 7466 5000 |
| Mark Court / Jennie Spivey / Miranda Higham |
Notes for editors:
About Nanoco Group plc
Nanoco is a world leader in the development and manufacture of commercial quantities of quantum dots for use in multiple applications including lighting, solar cells and biological imaging. Nanoco's quantum dots, which are free of heavy metals and comply with RoHS legislation, can be combined into a wide range of materials including liquids, polymers and glass.
Nanoco forms strategic partnerships with major end users across a range of applications.
Nanoco was founded in 2001 and is based in Manchester, UK. Nanoco began trading on the AIM market of the London Stock Exchange in May 2009 under the ticker symbol NANO.
About quantum dots
Quantum dots are fluorescent nano-sized particles of semiconductor material which have the ability to emit light in a specific colour dependent on the size of the particle.
Chairman's Statement
I am pleased to present Nanoco's maiden financial results as a quoted company, and to provide an introduction to our world-class technology and manufacturing capabilities. Our technology has multiple potential applications in many different industrial and consumer segments. To harness this diverse breadth of opportunities, we have chosen a collaborative business model through which we already have revenue-generating relationships with global companies.
Before discussing our strategy, I would like to give a brief summary of our technology, quantum dots, in which we have a strong global position.
Quantum dots are nano-sized particles of semiconductor material, each being around eighty thousandth of the width of a human hair. At this size, semiconductors develop a new property: the ability to emit intense light of a very specific colour, with the colour dependent on the size of the dot. These dots can be stimulated to fluoresce through excitation by light energy or by electricity and have the potential to make major improvements to commonly used products, including a substantial reduction in power consumption.
The academic understanding of quantum dots is not new, nor is an awareness of their commercial potential. However, this potential has not yet been realised because of the complexity of manufacturing quantum dots in commercial quantities. Nanoco's technology provides the solution to this problem, paving the way for quantum dots to be used in multiple applications. Nanoco has also overcome another key obstacle to the widespread use of quantum dots: the manufacture of dots that do not use heavy metals such as cadmium.
We are focusing initially on four substantial markets for our quantum dots: LED lighting, computer and mobile displays, solar cells and bio-imaging. Each of these markets represents a very substantial opportunity for Nanoco.
Our strategy is to access these markets through partnerships with major global end users, under a business model in which we receive revenues during the development phase followed by revenues from the manufacture and supply of quantum dots and additionally from a royalty payment on end-product sales.
This business model is exemplified by our partnership with a major Japanese corporation, which manufactures LEDs for the LCD display and general lighting markets. Following a successful joint development agreement with the corporation under which we received a total of US$1.2 million, a supply and licence agreement was signed in November 2008, which included a US$2 million upfront payment and from which a further US$8 million in milestone payments is expected by 31 December 2010. A royalty of 5 per cent will be paid to Nanoco on the net sales of the corporation's resulting products.
The use of LEDs as the backlight for LCD displays and in general lighting allows a substantial reduction in the power consumed. Quantum dots offer key advantages over the phosphors currently used to create white light from LEDs including superior colour performance. The potential market is considerable.
Further details of our technology and target markets, and of the progress made in our commercial relationships, are included in the Chief Executive Officer's Review of Operations.
In way of background, Nanoco was founded in 2001 from technology developed at Manchester University and at Imperial College, London. Nanoco made significant technical and commercial progress as a private company, including the signing of distribution agreements with Kisco, a leading Asian electronic materials and trading company, and Sigma-Aldrich Corporation, the world's largest supplier of research chemicals.
Flotation on AIM, via the reverse takeover of a cash shell, was one of the Company's key milestones during the year to 31 July 2009. This transaction strengthened the Company's financial resources for use in the continued development of our quantum dot technology and in the formation of further strategic partnerships. Nanoco shares began trading on AIM on 1 May 2009.
Financial results
Our revenues in the year to 31 July 2009 were £1.99 million (2008: £1.08 million), comprising primarily of milestone payments from strategic partners but including some income from the sale of products by our distribution partners. The loss before tax was £0.78 million (2008: loss of £0.70 million). Cash, and cash equivalents, at the year end were £6.59 million (31 July 2008: £2.53 million).
People
Nanoco has a team of 41 people, the great majority of whom have PhDs in quantum physics or chemistry. As the scale-up towards the mass production of quantum dots progresses, we envisage employing further staff, particularly in production.
I would like to take this opportunity to thank all at Nanoco for their energy and hard work and for their commitment to making Nanoco a world-class company. I would also like to thank our strategic partners, distributors and advisers for their contribution to the development of the Company during the course of the financial year.
Outlook
The current financial year has started well, with a new joint development agreement with a major Japanese electronics company active in the LCD TV market being signed in September 2009.
We are making substantial progress in the scale-up of manufacturing and are well on our way to producing our first kilograms of quantum dots. Our strategic relationships are also progressing well, and we anticipate the receipt of further milestone payments during the current half.
We are currently at discussion stages with further potential commercial partners, and look forward to announcing additional signed agreements with companies active in Nanoco's core markets in due course.
P Rowley
Non-executive Chairman
27 October 2009
CEO's Review of Operations
Nanoco's key strength is the world-class technology on which the company is based. This technology has multiple potential applications across diverse end-user markets, bringing a very substantial commercial opportunity. It is our responsibility as a management team to ensure that we commercialise this technology successfully for the benefit of all stakeholders.
Our technology, which is protected by an extensive patent portfolio, provides the solution to the challenging problem of manufacturing quantum dots in commercial quantities at economic pricing. This technology has positioned Nanoco as a world leader in the development and manufacture of quantum dots, with the additional benefit that the Company's manufacturing process allows quantum dots to be made from semiconductors that do not include heavy metals.
Owing to the scale of the opportunity presented to us, we have adopted a partnership strategy focused initially on four target markets: LED lighting, displays, solar cells and bio-imaging.
Before discussing these markets in detail, I would like to provide a review of the rapid progress we have made since the formation of Nanoco in 2001, focusing particularly on our partnership strategy and manufacturing scale-up.
Commercial agreements
Since the Company was founded we have used our technology to manufacture small quantities of quantum dots of around 50 grams per batch. Whilst our objective is to manufacture industrial quantities of quantum dots, our small-scale manufacturing has allowed us to sign two revenue-generating distribution agreements and enter into partnership with global corporations interested in using quantum dots in end-use applications. The first distribution deal was signed in 2007 with US-based Sigma-Aldrich Corporation, one of the world's largest suppliers of chemicals to the research market. The second distribution agreement was signed in 2008 with Japan-based Kisco Ltd, a major, privately owned electronic materials supplier to Asian markets.
Both of these distribution agreements contributed to Nanoco's revenues in the year to 31 July 2009 and have brought other benefits such as visibility in the nanomaterials industry, access to new application development programs and the business discipline of delivering products to fixed specifications.
Quantum dot development is one of the key strengths of Nanoco. Our scientists are able to design quantum dots of very specific size, which determines the wavelength of light they emit, and to modify their surface to allow the quantum dots to be incorporated into many different materials, such as water, glass and a variety of different polymers. They can also be developed into inks and printed using ink jet, screen and other conventional printing techniques.
Our business is to work with customers and potential customers in developing quantum dots to bespoke specifications for the customers' particular end use. Our business model is to efficiently tailor the quantum dots to meet a specific customer's end use application in a joint development where the customer covers a portion of the Nanoco development costs. Once the joint development is successful, a material supply and licence agreement is signed under which Nanoco receives payment for the manufacture and supply of quantum dots and receives a royalty on sales of the quantum dot containing product.
We are currently already working with customers or are in initial discussions with multiple potential customers in our four key target markets. We also have a number of joint development agreements under way.
In November 2008 Nanoco signed a major supply and license agreement with a large Japanese corporation to develop our quantum dots onto their LEDs for use in the general lighting and LCD backlight market. This agreement followed the successful completion of a joint development agreement signed in December 2007, worth US$1.2 million to Nanoco. The new agreement gives Nanoco US$10 million in upfront revenue based on hitting specific milestones. US$2 million of the US$10 million has already been paid and we expect to complete all milestones and receive the balance of US$8 million by 31 December 2010. Amongst other targets, this agreement requires the commercial supply of 1kg batches of quantum dots made without heavy metals.
Once the products are commercialised, a royalty of 5 per cent will be paid to Nanoco on the net sales of the corporation's products, which will comprise an LED chip, quantum dots and an encapsulant. The packaged LEDs will be sold by the corporation to LCD TV and display makers and to solid state lighting manufacturers. The world market for these LEDs is expected to be 167 billion units by 2012 (DisplaySearch, report: "Display LEDs: Lighting up the World").
In the current financial year, we recently announced a further agreement in the LED-backlight TV market.
Manufacturing scale-up
Nanoco's technology allows the industrial scale-up of the manufacture of quantum dots and is focused on producing quantum dots without heavy metals. This enables Nanoco's customers to comply with legislation that restricts hazardous heavy metals in electrical and electronic goods. Conforming to these regulations is a prerequisite for the large scale adoption of quantum dots into TVs and other electronic equipment.
During the financial year to 31 July 2009, and post the period end, we have made substantial progress in the scaling up of our manufacturing. Our flotation on AIM in May 2009 provided additional funds to support this growth.
The first of a suite of reactors capable of producing large batches of quantum dots was installed in our Manchester facility in September 2009 and is currently being commissioned on smaller batches of quantum dots. Throughout the current financial year we are working to scale up to 1kg per batch and then on to 25kg per batch. We do not anticipate inherent difficulties in scaling up to 25kg, which is a relatively small amount compared with many production processes, but intend to manage the scale-up carefully.
LED lighting
The use of quantum dots to produce white light from blue LEDs has significant advantages compared with currently used fluorescent lighting and phosphor technology. These advantages include superior colour performance and less energy used in future quantum dot products such as backlights for LCD TVs.
LEDs use less power than traditional light sources and also benefit from compact size, shock resistance and a very long service life. They have the potential to replace traditional light sources in many applications, including household and commercial lighting.
LEDs are particularly suited for use as the backlight in LCD TVs, owing to reduced power consumption. Legislation is being introduced in California forcing manufacturers to reduce the power consumed by their TVs by 33 per cent from 2011.
Nanoco is working with a number of global companies involved in the LCD TV market and the first TVs to include Nanoco quantum dots could be on the market as early as 2012. We also anticipate signing further agreements with companies active in the LED market.
Displays
Quantum dots can be lit up electronically which makes them well suited for next generation displays used on mobile devices, computer and laptop screens and TVs.
The benefits would include low power consumption, high colour quality and simple manufacturing. These displays would be very thin, as there would be no requirement for a backlight, and they could be printed by an ink-jet printer.
Nanoco is currently in discussions with a number of multinational companies with the objective of developing and commercialising quantum dots in electroluminescent displays.
Solar power
Quantum dots, owing to their ability to absorb light efficiently, have the potential to improve the efficiency of converting solar energy into electricity. Nanoco works with a range of quantum dot materials destined for different solar cell applications which could eventually improve efficiencies and reduce the cost per watt of solar energy produced.
Nanoco has developed quantum dots capable of capturing the full spectrum of wavelengths of light and which can be printed to form thin films by conventional printing technology.
We are working with a number of companies with relevant experience in this area and evaluation samples of quantum dots in thin films are under evaluation by potential partners.
Bio-imaging
The use of quantum dots for in vitro imaging of cells was the first market in which quantum dots were used as the application required only small quantities of materials. As Nanoco can produce large quantities our focus has been on higher volume applications such as electronics. With Nanoco's strategic focus on quantum dots free of heavy metals there has been an increasing demand to use our quantum dots for in vivo imaging.
Other markets
Whilst we intend to maintain our focus on our four key target markets, there are many other potential areas of use for quantum dots. In some of these we already have patent protection, including the security and anti-counterfeiting markets. Other markets such as functional decoration and printing have shorter development cycles and the opportunity to enter commercial production quickly. Given suitable commercial partnerships we would consider pursuing these, and other, markets.
Summary
Nanoco made excellent progress in the year to 31July 2009 in the development of its technology, commercial relationships and manufacturing. Through joining AIM in May 2009, we have strengthened our balance sheet and gained greater visibility as a world-leading company at the forefront of quantum dot commercialisation.
In the current financial year, we have already signed a significant joint development agreement with a Japanese electronics giant, and we are in multiple discussions with other potential partners across our chosen end-user markets.
The Company will continue to move forward by focusing on execution of our manufacturing scale-up plans and delivery of commercial product to our customers which will drive business growth.
M Edelman
Chief Executive Officer
27 October 2009
Consolidated Income statement
for the year ended 31 July 2009
| Notes | 2009 | 2008 | |
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| £000 | £000 |
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| Revenue | 4 | 1,994 | 1,078 |
| Cost of sales |
| (161) | (118) |
| Gross profit |
| 1,833 | 960 |
| Administrative expenses |
| (2,450) | (1,745) |
| Cost of reverse acquisition | 23 | (195) | - |
| Operating loss | 5 | (812) | (785) |
| Finance income | 7 | 57 | 122 |
| Finance costs | 7 | (25) | (35) |
| Loss on ordinary activities before taxation |
| (780) | (698) |
| Tax on loss on ordinary activities | 8 | 240 | 147 |
| Loss on ordinary activities after taxation attributable to members of the parent entity |
| (540) | (551) |
| Loss per share: |
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| Basic loss for the year | 9 | (0.31) | (0.37) |
| Diluted loss for the year | 9 | (0.31) | (0.36) |
The loss for the year arises from the Group's continuing operations.
Consolidated statement of changes in equity
for the year ended 31 July 2009
| Attributable to equity holders | |||||
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| Issued equity capital | Share based payment reserve | Merger reserve | Revenue reserve | Total |
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| £000 | £000 | £000 | £000 | £000 |
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| At 1 August 2007 | 4,839 | 42 | (1,242) | (869) | 2,770 |
| Loss for the year | - | - | - | (551) | (551) |
| Issue of share capital | 1,705 | - | - | (545) | 1,160 |
| Share based payments | - | 53 | - | - | 53 |
| At 31 July 2008 | 6,544 | 95 | (1,242) | (1,965) | 3,432 |
| Loss for the year | - | - | - | (540) | (540) |
| Exercise of warrant | 108 | - | - | - | 108 |
| Share based payments | - | 72 | - | - | 72 |
| Reallocation of reserves on reverse acquisition | 6,154 | - | - | - | 6,154 |
| Expenses on issue of shares | (455) | - | - | - | (455) |
| At 31 July 2009 | 12,351 | 167 | (1,242) | (2,505) | 8,771 |
Company statement of changes in equity
for the year ended 31 July 2009
| Attributable to equity holders | |||||
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| Issued equity capital | Share based payment reserve |
Capital redemption reserve | Revenue reserve | Total |
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| £000 | £000 | £000 | £000 | £000 |
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| At 1 January and 31 December 2008 | 27,037 | - | 4,804 | (26,050) | 5,791 |
| Treasury shares reclassified to EBT | (20) | - | - | 20 | - |
| Profit for the period | - | - | - | 287 | 287 |
| Share based expense | - | 167 | - | - | 167 |
| Shares issued on acquisition of Nanoco Tech Limited (see note 18) | 63,255 | - | - | - | 63,255 |
| Expenses on issue of shares | (455) | - | - | - | (455) |
| At 31 July 2009 | 89,817 | 167 | 4,804 | (25,743) | 69,045 |
Balance sheets
As at 31 July 2009
| Notes | 31 July 2009 | 31 July 2009 | 31 July 2008 | 31 December 2008 | |
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| Group | Company | Group | Company |
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| £000 | £000 | £000 | £000 |
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| Assets |
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| Non-current assets |
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| Plant and equipment | 10 | 2,127 | - | 1,150 | - |
| Intangible assets | 11 | 376 | - | 279 | - |
| Investment in subsidiary | 12 | - | 63,422 | - | 5,791 |
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| 2,503 | 63,422 | 1,429 | 5,791 |
| Current assets |
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| Inventories | 13 | 17 | - | 9 | - |
| Trade and other receivables | 14 | 378 | - | 236 | - |
| Income tax asset |
| 135 | - | 147 | - |
| Cash and cash equivalents | 15 | 6,589 | 5,939 | 2,528 | - |
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| 7,119 | - | 2,920 | - |
| Total assets |
| 9,622 | 69,361 | 4,349 | 5,791 |
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| Liabilities |
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| Current liabilities |
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| Trade and other payables | 16 | 376 | - | 379 | - |
| Short-term financial liabilities | 17 | 63 | - | 63 | - |
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| 439 | - | 442 | - |
| Non-current liabilities |
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| Long-term financial liabilities | 17 | 412 | (316) | 475 | - |
| Total liabilities |
| 851 | (316) | 917 | - |
| Net assets |
| 8,771 | 69,045 | 3,432 | 5,791 |
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| Capital and reserves |
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| Issued equity capital | 18 | 12,351 | 89,817 | 6,544 | 27,037 |
| Share based payment reserve | 19 | 167 | 167 | 95 | - |
| Merger reserve | 20 | (1,242) | - | (1,242) | - |
| Capital redemption reserve |
| - | 4,804 | - | 4,804 |
| Revenue reserve | 21 | (2,505) | (25,743) | (1,965) | (26,050) |
| Total equity |
| 8,771 | 69,045 | 3,432 | 5,791 |
Approved by the board and authorised for issue on 27 October 2009.
Dr M Edelman
Director Cash flow statements
for the year ended 31 July 2009
| Notes | 31 July 2009 | 31 July 2009 | 31 July 2008 | 31 December 2008 | |
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| Group | Company | Group | Company |
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| £000 | £000 | £000 | £000 |
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| (Loss)/profit before interest and tax |
| (812) | 287 | (785) | - |
| Adjustments for: |
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| Depreciation | 10 | 233 | - | 167 | - |
| Amortisation of intangible assets | 11 | 39 | - | 19 | - |
| Cost of reverse acquisition | 23 | 195 | - | - | - |
| Movement in share payment reserve | 19 | 72 | - | 53 | - |
| Impairment of investment in subsidiary | 12 | - | 5,338 | - | - |
| Net reversal of provision for non-recovery of loan to subsidiary | 12 | - | (5,744) | - | - |
| Changes in working capital (excluding the effects of acquisition): |
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| Inventories |
| (8) | - | 6 | - |
| Decease/(increase) in trade and other receivables |
| 162 | - | (92) | - |
| (Decease)/increase in trade and other payables |
| (124) | 312 | (150) | - |
| Cash (out)/inflow from operating activities |
| (243) | 193 | (782) | - |
| Interest paid | 7 | (25) | - | (35) | - |
| Research and development tax credit received |
| 136 | - | 135 | - |
| Net cash (out)/inflow from operating activities |
| (132) | 193 | (682) | - |
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| Cash flows from investing activities |
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| Purchases of plant and equipment | 10 | (1,242) | - | (312) | - |
| Related grant received | 10 | 32 | - | 50 | - |
| Net purchases of plant and equipment |
| (1,210) | - | (262) | - |
| Purchases of intellectual property | 11 | (136) | - | (145) | - |
| Loan repayment received from subsidiary | 12 | - | 6,197 | - | - |
| Interest received | 7 | 57 | 4 | 103 | - |
| Net cash (out)/inflow from investing activities |
| (1,289) | 6,201 | (304) | - |
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| Cash flows from financing activities |
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| Cash acquired on reverse acquisition | 23 | 5,892 | - | - | - |
| Net proceeds from issues of ordinary share capital |
| 108 | - | 1,160 | - |
| Expenses on issue of shares | 18 | (455) | (455) | - | - |
| Loan repayment |
| (63) | - | (62) | - |
| Net cash in/(out)flow from financing activities |
| 5,482 | (455) | 1,098 | - |
| Increase in cash and equivalents |
| 4,061 | 5,939 | 112 | - |
| Cash and cash equivalents at the start of the period |
| 2,528 | - | 2,416 | - |
| Cash and cash equivalents at the end of the period | 15 | 6,589 | 5,939 | 2,528 | - |
Notes to the financial statements
1. Authorisation of financial statements and statement of compliance with IFRSs
The financial statements of Nanoco Group PLC (formerly Evolutec Group PLC) and its subsidiaries (the "Group") for the year ended 31 July 2009 were authorised for issue by the Board of Directors on 27 October 2009 and the balance sheet was signed on the board's behalf by Dr M A Edelman.
Nanoco Group PLC ("the Company") is an AIM listed company incorporated and domiciled in the UK.
The Company's financial statements have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union ("IFRS") and International Financial Reporting Committee ("IFRIC") interpretations as they apply to the financial statements of the Group for the period ended 31 July 2009.
The principal accounting policies adopted by the Group are set out in note 2.
2. Accounting policies
Basis of preparation
These financial statements have been prepared in accordance with IFRS and IFRIC interpretations as they apply to the financial statements of the Group for the year ended 31 July 2009 and applied in accordance with the Companies Act 2006.
The accounting policies which follow set out those policies which apply in preparing the financial statements for the year.
The financial statements are prepared under the historical cost convention, except where otherwise stated.
The Company has elected to take the exemption under section 230 of the Companies Act 2006 not to present the parent company's income statement. The parent company's result for the period ended 31 July 2009 was a profit of £287,000 (year to 31 December 2008: £nil).
The Group financial statements are presented in Sterling and all values are rounded to the nearest thousand pounds (£000) except where otherwise indicated.
Basis of consolidation
The Group financial statements consolidate the financial statements of Nanoco Group PLC and the entities it controls (its subsidiaries) drawn up to 31 July each year.
Reverse acquisition of Evolutec Group PLC
On 30 April 2009, Evolutec Group PLC completed the acquisition of Nanoco Tech Limited (formerly Nanoco Tech PLC) in a share for share consideration exchange as detailed in note 23, at which time the Company also changed its name to Nanoco Group PLC.
The combination has been accounted for as a reverse acquisition equity transaction as if Nanoco Tech Limited had issued new shares in exchange for Evolutec Group PLC's cash and other assets. Although these Group financial statements have been issued in the name of the legal parent, the Group's activity is in substance a continuation of that of the legal subsidiary, Nanoco Tech Limited, because after the transaction the former Board of Nanoco Tech Limited were deemed to have control of the Group and of the legal parent. The following accounting treatment has been applied in respect of the transaction.
2. Accounting policies (continued)
Acquisition of Nanoco Tech Limited by Evolutec Group PLC (continued)
The retained loss and other equity balances recognised in the Group financial statements reflect the consolidated retained loss and other equity balances of Nanoco Tech Limited immediately before the transaction, and the consolidated results for the period from 1 August 2008 to the date of the transaction are those of Nanoco Tech Limited. However, the equity structure appearing in the Group financial statements reflects the equity structure of the legal parent, including the equity instruments issued under the share for share exchange to effect the transaction. The effect of using the equity structure of the legal parent gives rise to an adjustment to the Group's issued equity capital ("the reverse acquisition reserve"), see note 18.
Comparative numbers presented in the Group financial statements are those reported in the consolidated financial statements of the legal subsidiary, Nanoco Tech Limited, for the year ended 31 July 2008.
The fair value of the shares issued by Nanoco Group PLC has been determined from the perspective of Nanoco Tech Limited on the basis set out in note 23.
The Company's financial statements and related notes are for the legal parent for the period from 1 January 2009 to 31 July 2009 and present comparative information for the year from 1 January 2008 to 31 December 2008.
Pooling of interests method of consolidation
The purchase of Nanoco Technologies Limited by Nanoco Tech Limited on 27 June 2007 has been treated as a re-organisation using the pooling of interests method of accounting. It has therefore been presented as if the entities had always been combined. Therefore, on consolidation the assets and liabilities were reflected at carrying value rather than fair value. No goodwill arose on the combination, and the difference between the nominal value of shares issued by Nanoco Group PLC and the nominal value of the ordinary shares of Nanoco Technologies Limited, together with the capital and reserves of Nanoco Technologies Limited at the time of the pooling of interests, are shown as "merger reserve" in the consolidated financial statements.
Subsidiaries
Subsidiaries are all entities over which the Group has the power to govern the financial and operating policies, generally accompanying a shareholding of more than half of the voting rights. The existence and effects of potential voting rights are considered when assessing whether the Group controls the entity. Subsidiaries are fully consolidated from the date control passes.
The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group. The costs of an acquisition are measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are initially measured at fair value at acquisition date irrespective of the extent of any minority interest. The difference between the cost of acquisition of shares in subsidiaries and the fair value of the identifiable net assets acquired is capitalised as goodwill and reviewed annually for impairment. Any deficiency of the cost of acquisition below the fair value of identifiable net assets acquired (i.e. discount on acquisition) is recognised directly in the income statement.
All intra-group transactions, balances, and unrealised gains on transactions between group companies are eliminated on consolidation. Subsidiaries' accounting policies are amended where necessary to ensure consistency with the policies adopted by the Group. All financial statements are made up to 31 July 2009.
Foreign currency translation
Items included in the financial statements of each entity are measured using the currency of the primary economic environment in which the entity operates (the functional currency). The financial statements are presented in sterling, being the Group's presentational currency.
Transactions in foreign currencies are initially recorded in the functional currency by applying the spot rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the functional currency rate of exchange ruling at the balance sheet date. All differences are taken to the income statement.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined.
2. Accounting policies (continued)
Segment reporting
A business segment is a group of assets and operations engaged in providing products or services that are subject to risks and returns that are different from those of other business segments. A geographical segment is engaged in providing products or a service within a particular environment that are subject to risks and returns that are different from those segments operating in other economic environments.
Revenue recognition
Revenue is recognised to the extent that it is probable that economic benefits will flow to the group and the revenue can be reliably measured. Revenue is measured at the fair value of the consideration received or receivable for the sale of goods or services, excluding discounts, rebates, VAT and other sales taxes or duties.
The Group's revenues to date comprise amounts earned under joint development agreements and individual project development programmes, revenue from the sale of quantum dot products and grant income recognised. Revenues from development programmes are recognised following contractual entitlement. This typically comprises either time based fees, time and materials expended or time and technical milestones achieved, as agreed between the parties. Grant income is recognised as earned based on contractual conditions, generally as expenses are incurred.
Interest income
Interest income is recognised as interest accrues using the effective interest rate method.
Research and development
Research costs are charged against the statement of comprehensive income as they are incurred. Certain development costs will be capitalised as intangible assets when it is probable that the future economic benefits will flow to the Company. Such intangible assets will be amortised on a straight-line basis from the point at which the assets are ready for use over the period of the expected benefit, and are reviewed for impairment at each balance sheet date. Other development costs are charged against income as incurred since the criteria for their recognition as an asset are not met.
The criteria for recognising expenditure as an asset are:
it is technically feasible to complete the product;
management intends to complete the product and use or sell it;
there is an ability to use or sell the product;
it can be demonstrated how the product will generate probable future economic benefits;
adequate technical, financial and other resources are available to complete the development, use and sale of the product; and
expenditure attributable to the product can be reliably measured.
The costs of an internally generated intangible asset comprise all directly attributable costs necessary to create, produce and prepare the asset to be capable of operating in the manner intended by management. Directly attributable costs include employee costs incurred on technical development, testing and certification, materials consumed and any relevant third party cost. The costs of internally generated developments are recognised as intangible assets and are subsequently measured in the same way as externally acquired intangible assets. However, until completion of the development project, the assets are subject to impairment testing only.
Careful judgement by the Directors is applied when deciding whether the recognition requirements for development costs have been met. This is necessary as the economic success of any product development is uncertain and may be subject to future technical problems at the time of recognition. Judgements are based on the information available at each Balance Sheet date which includes the progress with testing and certification and progress on, for example, establishment of commercial arrangements with third parties. In addition, all internal activities related to research and development of new products are continuously monitored by the Directors.
No development costs to date have been capitalised as intangible assets.
Leases
Rental payable under operating leases, which are leases where the lessor retains a significant proportion of the risks and rewards of the underlying asset, are charged in the income statement on a straight line basis over the expected lease term.
2. Accounting policies (continued)
Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.
The expense relating to any provision is presented in the income statement, net of any expected reimbursement, but only where recoverability of such reimbursement is virtually certain.
Provisions are discounted using a current pre tax rate that reflects, where appropriate, the risk specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.
Financial assets and liabilities
Financial assets are recognised when the Group becomes party to the contracts that give rise to them and are classified as financial assets at fair value through the profit and loss; loans and receivables; held-to-maturity investments; or as available-for-sale financial assets, as appropriate. The Group determines the classification of its financial assets at initial recognition and re-evaluates this designation at each financial year end.
At the year end, the Group had no financial assets or liabilities designated as at fair value through the profit and loss (2008: nil).
Derecognition of financial assets and liabilities
A financial asset or liability is generally derecognised when the contract that gives rise to it is settled, sold, cancelled or expires.
Taxation
Current income tax
Current income tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the tax authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the balance sheet date.
Deferred income tax
Deferred income tax is recognised on all temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements, except to the extent that the directors do not anticipate that the timing differences will crystallise in the foreseeable future, and with the following exceptions:
where the temporary difference arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination that at the time of the transaction affects neither accounting nor taxable profit nor loss; and
in respect of taxable temporary differences associated with investments in subsidiaries where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.
Deferred income tax assets and liabilities are measured on an undiscounted basis using the tax rates and tax laws that have been enacted or substantially enacted by the balance sheet date and which are expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled.
Deferred income tax assets are recognised to the extent that it is probable that future taxable profits will be available against which differences can be utilised. An asset is not recognised to the extent that the transfer or economic benefits in the future is uncertain.
2. Accounting policies (continued)
Investments in subsidiaries
Investments in subsidiaries are stated in the Company balance sheet at cost less provision for any impairment.
Plant and equipment
Plant and equipment is recognised initially at cost. After initial recognition, these assets are carried at cost less any accumulated depreciation and any accumulated impairment losses. Cost comprises the aggregate amount paid and the fair value of any other consideration given to acquire the asset and includes cost directly attributable to making the asset capable of operating as intended.
Depreciation is computed by allocating the depreciable amount of an asset on a systematic basis over its useful life and is applied separately to each identifiable component.
The following bases and rates are used to depreciate classes of assets:
Laboratory infrastructure - straight line over ten years
Plant and machinery, fixtures and fittings - straight line over five years
Office equipment - straight line over three years
The carrying values of plant and equipment are reviewed for impairment if events or changes in circumstances indicate the carrying value may not be recoverable, and are written down immediately to their recoverable amount. Useful lives and residual values are reviewed annually and where adjustments are required these are made prospectively.
An item of plant and equipment is derecognised on disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the derecognition of the asset is included in the income statement in the period of derecognition.
Intangible assets
Intangible assets acquired either as part of a business combination or from contractual or other legal rights are recognised separately from goodwill provided they are separable and their fair value can be measured reliably.
Where intangible assets recognised have finite lives, after initial recognition their carrying value is amortised on a straight line basis over those lives. The nature of those intangibles recognised and their estimated useful lives are as follows:
Patents - straight line over ten years
Impairment of assets
At each reporting date the Group reviews the carrying value of its plant, equipment and intangible assets to determine whether there is an indication that these assets have suffered an impairment loss. If any such indication exists, or when annual impairment testing for an asset is required, the company makes an assessment of the asset's recoverable amount.
An asset's recoverable amount is the higher of an asset's or cash-generating unit's fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. Where the carrying value of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs to sell, an appropriate valuation model is used, these calculations corroborated by valuation multiples, or other available fair value indicators. Impairment losses on continuing operations are recognised in the income statement in those expense categories consistent with the function of the impaired assets.
2. Accounting policies (continued)
An assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the recoverable amount is estimated. A previously recognised impairment loss is reversed only if there has been a change in the assumptions used to determine the asset's recoverable amount since the last impairment loss was recognised. If that is the case the carrying amount of the asset is increased to its recoverable amount. That increased amount cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in the income statement unless the asset is carried at revalued amount, in which case the reversal is treated as a valuation increase. After such a reversal the depreciation charge is adjusted in future periods to allocate the asset's revised carrying amount, less any residual value, on a systematic basis over its remaining useful life.
Inventories
Inventories are stated at the lower of cost and net realisable value. Cost includes all costs incurred in bringing each product to its present location and condition. Net realisable value is based on estimated selling price less any further costs expected to be incurred to disposal. Provision is made for slow moving or obsolete items.
Trade and other receivables
Trade receivables, which generally have 30 to 60 day terms, are recognised and carried at the lower of their original invoiced value and recoverable amount. The time value of money is not material.
Provision is made when there is objective evidence that the Group will not be able to recover balances in full. Significant financial difficulties faced by the customer, probability that the customer will enter bankruptcy or financial reorganisation and default in payments are considered indicators that the trade receivable is impaired. The amount of the provision is the difference between the asset's carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. The carrying value of the asset is reduced through the use of an allowance account, and the amount of the loss is recognised in the income statement within administrative expenses.
When a trade receivable is uncollectible, it is written off against the allowance account for trade receivables.
Government grants
Government grants are recognised when it is reasonable to expect that the grants will be received and that all related conditions are met, usually on submission of a valid claim for payment.
Government grants of a revenue nature are deferred and recognised in the income statement in line with the terms of the underlying grant agreement.
Government grants relating to capital expenditure are deducted in arriving at the carrying amount of the asset.
Cash and cash equivalents
Cash and cash equivalents comprise cash at hand and deposits with an original term of not greater than 3 months.
Trade and other payables
Trade and other payables are not interest bearing and are initially recognised at fair value. They are subsequently measured at amortised cost using the effective interest rate method.
Borrowings
Borrowings are recognised when the Group becomes party to the related contracts and are measured initially at fair value, net of directly attributable transaction costs incurred. After initial recognition, borrowings are stated at amortised cost.
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least twelve months after the balance sheet date.
Share capital
Proceeds on issue of shares are included in shareholder's equity, net of transaction costs. The carrying amount is not remeasured in subsequent years.
Shares held by Employee Benefit Trust
Where an employee acquires an interest in shares in the Company jointly with the Nanoco Tech Employee Share Trust, the fair value benefit of these attributable to the employee at the purchase date is recognised as a company expense, with a corresponding increase to equity share based payments reserve, over the period to the earliest date on which the employee becomes entitled to exercise an option to acquire the Trustees interest in the jointly owned shares at the option price.
The fair value benefit is measured using the Black Scholes valuation model, taking into account the terms and conditions upon which the jointly owned shares were purchased.
Share-based payments
The Company undertakes equity settled share-based payment transactions with certain employees.
Equity settled share-based payment transactions are measured with reference to the fair value at the date of grant, recognised on a straight line basis over the vesting period, based on the company's estimate of shares that will eventually vest. Fair value is measured using the Black Scholes model.
At each balance sheet date before vesting, the cumulative expense is calculated, representing the extent to which the vesting period has expired and management's best estimate of the achievement or otherwise of non-market conditions and the number of equity instruments that will ultimately vest. The movement in cumulative expense since the previous balance sheet date is recognised in the income statement, with a corresponding entry in equity.
Where the terms of an equity-settled award are modified or a new award is designated as replacing a cancelled or settled award, the cost based on the original award terms continues to be recognised over the original vesting period. In addition, an expense is recognised over the remainder of the new vesting period for the incremental fair value of any modification, based on the difference between the fair value of the original award and the fair value of the modified award, both as measured on the date of the modification. No reduction is recognised if this difference is negative.
Where awards are granted to the employees of the subsidiary company, the fair value of the awards at grant date is recorded in the Company's financial statements as an increase in the value of the investment with a corresponding increase in equity as "other reserve".
Accounting standards and interpretations not applied
At the date of authorisation of these financial statements, the following Standards and Interpretations relevant to the operations of the Group that have not been applied in these financial statements were in issue but not yet effective or endorsed (unless otherwise stated).
The effective dates stated here are those given in the original IASB standards and interpretations. As the Group prepares its financial statements in accordance with IFRS, the application of new standards and interpretations will be subject to their having been endorsed for use in the EU via the EU Endorsement mechanism. In the majority of cases this will result in an effective date consistent with that given in the original standard or interpretation but the need for endorsement restricts the Group's discretion to early adopt standards:
| Effective Date | ||
| IFRS 2 | Share based payment (amendments) | 1 January 2009 |
| IFRS 3 | Business Combinations (revision) | 1 July 2009 |
| IFRS 7 | Financial Instruments: Disclosures (amendments) | 1 January 2009 |
| IFRS 8 | Operating Segments | 1 January 2009 |
| IFRS 8 | Operating Segments (amendments) | 1 January 2010 |
| IAS 1 | Presentation of Financial Statements (revision) | 1 January 2009 |
| IAS 1 | Presentation of Financial Statements (amendments) | 1 January 2009 |
| IAS 7 | Statement of Cash Flows (amendments) | 1 January 2009 |
| IAS 16 | Property, plant and equipment (amendments) | 1 January 2009 |
| IAS 17 | Leases (amendments) | 1 January 2010 |
| IAS 18 | Revenue (amendments) | 1 January 2009 |
| IAS 19 | Employee Benefits (amendments) | 1 January 2009 |
| IAS 27 | Consolidated and Separate Financial Statements (revision) | 1 July 2009 |
| IAS 27 | Consolidated and Separate Financial Statements (amendments) | 1 January 2009 |
| IAS 32 | Financial Instruments: Presentation (amendments) | 1 January 2009 |
| IAS 36 | Impairment of Assets (amendments) | 1 January 2009 |
| IAS 38 | Intangible Assets (amendments) | 1 January 2009 |
| IAS 39 | Financial Instruments: Recognition and Measurement (amendments) | 1 January 2009 |
The Directors anticipate that the adoption of these Standards and Interpretations in future periods will have no material impact on the financial statements of the Group.
3. Judgements and key sources of estimation uncertainty
The preparation of financial statements requires management to make estimates and assumptions that affect the amounts reported for assets and liabilities as at the balance sheet date and the amounts reported for revenues and expenses during the year. The nature of estimation means that actual amounts could differ from those estimates. Estimates and assumptions used in the preparation of the financial statements are continually reviewed and revised as necessary. While every effort is made to ensure that such estimates and assumptions are reasonable, by their nature they are uncertain and, as such, changes in estimates and assumptions may have a material impact on the financial statements.
The key sources of estimation uncertainty that have a significant risk of causing material adjustment to the carrying amount of assets and liabilities within the next financial year are discussed below.
Fair value of shares issued in reverse acquisition of Evolutec Group PLC
As described in note 23, the shares that were deemed to have been issued as consideration for the assets of Evolutec Group PLC have been recorded at the directors' estimate of fair value at 30 April 2009. In estimating fair value, the directors concluded that the quoted market price of the Evolutec Group PLC shares at 30 April 2009 were not a reliable basis of measurement due to limited liquidity in the market for such shares. The directors have based their estimate of fair value on forecast financial information, supported by the terms on which the reverse acquisition was agreed with Evolutec Group PLC and approved by the Nanoco Tech shareholders.
Equity settled share-based payments
The estimation of share-based payment costs requires the selection of an appropriate valuation method, consideration as to the inputs necessary for the valuation model chosen and the estimation of the number of awards that will ultimately vest, inputs for which arise from judgements relating to the future volatility of the share price of comparable companies, the Company's expected dividend yields, risk free interest rates and expected lives of the options. The Directors draw on a variety of sources to aid in the determination of the appropriate data to use in such calculations.
Provisions for irrecoverable receivables
Provisions for irrecoverable receivables are based on extensive historical evidence, and the best available information in relation to specific issues, but are nevertheless inherently uncertain.
4. Segmental information
Primary reporting format - business segments
At 31 July 2009 the Group operated in one business segment, being the provision of high performance nano particles for research and development purposes. All revenues have been generated from continuing operations and are from external customers.
Secondary reporting format - geographical segments
The Group operates in four main geographic areas, although all are managed in the UK. The Group's revenue per geographical segment is as follows:
| 31 July 2009 | 31 July 2008 | |
|
| £000 | £000 |
| Revenue |
|
|
| UK | 170 | 86 |
| Europe (excluding UK) | 63 | 15 |
| Asia | 1,697 | 946 |
| USA | 64 | 31 |
|
| 1,994 | 1,078 |
All the Group's assets are held in the UK and all of its capital expenditure arises in the UK.
5. Operating loss
| 31 July 2009 | 31 July 2008 | |
| The Group | £000 | £000 |
| Operating loss is stated after charging/(crediting): |
|
|
| Depreciation on plant and equipment (see note 10) | 233 | 167 |
| Amortisation of intangible assets (see note 11) | 39 | 19 |
| Cost of reverse acquisition (see note 23) | 195 | - |
| Staff costs (see note 6) | 981 | 875 |
| Foreign exchange (gains)/loss | (4) | 5 |
| Grants receivable | (168) | (84) |
| Operating lease rentals (see note 22): |
|
|
| Land and buildings | 122 | 100 |
| Auditor's remuneration: |
|
|
| Audit services |
|
|
| - Fees payable to company auditor for the audit of the parent and the consolidated accounts | 11 | 15 |
| Fees payable to company auditor for other services |
|
|
| - Auditing the accounts of subsidiaries pursuant to legislation | 14 | - |
| - Other services* | 28 | 31 |
| Total auditor’s remuneration | 53 | 46 |
*In addition £65k of fees are payable to the company auditors in relation to the re-admission to AIM.
6. Staff costs
The average number of employees during the year (including directors), was as follows:
| 31 July 2009 | 31 July 2008 | |
| The Group | Number | Number |
| Executive directors | 2 | 2 |
| Laboratory and administrative staff | 24 | 16 |
|
| 26 | 18 |
|
| 31 July 2009 | 31 July 2008 |
|
| £000 | £000 |
| Wages and salaries | 828 | 740 |
| Social security costs | 81 | 82 |
| Share based payments | 72 | 53 |
|
| 981 | 875 |
|
|
|
|
| Directors' remuneration included in the aggregate remuneration above comprised: |
|
|
| Emoluments for qualifying services | 335 | 286 |
Directors emoluments disclosed above include £192,000 paid to the highest directors (2008: £166,000).
7. Finance income/(cost)
| 31 July 2009 | 31 July 2008 | |
| The Group | £000 | £000 |
| Finance income |
|
|
| Bank interest receivable | 57 | 122 |
| Finance cost: |
|
|
| Loan interest payable | (25) | (35) |
|
| 32 | 87 |
8. Taxation
| 31 July 2009 | 31 July 2008 | |
| The Group | £000 | £000 |
| Current tax: |
|
|
| UK corporation tax losses in the year |
|
|
| Research and development tax credit receivable | (254) | (147) |
| Prior year adjustment | 14 | - |
| Current deferred tax | - | - |
| Tax credit on loss on ordinary activities | (240) | (147) |
| 31 July 2009 | 31 July 2008 | |
| The Group | £000 | £000 |
| Factors affecting tax charge for the year: |
|
|
| The tax assessed for the year varies from the standard rate of corporation tax as explained below: |
|
|
| Loss on ordinary activities before taxation | (780) | (698) |
| Tax at standard rate of 28.0% (2008: 29.3 %) | (218) | (205) |
| Effects of: |
|
|
| Expenses not deductible for tax purposes | 75 | 26 |
| Capital allowances in excess of depreciation | (47) | (7) |
| Additional reduction for research and development expenditure | (190) | (90) |
| Surrender of research and development relief for repayable tax credit | 380 | 269 |
| Research and development tax credit receivable | (254) | (147) |
| Tax losses brought forward | - | 7 |
| Prior year adjustment | 14 | - |
| Current tax credit | (240) | (147) |
The effective rate of tax in both the year end and the prior year takes account of the decrease in the standard rate of corporation tax in the UK to 28% from 30% from April 2008.
The Group has accumulated losses available to carry forward against future trading profits. No deferred tax asset has been recognised in respect of tax losses since it is uncertain at the balance sheet date as to whether future profits will be available against which the unused tax losses can be utilised. The estimated value of the deferred tax asset not recognised, measured at a standard rate of 28% (2008: 28%) is £270,000 (2008: £237,000).
The Group also has accelerated capital allowances of £258,000 for which no deferred tax liability has been provided (2008: £94,000).
9. Earnings per share
Basic
| 31 July 2009 | 31 July 2008 | |
| The Group | £000 | £000 |
| Loss attributable to the equity holders of the Company | (540) | (551) |
|
| Number | Number |
|
| 000 | 000 |
| Weighted average number of shares |
|
|
| Weighted average number of ordinary shares in issue during the period | 171,646,252 | 149,367,039 |
| Loss per share |
|
|
| Basic on loss for the year | (0.31)p | (0.37)p |
The weighted average number of shares for the year ended 31 July 2009 is based on the number of shares issued by Nanoco Group PLC to acquire Nanoco Tech Limited for the period up to acquisition (adjusted for the impact of shares issued by Nanoco Tech Limited in the year) and the weighted average number of shares in issue for the period since the acquisition. The weighted average number of shares for the year ended 31 July 2008 reflects the number of ordinary shares issued by Nanoco Group PLC to acquire Nanoco Tech Limited, adjusted for shares issued by Nanoco Tech Limited in that year.
Diluted
| 31 July 2009 | 31 July 2008 | |
| The Group | £000 | £000 |
| Loss attributable to the equity holders of the Company | (540) | (551) |
|
| Number | Number |
|
| 000 | 000 |
| Weighted average number of shares |
|
|
| Weighted average number of ordinary shares in issue during the period | 171,646,252 | 149,367,039 |
| Adjustments for: |
|
|
| Share options | 4,370,927 | 2,799,804 |
| Weighted average number of ordinary shares for diluted earnings per share | 176,017,179 | 152,166,843 |
| Loss per share |
|
|
| Diluted on loss for the year | (0.31)p | (0.36)p |
Diluted loss per share is calculated by adjusting the weighted average number of ordinary shares in issue during the period to a assume conversion of all dilutive potential ordinary shares.
10. Plant and equipment
| Laboratory infrastructure | Office equipment, fixtures and fittings | Plant and machinery | Total | |
| The Group | £000 | £000 | £000 | £000 |
| Cost |
|
|
|
|
| At 1 August 2007 | 905 | 28 | 176 | 1,109 |
| Additions | - | 172 | 140 | 312 |
| Grant received | (50) | - | - | (50) |
| At 31 July 2008 | 855 | 200 | 316 | 1,371 |
| Additions | 837 | 65 | 340 | 1,242 |
| Grant received | (32) | - | - | (32) |
| Reclassification | - | (106) | 106 | - |
| At 31 July 2009 | 1,660 | 159 | 762 | 2,581 |
| Depreciation |
|
|
|
|
| At 1 August 2007 | 33 | 4 | 17 | 54 |
| Provided during the year | 87 | 37 | 43 | 167 |
| At 31 July 2008 | 120 | 41 | 60 | 221 |
| Provided during the year | 94 | 68 | 71 | 233 |
| Reclassification | - | (41) | 41 | - |
| At 31 July 2009 | 214 | 68 | 172 | 454 |
| Net book value: |
|
|
|
|
| At 31 July 2009 | 1,446 | 91 | 590 | 2,127 |
| At 31 July 2008 | 735 | 159 | 256 | 1,150 |
| At 31 July 2007 | 872 | 24 | 159 | 1,055 |
11. Intangible assets
| Patents | |
| The Group | £000 |
| Cost |
|
| At 1 August 2007 | 178 |
| Additions | 145 |
| At 31 July 2008 | 323 |
| Additions | 136 |
| At 31 July 2009 | 459 |
| Amortisation |
|
| At 1 August 2007 | 25 |
| Provided during the year | 19 |
| At 31 July 2008 | 44 |
| Provided during the year | 39 |
| At 31 July 2009 | 83 |
| Net book value: |
|
| At 31 July 2009 | 376 |
| At 31 July 2008 | 279 |
| At 3 July 2007 | 153 |
12. Investment in subsidiaries
| Shares | Loans | Loan Provision | Total | |
| The Company | £000 | £000 | £000 | £000 |
| At 1 January 2008 and 31 December 2008 | 5,338 | 26,483 | (26,030) | 5,791 |
| Additions | - | 167 | - | 167 |
| Impairment | (5,338) | - | - | (5,791) |
| Repayment of loan | - | (6,197) | 6,197 | - |
| Increase in loan provision | - | - | (453) | (453) |
| Acquisition of subsidiary | 63,255 | - | - | 63,255 |
| At 31 July 2009 | 63,255 | 20,453 | (20,286) | 63,422 |
On 30 April 2009 the Company acquired 100 per cent. of the issued share capital of Nanoco Tech Limited for a consideration satisfied by the issue of 158,138,036 ordinary shares of 10p each credited as a fully paid at 40p each, being the quoted market price of the Company's shares on completion of the acquisition and re-admission to AIM (see note 23).
Loans to subsidiary undertakings carry no interest and are repayable on demand and carry interest. Further information in relation to these loans is given in note 25.
|
|
| Share of issued ordinary share capital | ||
| Subsidiary undertakings | Country of incorporation | Principal Activity | 31 July 2009 | 31 December 2008 |
| Nanoco Life Sciences Limited (formerly Evolutec Limited) | England and Wales | Research and development | 100% | 100% |
| Nanoco Tech Limited | England and Wales | Holding company | 100% | - |
| Nanoco Technologies Limited* | England and Wales | Research and develop nano particles | 100% | - |
*Share capital is owned by Nanoco Tech Limited. All other shareholdings are owned by Nanoco Group PLC.
13. Inventories
|
| 31 July 2009 | 31 July 2009 | 31 July 2008 | 31 December 2008 |
|
| Group | Company | Group | Company |
|
| £000 | £000 | £000 | £000 |
| Raw materials and consumables | 17 | - | 9 | - |
14. Trade and other receivables
| 31 July 2009 | 31 July 2009 | 31 July 2008 | 31 December 2008 | |
|
| Group | Company | Group | Company |
|
| £000 | £000 | £000 | £000 |
| Trade receivables | 101 | - | 12 | - |
| Less: provision for doubtful debts | - | - | (5) | - |
| Net trade receivables | 101 | - | 7 | - |
| Prepayments | 118 | - | 188 | - |
| Other receivables | 159 | - | 41 | - |
|
| 378 | - | 236 | - |
The Directors consider that the carrying amount of trade and other receivables approximates to their fair value.
Trade receivables are denominated in the following currencies:
| 31 July 2009 | 31 July 2009 | 31 July 2008 | 31 December 2008 | |
|
| Group | Company | Group | Company |
|
| £000 | £000 | £000 | £000 |
| Sterling | 84 | - | 1 | - |
| US dollars | 17 | - | 6 | - |
|
| 101 | - | 7 | - |
At 31 July the analysis of trade receivables that were past due but not impaired was as follows:
| Total | Neither past due or impaired |
| Past due but not impaired 30 to 60 days | |
|
| £000 | £000 | £000 | £000 |
| 2009 | 101 | 101 | - | - |
| 2008 | 7 | 7 | - | - |
Movements in the provision for doubtful debts were as follows:
| 31 July 2009 | 31 July 2009 | 31 July 2008 | 31 December 2008 | |
|
| Group | Company | Group | Company |
|
| £000 | £000 | £000 | £000 |
| At beginning of period | 5 | - | 4 | - |
| Amounts written off | - | - | (5) | - |
| Unused amounts reversed | (5) | - | 6 | - |
| At end of period | - | - | 5 | - |
|
|
|
|
|
15. Cash and cash equivalents
| 31 July 2009 | 31 July 2009 | 31 July 2008 | 31 December 2008 | |
|
| Group | Company | Group | Company |
|
| £000 | £000 | £000 | £000 |
| Cash at bank and on hand | 6,589 | 5,939 | 2,528 | - |
An analysis of cash at bank and on hand denominated currency is given in note 24
16. Trade and other payables
| 31 July 2009 | 31 July 2009 | 31 July 2008 | 31 December 2008 | |
|
| Group | Company | Group | Company |
|
| £000 | £000 | £000 | £000 |
| Trade payables | 144 | - | 149 | - |
| Other payables | 72 | - | 63 | - |
| Accruals | 160 | - | 167 | - |
|
| 376 | - | 379 | - |
The Directors consider that the carrying amount of trade and other payables approximates to their fair value.
17. Financial liabilities
| 31 July 2009 | 31 July 2009 | 31 July 2008 | 31 December 2008 | |
|
| Group | Company | Group | Company |
|
| £000 | £000 | £000 | £000 |
| Non-current |
|
|
|
|
| Other loan | 412 | - | 475 | - |
| Loan from subsidiary | - | 316 | - | - |
| Current |
|
|
|
|
| Other loan | 63 | - | 63 | - |
|
| 475 | 316 | 538 | - |
The Directors consider that the carrying amount of financial liabilities approximate to their fair value.
Loans from subsidiaries bear no interest and have no formal terms of repayment in place, see note 25 for further details.
The other loan is unsecured, bears interest at 2 per cent. above base rate and is repayable in quarterly instalments.
18. Issued equity capital
|
| Share capital | Share premium | Reverse acquisition reserve | Total | |
| The Group | Number | £000 | £000 | £000 | £000 |
| Authorised ordinary shares of 10p: |
|
|
|
|
|
| Nanoco Tech Limited |
|
|
|
|
|
| As at 31 July 2008 and 31 July 2007 | 100,000,000 | 10,000 | - | - | 10,000 |
| Nanoco Group PLC |
|
|
|
|
|
| As at 1 August 2008 | 77,000,000 | 7,700 | - | - | 7,700 |
| Increase in authorised share capital | 173,000,000 | 17,300 | - | - | 17,300 |
| At 31 July 2009 | 250,000,000 | 25,000 | - | - | 25,000 |
| Allotted, issued and fully paid ordinary shares of 10p: |
|
|
|
|
|
| Nanoco Tech Limited |
|
|
|
|
|
| As at 1 August 2007 | 31,551,983 | 3,151 | 1,688 | - | 4,839 |
| Issue of shares | 2,583,632 | 258 | 1,447 | - | 1,705 |
| As at 31 July 2008 | 34,095,615 | 3,409 | 3,135 | - | 6,544 |
| Nanoco Group PLC |
|
|
|
|
|
| As at 1 August 2008 | 25,949,996 | 2,595 | 24,442 | - | 27,037 |
| Share premium on treasury shares reclassified to EBT (see note 21) | - | - | (20) | - | (20) |
| Shares issued to acquire Nanoco Tech Limited (see note 12) | 158,138,036 | 15,814 | 47,441 | - | 63,255 |
| Arising on reverse acquisition of Nanoco Tech Limited | - | - | - | (77,466) | (77,466) |
| Expenses of issue of shares | - | - | (455) | - | (455) |
| At 31 July 2009 | 184,088,032 | 18,409 | 71,408 | (77,466) | 12,351 |
As outlined in note 2, the retained loss and other equity balances recognised in the Group financial statements reflect the consolidated retained loss and other equity balances of Nanoco Tech Limited immediately before the business combination, and the consolidated results for the period from 1 August 2008 to the date of the acquisition by Nanoco Group PLC are those of Nanoco Tech Limited. However, the equity structure appearing in the Group financial statements reflects the equity structure of the legal parent, including the equity instruments issued under the share for share exchange to effect the transaction. The effect of using the equity structure of the legal parent gives rise to an adjustment to the Group's issued equity capital in the form of a reverse acquisition reserve.
On 30 April 2009 the authorised share capital was increased from £7,700,000 to £25,000,000 by the creation of 173,000,000 ordinary shares of 10p each. On 30 April 2009 the Company issued 158,138,036 ordinary shares of 10p each as consideration for the acquisition of Nanoco Tech Limited.
18. Issued equity capital (continued)
|
|
| Share Capital | Share Premium | Total |
| The Company | Number | £000 | £000 | £000 |
| Authorised ordinary shares of 10p: |
|
|
|
|
| As at 1 January, 31 July and 31 December 2008 | 77,000,000 | 7,700 | - | 7,700 |
| Increase in authorised share capital | 173,000,000 | 17,300 | - | 17,300 |
| At 31 July 2009 | 250,000,000 | 25,000 | - | 25,000 |
| Allotted, issued and fully paid ordinary shares of 10p: |
|
|
|
|
| As at 1 January, 31 July and 31 December 2008 | 25,949,996 | 2,595 | 24,442 | 27,037 |
| Share premium on treasury shares reclassified to EBT (see note 21) | - | - | (20) | (20) |
| Shares issued to acquire Nanoco Tech Limited (see note 12) | 158,138,036 | 15,814 | 47,441 | 63,255 |
| Expenses of issue of shares | - | - | (455) | (455) |
| At 31 July 2009 | 184,088,032 | 18,409 | 71,408 | 89,817 |
19. Share based payments
Share options and shares held in employee benefit trust ("EBT")
The Group operates an EMI scheme for the benefit of employees. Share options are granted to all employees. The exercise price of the options is equal to the estimated market price of the shares on the date of grant. The options vest 3 years from the date of grant. The options are accounted for as equity settled share based payment transactions. Share options have also been granted to non employees, these have been measured using the indirect method.
The Group also operates a jointly owned EBT share scheme for senior management under which the trustee of the Group sponsored EBT has acquired shares in the Company jointly with a number of employees. The shares were acquired pursuant to certain conditions, set out in Jointly Owned Equity agreements ("JOE's"). Subject to meeting the performance criteria conditions set out in the JOE's, the employees are able to exercise an option to acquire the trustee interests in the jointly owned EBT shares at the option price. All of the relevant conditions had been successfully met by 31 July 2009 and the option to acquire the trustee interests are capable of being exercised at anytime from 31 October 2009 to 31 August 2016. The fair vale benefit is measured using the Black Scholes valuation model, taking into account the terms and conditions upon which the jointly owned shares were purchased.
The following tables illustrate the number and weighted average exercise prices of, and movements in, share options and jointly owned EBT shares during the year.
| 2009 | 2008 | ||||
|
| EMI | EBT | Unapproved | Total | Total |
| The Group | Number | Number | Number | Number | Number |
| Outstanding at 1 August | 1,610,000 | 826,209 | 85,000 | 2,521,209 | 2,366,209 |
| Granted during the year | 163,000 | - | - | 163,000 | 185,000 |
| Exercised during the year | (15,000) | - | - | (15,000) | - |
| Forfeited during the year | - | - | - | - | (30,000) |
| Adjustment on reverse acquisition | 6,240,900 | 2,933,042 | 301,750 | 9,475,692 | - |
| Outstanding at 31 July | 7,998,900 | 3,759,251 | 386,750 | 12,144,901 | 2,521,209 |
| Exercisable at 31 July | - | - | - | - | - |
19. Share based payments (continued)
Weighted average exercise price of options
| 2009 | 2008 | |
| The Group | pence | pence |
| Outstanding at 1 August | 20.8 | 17.9 |
| Granted during the year | 66.0 | 66.0 |
| Exercised during the year | 66.0 | - |
| Adjustment on reverse acquisition | (18.5) | - |
| Outstanding at 31 July | 5.2 | 20.8 |
On 30 April the Company acquired 100 per cent. of the issued share capital of Nanoco Tech Limited for consideration satisfied by the issue of 158,138,036 ordinary shares of 10 pence each in a ratio of 1:4.55. Consequentially the number of share options and jointly owned shares held by the EBT has increased by 4.55 times, and the exercise price has decreased by 4.55 times and reflected as an adjustment on reverse acquisition, see note 23 for further details.
The weighted average fair value of options granted during the year was 14.5p (66p pre adjustment on reverse acquisition), (2008: 66p). The range of exercise prices for options and jointly owned EBT shares outstanding at the end of the year was 3.52p-14.5p (16p-66p pre adjustment on reserve acquisition), (2008: 16p-66p).
For the share options outstanding as at 31 July 2009, the weighted average remaining contractual life is 170 days (2008: 535 days).
The fair value of equity-settled share options and jointly owned EBT shares granted is estimated as at the date of grant using the Black Scholes model, taking into account the terms and conditions upon which the options were granted.
A charge of £72,000 has been recognised in the income statement for the year (2008: £95,000).
The following table lists the inputs to the Black Scholes model used for the years ended 31 July 2009 and 31 July 2008.
| The Group | Granted year to 31 July 2009 | Granted year to 31 July 2008 |
| Dividend yield | - | - |
| Expected volatility | 50.0 | 50.0 |
| Risk free interest rate | 4.5 | 4.5 |
| Expected vesting life of options (years) | 3.0 | 3.0 |
| Weighted average exercise price (pence) | 66.0 | 66.0 |
| Weighted average share price at date of grant (pence) | 66.0 | 66.0 |
During the year no shares obtained under unapproved options were replaced by jointly owned shares transferred to the Employee Benefit Trust (2008: 826,209 shares were transferred, at 66p per share for a value of £545,000).
The expected life of the options is based on historical data and is not necessarily indicative of exercise patterns that may occur. The expected volatility reflects the assumption that the historical volatility is indicative of future trends, which may also not necessarily be the actual outcome.
No other features of options grant were incorporated into the measurement of fair value.
20. Merger reserve
| The Group | £000 |
| At 1 August 2007 | - |
| Arising on reorganisation (see note 2) | 1,242 |
| At 31 July 2008 and 31 July 2009 | 1,242 |
As disclosed in note 2, the merger reserve arises under section 131 of the Companies Act 1985 on the shares issued by Nanoco Tech Limited to acquire Nanoco Technologies Limited as part of a simple Group re-organisation on 27 June 2007.
21. Movement in revenue reserve and treasury shares
| The Group | Retained deficit | Treasury shares | Revenue reserve |
|
| £000 | £000 | £000 |
| Ordinary shares of 10p: |
|
|
|
| As at 1 August 2007 | (869) | - | (869) |
| Loss for the year | (551) | - | (551) |
| Purchase of treasury shares | - | (545) | (545) |
| As at 31 July 2008 | (1,420) | (545) | (1,965) |
| Loss for the year | (540) | - | (540) |
| Arising on reverse acquisition of Nanoco Tech Limited | 20 | (20) | - |
| At 31 July 2009 | (1,940) | (565) | (2,505) |
Shares in the Company that are held by the Group-sponsored Employee Benefit Trusts ("EBT") are included in the Group financial statements and classified as Treasury Shares. At 31 July 2009 3,771,473 shares in the Company were held by EBTs (31 July 2008: 826,209 shares).
| Retained deficit | Treasury Shares | Revenue reserve | |
| The Company | £000 | £000 | £000 |
| Ordinary shares of 10p: |
|
|
|
| Nanoco Group PLC |
|
|
|
| As at 1 January 2008 and 31 December 2008 | (26,030) | (20) | (26,050) |
| Treasury shares reclassified to EBT (see note 18) | - | 20 | 20 |
| Profit for the period | 287 | - | 287 |
| At 31 July 2009 | (25,743) | - | (25,743) |
22. Commitments
Operating lease commitments
The Group leases premises under non-cancellable operating lease agreements. The future aggregate minimum lease and service charge payments under non-cancellable operating leases are as follows:
| 31 July 2009 | 31 July 2009 | 31 July 2008 | 31 December 2008 | |
|
| Group | Company | Group | Company |
|
| £000 | £000 | £000 | £000 |
| Land and buildings: |
|
|
|
|
| Not later than one year | 134 | - | 100 | - |
| After one year but not more than five years | 400 | - | 400 | - |
| After five years | 367 | - | 467 | - |
|
| 901 | - | 967 | - |
23. Acquisition of subsidiary undertaking
On 30 April 2009 the Company acquired 100 per cent. of the issued share capital of Nanoco Tech Limited ("Nanoco Tech") for consideration satisfied by the issue of 158,138,036 ordinary shares of 10 pence each. The directly attributable costs of the transaction amounted to £455,000.
As described in note 2, the transaction has been accounted for as a reverse acquisition equity transaction as if Nanoco Tech Limited had issued new shares in exchange for Evolutec Group PLC's cash and other assets. The substance of the transaction is that of a share issue fund raising under which Nanoco Tech received cash and bank balances of £5,892,000 representing 98.9 per cent. of the value of the net assets of Evolutec Group PLC and the associated costs of the transaction have therefore been charged directly against equity share capital.
The fair value of the shares issued has been determined from the perspective of Nanoco Tech. The directors of Nanoco Tech negotiated the acquisition terms on the basis that Nanoco Tech had a total fair value worth of £37.5 million and that its shareholders would be diluted to 14.1 per cent. in the enlarged Group. This gives an implied fair value of shares issued of £6,154,000 which is £195,000 higher than the value of the net assets deemed acquired as set out below:
| Evolutec Group PLC | |
|
| £000 |
| Net assets acquired: |
|
| Bank and cash | 5,892 |
| Trade and other receivables | 308 |
| Trade and other payables | (241) |
|
| 5,959 |
| Cost of reverse acquisition | 195 |
| Fair value of reverse acquisition | 6,154 |
The difference between the fair value of the transaction and the net assets acquired has been recorded as a cost of reverse acquisition in the income statement.
The fair value of the assets deemed to have been acquired has been assessed as the book value on the acquisition date.
As described in note 2, the results of Evolutec Group PLC have been included in the consolidated financial statements from 30 April 2009. Evolutec Group PLC and its subsidiary, Evolutec Limited, did not contribute any material revenues or profits and/losses since the date of acquisition. If Evolutec Group PLC had been a member of the Group from 1 August 2008 it would have likewise not contributed any material revenues or profits and losses.
Evolutec Group PLC changed its name to Nanoco Group PLC on completion of the acquisition on 30 April 2009 and was re-admitted to AIM on 1 May 2009.
24. Financial instruments
Capital risk management
The Company manages its capital to ensure that entities in the Group will be able to continue as a going concern while maximising the return to stakeholders.
The capital structure of the Group consists of equity attributable to equity holders of the parent, comprising issued share capital, reserves and retained earnings as disclosed in notes 18, 20 and 21 and in the Group Statement of Changes in Equity.
The Group's principal financial liabilities comprise trade payables and loans given. The main purpose of these financial liabilities is to raise finance for the Group's operations. The Group has various financial assets such as trade receivables and cash and short-term deposits, which arise directly from its operations.
The Group does not currently enter into derivative transactions such as interest rate swaps and forward currency contracts.
Categorisation of financial instruments
| | Loans and receivables | Financial liabilities at amortised cost | Total |
| Financial assets/liabilities | £000 | £000 | £000 |
| 31 July 2009 | | | |
| Trade and other receivables | 101 | - | 101 |
| Cash and cash equivalents | 6,589 | - | 6,589 |
| Trade and other payables | - | (376) | (376) |
| Financial liabilities | - | (475) | (475) |
| | 6,690 | (851) | 5,839 |
| 31 July 2008 | | | |
| Trade and other receivables | 7 | - | 7 |
| Cash and cash equivalents | 2,528 | - | 2,528 |
| Trade and other payables | - | (379) | (379) |
| Financial liabilities | - | (538) | (538) |
| | 2,535 | (917) | 1,618 |
The main risks arising from the Group's financial instruments are credit risk and foreign currency risk. The Board of Directors reviews and agrees policies for managing each of these risks which are summarised below.
Other loans are subject to interest at base rate plus 2 per cent., however as the Group's cash deposits which attract interest at floating rates, are of a greater amount, any increase in base rate and thus interest payable would be more than offset by higher interest income.
24. Financial instruments (continued)
Credit risk
The Group's principal financial assets are cash and cash equivalents. The Group seeks to limit the level of credit risk on the cash balances by only depositing surplus liquid funds with counterparty banks that have high credit ratings.
The company trades only with recognised, creditworthy third parties. Receivable balances are monitored on an ongoing basis with the result that the group's exposure to bad debts is not significant. The Group's maximum exposure is the carrying amount as disclosed in note 14.
There are no significant concentrations of credit risk within the group.
Foreign currency risk
The company has transactional as well as translational currency exposures. Such exposure arises from sales or purchases in currencies other than the functional currency. There are no material sensitivities which require disclosure.
| 31 July 2009 | 31 July 2008 | |||||
|
| GBP | USD | Total | GBP | USD | Total |
| The Group | £000 | £000 | £000 | £000 | £000 | £000 |
| Cash and cash equivalents | 6,566 | 23 | 6,589 | 2,268 | 260 | 2,528 |
| Trade receivables | 84 | 17 | 101 | 1 | 6 | 7 |
|
| 6,650 | 40 | 6,690 | 2,269 | 266 | 2,535 |
Interest rate risk
As the Group has no significant borrowings the risk is limited to the reduction of interest received on cash surpluses held at bank which receive a floating rate of interest. The principal impact to the Group is the result of interest-bearing cash and cash equivalent balances held as set out below:
| 31 July 2009 | 31 July 2008 | |||||
|
| Fixed rate | Floating rate | Total | Fixed rate | Floating rate | Total |
| The Group | £000 | £000 | £000 | £000 | £000 | £000 |
| Cash and cash equivalents | 5,896 | 693 | 6,589 | 2,169 | 359 | 2,528 |
As the majority of cash and cash equivalents are held on fixed deposit the exposure rate is immaterial.
Maturity profile
Set out below is the maturity profile of the Group's financial liabilities at 31 July 2009 based on contractual undiscounted payments.
| Less than 1 year | 1 to 5 years | Greater than 5 years | Total | |
| 2009 | £000 | £000 | £000 | £000 |
| Financial liabilities |
|
|
|
|
| Trade and other payables | 376 | - | - | 376 |
| Other loans | 63 | 253 | 159 | 475 |
|
| 439 | 253 | 159 | 851 |
24. Financial instruments (continued)
| Less than 1 year | 1 to 5 years | Greater than 5 years | Total | |
| 2008 | £000 | £000 | £000 | £000 |
| Financial liabilities |
|
|
|
|
| Trade and other payables | 149 | - | - | 149 |
| Other loans | 63 | 253 | 222 | 538 |
|
| 213 | 253 | 222 | 688 |
The Directors consider that the carrying amount of the financial liabilities to approximates to their fair value.
The Group's policies in respect of managing liquidity risk are set out in the Directors' report.
As all financial assets are expected to mature within the next twelve months an aged analysis of financial assets has not been presented.
25. Related party transactions
Terms and conditions of transactions with related parties:
The Group:
There are no sales to related parties. Purchases from related parties are made at normal market prices. Outstanding balances at the year end are unsecured, interest free and settlement occurs in cash.
Included within borrowings is an amount of £475,000 (2008: £538,333) as set out in note 17 that is owing to The University of Manchester, a substantial shareholder in Nanoco Group PLC. There is a formal interest-bearing loan agreement in place which confirms that the loan is wholly repayable by 2017.
During the year ended 31 July 2009, consultancy fees of £22,000 (2008: £36,000) have been charged through the income statement in respect of Paul O'Brien, a former director of Nanoco Tech Limited. The outstanding balance at 31 July 2009 was £1,000 (2008: Nil).
During the year ended 31 July 2009, no monitoring fees (2008: £16,867) have been charged through the income statement in respect of Ora Capital Partners Limited which is a substantial shareholder in Nanoco Group PLC.
During the year ended 31 July 2009, monitoring fees of £10,000 and arrangement fees of £25,000 (2008: £13,145 and £nil) have been charged through the income statement in respect of Aquarius Equity Partners Limited. The outstanding balance as at 31 July 2009 was nil (2008: £12,500). Aquarius Equity Partners Limited is the manager of a seed fund, which was a substantial shareholder in Nanoco Group PLC during the period.
The Company:
As detailed in note 12, there is an amount of £20,286,000 (2008: £26,483,000) owing from Nanoco Life Sciences Limited to Nanoco Group PLC. A write down provision of £20,286,000 (2008: £26,030,000) is held against this loan.
In addition, there is an amount owing from Nanoco Technologies Limited of £167,000 (2008: £nil).
There are no formal terms of repayment in place for either of the loans and it has been confirmed by the directors that the loans will not be recalled within the next twelve months.
In addition, an amount of £316,000 is owed to Nanoco Technologies Limited (2008: £nil). This amount is repayable within the next twelve months. The loan in non-interest bearing.
Directors' remuneration.
The remuneration of the individual Directors is provided in the Directors' Remuneration Report and disclosed in note 6 of the financial statements.
25. Related party transactions (continued)
| Year ended 31 July 2009 | Year ended 31 December 2008 | |||
| Short-term employment benefits | Total Benefits | Employer's National Insurance Contribution | Total Cost to Company | Total Cost to Company |
|
| £000 | £000 | £000 | £000 |
| Dr P Rowley | 10 | 2 | 12 | - |
| Dr M Edelman | 192 | 20 | 212 | 182 |
| Dr N Pickett | 127 | 13 | 140 | 121 |
| Mr M Bretherton | 3 | - | 3 | - |
| Mr G Hall | 3 | - | 3 | 12 |