Directors report for the year ended
31 July 2009
The Directors present their Report and the audited Financial Statements for the year ended 31 July 2009
The Directors present their Report and the audited Financial Statements for the year ended 31 July 2009.
Principal activity and review of business and future developments
Based at Imperial College London, the Group commercialises, incubates and invests in a wide range of technologies and businesses primarily within the areas of healthcare, energy and the environment.
Imperial Innovations Group plc acts as a holding company. A review of the business of the Group is included in the Chief Executive’s Report. The Group had 10 subsidiaries at 31 July 2009 which are described more fully in note 1 to the financial statements.
The Chairman’s Statement together with the Chief Executive’s Report, the Financial Report, the Six Key Performance Indicators and the Corporate Governance Report describe the principal activities, key risks and performance indicators together with the financial position and future developments of the Group.
Results and dividends
The Group’s profit for the financial year was £5.3 million (2008: £5.9 million loss). The Directors do not recommend the payment of a dividend (2008: £nil).
Research and development
The Group from time to time funds technology development through its proof of concept programme to establish the technical viability of the inventions disclosed during its technology identification process. Wherever possible these activities are funded through a number of proof of concept funds secured from external sources such as the London Development Agency, the Johnson and Johnson Proof of Concept programme and the Higher Education Innovation Fund. The intellectual property is normally retained within the Group. These activities tend to be low in value between £5,000 and £25,000 and last between six and 18 months.
Charitable donations
The Group has made total charitable donations of £150 to the following charities: Mind and Imperial College Trust (2008: £750 to Just Giving and The Esther Benjamin Trust). No donations were made to any political party.
Financial risk management
Financial risk management is set out in note 23.
Post balance sheet events
Since the year end and as at 30 September 2009, the latest practical date prior to the approval of the accounts, the value of the Group’s most significant quoted asset, Ceres Power Holdings plc (CWR.L) has decreased by £0.4 million (8%). This has had the effect of decreasing investments by £0.4 million and reducing the provision for liabilities and charges by £21,000 since the year end. This is a non-adjusted post balance sheet event since it does not relate to conditions existing at the balance sheet date.
Directors
The Directors of the Group in office at, and since, the year end, are as follows:
| Company | Group | |
| M. Knight (Chairman) | 25 Mar 03 | 27 Apr 06 |
| S. Searle (Chief Executive Officer) | 14 July 99 | 27 Apr 06 |
| R. Cummings (Chief Investment Officer) | 18 Sept 06 | 18 Sept 06 |
| J. Smith (Chief Financial & Operations Officer) | 03 Jan 06 | 27 Apr 06 |
| P. Atherton (Non-Executive Director) | 29 Apr 04 | 27 Apr 06 |
| M. Rowan (Non-Executive Director) | 13 Jan 05 | 27 Apr 06 |
| D. Allen (Non-Executive Director) | 1 Aug 08 |
Company appointment indicates when the Director was appointed as a Director of Imperial Innovations Limited which prior to the creation of Imperial Innovations Group plc had been the holding company of the Group. Group appointment indicates when the Director was appointed as a Director of Imperial Innovations Group plc.
There have been no changes to the composition of the Board of Imperial Innovations Group plc between 31 July 2009 and the date of this report.
Business review
The Chairman’s Statement, Chief Executive’s Report and the Financial Report provide a business review of the Group’s position at the end of the financial year including the development and performance of the business. Key Performance Indicators are set out and a description of principal risks and uncertainties facing the Group is set out.
Please note the that the principal risks and uncertainties facing the Group are in Corporate Governance Report
| General Statistics | 2009 | 2008 |
| Profit / (loss) attributable to equity holders (£m) | 5.3 | (5.9) |
| Increase / (decrease) in fair value of equity investments net of revenue share (£m) | 7.0 | (3.0) |
| Cash and short term liquidity investments (£m) | 30.7 | 43.1 |
| Net cash from sale of trade investments (£m) | 3.9 | 3.6 |
| Purchase of trade investments (£m) | 14.4 | 6.4 |
| Revenue (£m) | 4.3 | 5.3 |
| New IP Agreements | 34 | 40 |
Set out below are details of the Directors’ shareholdings and share options at the end of the period under review.
Directors’ shareholdings
The following Directors held the following Ordinary Shares of Imperial Innovations Group plc:
| Number of Ordinary Shares held by Directors at 31 July (or date of appointment if later) | 2009 Ordinary Shares | 2008 Ordinary Shares |
| M. Knight (Chairman) | 118,140 | 118,140 |
| S. Searle (Chief Executive Officer) | 118,140 | 118,140 |
| J. Smith (Chief Financial & Operations Officer) | 78,760 | 78,760 |
| R. Cummings (Chief Investment Officer) | 2,577 | 2,577 |
| P. Atherton (Non-Executive Director) | 20,625 | 20,625 |
| M. Rowan (Non-Executive Director) | 20,625 | 20,625 |
| D. Allen (Non-Executive Director) | 4,313 | - |
The shareholdings of M. Knight, S. Searle and J. Smith arose from the conversion of employee incentive shares at the time of the Group’s IPO in July 2006. D. Allen and R. Cummings acquired their shares in the open market. P. Atherton and M. Rowan acquired their shares in 2005 prior to the IPO. Of the shares listed above, S. Searle holds the beneficial interest in 34,000 shares through her self invested personal pension plan. Of the shares listed above, J. Smith holds the beneficial interest in 35,039 shares through his self invested personal pension plan.
Directors’ awards of share options
No director was awarded options over Ordinary Shares in the Group during the period under review. As at 31 July 2009, the following Directors held the following options over Ordinary Shares:
| Number of share options held by Directors at 31 July | 2009 Options | 2008 Options |
| M. Knight (Chairman) | 561,547 | 561,547 |
| S. Searle (Chief Executive Officer) | 561,547 | 561,547 |
| J. Smith (Chief Financial and Operations Officer) | 193,115 | 193,115 |
| R. Cummings (Chief Investment Officer) | 68,500 | 68,500 |
| P. Atherton (Non-Executive Director) | 272,151 | 272,151 |
| M. Rowan (Non-Executive Director) | 251,526 | 251,526 |
| D. Allen (Non-Executive Director) | - | - |
None of the share options was exercised in the period under review and there are no changes to the above as at the date of this report. Certain changes are proposed following the date of this report and these are referred to below and explained in the Directors’ Remuneration Report under the heading EBT Arrangements.
EBT Related Incentive Arrangements
The Group intends to ask the trustees of its employee benefit trust to consider making certain awards/providing certain benefits to certain staff (other than Non-Executive Directors) and to purchase certain holdings of share options by directors (other than Non-Executive Directors). Following the latter purchase by the EBT which the Group intends to be after the date of this report, the Group intends that the holdings of share options by Directors will be as set out below.
| Intended holdings of share options by Directors following the date of this report | Change | |
| M. Knight (Chairman) | 78,760 | (482,787) |
| S. Searle (Chief Executive Officer) | 78,760 | (482,787) |
| J. Smith (Chief Financial and Operations Officer) | - | (193,115) |
| R. Cummings (Chief Investment Officer) | - | (68,500) |
| P. Atherton (Non-Executive Director) | 272,151 | - |
| M. Rowan (Non-Executive Director) | 251,526 | - |
| D. Allen (Non-Executive Director) | - | - |
Full details of all such arrangements are set out in the Directors’ Remuneration Report under the heading EBT Arrangements.
Company Secretary
The Company Secretary of the Group is J. Bowen.
Substantial shareholdings
As at 30 September 2009 the Company had been advised of the following shareholders with interests of 3% or more in its Ordinary Share capital.
Shareholder percentage holdings
| Company | % |
| Imperial College of Science, Technology and Medicine | 52.33 |
| Vidacos Nominees Limited (Invesco plc) | 22.24 |
| Morstan Nominees Limited (Lansdowne Partners) | 14.22 |
| LBPB Nominees Limited (The Tudor Group) | 3.38 |
Policy and practice on payment to creditors
The Group is a supporter of the Better Payment Practice Group’s ‘Better Payment Practice Code’ to which it subscribes when dealing with all of its suppliers. Copies of the Better Payment Practice Group’s code are available from the Department of Trade and Industry.
Trade creditors at the year end represented 22 days (2008: 21) of purchases (Company nil). It is the Group’s policy in respect of all suppliers to agree payment terms in advance of the supply of goods and to adhere to those payment terms.
Employees
The Group employed an average of 40 employees throughout the year, including Executive Directors, all of whom are located on the same site and the Group is therefore of a size where it is not necessary to have introduced formal consultation processes. However, the employees are encouraged to be involved with the decision making processes, through departmental meetings, bi-monthly CEO updates and an open and informal reporting structure.
During the reported year the Group undertook a review of its business in light of the economic climate. As a result of this review the Group took appropriate steps to reduce the headcount by 10 full time equivalent employees and thereby reduce the operating costs of the business.
The Group operated a discretionary annual bonus scheme during the year for its staff whereby staff are eligible for an annual bonus based on their own and the Group’s performance for the year. Alternative arrangements for certain employees are set out in the Directors’ Remuneration Report under the heading EBT Arrangements.
Applications for employment by disabled persons are always fully considered, bearing in mind the respective aptitudes of the applicant concerned. In the event of members of staff becoming disabled every effort is made to ensure that their employment within the Group continues and that the appropriate training is arranged. It is the policy of the Group that the training, career development and promotion of a disabled person should, as far as possible, be identical to that of a person who does not suffer from a disability.
Statement of directors’ responsibilities
The directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the group financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union, and the parent company financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and the company and of the profit or loss of the Group for that period. In preparing these financial statements, the directors are required to:
- select suitable accounting policies and then apply them consistently;
- make judgements and accounting estimates that are reasonable and prudent;
- state whether IFRSs as adopted by the European Union and applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the Group and parent company financial statements respectively; and
- prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of the Group's website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
Provision of information to auditors
So far as each of the Directors is aware there is no relevant audit information of which the Group’s auditors are unaware. Each Director has taken all the steps that he/she ought to have taken as a Director in order to make himself/herself aware of any relevant audit information and to establish that the Group’s auditors are aware of that information.
Annual general meeting
The Annual General Meeting of the Group will be held at 11.30am on 15 December 2009 in The Boardroom, The Imperial Incubator, Bessemer Building, Imperial College London, South Kensington, London SW7 2AZ.
Auditors
A resolution to re-appoint the auditors, PricewaterhouseCoopers LLP, will be proposed at the Annual General Meeting.
By order of the Board
J. Bowen
Company Secretary
6 October 2009