Key performance indicators

1. The health and quality of the intellectual property pipeline and the flow of opportunities

Demonstrated through the number of inventions disclosed, the patents filed and proof of concept projects undertaken.

Invention disclosures are ideas that are recorded and assessed as having commercial merit on which the technology transfer team conducts initial work.

Of the 328 invention disclosures this year 256 came from Imperial College London and 72 came from external sources. The Group expects the pipeline to remain “steady” and to monitor this metric to ensure that there is sufficient flow. The fall in the number of disclosures is as a result of the steady increase of the quality threshold for a disclosure accompanied by improvements to systems and knowledge of the commercialisation process.

Registered intellectual property is an important component in the commercial package and our patent portfolio provides the feedstock for licensing and the kernel for the creation of spinouts. However, models evolve allowing for the exploitation of many technologies not underpinned by patents – for example software, which is covered by copyright. During the year the Group filed 50 new patent applications which, although slightly down on previous years, reflects a higher quality threshold being applied before patent filings are submitted.

2. Rate of commercialisation of intellectual property

Measured by the number of IP agreements executed and the number of stand-alone technology companies with appropriate launch management teams and funding. IP agreements comprise licences and options granted both to established companies and to newly formed spin-outs. The number of these deals, at 34 for the year, is an indicator of growth in the portfolio of licences. However, this number should be considered in the knowledge that the financial returns are likely to be skewed, with a small number of IP agreements generating the bulk of the returns. A few high value licences will therefore represent a more valuable asset than many low value ones – and at this early stage it is difficult to identify which will be successful and generate the highest returns.

During the year the metric reflecting the rate of creation of new companies has been refined. The Group is moving away from merely measuring the number of companies formed, and is now considering the number of companies seed funded, where appropriate, with launch management teams.

Effectively this is moving the point of measurement away from the initial formation point and towards a point at which it is clear that the technology has been of sufficient quality to attract a management team and that the company has the financial capital to proceed. The number will be lower than the raw number of companies formed, but is a better reflection of the metric used by management in the business and as a performance indicator.

3. The investments made in the portfolio of technology companies

Measured in terms of total cash raised by the portfolio together with the investments we make and commitments entered into.

This gives an indication of the appetite for funding within the portfolio, and demonstrates progress in the portfolio. During 2009 total investments of £14.4 million were completed (2008: £6.4 million).

Outstanding commitments due under convertible loans and milestone investments were £3.1 million (2008: £3.2 million). The companies in the portfolio raised total commitments in excess of £41 million (2008: £55 million).

4. Potential value available from the existing portfolio

Measured by the number of accelerated and organic growth technology companies in the portfolio. Accelerated growth will be achieved through attraction of entrepreneurs, management and directors together with the investment of equity capital facilitating relationships with commercial partners.

At the end of July 2009, there were 80 technology companies in the portfolio (2008: 89) with active management of 31 accelerated growth companies, 17 organic growth companies under asset management and 32 smaller asset companies managed less actively or projects being formed.

5. Exits achieved

Measured to give an indication of cash return to sustain future investments and because it is the ultimate indicator of the success of the business.

During the year net cash realised from disposals after accounting for revenue sharing obligations and excluding deferred consideration was £3.9 million (2008: £3.6 million). Total disposals including revenue sharing obligations and deferred consideration was £12.1 million and net realisations after accounting for the payments due under the revenue-sharing obligations to Imperial College London and others were £9.8 million (2008: £3.4 million), the largest element being the transfer of the shares in Ceres Power subject to revenue-sharing obligations.

Also included in the disposal figure is the deferred consideration arising on the disposal of Thiakis (£6.0 million).

6. The growth in the value of the portfolio of technology companies

Measured in terms of the net value and net gain / (loss) arising in the value of the portfolio using established valuation methodologies based on International Private Equity and Venture Capital Valuation Guidelines (IPEVCVG).

Absolute value of the technology company portfolio

At the end of July 2009, the value of technology company holdings, net of revenue sharing obligations, on our Balance Sheet had increased to £50.1 million (2008: £38.5 million).

The total net aggregate value represents the total portfolio value growth since 2005 when the Group commenced investing in technology company holdings and therefore includes the net value of realisations since that date

Net Gain / (loss) in the value of the portfolio

The portfolio had net gains of £6.9 million (2008: £3.0 million loss) split into a £0.5 million gain in the quoted stocks (2008: £3.9 million loss) and £6.4 million gain in privately held companies (2008: £0.9 million gain).