TIDMIPS
RNS Number : 4463U
Ipso Ventures PLC
28 December 2012
28 December 2012
IPSO VENTURES PLC
FINAL RESULTS FOR THE YEAR ENDED 30 APRIL 2012
IPSO Ventures plc (AIM: IPS) ("IPSO", the "Company" or the
"Group"), the technology commercialisation business, is pleased to
announce its audited results for the year ended 30 April 2012.
For further information, please contact:
IPSO Ventures plc Tel: 020 7462 0093
Craig Rochford, Chairman craig@ipsoventures.com
Nick Rodgers, Chief Executive nick@ipsoventures.com
Officer www.ipsoventures.com
Allenby Capital Limited Tel: 020 3328 5656
(nominated adviser and broker) www.allenbycapital.com
Mark Connelly
Nick Athanas
Company description:
IPSO Ventures has created a portfolio of companies based on a
range of technologies. Its objective is to nurture these
investments to provide value to its shareholders.
Chairman's Review
This has again been a difficult year and, despite considerable
effort, none of the opportunities I alluded to in my letter with
the interim statement in January have come to fruition. Since the
year end we have therefore taken some tough decisions with the
portfolio investments.
Portfolio review
Axilica
Axilica provides a unique behavioural synthesis tool in the ESL
(electronic system level) design automation market. The advanced
section of the ESL market has been dominated by small technology
vendors and start-ups offering synthesis tools focused on
translating programming languages (C, C++) into hardware (FPGA,
ASIC).
During the year to 30 April 2012 Axilica continued to work on
the funded European research projects as it has done previously. It
has endeavoured to secure further funded research but this has not
proved possible and since the year end the decision has been taken,
by the board of Axilica, to reduce activity to a minimum in the
company.
It is unclear whether the residual technology has any value.
IPSO's shareholding is 45%.
Biocroí
Biocroí has designed and developed a range of unique advanced
microplates and a novel cell culture medium. Biocroi's microplates
use a gel-based buffering system surrounding the wells which leads
to better control of the microplate environment improving the
quality, accuracy and uniformity of results. Biocroí has launched
its products and signed distribution agreements for its cell
culture product. Revenues are being generated from sales of the
cell culture product and discussions are on-going for the licence
of the microplate technology. IPSO's shareholding is 6%.
Cambridge Meditech
Cambridge Meditech's novel patented wound infection technology
gives a visual indication of infection. Wound infection can be
detected without unnecessary disruption to a dressing and
appropriate intervention can be made immediately. It is anticipated
that the products will have multiple applications in various
settings.
At the 30 April 2012 the company's development partner, Lantor,
had an option to licence the technology. In August 2012 Lantor's
option expired. Early discussions are taking place with the new
owner of Lantor with a view to granting them a licence or selling
the technology. Cambridge Meditech is 100% owned by IPSO.
IPSol Energy
IPSol Energy is a service business providing testing,
certification and other services to the solar photovoltaic ("PV")
industry.
The downturn in the PV market in the UK as a result of the
Government's changes in the feed in tariffs has been considerable
and the business of IPSol Energy has come under severe pressure. In
August 2012 the company raised a further GBP150,000 of working
capital. The company has a reasonable order book but, due to
customer delays, product has been slow to arrive for testing which
has affected cash flow. However additional orders have been
received in the last two months and the outlook is a little more
positive. IPSO's shareholding is 23%.
Medermica
Medermica has so far been unsuccessful in licencing its ph
measurement technology to third parties. It has recently taken its
patents into the PCT national/regional phase in Europe and US.
Further significant business development is prevented through a
lack of funding. Medermica is 75% owned by IPSO.
Polyfect Solutions
Polyfect's novel process enables cost savings and quality
improvements to a range of plastics through the highly efficient
incorporation of functional fillers (which give polymers certain
characteristics and properties).
Polyfect is continuing its development work with a major
international brewer and has undertaken a feasibility study with a
consumer product multinational. Discussions with other interested
parties are also taking place with a view to exploiting Polyfect's
technology particularly in the nanotechnology area. Additionally
Polyfect has secured Technology Strategy Board funding for a
project on improved food packaging.
During the year to 30 April 2012 and since that date Polyfect
has raised some GBP80,000 from external investors which has diluted
the shareholding owned by IPSO. These monies have been raised at a
discount to the original valuation of the business and the value of
IPSO's shareholding has been reduced to GBP135,000. IPSO's current
shareholding is 22%.
Therakind
Therakind is a paediatric healthcare company. It takes known
adult drugs and creates a version for children which can be
protected by EU legislation. The revenue model is to generate
royalties on product sales.
Therakind's first product, Buccolam, which is licenced to
Viropharma Inc, has been launched in the UK and other European
countries. Royalties are now been received by Therakind from this
product. Therakind's second product which is being developed with a
partner is awaiting registration for the UK.
A third product has started development and others are being
reviewed. IPSO's shareholding is 35%.
Wildknowledge
Wildknowledge creates mobile applications that engage audiences
with their heritage (i.e. the environment, wildlife, archaeology
and history). Its offering includes data gathering applications;
location based content and engaging games.
Wildknowledge has reduced its reliance on the education market
and built revenues through three streams (white labelling existing
technology, delivery of native applications/subscriptions and
creation of standalone content) in the wider heritage market and
new markets. However Wildknowledge is a small business and with
limited funding is struggling to compete with bigger companies.
IPSO's shareholding is 9%.
Portfolio analysis by sector
As at 30 April 2012 As at 30 April 2011
Carrying value Number Carrying value Number
Sector GBP % % GBP % %
---------------------- ----------- ---- --- ---- ----------- ---- --- ----
Healthcare* 1,071,728 65 4 50 990,751 54 3 43
New materials 135,000 8 1 12 405,000 22 1 14
Process & software 100,000 6 2 25 100,000 5 2 29
Energy & environment 348,375 21 1 13 348,375 19 1 14
---------------------- ----------- ---- --- ---- ----------- ---- --- ----
Total portfolio
value 1,655,103 100 8 100 1,844,126 100 7 100
Consolidation
adjustments (147,001) - - - (147,001) - - -
---------------------- ----------- ---- --- ---- ----------- ---- --- ----
Consolidated value 1,508,102 100 8 100 1,697,125 100 7 100
---------------------- ----------- ---- --- ---- ----------- ---- --- ----
* This sector includes investments which are accounted for as
subsidiaries in the Group accounts. The adjustment row eliminates
the carrying value of these subsidiaries in order to arrive at the
consolidated investment value for the Group's remaining equity
investments, as shown in the statement of financial position.
The valuation policy of the Group is set out in the notes to the
financial statements.
Financial review
Revenues
Our revenues reduced slightly to GBP122,000 (2011: GBP155,000)
reflecting a reduction in non portfolio related income in this year
compared with last year.
Changes in fair value of investments
The value of our investments was reduced by GBP189,000 which was
a reduction in the value of our Polyfect holding partly offset by
the inclusion of our holding in Biocroi.
Investment activities
No new investments were made during the year.
Operating costs
Administrative expenses show another significant decrease this
year to GBP400,000 compared with GBP764,000 in 2011. This is a
direct result of significant efforts to reduce the cost structure
of the business. Some GBP105,000 of the 2012 operating costs was
paid in shares in IPSO.
Cash
At the year end IPSO had cash totalling GBP25,000 (2011:
GBP20,000).
Events after the reporting period
In August IPSol Energy Limited raised a further round of funding
from external investors diluting IPSO's shareholding to 23%. In
September Axilica made the decision to reduce its activities to a
minimum and the Directors of IPSO believe that has reduced the
value of this investment to zero.
In early October IPSO Management sold its wholly owned
subsidiary, IPSO Capital for GBP25,000 in cash. On 10 October
trading in the Company's shares on AIM was suspended due to the
uncertain financial position of the Company and its inability to
publish these accounts by 31 October 2012. Since that date the
Board has agreed a conditional fundraising of GBP360,000 and a
disposal of its operating subsidiary IPSO Management, both of which
are subject to the approval of shareholders at the General Meeting
of the Company scheduled for 14 January 2013 and the approval of
the Court. Assuming the fundraising is approved by both the
Company's shareholders and the Court then the creditors of the
Company and its subsidiaries will be paid in full and a further sum
will be paid into IPSO Management as working capital.
The Directors are of the view that the events since the year end
set out above have reduced the portfolio values from the value as
at 30(th) April 2012. However these are almost all minority
holdings in private companies where there is no ready market in the
shares and as such it is very difficult to give an accurate current
valuation. In a forced sale or liquidation the Directors believe
that the value realized would be very little. To maximize value in
the portfolio a longer time is needed. In the Directors' opinion
the most valuable investment in the portfolio is the holding in
Therakind.
Going concern
The new funding and reorganisation described in the events after
the reporting period section above, if approved by shareholders at
the General Meeting, should give both IPSO Ventures plc and IPSO
Management, after disposal, sufficient funding for at least 12
months in each case.
Outlook and strategy
Assuming that the new fundraising and reorganization are
approved by shareholders at the General Meeting, then I believe the
outlook for the Company is positive although my colleagues will not
be involved in the Company following the General Meeting and my
involvement is likely to cease shortly thereafter. Assuming that
IPSO Management has a modest amount of working capital available to
it then there is a reasonable opportunity for the realization of
the portfolio to create value for shareholders.
Consolidated Statement of Continuing Income
For the year ended 30 April 2012
2012 2011
Note GBP GBP
---------------------------------------- ----- ---------- ----------
Revenue 5 122,213 154,751
Fair value loss on equity investment 15 (189,022) (276,750)
Gain on deemed disposal of investments - 458,336
Administrative expenses (399,874) (763,832)
Research and development expenses - -
---------------------------------------- ----- ---------- ----------
Operating loss (466,683) (427,495)
Investment revenues from cash and
cash equivalents 9 327 3,740
---------------------------------------- ----- ---------- ----------
Loss before tax (466,356) (423,755)
Tax 10 (26) 76
---------------------------------------- ----- ---------- ----------
Loss for the year
Loss and total comprehensive loss
for the year attributable to: (466,382) (423,679)
Equity holders of the parent 7 (463,258) (409,182)
Non-controlling interest (3,124) (14,497)
---------------------------------------- ----- ---------- ----------
Loss per share
Basic and diluted 11 (1.4)p (2.7)p
---------------------------------------- ----- ---------- ----------
All results derive from continuing operations.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 30 April 2012
Share
Share Own Share option Other Retained Non-controlling Total
capital shares premium reserve reserve losses Total interest equity
GBP GBP GBP GBP GBP GBP GBP GBP GBP
-------------- -------- ---------- ---------- ---------- ---------- ------------ ---------- ---------------- ----------
At 30
April
2010 659,461 (325,295) 5,289,527 271,034 (175,292) (3,867,179) 1,852,256 415 1,852,671
Issue
of share
capital 162,500 - 127,500 - - - 290,000 - 290,000
Consolidated
loss
for the
year - - - - - (409,182) (409,182) (14,497) (423,679)
Dilution
of
investment
in
subsidiary - - - - - - - (83) (83)
Employee
share
option
charge - - - 47,447 - - 47,447 - 47,447
Share
options
exercised - 29,888 - (29,888) - - - - -
Share
Options
forfeited - - - (164,181) - 164,181 - - -
At 30
April
2011 821,961 (295,407) 5,417,027 124,412 (175,292) (4,112,180) 1,780,521 (14,165) 1,766,356
Issue
of share
capital 22,982 - 225,730 - 248,712 - 248,712
Consolidated
loss
for the
year - - - - - (463,258) (463,258) (3,124) (466,382)
Dilution - - - - - - - - -
of investment
in subsidiary
Employee
share
option
charge - - - 12,443 - - 12,443 - 12,443
Share
options
exercised - 49,655 - (49,655) - - - - -
Share
options
forfeited - - - (87,200) - 87,200 - - -
-------------- -------- ---------- ---------- ---------- ---------- ------------ ---------- ---------------- ----------
At 30
April
2012 844,943 (245,752) 5,642,757 - (175,292) (4,488,238) 1,578,418 (17,289) 1,561,129
-------------- -------- ---------- ---------- ---------- ---------- ------------ ---------- ---------------- ----------
Consolidated Statement of Financial Position
As at 30 April 2012
2012 2011
Note GBP GBP
---------------------------------- ----- ------------ ------------
Non-current assets
Intangible assets 12 69,651 73,757
Property, plant and equipment 13 2,579 5,300
Investments 15 1,508,102 1,697,124
---------------------------------- ----- ------------ ------------
1,580,332 1,776,181
---------------------------------- ----- ------------ ------------
Current assets
Other receivables 16 48,633 73,713
Cash and cash equivalents 16 24,740 19,968
---------------------------------- ----- ------------ ------------
73,373 93,681
---------------------------------- ----- ------------ ------------
Total assets 1,653,705 1,869,862
---------------------------------- ----- ------------ ------------
Current liabilities
Trade and other payables 17 (92,395) (103,325)
---------------------------------- ----- ------------ ------------
Net current liabilities/assets (19,022) (9,644)
---------------------------------- ----- ------------ ------------
Non-current liabilities
Deferred tax liabilities 10 (181) (181)
---------------------------------- ----- ------------ ------------
Total liabilities (92,576) (103,506)
---------------------------------- ----- ------------ ------------
Net assets 1,561,129 1,766,356
---------------------------------- ----- ------------ ------------
Equity
Share capital 18 844,943 821,961
Share premium 19 5,642,757 5,417,027
Own shares 20 (245,752) (295,407)
Share option reserve 21 - 124,412
Other reserve 22 (175,292) (175,292)
Retained losses 23 (4,488,238) (4,112,180)
---------------------------------- ----- ------------ ------------
Equity attributable to owners of
the Company 1,578,418 1,780,521
Non-controlling interest 24 (17,289) (14,165)
---------------------------------- ----- ------------ ------------
Total equity 1,561,129 1,766,356
---------------------------------- ----- ------------ ------------
Consolidated Cash Flow Statement
For the year ended 30 April 2012
2012 2011
Note GBP GBP
---------------------------------------------- ----- ---------- ----------
Net cash used in operating activities 25 (244,117) (433,115)
---------------------------------------------- ----- ---------- ----------
Investing activities
Interest received 327 3,740
Purchases of property, plant and equipment (150) (2,118)
Purchases of intangible assets - -
Loss of cash on deemed disposal - (1,480)
Loan capital repaid - 3,750
Payments to acquire investments - -
---------------------------------------------- ----- ---------- ----------
Net cash generated from/(used in) investing
activities 177 3,892
---------------------------------------------- ----- ---------- ----------
Financing activities
Proceeds on issue of shares 248,712 290,000
---------------------------------------------- ----- ---------- ----------
Net cash generated from financing activities 248,712 290,000
---------------------------------------------- ----- ---------- ----------
Net increase/(decrease) in cash and
cash equivalents 4,772 (139,223)
Cash and cash equivalents at beginning
of year 19,968 159,191
---------------------------------------------- ----- ---------- ----------
Cash and cash equivalents at end of
year 24,740 19,968
---------------------------------------------- ----- ---------- ----------
NOTES TO THE FINANCIAL INFORMATION
1. Basis of preparation
Whilst the financial information included in this announcement
has been prepared in accordance with the recognition and
measurement criteria of International Financial Reporting Standards
(IFRSs), this announcement does not itself contain sufficient
information to comply with IFRSs. The Group expects to publish full
financial statements that comply with IFRSs in December 2012.
The financial information set out in the announcement does not
constitute the Group's statutory accounts as defined in s435 of the
Companies Act 2006 for the years ended 30 April 2012 or 2011. The
financial information for the year ended 30 April 2011 is derived
from the statutory accounts for that year, which have been
delivered to the Registrar of Companies. The auditors reported on
those accounts: their report included an emphasis of matter in
respect of the material uncertainty over going concern, but was not
qualified. Their report did not contain a statement under s498(2)
or (3) Companies Act 2006. The audit of the statutory accounts for
the year ended 30 April 2012 is complete. The report of the
auditors on the 30 April 2012 financial statements included an
emphasis of matter in respect of the material uncertainty over
going concern, but was not qualified. These accounts will be
delivered to the Registrar of Companies following the Company's
annual general meeting.
2. Significant accounting policies
Basis of accounting
The financial statements have been prepared in accordance with
IFRS as adopted by the European Union.
The financial statements have been prepared on the historical
cost basis, except for certain financial instruments. The principal
accounting policies adopted are set out below.
Going concern
In determining the appropriate basis of preparation of the
financial statements, the Directors are required to consider
whether the Group can continue in operational existence for the
foreseeable future. The Group had cash and cash equivalents of
GBP24,740 as at 30 April 2012 and incurred a loss before tax of
GBP466,356 for the twelve months then ended. The Directors are
confident that GBP360,000 of further funding can be raised from a
group of new investors and the Company's operating subsidiary can
be disposed of. This would provide sufficient working capital for
the next 12 months, based on a detailed cash flow forecast ('the
forecast'). The forecast does not assume any revenues from existing
investments nor additional fundraisings, but it does assume that
operating costs will be reduced to a minimum. The further funding
and the disposal are however subject to the approval of
shareholders in and the approval of the Court.
Having reviewed the forecast and made enquiries into the
underlying assumptions, the Directors have a reasonable expectation
that the Group will be able to meet its liabilities as they fall
due for the foreseeable future. Therefore, the Directors consider
it appropriate to prepare the Group's financial statements on the
going concern basis.
Foreign currency
Transactions in currencies other than the entity's functional
currency (foreign currencies) are recorded at the rates of exchange
prevailing on the dates of the transactions. At each reporting
period end date, monetary assets and liabilities that are
denominated in foreign currencies are retranslated at the rates
prevailing on the reporting period end date.
Basis of consolidation
The consolidated financial statements incorporate the financial
statements of the Company and entities controlled solely by the
Company(its subsidiaries) made up to 30 April each year. Control is
achieved where the Company has the power to govern the financial
and operating policies of an investee entity so as to obtain
benefits from its activities.
Non-controlling interests in the net assets of consolidated
subsidiaries are identified separately from the Group's equity
therein. Non-controlling interests consist of the amount of those
interests at the date of the original business combination (see
below) and the non-controlled share of changes in equity since the
date of the combination.
The results of subsidiaries acquired or disposed of during the
year are included in the consolidated statement of comprehensive
income from the effective date of acquisition or up to the
effective date of disposal, as appropriate.
All intra-Group transactions, balances, income and expenses are
eliminated on consolidation.
Business combinations
Subsidiaries include all entities, including investee companies,
controlled by the Company.
The acquisition of subsidiaries is accounted for using the
purchase method. The cost of the acquisition is measured at the
aggregate of the fair values, at the date of exchange, of assets
given, liabilities incurred or assumed, and equity instruments
issued by the Group in exchange for control of the acquiree, plus
any costs directly attributable to the business combination. The
acquiree's identifiable assets, liabilities and contingent
liabilities that meet the conditions for recognition under IFRS 3
are recognised at their fair value at the acquisition date, except
for non-current assets (or disposal groups) that are classified as
held for sale in accordance with IFRS 5 'Non-current Assets Held
for Sale and Discontinued Operations', which are recognised and
measured at fair value less costs to sell.
Any goodwill arising on acquisition is recognised as an asset
and initially measured at cost, being the excess of the cost of the
business combination over the Group's interest in the net fair
value of the identifiable assets, liabilities and contingent
liabilities recognised. If, after reassessment, the Group's
interest in the net fair value of the acquiree's identifiable
assets, liabilities and contingent liabilities exceeds the cost of
the business combination, the excess is recognised immediately in
profit or loss.
Any interest of non-controlling shareholders in the acquiree is
initially measured at the non-controlled party's proportion of the
net fair value of the assets, liabilities and contingent
liabilities recognised.
Investments in associates and jointly controlled entities
An associate is an entity over which the Group is in a position
to exercise significant influence, but not control or joint
control, through participation in the financial and operating
policy decisions of the investee. Significant influence is the
power to participate in the financial and operating policy
decisions of the investee but is not control or joint control over
those policies.
A jointly controlled entity is one over which the Group,
together with one or more unrelated entities, is in a position to
control the financial and operating policies of the entity.
The Group's equity investments are held with a view to
realisation of capital gains and for this reason the Directors have
designated such investments in associates and jointly controlled
entities to be measured at fair value through profit or loss in
accordance with IAS 39 'Financial Investments: Recognition and
Measurement'.
Operating loss
Operating loss is stated before investment income and finance
costs.
Retirement benefit costs
Payments to defined contribution retirement benefit schemes are
charged as an expense as they fall due.
Revenue recognition
Revenue is measured at the fair value of the consideration
received or receivable and represents amounts receivable for
services provided in the normal course of business, net of
discounts, VAT and other sales-related taxes.
Revenue from consultancy, corporate finance and other services
are recognised in terms of the individual contracts. In most cases,
this would be an agreed fee over a fixed period of time.
Interest income is accrued on a time basis, by reference to the
principal outstanding and at the effective interest rate
applicable, which is the rate that exactly discounts estimated
future cash receipts through the expected life of the financial
asset to that asset's net carrying amount.
Leasing
Rentals payable under operating leases are charged to income on
a straight-line basis over the term of the relevant lease.
Taxation
The tax expense represents the sum of the tax currently payable
and deferred tax.
The tax currently payable is based on taxable profit for the
year. Taxable profit differs from net profit as reported in the
statement of comprehensive income because it excludes items of
income or expense that are taxable or deductible in other years and
it further excludes items that are never
taxable or deductible. The Group's liability for current tax is
calculated using tax rates that have been enacted or substantively
enacted by the reporting period end.
Deferred tax is the tax expected to be payable or recoverable on
differences between the carrying amounts of assets and liabilities
in the financial statements and the corresponding tax bases used in
the computation of taxable profit and is accounted for using the
statement of financial position liability method. Deferred tax
liabilities are generally recognised for all taxable temporary
differences and deferred tax assets are recognised to the extent
that it is probable that taxable profits will be available against
which deductible temporary differences can be utilised. Such assets
and liabilities are not recognised if the temporary difference
arises from the initial recognition of goodwill or from the initial
recognition (other than in a business combination) of other assets
and liabilities in a transaction that affects neither the tax
profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary
differences arising on investments in subsidiaries and associates,
except where the Group is able to control the reversal of the
temporary difference and it is probable that the temporary
difference will not reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at each
reporting period end and reduced to the extent that it is no longer
probable that sufficient taxable profits will be available to allow
all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to
apply in the period when the liability is settled or the asset is
realised. Deferred tax is charged or credited in the statement of
comprehensive income, except when it relates to items charged or
credited directly to equity, in which case the deferred tax is also
dealt with in equity.
Deferred tax assets and liabilities are offset when there is a
legally enforceable right to set off current tax assets against
current tax liabilities and when they relate to income taxes levied
by the same taxation authority and the Group intends to settle its
current tax assets and liabilities on a net basis.
Property, plant and equipment
Fixtures and equipment are stated at cost less accumulated
depreciation and any recognised impairment loss.
Depreciation is charged so as to write off the cost or valuation
of assets over their estimated useful lives using the straight-line
method, on the following bases:
Computer equipment three years
Fixtures and equipment five years
The gain or loss arising on the disposal or retirement of an
asset is determined as the difference between the sales proceeds
and the carrying amount of the asset and is recognised in
income.
Intangible assets
(i) Internally generated intangible assets - research and
development expenditure
Expenditure on research activities is recognised as an expense
in the period in which it is incurred.
An internally generated intangible asset arising from the
Group's development activities is recognised only if all of the
following conditions are met:
-- an asset is created that can be identified (such as software and new processes);
-- it is probable that the asset created will generate future economic benefits; and
-- the development cost of the asset can be measured reliably.
Internally generated intangible assets are amortised on a
straight-line basis over their useful lives. Where no internally
generated intangible asset can be recognised, development
expenditure is recognised as an expense in the period in which it
is incurred.
(ii) Acquired intangible assets
Intangible assets that are acquired as a result of a business
combination and that can be separately measured at fair value on a
reliable basis are separately recognised on acquisition at their
fair value. Amortisation is charged on a straight-line basis to the
statement of comprehensive income over their expected useful lives
and is included within 'Other administrative expenses'.
Patents and trademarks
Patents and trademarks are measured initially at purchase cost
and are amortised on a straight-line basis over their estimated
useful lives.
Impairment of tangible and intangible assets excluding
goodwill
At each reporting period end, the Group reviews the carrying
amounts of its tangible and intangible assets to determine whether
there is any indication that those assets have suffered an
impairment loss. If any such indication exists, the recoverable
amount of the asset is estimated in order to determine the extent
of the impairment loss (if any). Where the asset does not generate
cash flows that are independent from other assets, the Group
estimates the recoverable amount of the cash-generating unit to
which the asset belongs. An intangible asset with an indefinite
useful life is tested for impairment annually and whenever there is
an indication that the asset may be impaired.
Recoverable amount is the higher of fair value less costs to
sell and value in use. 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 for
which the estimates of future cash flows have not been
adjusted.
If the recoverable amount of an asset (or cash generating unit)
is estimated to be less than its carrying amount, the carrying
amount of the asset (cash generating unit) is reduced to its
recoverable amount. An impairment loss is recognised as an expense
immediately, unless the relevant asset is carried at a revalued
amount, in which case the impairment loss is treated as a
revaluation decrease.
Where an impairment loss subsequently reverses, the carrying
amount of the asset (cash generating unit) is increased to the
revised estimate of its recoverable amount, but so that the
increased carrying amount does not exceed the carrying amount that
would have been determined had no impairment loss been recognised
for the asset (cash generating unit) in prior years. A reversal of
an impairment loss is recognised as income immediately, unless the
relevant asset is carried at a revalued amount, in which case the
reversal of the impairment loss is treated as a revaluation
increase.
Financial instruments
Financial assets and financial liabilities are recognised in the
Group's statement of financial position when the Group becomes a
party to the contractual provisions of the instrument.
Financial assets
Financial assets are classified into the following specified
categories: financial assets 'at fair value through profit or loss'
(at 'FVTPL') and 'loans and receivables'. The classification
depends on the nature and purpose of the financial assets and is
determined at the time of initial recognition.
Financial assets at FVTPL
Financial assets are classified as at FVTPL where the financial
asset is either held for trading or it is designated as at
FVTPL.
A financial asset is classified as held for trading if:
-- it has been acquired principally for the purpose of selling in the near future;
-- it is a part of an identified portfolio of financial
instruments that the Group manages together and has a recent actual
pattern of short-term profit taking; or
-- it is a derivative that is not designated and effective as a hedging instrument.
A financial asset other than a financial asset held for trading
may be designated as at FVTPL upon initial recognition if:
-- such designation eliminates or significantly reduces a
measurement or recognition inconsistency that would otherwise
arise; or
-- the financial asset forms part of a group of financial assets
or financial liabilities or both, which is managed and its
performance is evaluated on a fair value basis, in accordance with
the Group's documented risk management or investment strategy, and
information about the Group is provided internally on that basis;
or
-- it forms part of a contract containing one or more embedded
derivatives and IAS 39 'Financial Instruments: Recognition and
Measurement' permits the entire combined contract (asset or
liability) to be designated as at FVTPL.
Financial assets at FVTPL are stated at fair value, with any
resultant gain or loss recognised in profit or loss. The net gain
or loss recognised in profit or loss incorporates any dividend or
interest earned on the financial asset.
The fair value of unlisted investments is established using
valuation techniques. The valuation methodology used most commonly
by the Group is the 'price for recent investment' contained in the
'International private equity and venture capital valuation
guidelines' endorsed by the British & European Venture Capital
Associations. The following considerations are used when
calculating the fair value of unlisted investments:
-- where the investment being valued was itself made recently,
its cost will generally provide a good indication of fair value;
and
-- where there has been any recent investment by third parties,
the price of that investment will provide a basis of the
valuation.
Loans and receivables
Trade receivables, loans and other receivables that have fixed
or determinable payments that are not quoted in an active market
are classified as loans and receivables. Loans and receivables are
initially measured at fair value and subsequently measured at
amortised cost using the effective interest method, less any
impairment. Interest income is recognised by applying the effective
interest rate, except for short-term receivables when the
recognition of interest would be immaterial.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand
deposits and other short-term highly liquid investments that are
readily convertible to a known amount of cash and are subject to an
insignificant risk of changes in value.
Impairment of financial assets
Financial assets, other than those at FVTPL, are assessed for
indicators of impairment at each reporting period end. Financial
assets are impaired where there is objective evidence that, as a
result of one or more events that occurred after the initial
recognition of the financial asset, the estimated future cash flows
of the investment have been impacted.
For certain categories of financial assets, such as trade
receivables, assets that are assessed not to be impaired
individually are subsequently assessed for impairment on a
collective basis. Objective evidence of impairment for a portfolio
of receivables could include the Group's past experience of
collecting payments, an increase in the number of delayed payments
in the portfolio past the average credit period of 60 days, as well
as observable changes in national or local economic conditions that
correlate with default on receivables.
The carrying amount of the financial asset is reduced by the
impairment loss directly for all financial assets with the
exception of trade receivables, where the carrying amount is
reduced through the use of an allowance account. When a trade
receivable is considered uncollectible, it is written off against
the allowance account. Subsequent recoveries of amounts previously
written off are credited against the allowance account. Changes in
the carrying amount of the allowance account are recognised in
profit or loss.
Impairment of financial assets continued
If, in a subsequent period, the amount of the impairment loss
decreases and the decreasecan be related objectively to an event
occurring after the impairment was recognised, the previously
recognised impairment loss is reversed through profit or loss to
the extent that the carrying amount of the investment at the date
the impairment is reversed does not exceed what the amortised cost
would have been had the impairment not been recognised.
Derecognition of financial assets
The Group derecognises a financial asset only when the
contractual rights to the cash flows from the asset expire; or it
transfers the financial asset and substantially all the risks and
rewards of ownership of the asset to another entity. If the Group
neither transfers nor retains substantially all the risks and
rewards of ownership and continues to control the transferred
asset, the Group recognises its retained interest in the asset and
an associated liability for amounts it may have to pay. If the
Group retains substantially all the risks and rewards of ownership
of a transferred financial asset, the Group continues to recognise
the financial asset and also recognises a collateralised borrowing
for the proceeds received.
Financial liabilities and equity
Financial liabilities and equity instruments are classified
according to the substance of the contractual arrangements entered
into.
Equity instruments
An equity instrument is any contract that evidences a residual
interest in the assets of the Group after deducting all of its
liabilities. Equity instruments issued by the Group are recorded at
the proceeds received, net of direct issue costs.
Financial liabilities
Financial liabilities are classified as 'other financial
liabilities'.
Other financial liabilities
Other financial liabilities, including borrowings, are initially
measured at fair value, net of transaction costs. Other financial
liabilities are subsequently measured at amortised cost using the
effective interest method, with interest expense recognised on an
effective yield basis. The effective interest method is a method of
calculating the amortised cost of a financial liability and of
allocating interest expense over the relevant period. The effective
interest rate is the rate that exactly discounts estimated future
cash payments through the expected life of the financial liability
or, where appropriate, a shorter period.
Derecognition of financial liabilities
The Group derecognises financial liabilities when, and only
when, the Group's obligations are discharged, cancelled or they
expire.
Provisions
Provisions are recognised when the Group has a present
obligation as a result of a past event and it is probable that the
Group will be required to settle that obligation. Provisions are
measured at the Directors' best estimate of the expenditure
required to settle the obligation at thereporting period end, and
are discounted to present value where the effect is material.
Share-based payments
The Group has applied the requirements of IFRS 2 'Share-based
Payments'.
The Group issues equity-settled share based payments to certain
employees. Equity settled share based payments are measured at fair
value at the date of grant. The fair value determined at the grant
date of the equity settled share based payments is expensed on a
straight-line basis over the vesting period, based on the Group's
estimate of shares that will eventually vest and adjusted for the
effect of non-market based vesting conditions.
Fair value is measured by use of the Black Scholes model. The
expected life used in the model has been adjusted, based on
management's best estimate, for the effects of non-transferability,
exercise restrictions and behavioural considerations.
3. Critical accounting judgements and key sources of estimation
uncertainty
Critical judgements in applying the Group's accounting
policies
In the application of the Group's accounting policies, which are
described in note 2, the Directors are required to make judgements,
estimates and assumptions about the carrying amounts of assets and
liabilities that are not readily apparent from other sources. The
estimates and associated assumptions are based on historical
experience and other factors that are considered to be relevant.
Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an
ongoing basis. Revisions to accounting estimates are recognised in
the period in which the estimate is revised if the revision affects
only that period; or in the period of the revision and future
periods if the revision affects both current and future
periods.
Key sources of estimation uncertainty
The key assumptions concerning the future and other key sources
of estimation uncertainty at the reporting period end, that have a
significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year,
are discussed [below].
(i) Share-based compensation
In order to calculate the charge for share-based compensation as
required by IFRS 2, the Group makes estimates principally relating
to the assumptions used in its option pricing model as set out in
note 26.
(ii) Valuation for unquoted equity investments
As described [above], investments in associates are held at fair
value with changes in such fair value recorded in the statement of
comprehensiveincome. This represents a critical accounting policy
of the Group. The Group relies on judgements in order to determine
the appropriate valuation methodology of unquoted equity
investments. These judgements include making assessments of the
future earnings potential of associated companies and marketability
discounts.
(iii) Impairment
The Group tests intangible assets annually for impairment by
comparing carrying values to recoverable amounts. Recoverable
amounts are calculated as the present value of future cash flows
expected to be derived from each intangible asset. The future cash
flows are estimated by relying on certain assumptions and
judgements.
4. Revenue
The principal sources of revenue for the Group are as
follows:
2012 2011
GBP GBP
---------------------- -------- --------
Consultancy 117,149 94,751
Corporate finance - 27,000
Headhunting - 20,000
Other services 5,064 13,000
---------------------- -------- --------
Consolidated revenue 122,213 154,751
---------------------- -------- --------
5. Business segments
In accordance with IFRS 8, the Group is required to define its
operating segments based on the internal reports presented to its
chief operating decision maker in order to allocate resources and
assess performance. The chief operating decision maker is the Board
of the Company. The reportable segments for revenue and cost
purposes are Consultancy & Portfolio Management; Healthcare;
and Energy & Environmental. The principal assets of the Group
being its investment portfolio are reported by investment sector in
the Chairman's review, being Healthcare, New Materials, Process
& Software and Energy & Environment.
The accounting policies of the reportable segments are the same
as the Group's accounting policies. Administrative costs incurred
in the Portfolio Management segment are not allocated to the
various reportable segments; each segment incurs its own
administrative costs.
No geographical information is provided because the Group only
operates in the United Kingdom.
Information about major customers
In 2012, revenue from our largest client amounted to GBP43,510
(36% of revenues). This revenue was reported in the Consultancy
& Portfolio Management segment.
Segment revenue and results
The following is an analysis of the Group's revenue and results
by reportable segment for the year ended 30 April 2012:
Consultancy
& Portfolio Energy &
Management Healthcare Environmental Consolidated
2012 2012 2012 2012
GBP GBP GBP GBP
--------------------------- ------------ ----------- -------------- -------------
Revenue
Total segment revenue 117,213 5,000 - 122,213
Result
Change in fair value
of investments (189,022) - - (189,022)
Gain on deemed disposal - - - -
of investment
Share based payments (12,443) - - (12,443)
Administrative expenses (366,581) (20,850) - (387,431)
--------------------------- ------------ ----------- -------------- -------------
Operating loss (450,833) (15,850) - (466,683)
Finance income - interest
receivable 327 - - 327
--------------------------- ------------ ----------- -------------- -------------
Loss before tax (450,506) (15,850) - (466,356)
--------------------------- ------------ ----------- -------------- -------------
The following is an analysis of the Group's revenue and results
by reportable segment for the year ended 30 April 2011:
Consultancy
& Portfolio Energy &
Management Healthcare Environmental Consolidated
2011 2011 2011 2011
GBP GBP GBP GBP
-------------------------------------- ------------ ----------- -------------- -------------
Revenue
Total segment revenue 150,751 4,000 - 154,751
Result
Change in fair value of investments (276,750) - - (276,750)
Gain on deemed disposal of
investment 458,336 - - 458,336
Share based payments (47,447) - - (47,447)
Administrative expenses (562,235) (81,161) (72,989) (716,385)
-------------------------------------- ------------ ----------- -------------- -------------
Operating loss (277,345) (77,161) (72,989) (427,495)
Finance income - interest receivable 3,740 - - 3,740
-------------------------------------- ------------ ----------- -------------- -------------
Loss before tax (273,605) (77,161) (72,898) (423,755)
-------------------------------------- ------------ ----------- -------------- -------------
Segment assets
2012 2011 2010
GBP GBP GBP
------------------------------------ ---------- ---------- -----------
Consultancy & Portfolio Management 1,608,869 1,821,556 1,874,499
Healthcare 44,836 48,306 81,830
Energy & Environmental - - 8,155
------------------------------------ ---------- ---------- -----------
1,653,705 1,869,862 1,964,484
------------------------------------ ---------- ---------- -----------
No assets are allocated to reportable segments; all segments own
and manage their own assets. No information is provided for segment
liabilities as this measure is not provided to the chief operating
decision maker.
In 2011, there were administrative expenses arising in the
Energy and Environmental sector in 2011 from a subsidiary
undertaking. In 2012, the Company has maintained a 27% share in the
entity but it is no longer a subsidiary and is therefore not
included in this analysis.
6. Loss for the year
Loss for the year has been arrived at after charging:
2012 2011
GBP GBP
----------------------------------------------- -------- --------
Research and development costs - -
Depreciation of property, plant and equipment 2,871 3,134
Operating lease in respect of property 28,668 30,118
Employee costs - including share option costs
(see note 8) 120,302 420,307
Net foreign exchange loss - -
----------------------------------------------- -------- --------
The analysis of auditors' remuneration is as follows:
2012 2011
GBP GBP
---------------------------------------------------- ------- -------
Fees payable to the Company's auditors for
the audit of the Company's annual accounts 7,000 7,000
Fees payable to the Company's auditors and
their associates for other services to the
Group:
- the audit of the Company's subsidiaries pursuant
to legislation 8,750 20,450
- the audit of the Company's associates pursuant
to legislation 4,000 4,000
---------------------------------------------------- ------- -------
Total audit fees 19,750 31,450
---------------------------------------------------- ------- -------
Other services pursuant to legislation:
- tax services 6,090 8,500
---------------------------------------------------- ------- -------
Total non-audit fees 6,090 8,500
---------------------------------------------------- ------- -------
7. Investments
The Group held the following equity investments in unquoted
companies:
Investments
(fair value)
GBP
------------------------------------------------------ -------------
At 1 May 2010 1,629,249
Investments during the year (276,750)
Retained investment on deemed disposal of subsidiary 348,375
Realisations during the year (3,750)
At 1 May 2011 1,697,124
Change in fair value in the year (189,022)
Realisations during the year -
------------------------------------------------------ -------------
At 30 April 2012 1,508,102
------------------------------------------------------ -------------
All of the investments, held at fair value through profit and
loss, were designated as such upon initial recognition.
The following table provides an analysis of financial
instruments that are measured subsequent to initial recognition at
fair value, grouped into Levels 1 to 3 based on the degree to which
the fair value is observable:
-- Level 1 fair value measurements are those derived from quoted
prices (unadjusted) in active markets or for identical assets and
liabilities;
-- Level 2 fair value measurements are those derived from inputs
other than quoted prices included within Level 1 that are
observable for the asset or liability, either directly (i.e. as
prices) or indirectly (i.e. derived from prices); and
-- Level 3 fair value measurements are those derived from
valuation techniques that include inputs for the asset or liability
that are not based on observable market data (unobservable
inputs).
Fair value measurements recognised in the statement of financial
position:
2012
--------- --------------- ----- ----------
Level 1 Level 2 Level 3 Total
GBP GBP GBP GBP
--------------------------- --------- ---------- ---------- ----------
Financial assets at FVTPL
Non-derivative financial
assets - 1,408,102 100,000 1,508,102
--------------------------- --------- ---------- ---------- ----------
There were no transfers between Level 1 and Level 2 during the
year. There was no movement in Level 3 during the year.
8. Events after the reporting period
In August IPSol Energy Limited raised a further round of funding
from external investors diluting IPSO's shareholding to 23%. In
September Axilica made the decision to reduce its activities to a
minimum and the Directors of IPSO believe that has reduced the
value of this investment to zero.
In early October IPSO Management sold its wholly owned
subsidiary, IPSO Capital for GBP25,000 in cash. On 10 October
trading in the Company's shares on AIM was suspended due to the
uncertain financial position of the Company and its inability to
publish these accounts by 31 October 2012. Since that date the
Board has agreed a fundraising of GBP360,000 and a disposal of its
operating subsidiary IPSO Management, both of which are both
subject to the approval of shareholders at the General Meeting of
the Company scheduled for 14 January 2013 and the approval of the
Court. Assuming the fundraising is approved then the creditors of
the Company and its subsidiaries will be paid and a further sum
will be paid into IPSO Management as working capital.
9. Availability of statutory accounts
The Group expects to publish its full statutory accounts today,
28 December 2012. Following publication, copies of the full
statutory accounts will be available from the registered office at
Suite 3 1(st) Floor, 1 Duchess Street, London W1W 6AN and will also
be available from the website at www.ipsoventures.com
10. Annual General Meeting
The Annual General Meeting will be held at the offices of DMH
Stallard LLP, 6 New Street Square, New Fetter Lane, London EC4A 3BF
on 21 January 2013 at 10.30am.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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