Preliminary Results 2009

24th Jul 2009 07:00



PRELIMINARY RESULTS 2009

Ipso Ventures plc (AIM: IPS) ("IPSO" or the "Company"), the demand led technology commercialisation business, is pleased to announce its unaudited preliminary results for the year ended 30 April 2009.

Highlights:

	IPSO model re-engineered to focus on demand led technology commercialisation
	Value added to portfolio companies:
	Therakind - external funding at 61% uplift in value Medermica - pH measurement patent filed Axilica - product launched
	Second Loughborough company created, Polyfect Solutions
	Acquired Cambridge Meditech

Simon Hunt, Chairman of IPSO, said: "This has been a defining year for IPSO, as we re-engineered our model to focus on demand led technology commercialisation. Early indicators show that this model will be highly productive and create significant opportunities. We anticipate raising further funds in due course to enable us to build on our strategy.

"Our portfolio companies are performing well and we are confident of a successful exit from one of these businesses within the next year."

Further information, please contact:

IPSO Ventures plc Simon Hunt, Executive Chairman Nick Rodgers, Chief Executive Officer	Tel: 020 7921 2990  [email protected] [email protected] www.ipsoventures.com
Ambrian Partners Limited Samantha Harrison	Tel: 020 7634 4712 [email protected]
Old Park Lane Capital plc Michael Parnes	Tel: 020 7493 8188  [email protected]
Rawlings Financial PR Limited Catriona Valentine	Tel: 01653 618 016 [email protected] www.rawlingsfinancial.co.uk

Company description:

IPSO creates commercial value from technology and its business model is entirely demand driven. It works closely with its industrial collaborators to identify the demand for new, innovative technologies and then, through its strong relationships with research institutions, sources technologies which could meet those needs. Much of this technology requires considerable further work by IPSO before it can be sold to industry as a developed product. IPSO creates businesses and provides expertise, strategic direction, human and seed capital, as well as corporate finance advice. 

For industrial collaborators, IPSO provides a mechanism to identify and develop technologies which could be of significant value to their businesses, and removes the risk to them of acquiring raw, unproven and undeveloped technology. 

For research institutions, IPSO provides greater certainty that their technology will find commercial success.

CHAIRMAN AND CHIEF EXECUTIVE'S REVIEW

This has been a productive year for IPSO, as our first investments moved closer to exit and we refocused our model on demand driven commercialisation.

New model

IPSO's new model is to work directly with industrial collaborators to identify unfulfilled technology needs which, once identified, can then be sourced through our strong relationships with universities and other research institutions and developed into viable commercial opportunities.

We have met a number of the UK's largest companies over the past 12 months, developing a clear understanding of their future product plans and new technology requirements. These discussions are proving very useful and have already yielded a number of interesting opportunities.

On the technology sourcing side, our relationship with Loughborough University is working well and we continue to unearth commercially relevant technologies from within the university. We have made further progress in the development of our relationships with other universities on an informal basis, to broaden our knowledge and awareness of developing IP and technologies which could provide a solution in areas where we have identified demand.

Investments

In addition to the significant amount of hands on management, human capital and administrative support we have given our portfolio companies to help them create value, we have invested a further £762,000 during the year.

An additional £250,000 was invested, as planned, in Axilica Limited, our first company from Loughborough. Axilica has a novel software product, FalconML that accelerates the specification and design of electronic systems. Axilica launched the product in late 2008 after successful beta testing with a major defence company. It is actively developing customer endorsements for its product to maximise value in preparation for IPSO's planned exit. Lachesis, the university challenge fund at Loughborough, invested £107,000 alongside IPSO.

In November 2008, we acquired the whole of the issued share capital of Cambridge Meditech Limited, a company with a novel technology that detects infection in wounds. This patent-protected technology will enable the development of a range of products for the healthcare market. The total cost of the acquisition and further investment in patents for Cambridge Meditech this year was £97,000. It is IPSO's intention to combine this business with Medermica Limited when appropriate.

Medermica Limited, our joint venture with Imperial Innovations plc, which is developing wound management and other diagnostic and measurement technologies, received a further £135,000 in the period under review. Just after the year end, the company filed a patent application relating to a novel technology for the measurement of pH. This innovative pH measuring device works with ultra small volumes of liquid and is cheap, accurate, rapid and disposable.

In July 2008, we established our second Loughborough company, Polyfect Solutions Limited. Polyfect Solution's technology enables low cost, homogeneous dispersion of functional fillers into thermoplastic polymers without the use of chemical compatibilisers. This achieves cost savings and quality improvements over existing industrial methods. The company has established a demonstration facility and is gaining good customer interest. IPSO invested £250,000 with a further £107,000 provided by Lachesis.

Our paediatric healthcare business, Therakind Limited, secured a further £350,000 of funding from third party investors in April 2009 at a price that increased the value of its original investment by 61%. Therakind continues to generate revenues but, more importantly, in July 2009 it secured European regulatory approval to commence the final stage of development for its first paediatric drug. A contract was also signed with a pharmaceutical manufacturer during the year to develop a second drug for the treatment of pain.

Wildkey Limited (trading as WildKnowledge) provides a software platform for a suite of applications which enable users of handheld devices to receive or create information whilst mobile. The principal market is in education but there are also applications in other areas such as healthcare. In May 2008, IPSO invested an additional £30,000 alongside some of the existing investors. Since the year end, WildKnowledge has completed another fundraising which IPSO did not participate in.

Financial and operational review

Changes in fair value of investments

We recorded an increase of £263,000 in the fair value of our investment in Therakind after securing third party investment at an uplift to our original investment cost. This is in accordance with our accounting policies.

Investment activities

Investments during the year totalled £762,000 plus costs of £4,000. Of this, £232,000 was invested in Medermica and Cambridge Meditech which are treated as subsidiaries on consolidation and, therefore, are excluded from the investments total of £1,453,000 shown in the consolidated balance sheet.

Operating costs

Operating costs were reduced to £942,000 this year, compared with £1,003,000 in 2008 through reductions in staff, property and other overhead costs. Research and development expenses for Medermica Limited, which is currently a majority-owned subsidiary, totalled £206,000 compared with £274,000 in 2008 with the deferral of some costs into next year.

Cash

At the year end, the Group had cash and short term investments totalling £1,173,000.

Outlook

In the year under review, we sought to control our costs whilst continuing making investments and developing the value of our portfolio. Our re-engineered model has been very favourably received by our industrial collaborators and the research institutions. We are confident that IPSO will begin to enjoy real benefits from this strategy in the current financial year.

We are currently working on the formation of a new energy-related business to capitalise on a clear demand-led opportunity which IPSO has identified. It is pleasing to note that new technologies continue to have real value, despite difficult economic conditions, particularly where they can deliver cost reduction and efficiency benefits.

In order to progress the business over the next few years and continue to develop and expand our portfolio, we will require further funds which will come from raising additional equity capital, revenue generation and sales of investments or a combination of these sources. The Directors are confident that further funds can be raised but, in the event that this is not possible, then the Board has devised a plan which will allow the business to operate successfully on a reduced level.

We are grateful for the support of our colleagues and our collaborators and we look forward to further progress in the current year.

Simon Hunt, Executive Chairman

Nick Rodgers, Chief Executive

24 July 2009

CONSOLIDATED INCOME STATEMENT (UNAUDITED)

For the year ended 30 April 2009

		2009	2008
	Note	£	£
Continuing operations
Revenue		27,374	3,225
Change in fair value of investments		262,663	-
Administrative expenses
- exceptional aborted acquisition costs		-	(109,408)
- other administrative expenses		(942,149)	(1,002,720)
		(942,149)	(1,112,128)
Research and development expenses		(206,500)	(274,000)
Operating loss		(858,612)	(1,382,903)
Investment revenues from cash and cash equivalents		85,516	200,358
Loss before tax		(773,096)	(1,182,545)
Taxation		5,405	8,806
Loss for the year attributable to equity holders of the parent		(767,691)	(1,173,739)
Loss per share
Basic and diluted	4	(6.1)p	(9.4)p

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (UNAUDITED)

For the year ended 30 April 2009

	Share Capital	Own Shares	Share Premium	Share Option Reserve	Other Reserve	Retained Losses	Total	Minority Interest	Total
	£	£	£	£	£	£	£	£	£
At 30 April 2007	625,647	-	4,941,281	13,676	(175,292)	(930,935)	4,474,377	-	4,474,377
Issue of share capital	2,235	-	37,765	-	-	-	40,000	-	40,000
Own shares held by Employee Benefit Trust	-	(40,000)	-	-	-	-	(40,000)	-	(40,000)
Consolidated loss for the year	-	-	-	-	-	(1,173,739)	(1,173,739)	-	(1,173,739)
Employee share option charge	-	-	-	34,210	-	-	34,210	-	34,210
At 30 April 2008	627,882	(40,000)	4,979,046	47,886	(175,292)	(2,104,674)	3,334,848	-	3,334,848
Issue of share capital	8,461	-	101,539	-	-	-	110,000	-	110,000
Own shares held by Employee Benefit Trust	-	(60,000)	-	-	-	-	(60,000)	-	(60,000)
Consolidated loss for the year	-	-	-	-	-	(767,691)	(767,691)	-	(767,691)
Dilution of investment in subsidiary	-	-	-	-	-	-	-	332	332
Employee share option charge	-	-	-	25,059	-	-	25,059	-	25,059
At 30 April 2009	636,343	(100,000)	5,080,585	72,945	(175,292)	(2,872,365)	2,642,216	332	2,642,548

CONSOLIDATED BALANCE SHEET (UNAUDITED) 

At 30 April 2009

		2009	2008
	Note	£	£
Non current assets
Intangible assets		88,481	-
Property, plant and equipment		9,410	9,121
Investments	5	1,453,124	681,027
		1,551,015	690,148
Current assets
Trade and other receivables		78,567	137,984
Cash and cash equivalents		1,172,530	2,677,140
		1,251,097	2,815,124
Total assets		2,802,112	3,505,272
Current liabilities
Trade and other payables		(158,913)	(170,340)
Net current assets		1,092,184	2,644,784
Non current liabilities
Deferred tax liabilities		(651)	(84)
Total liabilities		(159,564)	(170,424)
Net assets		2,642,548	3,334,848
Equity
Share capital		636,343	627,882
Share premium		5,080,585	4,979,046
Own shares		(100,000)	(40,000)
Share option reserves		72,945	47,886
Other reserve		(175,292)	(175,292)
Retained losses		(2,872,365)	(2,104,674)
Equity attributable to equity holders of the parent		2,642,216	3,334,848
Minority interest		332	-
Total equity		2,642,548	3,334,848

CONSOLIDATED CASH FLOW STATEMENT (UNAUDITED)

For the year ended 30 April 2009

		2009	2008
		£	£
Net cash from operating activities		(1,035,679)	(1,262,670)
Investing activities
Interest received		85,516	200,358
Purchases of property, plant and equipment		(6,864)	(2,744)
Payments to acquire subsidiary net of cash acquired		(38,481)	-
Payments to acquire investments		(509,434)	(505,445)
Net cash used in investing activities		(469,263)	(307,831)
Financing activities
Proceeds on issue of shares		332	-
Net cash from financing activities		332	-
Net decrease in cash and cash equivalents		(1,504,610)	(1,570,501)
Cash and cash equivalents at beginning of year		2,677,140	4,247,641
Cash and cash equivalents at end of year		1,172,530	2,677,140

NOTES TO THE FINANCIAL INFORMATION

1. Basis of preparation

Whilst the financial information included in this preliminary 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 Company expects to publish full financial statements that comply with IFRSs in July 2009.

The financial information set out in the announcement does not constitute the Company's statutory accounts for the years ended 30 April 2009 or 2008. The financial information for the year ended 30 April 2008 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 was unqualified, did not draw attention to any matters by way of emphasis and did not contain a statement under s237(2) or (3) Companies Act 1985. The audit of the statutory accounts for the year ended 30 April 2009 is not yet complete. These accounts will be finalised on the basis of the financial information presented by the Directors in this preliminary announcement and will be delivered to the Registrar of Companies following the Company's annual general meeting.

2. Significant accounting policies

The announcement is prepared on the basis of the accounting policies as stated in the previous year's financial statements of the Group.

The principal accounting policies adopted are set out below:

Basis of accounting

The financial statements have been prepared in accordance with the recognition and measurement criteria of IFRS as adopted by the European Union.

The financial statements have been prepared on the historical cost basis, except for financial instruments. The principal accounting policies adopted are set out below.

Going Concern

In determining the appropriate basis of preparation of the financial information, 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 £1,173,000 as at 30 April 2009 and incurred a loss of £768,000 for the 12 months then ended. The Directors have prepared a detailed cash flow forecast ("the forecast") which is based on a number of assumptions including the requirement to secure additional funding, the generation of revenue and the realisation of existing investments.

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.

Additionally, given the currently uncertain market conditions, the Directors have prepared a contingency plan in the event that some, or all, of the assumptions above do not materialise within a certain timeframe. This contingency plan includes a significant reduction in staff and other costs sufficient to allow the business to operate for the foreseeable future. 

Accordingly, the Directors have a reasonable expectation that the Group will continue to operate for the foreseeable future, even if certain assumptions prove to be unattainable. 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 balance sheet date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the balance sheet 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.

Minority interests in the net assets of consolidated subsidiaries are identified separately from the Group's equity therein. Minority interests consist of the amount of those interests at the date of the original business combination (see below) and the minority's share of changes in equity since the date of the combination. Losses applicable to the minority in excess of the minority's interest in the subsidiary's equity are allocated against the interests of the Group except to the extent that the minority has a binding obligation and is able to make an additional investment to cover the losses.

The results of subsidiaries acquired or disposed of during the year are included in the consolidated income statement 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 minority shareholders in the acquiree is initially measured at the minority'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'.

Other investments

Investments over which the Group does not exercise control or significant influence are recognised at fair value.

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.

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

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases. 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 Income statement 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 balance sheet date.

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 balance sheet 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 balance sheet date 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 Income statement, 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	3 years
Fixtures and equipment	5 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 income statement 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 balance sheet date, 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 balance sheet 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' (FVTPL), 'available-for-sale' (AFS) financial assets 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; or
	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 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 shortߛterm 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 balance sheet date. 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 shares classified as available for sale (AFS), a significant or prolonged decline in the fair value of the security below its cost is considered to be objective evidence of impairment. For all other financial assets, including redeemable notes classified as AFS and finance lease receivables, objective evidence of impairment could include:

	significant financial difficulty of the issuer or counterparty; or
	default or delinquency in interest or principal payments; or
	it becoming probable that the borrower will enter bankruptcy or financial re-organisation.

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.

With the exception of AFS equity instruments, if, in a subsequent period, the amount of the impairment loss decreases and the decrease can 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. 

In respect of AFS equity securities, impairment losses previously recognised through profit or loss are not reversed through profit or loss. Any increase in fair value subsequent to an impairment loss is recognised directly in equity.

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 either financial liabilities 'at FVTPL' or '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 the balance sheet date, 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. Business segments

	Core business	Subsidiary business	Consolidated
	2009	2009	2009
	£	£	£
Income statement
Revenue	27,374	-	27,374
Change in fair value of investments	262,663	-	262,663
Administrative expenses	(879,769)	(62,380)	(942,149)
Research and development expenses	-	(206,500)	(206,500)
Operating loss	(589,732)	(268,880)	(858,612)
Finance income - interest receivable	85,409	107	85,516
Loss before taxation	(504,323)	(268,773)	(773,096)
Tax	(567)	5,972	5,405
Loss attributable to equity holders	(504,890)	(262,801)	(767,691)
Balance sheet
Assets	2,709,948	92,164	2,802,112
Liabilities	(72,370)	(87,194)	(159,564)
Net assets	2,637,578	4,970	2,642,548
Other segment items
Capital expenditure	6,864	-	6,864
Depreciation	6,575	-	6,575
	Core business	Subsidiary business	Consolidated
	2008	2008	2008
	£	£	£
Income statement
Revenue	3,225	-	3,225
Administrative expenses	(1,072,930)	(39,198)	(1,112,128)
- exceptional aborted acquisition costs	(109,408)	-	(109,408)
- other administrative expenses	(963,522)	(39,198)	(1,002,720)
Research and development expenses	-	(274,000)	(274,000)
Operating loss	(1,069,705)	(313,198)	(1,382,903)
Finance income - interest receivable	200,264	94	200,358
Loss before taxation	(869,441)	(313,104)	(1,182,545)
Tax	406	8,400	8,806
Loss attributable to equity holders	(869,035)	(304,704)	(1,173,739)
Balance sheet
Assets	3,487,818	17,454	3,505,272
Liabilities	(105,216)	(65,208)	(170,424)
Net assets	3,382,602	(47,754)	3,334,848
Other segment items
Capital expenditure	2,744	-	2,744
Depreciation	5,769	-	5,769

4. Loss per share

The basic and diluted loss per ordinary share is based on losses attributable to ordinary shareholders for the year of £767,691 (2008: £1,173,739). The basic loss per share is based on the weighted average number of ordinary shares of 12,636,576 in issue during the year (2008: 12,512,932).

Given that the group incurred a loss in the current year and the preceding year, no adjustment is required to the weighted average number of shares in order to calculate diluted earnings per share. Therefore, basis and diluted earnings per share are the same.

5. Investments

The Group held the following equity investments in unquoted companies:

	Available-for-sale investments (fair value) 2009
	£
At 1 May 2007	175,582
Investments during the year	505,445
At 1 May 2008	681,027
Investments during the year	534,258
Change in fair value in the year	262,663
Reclassifications	(24,824)
At 30 April 2009	1,453,124

6. Post balance sheet events

There were no significant post balance sheet events.

7. Availability of statutory accounts

Copies of the full statutory accounts will be available from the registered office at Elizabeth House, 39 York Road, London SE1 7NQ from Monday 10 August 2009 and will also be available from the website at www.ipsoventures.com.

8. Annual General Meeting

The Annual General Meeting will be held at the registered offices of IPSO Ventures at Elizabeth House, 39 York Road, London SE1 7NQ on 10 September 2009 at 12 noon.

ENDFR UOONRKURBUAR

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Related Shares:

PPG.L