Registered number:
FOR THE YEAR ENDED 31 DECEMBER 2023
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INNVOTEC LIMITED
COMPANY INFORMATION
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INNVOTEC LIMITED
CONTENTS
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INNVOTEC LIMITED
GROUP STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
This Strategic Review covers a twelve-month accounting period ending 31st December 2023.
The Company has continued to work hard to diversify away from its core and historic activity of being an Alternative Investment Fund Manager (AIFM) and 2023 saw further progress in generating corporate finance revenues and further revenues generated from outside the UK. A trend that the Board is confident will continue.
Whilst the Company continued to focus on revenue stream diversification and generating meaningful revenues from outside the United Kingdom, much effort continued to be expended on Alternative Investment Fund Management and working with the assembled portfolio of emerging UK-based companies, especially those whose performance continued to be strong. Our managed funds have a handful of such "GEMS" and resources have been focused on ensuring those portfolio companies considered to possess the most potential develop under our "Rising Stars" programme so that they have a realistic prospect of becoming "GEMS" at a later date. During the year the Company raised £15,350 of new equity. The Company does not envisage raising further equity in the short term although should interesting opportunities arise, the Company reserves the right to do so. Trading revenue was £492,431, administrative costs totalled £1,128,116, and fair value movements totalled £347,305. The overall result being a loss of £1,004,816 in the year under review . The Company's shareholder base is truly global with strong and supportive stakeholders in the United Kingdom, North America and the Middle East. It is the Company's ongoing intention to use the relative attractiveness of such a global shareholder base not only for its own future growth but also to support the progress of the "GEMS" and "Rising Stars" within the managed portfolios and other companies where lnnvotec has a purely Corporate Finance mandate. The managed Funds themselves are valued at circa £20 million and continue to perform well, in both absolute and relative terms, and provide an integral part of the base upon which the Company is relaunching itself. There was no Board movement in the year under review.
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INNVOTEC LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
The Company continues to be reliant on a small core team led by two executive directors in the year under review, their on-going presence is considered essential to both the growth of the business and its underpinning. Internal effort is supplemented by third party support as and when required.
Only a handful of the portfolio companies are consistently cash-generative with the majority likely to remain, for the near term, dependent on on-going financial support from a combination of new and existing shareholders. The Company's ability to convert its increasing accrued fund management fees to cash depends on portfolio company "exits" and accompanying cash realization. For Corporate Finance clients, the Company's efforts are directed at assisting such clients with raising new investment which may run into tens of millions of dollars. There is no certainty of success and considerable time and effort may be expended with unfortunately nil or negligible return. The Company through one of its subsidiaries holds a significant amount of stock in a Nasdaq quoted company, the price per share of which fluctuates widely. There is no guarantee that when the Company seeks to sell its stock that the price per share will be considered acceptable. The Company itself continues to trade normally although operations remain largely conducted by remote working amongst the small but dedicated team, supplemented by knowledgeable third parties as and when necessary. Past investment by the Company in systems and processes means that the company continued to operate fully and effectively during the year under review.
Any investment firm is only as good as the performance of its Funds. With the Company continuing to diversify into transaction-led/ fee generative business and harnessing new revenue streams, its revenue is no longer dependent on management and other fees from its historic Venture Funds. For the Company to be successful in raising new funds and generating management fee income, it must continue to show that its Funds perform better than those of its peer group and the Company believes this to be the case although direct comparison information is hard to come by.
The Company believes that during its move to diversify revenue streams, exploring continents on which to do business and the fact that there is a small core team means that Key Performance Indicators provide no meaningful analysis. All Companies regulated by the FCA are required to abide by minimum thresholds in capital adequacy and liquidity and continuing to meet these are considered by the Board to be the only essential Key Performance Indicators.
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INNVOTEC LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
The Directors have acted in a way that they considered, in good faith, to be the most likely to promote the long term success of lnnvotec Limited for the benefit of its members and stakeholders as a whole, and in doing so, had regard, amongst other matters, to:
• the likely consequences of any decision, in the long term; on the interests of the Company's shareholders; • the interests of the Company's employees; • the need to foster the Company's business relationships with suppliers, customers and others; • the impact of the Company's operations on the community and the environment; • the desirability of the Company maintaining a reputation for high standards of business conduct • the need to act fairly as between members of the Company and its on-going good standing with its Regulator - the FCA. The Directors also took into account the views and interests of the wider set of stakeholders, including our portfolio companies and investors in our managed funds. IS172(1) (A) "The likely consequences of any decision in the long term" Considering the broadest range of stakeholder interests is an important and integral factor influencing the decisions made by the Board, although, in balancing these different perspectives, it isn't always possible to deliver all parties' desired outcomes. The Board will sometimes engage directly with certain stakeholders on certain issues, but the size and diversity of our stakeholder base means that stakeholder engagement often takes place infrequently, informally and at an operational level. The Board considers and discusses information received from a variety of sources to help it understand the impact of its decisions on its operations, and the interests and views of key stakeholders. It also reviews strategy, financial and operational performance, as well as information covering areas such as key risks and legal and regulatory compliance. This information is provided to the Board through reports provided at each Board meeting and through in-person presentations. As a result of these activities, the Board has an overview of the Company's engagement with stakeholders and other relevant factors to enable the Directors to comply with their legal duty under section 172 of the Companies Act 2006. The Directors have put in place, and will continue to put in place, new strategies and plans for their accompanying implementation so as to build a substantial business in the evolving financial services sector in which it operates. The Board is required by the Regulator to prepare an annual Business Plan and accompanying budget that maps the planned development of lnnvotec Limited over the next three years. This plan is shared with all the Company's relevant stakeholders. S172(1) (B) "The interests of the company's employees" The Company has a small core team. and the Directors recognise that lnnvotec Limited employees (including themselves) at all levels, are fundamental to its business and the delivery of its ambitions. The success of the business depends on attracting, retaining, and motivating all employees from the Board downwards. To ensure that the Company remains a responsible employer, with regards to pay and benefits and our health, safety and workplace environment, the Directors factor in the implications of decisions on employees and the wider workforce, where relevant and feasible. S172(1) (C) "The need to foster the company's business relationships with suppliers, customers and others" Delivering the Company's strategy requires strong mutually beneficial relationships with third-parties, shareholders, governments, portfolio companies and clients, both large and small. lnnvotec Limited seeks the promotion and application of certain general principles in such relationships. The ability to effectively promote
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INNVOTEC LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
these principles is an important factor in the decision to enter into or remain in such relationships and this, along with other standards, are described in the Company’s annual Business Plan. The Company continually addresses those with whom it does business and the Board engages with the underlying portfolio companies on these topics.
The Directors receive information updates from a variety of sources on a variety of topics that indicate and inform how stakeholders have been and will continue to be engaged. Information provided by the Company ranges from the Client-side of its Operations (with clients being provided with regular updates on their portfolios) to information and expertise provided to the portfolio companies, for example, business strategies, projects and investment or divestment proposals. S172(1) (D) "The impact of the company's operations on the community and the environment" Corporate citizenship and rigid application of ESG principles is inherent in the Company's strategic thinking, most notably its ambitions to promote a message of positive social, environmental and economic impact throughout its operations. As such, the Board receives information on these topics to both provide the basis for specific Board decisions (e.g. those related to strategic initiatives such as the Female Ventures Fund initiative, our Environmental, Social and Governance (ESG) focused investment strategy, investment or divestment proposals, business strategy reviews and sector entry considerations) and to provide ongoing overviews at operational level. Throughout 2023, the Board focused heavily on re-defining itself and its priorities which culminated in the updated annual Business Plan and in communicating these priorities to stakeholders. S172(1) (E) "The desirability of the company maintaining a reputation for high standards of business conduct" lnnvotec aims to meet the world's growing need for investing in exciting sectors that not only provide the potential for significant financial gains for our clients but also demands the investee companies in receipt of investment, to operate in ways that are economically, environmentally and socially responsible. The Board periodically reviews and approves clear frameworks, such as its General Business Principles, Code of Conduct, specific Ethics & Compliance manuals, and its Modern Slavery Statements, to ensure that high standards are maintained both within the business itself and in the business relationships it maintains. This, complemented by the ways in which the Board is informed and monitors compliance and governance with relevant regulatory standards, helps ensure decisions are taken, so that lnnvotec Limited always acts in a way that promotes high standards of business conduct and governance. S172(1) (F) "The need to act fairly as between members of the Company" After weighing up all relevant factors, the Directors consider which courses of action best enable delivery of the agreed strategies through the long-term, taking into consideration the impact on stakeholders. In doing so, the Directors aim to act fairly between the Company's members but are not required to balance the Company's interest with those of non-member stakeholders, and this can sometimes mean that certain stakeholder interests may not be fully aligned. Culture The Board recognises that it has an important role in assessing and monitoring that its desired values are embedded in the culture, attitude and behavior that all employees demonstrate, including in their activities and stakeholder relationships. The Board has established honesty, integrity and respect for people as lnnvotec Limited's core values. The General Business Principles, Code of Conduct, and Code of Ethics help everyone at lnnvotec Limited act in line with these values and comply with relevant laws and regulations. The application of the Commitment and Policy on Health, Safety, Security, Environment & Social Performance is designed to help protect the environment and all those with whom the Company comes into contact. At all times we also strive to maintain a diverse and inclusive culture. The Board considers regular meetings to be one of its principal tools to measure employee engagement, motivation, affiliation and commitment. These provide insights into employee views and have a consistently high contribution from the whole team. The Board also utilises this engagement to survey how outcomes are being
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INNVOTEC LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
leveraged to strengthen internal culture and values.
Stakeholder engagement (including employee engagement) The Board recognises the important role lnnvotec Limited has to play in society and is deeply committed to public collaboration and all-round stakeholder engagement. This commitment is at the heart of the Company's strategic ambitions·. The Board strongly believes that the Company will only succeed by working with clients, governments, its Regulator, business partners, shareholders and other stakeholders. Working together is critical, particularly at a time when society, including businesses, governments, and consumers, faces issues as complex and challenging as climate change, its effect on the global environment and geo-politics. The Company continues to build on its long track record of working with others, such as clients, industry and trade groups, universities, governments, NGOs and in some instances its competitors, through joint-venture operations and industry bodies. The Company believes that working together, sharing knowledge and experience with others, offers them greater insight into our business. The Company also appreciates its long-term relationships with clients and acknowledges the positive impact of ongoing engagement and dialogue. To support strengthening the Board's knowledge of the significant levels of engagement undertaken by the broader business, guidance on information, proposals or discussion items provided to the Board is constantly updated. Such guidance was aimed at further promoting and focusing consideration on the views, interests and concerns of the widest stakeholder-base and how these were considered by Management. Board minutes have also reflected key points on stakeholder considerations, where appropriate. The Board directly engaged with certain stakeholders - to gain a first-hand understanding of their views. Information on how the Directors have engaged with employees can be found in a prior section. Principal decisions The Board considers that no principal decisions were made in the year under review. Were any principal decisions to have been made, the Board would have explained how the Directors engaged with the different key stakeholder groups and how stakeholder interests were considered over the course of the decision-making process. To remain concise, the Board would have categorised its key stakeholders into five groups. Where appropriate, each group is considered to include both current and potential stakeholders: Shareholder Community Employees/Workforce/Pensioners (of which there are none) Regulators/Governments/NGOs The Communities in which we and our portfolio companies operate Clients Suppliers/Strategic Partners The Company defines principal decisions taken by the Board as those decisions in 2023 and to the date of this Report that are of a strategic nature and that are significant to any of our key stakeholder groups. How were stakeholders considered? The Company would have described how regard was given to likely long-term consequences of the Board's decisions, including how stakeholders were considered during the decision-making process. What was the outcome?
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INNVOTEC LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
The Company would have described how any accommodations / mitigations were made and, if any, how Directors would have considered different interests and the factors that have been taken into account when arriving at decisions.
This report was approved by the board and signed on its behalf..
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INNVOTEC LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
The directors present their report and the financial statements for the year ended 31 December 2023.
The directors are responsible for preparing the Group Strategic Report, the Directors' Report and the consolidated financial statements in accordance with applicable law and regulations.
In preparing these financial statements, the directors are required to:
∙select suitable accounting policies for the Group's financial statements and then apply them consistently;
∙make judgments and accounting estimates that are reasonable and prudent;
∙state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;
∙prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and the Group and to enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The loss for the year, after taxation, amounted to £1,004,816 (2022 - loss £375,131).
No dividends were declared or paid during the year.
The directors who served during the year were:
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INNVOTEC LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
The Group has not disclosed information in respect of greenhouse gas emissions, energy consumption and energy efficiency action as its energy consumption in the United Kingdom for the year is 40,000kWh or lower.
Disclosure of information to auditors Each of the persons who are directors at the time when this Directors' Report is approved has confirmed that: • so far as the director is aware, there is no relevant audit information of which the Company's auditors are unaware, and • the director has taken all the steps that ought to have been taken as a director in order to be aware of any relevant audit information and to establish that the Company's auditors are aware of that information. Auditors The auditors, Harris & Trotter LLP, will be proposed for reappointment in accordance with section 485 of the Companies Act 2006.
This report was approved by the board and signed on its behalf.
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INNVOTEC LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF INNVOTEC LIMITED
We have audited the financial statements of Innvotec Limited (the 'parent Company') and its subsidiaries (the 'Group') for the year ended 31 December 2023, which comprise the Consolidated Statement of Comprehensive Income, the Consolidated Balance Sheet, the Company Balance Sheet, the Consolidated Statement of Cash Flows, the Consolidated Statement of Changes in Equity, the Company Statement of Changes in Equity and the related notes, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice).
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditors' responsibilities for the audit of the financial statements section of our report. We are independent of the Group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the United Kingdom, including the Financial Reporting Council's Ethical Standard and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Group's or the parent Company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
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INNVOTEC LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF INNVOTEC LIMITED (CONTINUED)
The other information comprises the information included in the Annual Report other than the financial statements and our Auditors' Report thereon. The directors are responsible for the other information contained within the Annual Report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
In our opinion, based on the work undertaken in the course of the audit:
∙the information given in the Group Strategic Report and the Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
∙the Group Strategic Report and the Directors' Report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the Group and the parent Company and its environment obtained in the course of the audit, we have not identified material misstatements in the Group Strategic Report or the Directors' Report.
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INNVOTEC LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF INNVOTEC LIMITED (CONTINUED)
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an Auditors' Report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these Group financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:
The objectives of our audit are to identify and assess the risks of material misstatement of the financial statements due to fraud or error; to obtain sufficient appropriate audit evidence regarding the assessed risks of material misstatement due to fraud or error; and to respond appropriately to those risks. Owing to the inherent limitations of an audit, there is an unavoidable risk that material misstatements in the financial statements may not be detected, even though the audit is properly planned and performed in accordance with the ISAs (UK). In identifying and assessing risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, our procedures included the following: • We obtained an understanding of the legal and regulatory frameworks applicable to the Group and the industry in which it operates. We determined that the following laws and regulations were most significant: FRS 102 and the Companies Act 2006. • We obtained an understanding of how the Group is complying with those legal and regulatory frameworks by making enquiries of management. • We challenged assumptions and judgments made by management in its significant accounting estimates. We did not identify any key audit matters relating to irregularities, including fraud.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our Auditors' Report.
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INNVOTEC LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF INNVOTEC LIMITED (CONTINUED)
This report is made solely to the Company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an Auditors' Report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members, as a body, for our audit work, for this report, or for the opinions we have formed.
for and on behalf of
Chartered Accountants and Statutory Auditors
101 New Cavendish Street
1st Floor South
W1W 6XH
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INNVOTEC LIMITED
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2023
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INNVOTEC LIMITED
REGISTERED NUMBER: 02030086
CONSOLIDATED BALANCE SHEET
AS AT 31 DECEMBER 2023
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INNVOTEC LIMITED
REGISTERED NUMBER: 02030086
CONSOLIDATED BALANCE SHEET (CONTINUED)
AS AT 31 DECEMBER 2023
The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
The notes on pages 23 to 42 form part of these financial statements.
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INNVOTEC LIMITED
REGISTERED NUMBER: 02030086
COMPANY BALANCE SHEET
AS AT 31 DECEMBER 2023
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INNVOTEC LIMITED
REGISTERED NUMBER: 02030086
COMPANY BALANCE SHEET (CONTINUED)
AS AT 31 DECEMBER 2023
The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
The notes on pages 23 to 42 form part of these financial statements.
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INNVOTEC LIMITED
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
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INNVOTEC LIMITED
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
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INNVOTEC LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2023
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INNVOTEC LIMITED
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INNVOTEC LIMITED
CONSOLIDATED ANALYSIS OF NET DEBT
FOR THE YEAR ENDED 31 DECEMBER 2023
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INNVOTEC LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
Innvotec Limited is a private company limited by shares and incorporated in England and Wales under the Companies Act 2006. The address of the registered office is 101 New Cavendish Street, 1st Floor South, London W1W 6XH.
2.Accounting policies
The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006.
The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires Group management to exercise judgment in applying the Group's accounting policies (see note 3).
The Company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own Statement of Comprehensive Income in these financial statements.
The following principal accounting policies have been applied:
The consolidated financial statements present the results of the Company and its own subsidiaries ("the Group") as if they form a single entity. Intercompany transactions and balances between group companies are therefore eliminated in full.
The consolidated financial statements incorporate the results of business combinations using the purchase method. In the Balance Sheet, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations are included in the Consolidated Statement of Comprehensive Income from the date on which control is obtained. They are deconsolidated from the date control ceases. In accordance with the transitional exemption available in FRS 102, the Group has chosen not to retrospectively apply the standard to business combinations that occurred before the date of transition to FRS 102, being 01 October 2015.
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INNVOTEC LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
2.Accounting policies (continued)
The Group continues with its policy of diversification away from traditional fund management to Corporate Finance with strategic fund management.
To its core activity of being an Alternative Investment Fund Manager, the Group has added Corporate Finance and the Group's immediate focus is on generating transactional income for which it is well equipped through its international network of shareholders and third parties. The directors are confident that they are taking the neccessary steps in connection with the recovery of portfolio company monitoring and accrued management fees, a major percentage of which has been outstanding for some time. Ongoing and increased effort will be directed at their recovery but there remains considerable uncertainty over the timing of when these will be recovered given the age of these debts. Ultimate recovery can be impacted by the future performance of these investee companies. The directors continue to have a reasonable expectation that the Group has adequate resources to continue in operational existence for the forseeable future through its existing reserves, on-going support from its shareholders and increasing revenue. The Group therefore continues to adopt the going concern basis in preparing its financial statements.
Functional and presentation currency
Transactions and balances
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INNVOTEC LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
2.Accounting policies (continued)
Revenue is recognised when earned and to the extent that the company obtains the right to consideration in exchange for its performance under the contracts with the venture capital funds that it manages, its contracts to provide other management services to both its managed funds and the underlying portfolio companies and its contracts to provide corporate finance services. Revenue is measured at the fair value of the consideration received or receivable for such services. Revenue is generally recognised as contractual activity progresses so that for contracts for existing funds it reflects partial performance on the contractual obligations in the Profit and Loss account. For such contracts, the amount of revenue reflects the accrual of the right to consideration by reference to the value of work performed as at the financial year end.
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INNVOTEC LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
2.Accounting policies (continued)
All intangible assets are considered to have a finite useful life. If a reliable estimate of the useful life cannot be made, the useful life shall not exceed ten years.
Amortisation is provided on the following bases:
Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, on a reducing balance basis.
Depreciation is provided on the following basis:
The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss.
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INNVOTEC LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
2.Accounting policies (continued)
Provisions are measured as the best estimate of the amount required to settle the obligation, taking into account the related risks and uncertainties.
The Group has elected to apply the provisions of Section 11 “Basic Financial Instruments” of FRS 102 to all of its financial instruments.
The Group has elected to apply the recognition and measurement provisions of IFRS 9 Financial Instruments (as adopted by the UK Endorsement Board) with the disclosure requirements of Sections 11 and 12 and the other presentation requirements of FRS 102.
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INNVOTEC LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
2.Accounting policies (continued)
Financial instruments are recognised in the Group's Balance Sheet when the Group becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets
Basic financial assets, which include trade and other debtors, cash and bank balances, are initially measured at their transaction price (adjusted for transaction costs except in the initial measurement of financial assets that are subsequently measured at fair value through profit and loss) and are subsequently carried at their amortised cost using the effective interest method, less any provision for impairment, unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest.
Discounting is omitted where the effect of discounting is immaterial. The Group's cash and cash equivalents, trade and most other debtors due with the operating cycle fall into this category of financial instruments.
Other financial assets
Other financial assets, which includes investments in equity instruments which are not classified as subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the recognised transaction price. Such assets are subsequently measured at fair value with the changes in fair value being recognised in the profit or loss. Where other financial assets are not publicly traded, hence their fair value cannot be measured reliably, they are measured at cost less impairment.
Impairment of financial assets
At the end of each reporting period financial assets measured at amortised cost are assessed for objective evidence of impairment. If an asset is impaired the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
Financial assets are impaired when events, subsequent to their initial recognition, indicate the estimated future cash flows derived from the financial asset(s) have been adversely impacted. The impairment loss will be the difference between the current carrying amount and the present value of the future cash flows at the asset(s) original effective interest rate.
If there is a favourable change in relation to the events surrounding the impairment loss then the impairment can be reviewed for possible reversal. The reversal will not cause the current carrying amount to exceed the original carrying amount had the impairment not been recognised. The impairment reversal is recognised in the profit or loss.
Basic financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the Group after the deduction of all its liabilities.
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INNVOTEC LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
2.Accounting policies (continued)
Basic financial liabilities, which include trade and other creditors, bank loans, other loans and loans due to fellow group companies are initially measured at their transaction price (adjusting for transaction costs except in the initial measurement of financial liabilities that are subsequently measured at fair value through profit and loss). When this constitutes a financing transaction, whereby the debt instrument is measured at the present value of the future payments discounted at a market rate of interest, discounting is omitted where the effect of discounting is immaterial.
Debt instruments are subsequently carried at their amortised cost using the effective interest rate method.
Trade creditors are obligations to pay for goods and services that have been acquired in the ordinary course of business from suppliers. Trade creditors are classified as current liabilities if the payment is due within one year. If not, they represent non-current liabilities. Trade creditors are initially recognised at their transaction price and subsequently are measured at amortised cost using the effective interest method. Discounting is omitted where the effect of discounting is immaterial.
Other financial instruments
Derivatives, including forward exchange contracts, futures contracts and interest rate swaps, are not classified as basic financial instruments. These are initially recognised at fair value on the date the derivative contract is entered into, with costs being charged to the profit or loss. They are subsequently measured at fair value with changes in the profit or loss.
Debt instruments that do not meet the conditions as set out in FRS 102 paragraph 11.9 are subsequently measured at fair value through the profit or loss. This recognition and measurement would also apply to financial instruments where the performance is evaluated on a fair value basis as with a documented risk management or investment strategy.
Derecognition of financial instruments
Derecognition of financial assets
Financial assets are derecognised when their contractual right to future cash flow expire, or are settled, or when the Group transfers the asset and substantially all the risks and rewards of ownership to another party. If significant risks and rewards of ownership are retained after the transfer to another party, then the Group will continue to recognise the value of the portion of the risks and rewards retained.
Derecognition of financial liabilities
Financial liabilities are derecognised when the Group's contractual obligations expire or are discharged or cancelled.
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INNVOTEC LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
The whole of the turnover is attributable to financial services.
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INNVOTEC LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
Page 31
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INNVOTEC LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
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INNVOTEC LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
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INNVOTEC LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
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INNVOTEC LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
12.Intangible assets (continued)
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INNVOTEC LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
Page 36
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INNVOTEC LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
13.Tangible fixed assets (continued)
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INNVOTEC LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
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INNVOTEC LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
Page 39
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INNVOTEC LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
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INNVOTEC LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
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INNVOTEC LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
During the year, the Company issued 1,535,018 ordinary shares with a nominal value of £0.01 at par for consideration of £15,350.
Profit and loss account
The Group operates a defined contributions pension scheme. The assets of the scheme are held separately from those of the Group in an independently administered fund. The pension cost charge represents contributions payable by the Group to the fund and amounted to £3,352 (2022 - £4,612) . Contributions totalling £1,460 (2022 - £948) were payable to the fund at the balance sheet date and are included in creditors.
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