Fusion IP plc  
Annual Report and Accounts 2011
www.fusionip.co.uk
Turning world class research into business Fusion IP plc Annual Report and Accounts 2011
World-class university research needs business 
expertise and funding to turn it into profitable 
commercial applications. 
Working with our two university partners in Sheffield 
and Cardiff, we use our exclusive agreements to bridge 
the gap between laboratory-based innovation and 
commercial success.
By providing early-stage business acumen and capital  
we continue to build a portfolio of fast-growing, 
successful companies to deliver dividends or capital 
returns for our shareholders.
Contents
Highlights 1
Chairman’s Statement 2
Chief Executive’s Statement 3
Financial Review 7
Board of Directors 9
Directors’ Report 10
Report on the Directors’ Remuneration 12
Corporate Governance 15
Independent Auditors’ Report 17
Consolidated Statement of Comprehensive Income 18
Consolidated Statement of Financial Position 19
Consolidated Statement of Cash Flows 20
Consolidated Statement of Changes in Equity 21
Notes to the Consolidated Financial Statements 22
Company Balance Sheet 41
Notes to the Company Financial Statements 42
Notice of Annual General Meeting 44
Form of Proxy 47
Company Information and Advisors 49 1
Fusion IP plc Annual Report and Accounts 2011
Business and portfolio highlights:
•	 Revenue & portfolio return increased by 35% to £5.9m (2010: £4.4m)
•	 Profit, excluding subsidiary spin-out costs and amortisation, increased by 68%  
to £4.2m (2010: £2.5m)
•	 Earnings before Interest, Tax, Depreciation and Amortisation (EBITDA) increased  
by 650% to £3.0m (2010: £0.4m)
•	 Profit before taxation of £1.0m (2010: £1.6m loss)
•	 Cash balances of £2.0m (2010: £4.6m)
•	 Co-investment agreement with IP Group implemented on three occasions
•	 One new portfolio company started and funded in the year (Perlemax)
•	 Six portfolio companies in trading phase of growth, three of which are trading profitably
•	 Portfolio company Simcyp increased turnover by 25% to £5.9m (2010: £4.7m) and  
profit by 35% to £2.3m (2010: £1.7m)
•	 Portfolio company Magnomatics increased turnover by 62% to £1.3m (2010: £0.8m) 
•	 £1.6m invested in the portfolio companies by Fusion (2010: £1.8m) 
•	 £6.1m invested in the portfolio companies by third party investors (2010: £6.9m)
•	 15 funding rounds completed by portfolio companies (2010: 20)
Post year end highlights:
•	 Diurnal, our Cardiff-based drug development company, completed a £335k funding 
round in August that will enable its lead product, Chronocort
®
, to complete the profile 
stage of its Phase I clinical trials
•	 Mesuro, our Cardiff-based Radio Frequency (RF) technology company, raised a further 
£440k in August to support its growing sales activity
Recognition:
Following on from last year’s awards for Magnomatics and Simcyp, our portfolio companies 
continue to be recognised for their achievements: 
•	 In December 2010 MedaPhor, our Cardiff based ultrasound simulation company, won 
the MediWales Industry Innovation Award for its new ScanTrainer ultrasound simulator 
that is revolutionising how medical trainees acquire the necessary obstetrics and 
gynaecology skills needed to safely examine patients; and
•	 In October 2011 Simcyp won Insider’s ‘Growth 100 Rising Star Award’ for the UK’s  
most promising business.
Highlights 2
Fusion IP plc Annual Report and Accounts 2011
Chairman’s Statement
I am delighted to present our results for the year ended  
31 July 2011, a year during which our revenue and 
portfolio returns grew by 35% to £5.9m (2010: £4.4m) 
and profit, excluding subsidiary spin-out costs and 
amortisation, increased by 68% to £4.2m (2010: £2.5m). 
In turn our EBITDA during the year increased by 650% to 
£3.0m (2010: £0.4m).
The Board and Executive team have concentrated on 
progressing the development of our portfolio of companies 
and as a result, our portfolio has continued to mature and 
grow in value. With more than 20 companies in the portfolio, 
our strategy is to focus on the companies that have the 
greatest potential long-term value and the companies that 
are rising stars in the early stages of trading. Our aim is to 
ensure all these businesses have sufficient management and 
funding support from Fusion, such that they have long term 
operating security as well as the necessary drive and energy to 
ensure they keep growing in the future. This focus on success 
inevitably means there will be wastage in the portfolio and we 
are fully prepared to stop supporting companies that are not 
growing in value. To this end, one company ceased trading 
during the period.
Corporately, we continue to maintain a tight focus on our 
central overhead, whilst developing revenue opportunities 
through licensing activities. This means that the business is 
well positioned to maximise the enormous potential value in 
our portfolio companies and university research pipelines.
Our model
Research is the driver of innovation, wealth creation and 
economic prosperity. In the right environment, with the right 
management, research can be transformed into commercial 
innovation that generates significant value for not just our 
shareholders, but also the country as a whole.
Our exclusive IP commercialisation agreements with the 
University of Sheffield and Cardiff University give us long-
term, exclusive rights over the commercialisation of the 
world-class research being generated by these two leading 
universities. This research is worth over £200m per annum 
and we use our privileged access to this research to identify 
innovative technologies that have the potential to be high 
value businesses. To diminish the inherent risks associated 
with these early stage companies and technologies we apply 
strict investment criteria, combined with our technological/
entrepreneurial expertise, management experience and fund-
raising capability through all stages of their lifecycle.
Investment Partners
During the year, we have continued to develop our 
relationships with both IP Group and Finance Wales and these 
relationships continue to bear fruit. During the year IP Group 
invested in three portfolio companies and Finance Wales 
invested in four.
People
The sad and untimely death of Professor Tony Atkinson in 
June was a shock to the Group. Tony was a member of the 
Board since the Group’s listing in 2005 and was both a 
reliable source of advice and a good friend to all the Board. 
He will be greatly missed. 
In April our Finance Director, Tony Gardiner, left the Group to 
pursue other business interests. Tony has been a valuable and 
significant contributor to the Group since he joined in 2007 
and we wish him every success with his new company.
Outlook 
Our priority in the year ahead is to continue to focus on the 
growth of the portfolio and maximise value realisation, through 
trade sales or flotations, as appropriate. The Group anticipates 
it will need to generate additional funds during the year, and 
believes it can achieve this either through trade sale exits 
or dividends. However the directors continue to review all 
financing and resourcing options.
The value of our portfolio is growing and we anticipate 
we will be able to demonstrate this further in the current 
financial year, and remain focused on achieving our first cash 
realisation. We look forward with confidence.
Finally, I would like to thank all our stakeholders, including our 
university partners, and particularly our employees at Group 
and portfolio level, of which there are now nearly 250, for their 
unstinting efforts and support in the past year. 
Doug Liversidge CBE
Chairman 3
Fusion IP plc Annual Report and Accounts 2011
This has been another excellent year for the Group and we 
now have more than 20 companies in our portfolio, employing 
nearly 250 staff (including executive and non-executive 
Directors); a well-balanced asset base of engineering, software 
and medical businesses at varying stages of maturity, growth 
and profitability. 
Our leading portfolio companies
The six leading companies in the portfolio are: 
Simcyp – software/science
Simcyp is a profitable Sheffield based company, which provides 
modelling and simulation technology and consultancy services 
to the global pharmaceutical industry. The company continued 
to grow strongly in 2010/11. The company expects to exceed 
its forecasts for the seventh year in a row, with unaudited 
numbers suggesting a 25% increase in turnover (2010: £4.7m) 
and 35% increase in profit before tax (2010 £1.7m). Retaining 
considerable cash holdings, the company is expected to show 
strong growth in the current year and beyond. 
Simcyp tools allow pharmaceutical and biotechnology 
companies to evaluate their medicines in the safety of a 
computer, prior to studies in humans. The Simcyp Simulator 
uses data which is routinely generated in drug discovery and 
development to model and simulate how a drug is absorbed, 
distributed, metabolised and excreted by the body, as well 
as providing information on its effects and any potential 
drug-drug interactions. Simulations, carried in virtual human 
populations, capture real-life variability, which allows clients 
to prioritise and optimise the design of clinical studies. This 
saves significant time and money in drug development. 
Simcyp also develops and licenses virtual animal models 
that can help to reduce, refine or even replace testing in 
laboratory animals.
Simcyp currently holds contracts with 16 of the 20 largest 
pharmaceutical companies worldwide, including the entire top 
ten, and during the year opened an office in Boston, USA to 
keep pace with its global expansion.
Fusion has a 20.8% (undiluted) shareholding in Simcyp.
Magnomatics - engineering
Magnomatics, Fusion’s Sheffield-based electric motor 
company, continues to grow strongly and has won prestigious 
new clients in the automotive, aerospace and defence sectors. 
Product development continues to advance on plan and 
turnover, on a like for like basis, is expected to grow by 100% 
during the 12 month period ending December 2011 (year-
ended July 2010; £0.8m).
Magnomatics develops high torque magnetic transmissions 
and ultra-compact magnetically geared motors and 
generators. The technology uses magnetic fields with high-
powered permanent magnets to replace the meshed teeth 
that normally transmit mechanical power in gear systems. The 
magnetic fields eliminate the friction of contacting parts. As 
such the technology requires little to no maintenance. There 
is no need for oil lubrication and gears are not “stripped” 
through misuse. Motion is transferred through air gaps 
between rings allowing for a quieter and smoother operation. 
The lack of friction decreases the need for cooling systems, 
while the technology allows for more compact packaging. The 
product offers dramatic new engineering possibilities ranging 
from efficient, gearless generators for wind turbines, to lighter 
and more compact motors for hybrid vehicles.
Magnomatics has signed various large development contracts 
with the Ministry of Defence so that defence equipment 
suppliers can assess the potential for its use within propulsion 
systems for future naval vessels. Also in this past year, 
Magnomatics was part of a consortium that won a £3m 
Department of Transport low carbon grant to develop an urban 
lightweight refuse collection vehicle that will halve carbon 
emissions of current best-in-class Refuse Collection Vehicles. 
In February 2011, Magnomatics announced its involvement 
in key research initiatives, with total budgets of over $25m, 
from which Magnomatics expects to earn £1.4m in the current 
period. Other research projects include two new EU initiatives 
in which Magnomatics will be working together with leading 
engineering companies Siemens AG, Volkswagen and Fiat. 
The focus of the projects is on the development of eco-
friendly, energy efficient vehicles including new concepts for 
urban driving and electric vehicles. 
In February 2011, Magnomatics appointed Dr. Michael 
Lloyd as Chairman. Dr. Lloyd was the former president of 
Rolls Royce Gas Turbine Operations and brings experience 
in key markets for Magnomatics including the defence, 
nuclear and aerospace sectors. He is a Fellow of the Institute 
of Engineering and Technology, Fellow of the Institute of 
Mechanical Engineers, Fellow of the Royal Aeronautical 
Society, and Fellow of the Royal Academy of Engineers. 
Fusion has a 48% (undiluted) shareholding in Magnomatics.
Chief Executive’s Statement 4
Fusion IP plc Annual Report and Accounts 2011
Chief Executive’s Statement continued
Our leading portfolio companies continued
Phase Focus – software/engineering
Phase Focus, the Sheffield-based microscopy company, 
raised £0.9m at the end of July 2011 to expand its operations, 
grow sales and conclude commercial deals with its 
commercial partners. As a result of this investment Fusion’s 
stake reduced to 49.1% on an undiluted basis. This company 
is now held as an investment and is deconsolidated from the 
Group’s results going forwards.
The Phase Focus Virtual Lens eliminates the need for high-
quality lenses in microscopes by transferring the image 
production to a computer programme. This disruptive 
innovation is expected to revolutionise microscopy. The 
technology enables higher performance at a lower cost, 
eliminating the need for high quality lenses that have 
traditionally accounted for a substantial portion of the expense 
of high performance microscopes. It also generates new 
information that enables a range of novel applications. The 
Virtial Lens generates images from the diffraction pattern 
created when a specimen is illuminated. Potentially applicable 
to the full electromagnetic spectrum as well as to electron 
and other particle waves, the Virtual Lens has demonstrated 
significant interest in a broad range of applications from 
cellular assays and semiconductor and engineering metrology 
to X-ray and electron microscopy. 
The Company’s OEM software licensing model enables 
it to operate with relatively low overheads and low capital 
expenditure, which should translate into high margins. The 
Company is also now revenue generating, with commercial 
relationships with OEMs in several multi-billion dollar 
markets, including the $8bn contact lens market, the $2.1bn 
semiconductor metrology market and the $1.6bn electron 
microscopy market.
Fusion has a 49% (undiluted) shareholding in Phase Focus.
Seren Photonics – engineering
Based in Sheffield, Seren Photonics is commercialising 
its revolutionary highly efficient light-emitting diode (LED) 
technology that brings together nanoscience and fundamental 
physics to increase the efficiency by which a light-emitting 
diode (LED) converts energy into light. It increases light 
output creation from an existing LED wafer leading to either 
significantly brighter illumination or greatly reduced power 
consumption in the packaged device. 
In 2010 the LED market was valued at over $5bn and is 
forecast to increase to more than $12bn by 2013. Applications 
for Seren’s LED technology include backlighting for laptop 
computers, smartphones, flatscreen televisions, signs and 
displays and domestic and architectural lighting. 
Its seed funding round enabled the Company to build its first 
pilot scale high-brightness (HB) LEDs for showcasing to larger 
HB LED companies and the company is in negotiations with a 
number of global LED manufacturing companies.
Fusion IP holds a 48% (undiluted) stake in Seren. 
Diurnal – drug development
Diurnal, our Cardiff-based drug development company, 
completed a £335k funding round in August 2011 that will 
enable its lead product, Chronocort®, to continue its Phase 
I clinical trials. This follows on from the £0.6m raised in 
November 2009 and the £0.4m raised in November 2010. 
The company is due to complete its extended Phase 1 trials 
in early 2012, before embarking on Phase 2 trials prior to 
sale or licensing.
Chronocort is Diurnal’s lead product and it delivers 
hydrocortisone in a manner that mimics the body’s normal 
circadian rhythm (the body’s natural 24 hour hormone 
cycle) to improve the drug’s efficacy and reduce adverse 
side effects. This therapeutic approach has the potential 
to help patients with deficiencies in the steroid hormone 
cortisol namely adrenal insufficiency and congenital adrenal 
hyperplasia. These deficiencies require life-long treatment and 
Diurnal’s novel approach to drug delivery has the potential to 
drastically improve patients’ lives.
Chronocort has significant potential as the first circadian 
based formulation to launch in the market for adrenal 
insufficiency (including congenital adrenal hyperplasia), 
which is believed to be a market that exceeds $200m. 
Chronocort has already received orphan drug designation in 
the EU enabling 10 years market exclusivity post marketing 
authorisation in Europe. 
Fusion IP held a 43% stake in Diurnal at the year-end.
Asalus Medical Instruments – medical devices
Based in Cardiff, Asalus is developing a range of innovative 
medical devices that will improve the safety and efficiency  
of laparoscopic surgery. In December 2010 Asalus 
successfully completed a £510k funding round that 
will enable it to further develop its first three products: 
Innervision, Snugport and Surehold.
Laparoscopic surgery is a modern surgical technique in 
which operations in the abdomen are performed through 
small incisions, as compared to the larger incisions needed 
in traditional surgical procedures. There are several benefits 
to conducting laparoscopic surgery and, as a result, the 
number of procedures conducted using this technique has 
grown rapidly over recent years. Over 2 million laparoscopic 
operations per year are now performed in the USA alone. 
The market for laparoscopic surgery products is estimated  5
Fusion IP plc Annual Report and Accounts 2011
at approximately $18bn worldwide, growing 7-8% annually. 
Asalus currently has three lead projects in development,  
which it is looking to commercialise through partnerships  
with leading medical device companies.
The Company continues to achieve all of its key milestones, 
with particular interest being generated by its novel Innervision 
product. Innervision is an efficient smoke and steam 
clearance system which silently and continually clears smoke 
without the need for intervention by the surgeon. Asalus’s 
management estimates that Innervision could be used in more 
than 4 million surgical procedures annually. 
Fusion IP holds a 45% (undiluted) stake in Asalus.
Our portfolio rising stars
The following companies represent our potential rising 
stars. They are either fast growing, on the cusp of or already 
breaking through into profit, or with innovative technologies 
that are meeting development milestones and proving 
successful in the marketplace.
i2L Research – environmental testing 
Based in Cardiff, i2L Research is a fast-growing product 
testing and development centre for the pest control industry 
and agrochemicals industry across Europe. The company, 
which has offices in Newcastle and Cardiff, is expanding 
its operations into Europe, through its new offices in Czech 
Republic and Spain. 
During the year, i2L increased its turnover by 40% to  
£1.1m (2010: £0.8m) and its profits by 200% to £0.15m 
(2010: £0.05m). It is anticipated that this growth will 
continue in 2012.
Fusion has a 31% (undiluted) shareholding in i2L Research.
MedaPhor – medical simulation
MedaPhor is a Cardiff-based ultrasound simulation business, 
specialising in the development and sale of advanced, virtual 
ultrasound training systems for the healthcare service.
The company’s new ScanTrainer simulator is designed to 
teach all the core and advanced obstetrics and gynaecology 
ultrasound skills in a non-clinical environment, without the 
need for a patient to learn on and with minimal time from 
a tutor. By combining ‘real feel’ simulation, virtual patients 
with multiple pathologies and trainee feedback, the system 
enables a trainee to self learn the key ultrasound skills, prior 
to patient contact. This significantly increases a trainee’s 
speed of skill acquisition, because it removes the current 
constraints on training caused by the limitations of tutor 
resource and patient access. 
A range of diagnostic and image interpretation case studies 
have recently been added to the system, broadening the 
appeal of the system to the experienced practitioner.
Launched in 2010, the award winning ScanTrainer system has 
been sold into 12 UK hospitals and the company has recently 
made its first sales into the all-important US and European 
market. With distributors covering an additional eight countries 
in the Far East, the company’s sales pipeline is expected to 
grow in 2012. Further products in the ScanTrainer range are 
planned during the next 12 months.
Fusion has a 38% (undiluted) shareholding in MedaPhor.
Absynth – lifesciences
Absynth was founded in 2007 and is based in Sheffield. The 
Company is developing vaccine and therapeutic antibody 
candidates for the prevention and treatment of bacterial 
infections. The Company’s lead program focuses on infections 
caused by the bacterium Staphylococcus Aureus and the 
Methicillin-resistant form, MRSA.
Hospital-acquired infections are a serious healthcare issue. 
Patients acquiring infections in hospital stay on average two 
and a half times longer in hospital. Total costs of healthcare 
related infections to the NHS are estimated at £1bn per year, 
of which roughly half are attributed to the MRSA bug. Costs 
to the economy related to MRSA in the UK alone have been 
estimated at between £3bn and £11bn.
Absynth is continuing its license and collaboration agreement 
with the German-based biotechnology company, MorphoSys 
(the agreement was signed in September 2010). Absynth has 
received upfront payments and ongoing research funding 
together with future prospects for development-dependent 
milestone payments and long-term royalties. 
Absynth has six patent families on all targets involved in the 
vaccine and antibody programmes, with three granted patents 
to date.
Fusion has a 52% (undiluted) shareholding in Absynth and its 
results are consolidated into the group figures.
Mesuro – electronics
Mesuro is based in Cardiff and focuses on the development 
of solutions (Open Loop, Active Harmonic Load Pull) that 
provide performance improvements in the design and 
manufacture of RF (radio frequency) devices, microwave 
devices and amplifiers. Mesuro’s technology gives advantages 
to manufacturers such as: improved device efficiency and 
product performance; reduction in design cycles and time to 
market; and reduced power consumption. 6
Fusion IP plc Annual Report and Accounts 2011
Our portfolio rising stars continued
The Company started generating its first sales in 2011 and 
has raised an additional £440k during this calendar year to 
support its sales efforts.
Fusion has a 47% (undiluted) holding in Mesuro. 
Our new portfolio companies
During the year we created one new spin-out company:
Perlemax - environmental engineering
Perlemax Limited was founded on the research of Professor 
Will Zimmerman, Chair of Biochemical Dynamical Systems 
at the Department of Chemical and Biological Engineering at 
the University of Sheffield. Professor Zimmerman’s invention 
enables the super efficient generation of micro sized bubbles 
of gas. This process can greatly improve the efficiency of all 
gas exchange, ranging from wastewater treatment to algae 
growth for biofuels. Perlemax is working with a number of 
engineers to incorporate its technology within processes in 
and outside the UK. Perlemax has started generating income, 
and made a small profit during its first year of trading.
Research pipeline potential
We continue to be excited about the depth and breadth of 
the research emanating from our two university partners. 
Both universities continue to invest not only in world-leading 
research programmes, but also the capital expenditure 
required to build world-leading facilities in which to conduct 
the research. Each university has received external recognition 
for the quality of its research output and attracts internationally 
renowned experts to lead its research teams.
We have strong relationships with the relevant academics and 
technology transfer teams at both universities and this ensures 
we have good visibility over research activities spend that is 
worth over £200m per annum.
Several other promising opportunities have been identified, 
at various points of the pipeline, on both campuses and 
our commercialisation team is working with the university 
and academics to identify the best market applications and 
business proposals for these new technologies in 2012. 
David Baynes
Chief Executive Officer 
Chief Executive’s Statement continued 7
Fusion IP plc Annual Report and Accounts 2011
Financial Review
Summary
For the second year in a row, the Group generated a profit 
(excluding subsidiary spin-out costs and amortisation), 
recording figures of £4,175,000 (2010: £2,517,000). The 
Group also reported its first profit before tax of £1,046,000 
(2010: loss £1,600,000). Closing cash balances were 
£1,962,000 (2010: £4,610,000). The value of the Group’s 
investments in non-subsidiary spin-out companies increased 
to £16,768,000 (2010: £10,788,000).
Revenue
Total revenue and portfolio returns increased to £5,894,000 
(2010: £4,363,000) due to increases in revenue and net fair 
value gains on investments, and gains on the deconsolidation 
of Phase Focus and Diurnal.
Revenue, which includes the amounts charged to non-
subsidiary spin-out companies for management services 
provided, licence income and development grants received, 
decreased to £975,000 (2010: £1,137,000). 
The net gain in the fair value of investments amounted 
to £3,204,000 (2010: £2,590,000). The Group’s gains 
arose from valuation uplifts in seven of the Group’s 
holdings during the year, with uplifts in Simcyp, Phase 
Focus and Diurnal being the major component, the latter 
two companies triggered deconsolidation gains as their 
accumulated losses were taken out of the Group’s results 
upon deconsolidation. Fair value write downs and provisions 
were taken on five investments as we applied a critical eye 
to company prospects versus funding requirements. 
2011 
£000
2010 
£000
Fair value gains 3,983 3,671
Fair value losses (779) (1,081)
3,204 2,590
The gain on disposal of subsidiaries of £1,679,000  
(2010: £545,000) relates to the two subsidiary spin-out 
investments: Phase Focus and Diurnal in which the Group’s 
holding has fallen below 50% following completion of funding 
rounds in the year.
Operating expenses
Operating expenses have decreased to £4,910,000  
(2010: £5,956,000) and are broken down into  
three components:
•	 corporate operating expenses of £1,719,000  
(2010: £1,839,000) reflect the cost of running the 
Parent PLC company together with the Sheffield  
and Cardiff operations. 
•	 subsidiary spin-out operating expenses of £1,196,000 
(2010: £2,119,000), which are consolidated into the Group’s 
results by virtue of Fusion’s >50% shareholding in each 
spin-out company. Two significant deconsolidations occurred 
during the year (Diurnal – November 2010; and Phase Focus 
– July 2011) which reduced the impact of consolidated costs 
going forwards; and
•	 amortisation of intangible assets of £1,995,000 (2010: 
£1,998,000) which reflects the charge over the Cardiff 
and Sheffield IP rights which are both being amortised on 
a straight line basis over the ten-year pipeline agreements, 
together with an amortisation charge for purchased patent 
costs within certain subsidiary spin-out companies.
Investments
As at 31 July 2011 investments in spin-out companies 
amounted to £16,768,000 (2010: £10,788,000). Additions 
during the year amounted to £1,594,000 (2010: £1,801,000) 
and consist of equity investments, convertible loan investments 
and accrued interest to a number of portfolio companies.
The investments are all classified as financial assets and are held 
at fair value under IAS 39 “Financial Instruments: Recognition 
and Measurement”. The Group uses the International Private 
Equity and Venture Capital Valuation (IPEVCV) guidelines to 
establish the fair value of unlisted securities.
Intangible Assets and Liabilities
IP rights comprise IP, patents and licences purchased 
by the Group together with the IP pipelines with Cardiff 
University and the University of Sheffield. As outlined 
above, the Group’s view is that these assets have a finite 
life of ten years and to that extent they should be amortised 
over their respective unexpired periods with provision 
made for any impairment when required. IP rights are 
tested annually for impairment and are carried at cost less 
accumulated impairment losses.
Non-current liabilities totalling £3,189,000 (2010: 
£3,304,000) consist of two components classified as amounts 
owed to related parties. 
Firstly the Group owes amounts totalling £2,216,000  
(2010: £2,162,000) to the University of Sheffield and 
Cardiff University in relation to loan notes and accrued 
interest, arising from the purchase of the Group’s interest 
in certain spin-out companies when the IP pipeline 
agreements were signed in 2005 and 2007 respectively.
Secondly, as a result of the expanded Sheffield agreement 
signed in 2008, there is an amount of deferred consideration 
due to the University of Sheffield, representing 785,609 
Ordinary shares (2010: 785,609 Ordinary shares) which 
will be issued once further Ordinary shares are issued to  8
Fusion IP plc Annual Report and Accounts 2011
the extent that its shareholding does not exceed 29.9% 
of the issued share capital of the Company. No further 
Ordinary shares were issued this year; hence this deferred 
consideration remains unchanged from last year. 
Cash flows
The Group’s cash balances at 31 July 2011 amount to 
£1,962,000 (2010: £4,610,000). These balances include 
£257,000 (2010: £258,000) in relation to consolidated 
subsidiary spin-out companies.
The cash outflow in the year amounted to £2,648,000  
(2010: £423,000) and can be summarised as follows:
2011 
£000
2010 
£000
Net cash used in 
operating activities (2,045) (2,827)
Net cash used in 
investing activities (603) (585)
Net cash from 
financing activities – 2,989
(2,648) (423)
The net cash used in investing activities reflects two  
main components:
•	 amounts invested in spin-out companies which  
are not subsidiary undertakings £1,405,000  
(2010: £1,515,000); and
•	 amounts received by subsidiary spin-out companies  
from third-party investors of £nil (2010: £853,000).
Share capital
There were no changes in share capital during the year.
Financial Review continued 9
Fusion IP plc Annual Report and Accounts 2011
Board of Directors
Doug Liversidge CBE
Chairman 
Appointed to the Board of Fusion IP plc on 1 December 2004. 
He was employed for 21 years at British Steel, before moving to 
G W Thornton Limited as managing director and subsequently 
chief executive. He guided the company through its flotation on 
the full list of the London Stock Exchange in 1987. 
Doug acts as a senior industrial advisor to the University of 
Sheffield and was awarded the CBE in the 2000 New Year’s 
Honours List for services to industry. He is also the non-
executive chairman of Surgical Innovations plc.
David Baynes
Chief Executive
Appointed to the Board of Fusion IP plc on 2 November 2004. 
David has previously worked at Celsis International plc from its 
incorporation to its flotation on the full list of the London Stock 
Exchange in 1993; Toad plc (now 21st Century Technology 
plc), which he co-founded and was responsible for taking the 
company from start-up to a full listing on the London Stock 
Exchange; Whereonearth Limited; and Codemasters Limited.
Stuart Gall
Commercial Director
Appointed to the Board of Fusion IP plc on 27 April 2005.  
Stuart has experience in both small company start-ups and 
public companies and specialises in marketing, communications 
and new business development. He has previously worked at 
British Airways plc, The Promotions Partnership Limited, Anvil 
Limited and Toad plc (now 21st Century Technology plc).
Dr Peter Grant
Operations Director
Appointed to the Board of Fusion IP plc on 1 December 
2004. Peter has a PhD in biochemistry from Cardiff University 
and has previously worked at Genzyme UK Limited, Celltech 
Limited, Enzymatix Limited and Celsis plc, which he co- 
founded and took to a full listing on the London Stock Exchange.
David Catton
Non-executive Director
Appointed to the Board of Fusion IP plc on 1 December 
2004. David was previously managing director of SUEL, the 
University of Sheffield’s tech transfer operation. Prior to this 
David worked for Ford Motor Company, British Leyland, Rank 
Xerox Limited and Cambridge Consultants Limited.
Mike Davies
Non-executive Director
Appointed to the Board of Fusion IP plc on 29 January 2007. 
Mike is Cardiff University’s director of physical and financial 
resources. He has gained extensive experience of Cardiff’s 
technology transfer activities through his role as chairman 
of UC3 and as a director/company secretary of the General 
Partner Board of the Cardiff Partnership Fund.
Dr Alison Fielding
Non-executive Director
Appointed to the Board of Fusion IP plc on 29 January 
2010. Alison is the Chief Technology Officer of IP Group plc. 
Alison co-founded Techtran Group Limited and was the Chief 
Operating Officer of Techtran when it was acquired by IP 
Group in January 2005. Previously, she worked for McKinsey 
& Co and Zeneca plc. Alison holds an MBA from Manchester 
Business School and a PhD in organic chemistry from the 
University of Glasgow.
Bob Rabone
Non-executive Director
Appointed to the Board of Fusion IP plc on 31 July 2008. 
Bob is director of finance and resources for the University 
of Sheffield. He previously worked as part of the senior 
management team of the international law firm, Eversheds LLP 
and prior to that held several finance director positions in both 
public and private organisations.  10
Fusion IP plc Annual Report and Accounts 2011
The Directors present their report and the audited financial 
statements for the year ended 31 July 2011.
Results and dividend
Group profit for the year after taxation amounted to 
£1,046,000 (2010: loss £1,600,000). The Directors do not 
recommend the payment of a dividend (2010: £nil).
Principal activity
The Company acts as a holding company for the Group 
and is incorporated by shares in England and Wales. The 
Company’s subsidiary undertakings are detailed in note 2 to 
the consolidated financial statements. The Group’s principal 
activity is the commercialisation of intellectual property (IP) 
that is developed at universities and similar establishments. 
Business review
The information, which is necessary to fulfil the requirements 
of the Business Review, is incorporated within the respective 
Chairman and Chief Executive Statements.
Directors
The names of the Directors who held office during the 
financial year are as follows:
Executive
D Baynes 
P Grant 
S Gall 
T Gardiner (appointed 5 October 2010; resigned 28 April 2011)
Non-executive
D Liversidge CBE (Chairman)  
T Atkinson (died 19 June 2011) 
D Catton 
M Davies 
B Rabone  
A Fielding 
The Company Secretary is R Birtles.
Major interest in shares
As at 5 October 2011, according to the Company’s register, 
the following shareholders each held 3% or more of the 
Company’s issued share capital:
Name
Ordinary  
1p shares
%
holding
The University of 
Sheffield 12,895,541 23.8
Cardiff University 10,997,541 20.3
IP Group plc 10,740,741 19.8
Invesco Limited 5,570,363 10.3
AXA Framlington 4,112,647 7.58
Legal & General 3,325,926 6.1
Directors’ interests in shares
The Directors at 31 July 2011 with interests in the share 
capital of the Company were as follows:
The Company – ordinary 1p shares
31 July
2011
D Baynes 1,333,332
P Grant 1,333,332
S Gall 1,333,332
D Liversidge (Chairman) 10,000
Apart from the interests disclosed above, no Directors held 
interests at any time in the year in the share capital or loan 
stock of the Company or other Group companies.
The Directors’ interests in respect of options to acquire Ordinary 
shares are set out in the Report on the Directors’ Remuneration.
Financial instruments and risk management
The Group’s financial risk management objectives and 
policies, including those relating to interest rate risk, 
liquidity risk and market price risk, are provided in note 3 
to the consolidated financial statements, along with further 
information on the Group’s use of financial instruments.
Creditor payment policy
The Group’s policy is to:
•	 establish the payment terms with suppliers when agreeing 
the terms of supply;
•	 ensure that suppliers are aware of the terms of payment; 
and 
•	 adhere to the agreed terms.
The Group’s average creditor payment period at  
31 July 2011 was 21 days (2010: 15 days). The Company  
has no trade creditors.
Employee participation
The Group values the involvement of its employees and keeps 
them informed of matters affecting them as employees and on 
the various factors affecting the performance of the Group.
Equal opportunities
The Group endorses and supports the principles of equal 
employment opportunities. It is the policy of the Group to 
provide equal employment opportunities to all qualified 
individuals which ensures that all employment decisions  
are made, subject to legal obligations, on a non-
discriminatory basis.
Directors’ Report 11
Fusion IP plc Annual Report and Accounts 2011
Disabled employees
Applications for employment by disabled persons are always 
fully considered, bearing in mind the aptitudes of the applicant 
concerned. In the event of members of staff becoming 
disabled, every effort is made to ensure that the training, 
career development and promotion opportunities of disabled 
persons should, as far as possible, be identical with those of 
other employees.
Political and charitable donations
During the year the Group has made no political or charitable 
donations (2010: £nil).
Provision of information to auditors
So far as each of the Directors is aware, there is no relevant 
audit information of which the Group’s auditors are unaware. 
Each Director has taken all the steps that they ought to have 
taken as a Director to make themselves aware of any relevant 
audit information and to establish that the Group’s auditors are 
aware of that information.
Annual general meeting 
The Annual General Meeting of the Group will be held at 
10.30am on Friday 25 November 2011 at the offices of 
Ashurst LLP, Broadwalk House, 5 Appold Street, London 
EC2A 2HA. 
Auditors
In accordance with Section 489 of the Companies Act 2006, 
a resolution for the re-appointment of KPMG Audit Plc will be 
proposed at the forthcoming Annual General Meeting.
By order of the Board
David Baynes
Chief Executive
10 October 2011 12
Fusion IP plc Annual Report and Accounts 2011
This Report on the Directors’ Remuneration sets out the 
Company’s policy on the remuneration of Executive and 
Non-executive Directors, together with details of Directors’ 
remuneration packages and service contracts.
Remuneration Committee
For the financial year ended 31 July 2011, remuneration 
policy for Executive and Non-executive Directors and the 
determination of individual Executive Directors’ remuneration 
packages have been delegated to the Board’s Remuneration 
Committee comprising three Non-executive Directors, one of 
which is the Non-executive Chairman.
In setting the remuneration policy, the Remuneration 
Committee considers a number of factors including:
•	 the basic salaries and benefits available to Executive 
Directors of comparable companies;
•	 the need to attract and retain Directors of an  
appropriate calibre; 
•	 the need to ensure Executive Directors’ commitment to the 
continued success of the Company by means  
of incentive schemes; and
•	 the need for the remuneration awarded to  
reflect performance.
Remuneration of the Non-executive Directors
D Liversidge, T Atkinson and D Catton received a fee for 
their services. The fee is agreed by the Board following 
recommendation by the Chairman with a view to rates paid 
in comparable organisations and appointments. They did 
not receive any pension or other benefits from the Company, 
nor did they participate in any bonus or incentive schemes 
other than share options. They each have a three-year service 
contract with the Company with three months’ notice either 
side. After this time their appointment is reviewed annually. 
M Davies, who represents Cardiff University, B Rabone, who 
represents the University of Sheffield and A Fielding, who 
represents IP Group plc receive no fee for their services and 
as a result of this do not have service contracts.
Remuneration policy for Executive Directors
The Company’s remuneration policy for Executive Directors is to:
•	 have regard to the Directors’ experience and the nature and 
complexity of their work in order to pay a competitive salary 
that attracts and retains management of the highest quality;
•	 link individual remuneration packages to the Group’s 
long-term performance through the award of discretionary 
bonus schemes; and
•	 provide employment-related benefits including life 
assurance, insurance relating to the Directors’ duties and 
medical insurance. 
Salaries and benefits
The Remuneration Committee meets at least once a year to 
consider and set the annual salaries for Executive Directors 
having regard to personal performance and information 
regarding the remuneration practices of companies of a similar 
size and of industry competitors. Executive Directors’ salaries 
were last reviewed in January 2011. No increases in Executive 
pay were approved at that time.
Directors’ service contracts
The service contracts of the Executive Directors provide for six 
months’ notice of termination. Other than the notice periods 
afforded to the Executive and Non-executive Directors, there 
are no special provisions for compensation in the event of 
loss of office. The Remuneration Committee considers the 
circumstances of individual cases of early termination and 
determines compensation payments accordingly.
Details of individual Directors’ service contracts are as follows:
Effective 
contract date
Unexpired 
term at 
31 July
Notice
period
D Liversidge* 
(Chairman)
1 December
2004 n/a 3 months
D Baynes
26 January
 2005 n/a 6 months
P Grant
26 January
 2005 n/a 6 months
S Gall 1 April 2005 n/a 6 months
D Catton
1 December 
2004 n/a 3 months
* Service contract is via an agreement with Quest Investments Limited.
The Directors are required to retire by rotation once every 
three years. None of the Directors are required to retire by 
rotation at the forthcoming Annual General Meeting.
Non-executive directorships
With the permission of the Chairman, the Executive Directors 
may accept appointments as non-executive directors. Where 
an Executive Director accepts an appointment to the board 
of a company in which the Group is a shareholder, the Group 
retains the Director’s fees. Fees earned for directorships of 
companies in which the Group does not have a shareholding 
will be retained by the Director.
Report on the Directors’ Remuneration 13
Fusion IP plc Annual Report and Accounts 2011
Directors’ detailed emoluments
Details of individual Directors’ emoluments for the year are as follows:
Salary
and fees
£
 Bonuses 
£
Pension
contributions
 £
Benefits 
£
 Total 
2011
 £
 Total
 2010
 £
Executive
D Baynes 163,375 – 16,338 – 179,713 177,520
P Grant 140,000 – 14,000 1,659 155,659 153,788
S Gall 140,000 – 14,000 1,469 155,469 153,890
T Gardiner (resigned 28 April 2011) 87,525 – 10,698 862 99,085 129,570
Non-executive
D Liversidge (Chairman) 36,000 – – – 36,000 36,000
T Atkinson (deceased 19 June 2011) 25,500 – – – 25,500 25,500
D Catton 12,750 – – – 12,750 12,750
605,150 – 55,036 3,990 664,176 689,018
The pension contributions are paid into private pension plans nominated by the related Directors or can be included with the 
basic salary. During the year D Baynes chose to have accrued pension contributions amounting to £16,338 paid as basic salary.
M Davies, B Rabone and A Fielding receive no emoluments for their role as Non-executive Directors. 
Directors’ interests in share options
Details of options held by Directors over the Company’s Ordinary shares of 1p are set out below:
As at
31 July
2010
As at
31 July
2011
Exercise
price
Earliest 
exercise 
date Expiry date
D Liversidge 50,000 50,000 33.5p 31.07.12 31.07.19
T Atkinson (deceased 19 June 2011) 33,333 33,333 150p 28.01.08 28.01.15
T Atkinson (deceased 19 June 2011) 50,000 50,000 33.5p 31.07.12 31.07.19
D Catton 33,333 33,333 150p 28.01.08 28.01.15
D Catton 50,000 50,000 33.5p 31.07.12 31.07.19
The market price of the Company’s shares at the end of the financial year was 25.5p (2010: 29.5p) and the range of market 
prices during the year was 32p to 21.5p (2010: 34.5p to 29.5p).
Each option will vest monthly as to 1/36th of the Ordinary shares under option on the expiry of each month following the date of 
the grant until the third anniversary of the date of the grant when the option shall become fully vested. Any vested portion of the 
options will normally be exercisable between the expiry of the third month after the date of the grant and the tenth anniversary 
of the date of the grant. No performance conditions are required to be met. Options will become immediately exercisable in 
full on the death of the option-holder for a period of twelve months from the date of death. If an option-holder ceases to be a 
Non-executive Director of the Company for any reason other than death, his option (to the extent unexercised and unvested) 
will lapse. On a change of control or a voluntary winding-up of the Company, options may be exercised in full for a fixed period. 
Options will lapse on the expiry of ten years from their date of grant. 14
Fusion IP plc Annual Report and Accounts 2011
Report on the Directors’ Remuneration continued
Directors’ interests in share options continued
Until options are exercised, the option-holders have no voting or 
other rights in respect of the Ordinary shares under their options. 
Ordinary shares issued pursuant to the Share Option Agreements 
shall rank pari passu in all respects with the Ordinary shares 
already in issue except that they will not rank for any dividend 
or other distribution announced prior to the date of the exercise. 
Options are not transferable nor are they pensionable.
On 27 January 2005, D Baynes, P Grant and S Gall granted 
an option to D Liversidge entitling him to acquire 97,756 
Ordinary shares from each of them at an aggregate exercise 
price of £44,000. The options can be exercised at any time 
prior to 27 January 2015. D Liversidge has undertaken to 
the Company to indemnify it from any PAYE and employers’ 
national insurance contributions payable by the Group as a 
result of the exercise of any or all of these options.
Doug Liversidge CBE
Chairman
10 October 2011 15
Fusion IP plc Annual Report and Accounts 2011
Corporate Governance
The Board acknowledges the importance of the Combined 
Code on Corporate Governance (the “Code”). Whilst the Group 
is not required to report on compliance with the Code since 
its shares are traded on AIM, every effort is made to comply 
with the Code. The statement below describes how principles 
of corporate governance have been consistently complied with 
by the Group throughout the year.
The workings of the Board and its committees
The Board
The Board currently comprises five Non-executive Directors 
and three Executive Directors and is responsible for the 
management of the Group. As disclosed on page 13, 
D Liversidge and D Catton have some share options in 
the Company, however the Board considers them to be 
independent because the number of share options are not 
considered to be material. B Rabone, M Davies and A Fielding 
by virtue of their roles with the University of Sheffield, Cardiff 
University and IP Group plc respectively are not considered to 
be independent Non-executive Directors. 
The Board meets at least six times a year, setting and 
monitoring Group strategy, reviewing trading performance, 
reviewing and agreeing on investments in spin-out companies 
and formulating policy on key issues. Day to day operational 
decisions are delegated to the Executive Directors. Key issues 
reserved for the Board include the consideration of potential 
investments, share issues and fund raising and the setting 
of Group strategy, City public relations and the review and 
evaluation of significant risks facing the business. 
Briefing papers are distributed to all Directors in advance 
of Board meetings. All Directors have access to the advice 
and services of the Company Secretary who is responsible 
for ensuring that Board procedures are followed and that 
applicable rules and regulations are complied with. The 
appointment and removal of the Company Secretary is a 
matter for the Board as a whole. In addition, procedures are in 
place to enable Directors to obtain independent professional 
advice in the furtherance of their duties if necessary, at the 
Company’s expense.
The Audit Committee
The Audit Committee comprises D Liversidge and D Catton. 
The Audit Committee’s remit is set out in its terms of reference 
and meets with the auditors at least twice a year. The 
Committee assists the Board in ensuring that the Group’s 
published financial statements give a true and fair view and 
that, where the auditors provide non-audit services, their 
objectivity and independence is safeguarded. 
Due to the nature and size of the Group at present it would not 
be appropriate for the Company to have its own internal audit 
department reporting directly to the Audit Committee.
The Remuneration Committee
The Remuneration Committee comprises D Liversidge and 
D Catton and A Fielding. When necessary non-committee 
members are invited to attend. No Director is involved in 
deciding his own remuneration. The Committee is responsible 
for making recommendations to the Board on the scale and 
structure of remuneration for senior management, including 
the award of share options.
The Nomination Committee
The Nomination Committee comprises the Non-executive 
Directors and is chaired by the Chairman, D Liversidge. 
It meets as necessary and is responsible for making 
recommendations to the Board on the appointments of 
Executive and Non-executive Directors. When required, it is 
the usual practice of the Nomination Committee to employ 
specialist external search and selection consultants to assist 
in the appointment process for new Executive and Non-
executive Directors.
Terms of reference
The terms of reference for the Audit, Remuneration and 
Nomination Committees are available on request from the 
Company Secretary. 
Relations with shareholders
Key members of the Executive Board regularly visit 
institutional investors and the full Board makes itself available 
to questions at all the shareholder meetings it holds. The 
Chief Executive reports back to the Board views of investors 
obtained at analysts’ and brokers’ briefings. The Board will use 
the Annual General Meeting to communicate with private and 
institutional investors and welcomes their participation. 
In addition the Group operates a website, which can be found 
at www.fusionip.co.uk. The website contains the information 
about the Group that is required by AIM Rule 26. That 
information can be found under the section of the website 
headed Investor Relations and contains, amongst other 
information, details on the Group and its activities, the Group’s 
regulatory announcements, its Annual Reports and Interim 
Reports and details of the Group’s share price.
Going concern
After making enquiries, the Directors have a reasonable 
expectation that the Group has adequate resources to 
continue in operational existence for the foreseeable 
future. For this reason, they continue to adopt the going 
concern basis in preparing the financial statements. 
Further details are provided in note 2 to the consolidated 
financial statements. 16
Fusion IP plc Annual Report and Accounts 2011
Internal controls
The Directors acknowledge that they are responsible for 
the Group’s system of internal control and for reviewing 
its effectiveness. Internal control systems are designed to 
meet the particular needs of the Group and the risks to 
which it is exposed. The internal control procedures are 
regularly reviewed on an ongoing basis to identify, evaluate 
and manage the significant risks faced by the Group. The 
procedures are designed to manage, rather than eliminate, 
risk of failure to achieve business objectives and can only 
provide reasonable but not absolute assurance against 
material misstatement or loss.
The key procedures which the Directors have established with 
a view to providing effective internal control are as follows:
•	 the Board has overall responsibility for the Group and there 
is a formal schedule of matters specifically reserved for 
decision by the Board. Each Executive Director has been 
given responsibility for specific aspects of the Group’s 
affairs. The Executive Directors meet monthly to discuss 
operational matters including management and technical 
reports, government and fiscal policy issues, employment 
and information technology and cash control procedures; 
•	 the Directors have established control procedures in 
response to key risks. Standardised financial control 
procedures operate throughout the Group to ensure the 
integrity of the Group’s financial statements. The Board  
has established procedures for authorisation of capital  
and revenue expenditure; and
•	 the Board reviews the Group’s performance against 
detailed budgets and working capital forecasts on a  
bi-monthly basis. 
Statement of the Directors’ responsibilities in respect  
of the Annual Report, Directors’ Report and the  
Financial Statements
The Directors are responsible for preparing the Annual Report, 
Directors’ Report and the Group and Parent Company financial 
statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare group and 
parent company financial statements for each financial year. 
As required by the AIM rules of the London Stock Exchange 
they are required to prepare the group financial statements in 
accordance with IFRS as adopted by the EU and applicable 
law and have elected to prepare the parent company financial 
statements in accordance with UK Accounting Standards and 
applicable law (UK Generally Accepted Accounting Practice). 
Under company law the Directors must not approve the 
financial statements unless they are satisfied that they give 
a true and fair view of the state of affairs of the Group and 
Parent Company and of their profit or loss for that period. In 
preparing each of the Group and Parent Company financial 
statements, the Directors are required to:
•	 select suitable accounting policies and then apply  
them consistently;
•	 make judgements and estimates that are reasonable  
and prudent;
•	 for the Group financial statements, state whether they have 
been prepared in accordance with IFRS as adopted by the 
EU; for the Parent Company financial statements, state 
whether applicable UK Accounting Standards have been 
followed, subject to any material departures disclosed and 
explained in the financial statements; and
•	 prepare the financial statements on the going concern 
basis unless it is inappropriate to presume that the Group 
and the Parent Company will continue in business. 
The Directors are responsible for keeping adequate 
accounting records that are sufficient to show and explain 
the Parent Company’s transactions and disclose with 
reasonable accuracy at any time the financial position of the 
Parent Company and enable them to ensure that its financial 
statements comply with the Companies Act 2006. They have 
general responsibility for taking such steps as are reasonably 
open to them to safeguard the assets of the Group and to 
prevent and detect fraud and other irregularities.
The Directors are responsible for the maintenance and 
integrity of the corporate and financial information included 
on the Group’s website. Legislation in the UK governing the 
preparation and dissemination of financial statements may 
differ from legislation in other jurisdictions.
Corporate Governance continued 17
Fusion IP plc Annual Report and Accounts 2011
Independent Auditor’s Report to the members of Fusion IP plc
We have audited the financial statements of Fusion IP plc for 
the year ended 31 July 2011 set out on pages 18 to 40. The 
financial reporting framework that has been applied in the 
preparation of the Group financial statements is applicable 
law and International Financial Reporting Standards (IFRSs) 
as adopted by the EU. The financial reporting framework that 
has been applied in the preparation of the Parent Company 
financial statements is applicable law and UK Accounting 
Standards (UK Generally Accepted Accounting Practice).
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.
Respective responsibilities of Directors and auditor
As explained more fully in the Statement of the Directors’ 
Responsibilities set out on page 16, the Directors are 
responsible for the preparation of the financial statements 
and for being satisfied that they give a true and fair view. 
Our responsibility is to audit, and express an opinion on, the 
financial statements in accordance with applicable law and 
International Standards on Auditing (UK and Ireland). Those 
standards require us to comply with the Auditing Practices 
Board’s (APB’s) Ethical Standards for Auditors.
Scope of the audit of the financial statements
A description of the scope of an audit of financial statements 
is provided on the APB’s website at www.frc.org.uk/apb/
scope/private.cfm.
Opinion on financial statements
In our opinion:
•	 the financial statements give a true and fair view of the 
state of the Group’s and of the Parent Company’s affairs as 
at 31 July 2011 and of the Group’s profit for the year then 
ended; 
•	 the Group financial statements have been properly 
prepared in accordance with IFRS as adopted by the EU; 
•	 the Parent Company financial statements have been 
properly prepared in accordance with UK Generally 
Accepted Accounting Practice; and 
•	 the financial statements have been prepared in accordance 
with the requirements of the Companies  
Act 2006.
Opinion on other matters prescribed by the  
Companies Act 2006
In our opinion the information given in the Directors’ Report 
for the financial year for which the financial statements are 
prepared is consistent with the financial statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters 
where the Companies Act 2006 requires us to report to you if, 
in our opinion:
•	 adequate accounting records have not been kept by the 
Parent Company, or returns adequate for our audit have not 
been received from branches not visited by us; or
•	 the Parent Company financial statements are not in 
agreement with the accounting records and returns; or
•	 certain disclosures of Directors’ remuneration specified by 
law are not made; or
•	 we have not received all the information and explanations 
we require for our audit.
David Morritt (Senior Statutory Auditor)
for and on behalf of KPMG Audit Plc, Statutory Auditor
Chartered Accountants
KPMG Leeds 
1 The Embankment 
Neville Street 
Leeds 
LSI 4DW  18
Fusion IP plc Annual Report and Accounts 2011
Consolidated Statement of Comprehensive Income
for the year ended 31 July 2011
Note
2011
 £000
2010
 £000
Revenue and portfolio return
Revenue 5 975 1,137
Dividend income 36 91
Change in fair value of investments 15 3,204 2,590
Gain on disposal of subsidiaries 15 1,679 545
5,894 4,363
Operating expenses:
– corporate operating expenses (1,719) (1,839)
– subsidiary spin-out operating expenses (1,196) (2,119)
– amortisation of intangible assets 14 (1,995) (1,998)
6 (4,910) (5,956)
Results from operating activities 6 984 (1,593)
Finance income 10 118 55
Finance expenses 10 (56) (62)
Profit/(Loss) before taxation 1,046 (1,600)
Taxation 11 – –
Profit/(Loss) and total comprehensive profit/(loss) for the year 1,046 (1,600)
Attributable to:
– owners of the parent 1,370 (789)
– non-controlling interests 20 (324) (811)
1,046 (1,600)
Basic and fully diluted profit/(loss) per share 12 2.53p (1.57)p 19
Fusion IP plc Annual Report and Accounts 2011
Consolidated Statement of Financial Position
as at 31 July 2011
Note
2011
 £000
2010
 £000
Assets
Non-current assets
Property, plant and equipment 13 16 58
Intangible assets 14 11,442 13,507
Investments 15 16,768 10,788
Total non-current assets 28,226 24,353
Current assets
Trade and other receivables 16 613 402
Cash and cash equivalents 17 1,962 4,610
Total current assets 2,575 5,012
Total assets 30,801 29,365
Equity 
Called up share capital 18 542 542
Capital reserve 19 2 2
Share premium 18 39,034 39,034
Capital redemption reserve 19 1 1
Retained earnings (12,347) (13,853)
Equity attributable to equity holders of the parent 27,232 25,726
Non-controlling interests 20 – –
Total equity 27,232 25,726
Non-current liabilities
Other payables 21 – 85
Amounts owed to related parties 21 3,189 3,219
Total non-current liabilities 3,189 3,304
Current liabilities
Trade and other payables 22 380 335
Total liabilities 3,569 3,639
Total equity and liabilities 30,801 29,365
These financial statements were approved by the Board of Directors on 10 October 2011 and were signed on its behalf by 
the Chairman.
Doug Liversidge CBE
Chairman
Fusion IP plc – registered number 5275732 20
Fusion IP plc Annual Report and Accounts 2011
Consolidated Statement of Cash Flows
for the year ended 31 July 2011
2011
 £000
2010
 £000
Cash flows from operating activities
Profit/(Loss) for the period 1,046 (1,600)
Adjustments for:
– depreciation of property, plant and equipment 26 177
– amortisation of intangible assets 1,995 1,998
– net finance (income)/costs (62) 7
– share-based payments 35 57
– dividend income (36) (91)
– gain on disposal of subsidiaries (1,679) (545)
– change in fair value of investments (3,204) (2,590)
Changes in working capital:
– (increase)/decrease in trade and other receivables (211) 101
– increase/(decrease) in trade and other payables 45 (341)
(2,045) (2,827)
Interest paid – –
Net cash flows used in operating activities (2,045) (2,827)
Cash flows from investing activities
Purchase of property, plant and equipment (5) (72)
Proceeds from sale of property, plant and equipment – 34
Purchase of investments (957) (1,515)
Third party investment into subsidiary spin-out companies 205 853
Purchase of intangible assets – (31)
Dividend income 36 91
Interest received 118 55
Net cash flows used in investing activities (603) (585)
Cash flows from financing activities
Proceeds from issue of share capital – 3,150
Share issue costs – (161)
Net cash flows from financing activities – 2,989
Net decrease in cash and cash equivalents (2,648) (423)
Cash and cash equivalents at the beginning of the period 4,610 5,033
Cash and cash equivalents at the end of the period 1,962 4,610 21
Fusion IP plc Annual Report and Accounts 2011
Consolidated Statement of Changes in Equity
for the year ended 31 July 2011
Attributable to equity holders of the Group
Share
capital
£000
Share premium
£000
Other 
reserves
£000
Retained
earnings
£000
Total
£000
Non-controlling
interests
£000
Total
£000
At 1 August 2009 422 36,052 3 (12,936) 23,541 139 23,680
Loss and total 
comprehensive loss for 
the year – – – (789) (789) (811) (1,600)
Non-controlling interest 
attributable to the Group – – – (185) (185) 185 –
Issue of share capital 120 2,982 – – 3,102 – 3,102
Share-based payments – – – 57 57 – 57
Disposal of subsidiaries – – – – – 487 487
At 31 July 2010 542 39,034 3 (13,853) 25,726 – 25,726
Profit and total 
comprehensive profit for 
the year – – – 1,370 1,370 (324) 1,046
Non-controlling interest 
attributable to the Group – – – 100 100 (100) –
Share-based payments – – – 36 36 – 36
Disposal of subsidiaries – – – – – 424 424
At 31 July 2011 542 39,034 3 (12,347) 27,232 – 27,232 22
Fusion IP plc Annual Report and Accounts 2011
Notes to the Consolidated Financial Statements
for the year ended 31 July 2011
1. General information
Fusion IP plc is a public limited company which is listed on AIM, part of the London Stock Exchange, and is incorporated and 
domiciled in the UK. The address of its registered office is The Sheffield Bioincubator, 40 Leavygreave Road, Sheffield S3 7RD. 
The registered number of the Company is 5275732.
These consolidated financial statements are presented in Sterling which is also the currency of the primary economic 
environment in which the Group operates.
2. Summary of significant accounting policies
The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. 
Basis of preparation
The consolidated financial statements comprise a consolidation of amounts included in the financial statements of the 
following companies:
Principal
activity Holding
Class of 
shares held
Fusion IP Sheffield Limited Holding company 100% Ordinary
Fusion IP Cardiff Limited Holding company 100% Ordinary
Biofusion Licensing (Sheffield) Limited* Dormant 100% Ordinary
Mantelum Limited* Dormant 100% Ordinary
Absynth Biologics Limited* MRSA vaccines 52% Ordinary
BioHydrogen Limited* Dormant 60% Ordinary
Medella Therapeutics Limited* Cancer
 therapeutics 60% Ordinary
Phase Focus Limited*¹ Lensless
 microscopy 53% Ordinary
Diurnal Limited*¹ Hormone 
replacement 52% Ordinary
Lifestyle Choices Limited* Dormant 51% Ordinary
* Indirectly held. *¹ Deconsolidated when holdings dropped below 50% in July 2011 (Phase Focus) and November 2010 (Diurnal).
All companies are incorporated in England and Wales.
The consolidated financial statements of Fusion IP plc have been prepared in accordance with International Financial Reporting 
Standards (“IFRS”) as adopted by the EU. The Company has elected to prepare its Parent Company financial statements in 
accordance with UK GAAP and these are presented on pages 41 to 43.
The consolidated financial statements have been prepared under the historical cost convention, as modified by the  
revaluation of certain financial assets at fair value through profit and loss, as required by IAS 39 “Financial Instruments: 
Recognition and Measurement”.
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also 
requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a 
higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial 
statements are disclosed in note 4. 23
Fusion IP plc Annual Report and Accounts 2011
Change in accounting policies
IFRS and IFRIC are issued by the International Accounting Standards Board (the IASB) and must be adopted into European 
Union law, referred to as endorsement, before they become mandatory under the IAS Regulation. 
The following IFRSs, IFRIC interpretations and amendments have been adopted in the financial statements for the first time in 
this financial period:
(i) IFRIC 19 - Extinguishing Financial Liabilities with Equity Instruments 
This interpretation is effective for annual periods beginning on or after 1 July 2010. This has not had a material impact on the 
Group as it has not had any ‘debt for equity swaps’.
(ii) IFRS 2 ‘Share-based Payment’  
This was amended in June 2009 and is effective for annual periods beginning on or after 1 January 2010. The Group has 
adopted the amendments, which impact on subsidiary companies but not the Group and has no impact on consolidation.
(iii) IAS 32 ‘Financial Instruments: Presentation’  
This was amended in 2009 relating to classification of rights issues. The changes were effective for annual periods beginning on 
or after 1 February 2010. This did not have an impact on the Group as it has not carried out a rights issue.
(iv) IAS 24 ‘Related Party Disclosures’ (revised 2011) 
This became effective from 1 January 2011 and the Group has accordingly given greater detail in disclosures in note 24 about 
Related Party Transactions concerning transactions involving the Group and other related parties – such as its university partners.
Amendments resulting from April 2009 Annual Improvements to IFRSs – the following amendments are effective from 1 January 
2010 but had no significant impact on the Group:
(i) IFRS 5 ‘Non-current Assets Held for Sale and Discontinued Operations’
(ii) IFRS 8 ‘Operating Segments’
(iii) IAS 1 ‘Presentation of Financial Statements’
(iv) IAS 7 ‘Statement of Cash Flows’
(v) IAS 17 ‘Leases’
(vi) IAS 36 ‘Impairment of Assets’
(vii) IAS 38 ‘Intangible Assets’
(viii) IAS 39 ‘Financial Instruments: recognition and measurement’
Amendments resulting from May 2010 Annual Improvements to IFRSs – the following amendments are effective from 1 July 2010, 
but had no significant impact on the Group:
(i) IFRS 3 ‘Business Combinations’
(ii) IAS 27 ‘Consolidated and Separate Financial Statements’ 24
Fusion IP plc Annual Report and Accounts 2011
Notes to the Consolidated Financial Statements continued
for the year ended 31 July 2011
2. Summary of significant accounting policies continued
Amendments resulting from May 2010 Annual Improvements to IFRSs – the following amendments are effective from  
1 January 2011, but are not likely to have a significant impact on the Group
(i) IFRS 7 ‘Financial Instruments: Disclosures’
(ii) IAS 1 ‘Presentation of financial statements’
(iii) IAS 34 ‘Interim Financial Reporting’
(iv) IFRIC 13 (amendment) ‘Customer Loyalty Programmes’ 
(v) IFRIC 14 (amendment) ‘The Limit on a Defined Benefit Asset’
At the date of approval of these financial statements, the following Standards and Interpretations were in issue and endorsed by 
the EU but not yet effective. None are expected to have a significant impact on the Group:
(i) IAS 27 ‘Consolidated and Separate Financial Statements’ (revised 2011) ‘Separate Financial Statements’ – effective 1 January 2013 
Going concern
The Group’s business, together with the factors likely to affect its future development, performance and financial position are set 
out in the Chief Executive’s Review on pages 3 to 6. The financial position of the Group, its cash flows, and its liquidity position 
are described in the Financial Review on pages 7 to 8.
The Directors prepare and review financial forecasts and other information on a regular basis. These forecasts include a number 
of scenarios relating to cash exits, raising additional funding or scaling back expenditure to preserve cash balances.
The Group has cash balances as at 31 July 2011 of £1,962,000 although this is not sufficient to fund all the planned levels of 
investment and expenditure for the next 12 months.
However, the Directors believe there is a reasonable likelihood that the Group will achieve cash exits during the next year and 
that these exits will generate sufficient cash for the Group to continue in operational existence at planned investment levels for 
the foreseeable future.
Further, the Directors believe that, if these exits are not achieved, it will be possible to raise additional funds from current 
investors, a number of whom have indicated a willingness to support the Group. Again this will allow the Group to continue in 
operational existence at planned investment levels.
In addition, the Directors have prepared a forecast that demonstrates, in the absence of an exit or fund raising, the Group could 
alter its planned expenditure and investment plans sufficiently to ensure it has adequate resources to continue in operational 
existence albeit at reduced investment and expenditure levels.
For these reasons, the Directors have concluded that the Group has adequate working capital and cash balances to operate for 
the foreseeable future and it is appropriate to use the going concern basis of preparation for these financial statements.
Basis of consolidation
Subsidiaries
The Group’s consolidated financial statements consist of Fusion IP plc and all of its subsidiaries. The consolidated financial 
statements exclude intra-group transactions.
Subsidiaries are consolidated from the date of their acquisition, being the date on which the Group obtains control and continues 
through to the date control ceases. Control consists of the power to govern the financial and operating policies of the entity in order 
to obtain benefit from its activities, usually by holding more than 50% of the voting rights or by way of contractual agreement. 25
Fusion IP plc Annual Report and Accounts 2011
The cost of acquisition is measured at fair value of assets given, equity instruments issued and liabilities incurred or assumed 
at the date of exchange. Costs directly attributable to the transaction are expensed as incurred. The excess of the cost of 
acquisition over the fair value of the Group’s share of the identifiable assets, liabilities and contingent liabilities is recorded 
as goodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is 
recognised directly in the statement of comprehensive income.
Upon the loss of control, the Group derecognises the assets and liabilities of the subsidiary, any non-controlling interests and 
other components of equity related to the subsidiary. Any surplus or deficit arising on the loss of control is recognised in the 
statement of comprehensive income. If the Group retains any interest in the previous subsidiary, then such interest is measured 
at fair value at the date that control is lost. Subsequently it is accounted for as a spin-out investment as detailed below.
Spin-out investments
Spin-out investments are entities over which the Group has significant influence, but not control, generally accompanied by 
a shareholding of less than 50% of the equity or voting rights. Spin-out investments that are held by the Group with a view to 
the ultimate realisation of capital gains are accounted for in accordance with IAS 39 “Financial Instruments: Recognition and 
Measurement” and upon initial recognition are designated at fair value through profit or loss. This treatment is permitted by IAS 
28, in which investments held by entities which are akin to venture capitalist organisations can be excluded from its scope.
Dilution gains and losses arising in spin-out investments are recognised in the statement of comprehensive income.
Dividends received from spin-out investments are recognised in the statement of comprehensive income in the period in which 
they are received.
Loan investments
Loan investments are generally unquoted loan instruments which are convertible to equity at a future point in time. Such 
instruments are considered to be hybrid instruments containing a fixed rate of debt host contract with an embedded equity 
derivative. The Group designates the entire hybrid contract at fair value through the statement of comprehensive income 
on initial recognition and accordingly, the embedded derivative is not separated from the host contract and accounted for 
separately. The fair value of loan instruments is established by calculating the present value of expected future cash flows 
associated with the instrument.
Transactions with minority shareholders – “economic entity approach”
The Group applies a policy of treating transactions with non-controlling interests as transactions with equity owners of the Group. 
For purchases from non-controlling interests, the difference between any consideration paid and the relevant share acquired 
of the carrying value of net assets of the subsidiary is deducted from equity. Gains or losses on disposals to non-controlling 
interests are also recorded in equity. For disposals to non-controlling interests, differences between any proceeds received and 
the relevant share of non-controlling interests are also recorded in equity.
Operating segments 
An operating segment is a group of assets and operations which are identified on the basis of internal reports that are regularly  
reviewed by the Board, which analyse the Group in order to allocate resources to the segment and to assess its ongoing performance.
Foreign currency translation
Transactions in foreign currencies are translated at the foreign exchange rate ruling at the date of the transaction. Monetary 
assets and liabilities denominated in foreign currencies at the balance sheet date are translated to Sterling at the foreign 
exchange rate ruling at that date. Foreign exchange differences arising on translation are recognised in the statement of 
comprehensive income.  26
Fusion IP plc Annual Report and Accounts 2011
Notes to the Consolidated Financial Statements continued
for the year ended 31 July 2011
2. Summary of significant accounting policies continued
Property, plant and equipment
All property, plant and equipment is shown at cost less depreciation and impairment. Depreciation is provided to write off the 
cost, less the estimated residual value, by equal instalments over the estimated useful economic lives as follows:
Computer equipment – 4 years
Office/laboratory equipment – 3 to 5 years
Demonstration prototypes – 2 to 3 years
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date. Gains 
and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised within the 
statement of comprehensive income.
Goodwill
Goodwill arises on the acquisition of subsidiary undertakings, representing the excess fair value of the consideration given over 
the fair value of the identifiable assets, liabilities and contingent liabilities acquired. Goodwill is tested annually for impairment 
and is carried at cost less accumulated impairment losses.
Goodwill in respect of acquisitions prior to 1 August 2006 is included on the basis of its deemed cost, which represents the 
amount recorded under UK GAAP.
IP rights
IP rights comprise IP, patents and licences purchased by the Group together with the IP pipelines with Cardiff University and 
the University of Sheffield. The Group’s view is that these assets have a finite life of ten years and to that extent they should be 
amortised over their respective unexpired periods with provision made for any impairment when required. IP rights are tested 
annually for impairment and are carried at cost less accumulated impairment losses.
Impairment of intangible assets
Assets that are subject to amortisation are tested for impairment annually as a matter of policy. An impairment loss is recognised 
for the amount by which the carrying amount exceeds its recoverable amount. The recoverable amount is the higher of the 
asset’s fair value less costs to sell and the value in use. For the purposes of assessing impairments, assets are grouped at the 
lowest levels for which there are largely independent cash flows (cash-generating units (CGUs)).
Research and development expenditure
Expenditure on research activities is recognised in the statement of comprehensive income as an expense as incurred.
Expenditure on development activities is capitalised if the product or process is technically and commercially feasible and the 
Group intends to, and has the technical ability and sufficient resources to, complete development and if the Group can measure 
reliably the expenditure attributable to the intangible asset during its development. The expenditure capitalised includes the 
cost of materials, direct labour and an appropriate proportion of overheads. Other development expenditure is recognised in the 
statement of comprehensive income as an expense as incurred. 
Financial assets
The Group classifies its financial assets into one of the categories listed below, depending on the purpose for which the asset 
was acquired. None of the Group’s assets are categorised as held to maturity or available for sale.
In respect of regular purchases and sales, these are recognised on the trade-date – the date on which the Group commits to 
purchasing or selling the asset. Financial assets are derecognised when the rights to receive cash flows from the assets have 
expired or the Group has transferred substantially all risks and rewards of ownership. 27
Fusion IP plc Annual Report and Accounts 2011
Financial assets at fair value through profit or loss
Spin-out investments and associated loans that are held by the Group with a view to the ultimate realisation of capital gains are 
designated as financial assets at fair value through profit and loss. Realised and unrealised gains on financial assets at fair value 
through profit or loss are included in the statement of comprehensive income in the period they arise.
Price of recent investment
The fair value of unlisted securities is established using IPEVCV guidelines. The valuation methodology used most commonly by 
the Group is the “price of recent investment”. The following considerations are used when calculating the fair value using the 
price of recent investment guidance:
•	 where the investment being valued was itself made recently, its cost will generally provide a good indication of fair value;
•	 where there has been any recent investment by third parties, the price of that investment will provide a basis for the 
valuation; and
•	 where a fair value cannot be estimated reliably the investment is reported at cost unless there is evidence that the investment 
has since been impaired.
Other valuation techniques
Where spin-out investments are trading profitably and cash generative there is usually no readily ascertainable value from 
following the “price of recent investment” methodology. In these circumstances the Group considers alternative methodologies 
in the IPEVCV guidelines, such as discounted cash flows (“DCF”) or price-earnings multiples. DCF involves estimating the fair 
value of business by calculating the present value of expected future cash flows, based on the most recent forecasts in respect 
of the underlying business. 
When using the earnings multiple methodology, earnings before interest and tax (“EBIT”) are generally used, adjusted to a 
maintainable level. A suitable earnings multiple is derived from an equivalent business or group of businesses, for which the 
average price-earnings multiple for the relevant sector index can generally be considered a suitable proxy. This multiple is 
applied to earnings to derive an enterprise value which is then discounted to reflect non-marketability and other risks inherent to 
businesses in early stages of operation.
Other receivables
Other receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active 
market. They are included in current assets and comprise “trade and other receivables” and “cash and cash equivalents”. They 
are carried at cost less any provision for impairment.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call deposits with an original maturity of three months or less.
Payments on account
Payments on account are recorded within trade and other receivables and represent the transfer of funds in advance to the 
University of Sheffield held on the balance sheet of Fusion IP Sheffield Limited. The payments on account are held at cost, less 
any amounts transferred to investments on account of the acquisition of interests in spin-out companies or the transfer of IP 
from the University of Sheffield.
Trade and other payables
Trade and other payables are comprised of trade payables and other short-term monetary liabilities, which are recognised 
at amortised cost. Unless otherwise indicated, the carrying amounts of the Group’s financial liabilities are a reasonable 
approximation of their fair value.  28
Fusion IP plc Annual Report and Accounts 2011
Notes to the Consolidated Financial Statements continued
for the year ended 31 July 2011
2. Summary of significant accounting policies continued
Non-current liabilities owed to related parties
Non-current liabilities owed to related parties relate to loan notes and accrued interest due to the University of Sheffield and 
Cardiff University arising from the purchase of the Group’s interest in its portfolio of spin-out companies. These amounts 
are repayable on the earlier of the sale by Fusion IP of the underlying share capital in the Company, or the Company making 
dividend payments, or ten years from the day of issue should the spin-out company generate a return. These amounts are only 
payable to the extent that any gain or dividend is received by Fusion IP, and can be cancelled by Fusion IP by the return of the 
shares to which they relate to the University of Sheffield or Cardiff University respectively. They are recognised at amortised cost 
which is a reasonable approximation of fair value.
Share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown  
in equity as a deduction, net of tax, from the proceeds.
Leases
Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating 
leases. Payments made under operating leases are charged to the income statement on a straight line basis over the period of 
the lease.
Income tax
Income tax expense comprises current and deferred tax. Current tax and deferred tax is recognised in the statement of 
comprehensive income except to the extent that it relates to a business combination, or items recognised directly in equity or in 
other comprehensive income.
Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or 
substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years. Current tax payable 
also includes any tax liability arising from the declaration of dividends.
Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial 
reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for:
•	 temporary differences on the initial recognition of assets or liabilities in a transaction that is not a business combination and 
that affects neither accounting nor taxable profit or loss;
•	 temporary differences related to investments in subsidiaries and jointly controlled entities to the extent that it is probable that 
they will not reverse in the foreseeable future; and
•	 taxable temporary differences arising on the initial recognition of goodwill.
Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on 
the laws that have been enacted or substantively enacted by the reporting date.
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and 
they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they 
intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously.
A deferred tax asset is recognised for unused tax losses, tax credits and deductible temporary differences, to the extent that it is 
probable that future taxable profits will be available against which they can be utilised. Deferred tax assets are reviewed at each 
reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.
Employee benefits
Pension obligations
The Group does not operate any pension schemes for employees but makes contributions to employee personal pension 
schemes on an individual basis. The Group has no further payment obligations once the contributions have been paid. The 
contributions are recognised as employee benefit expenses when they are due. 29
Fusion IP plc Annual Report and Accounts 2011
Share-based payments
Share-based incentive arrangements are provided to Directors and certain employees. Share options granted are valued at the 
date of grant using the Black-Scholes option pricing model and are expensed on a straight line basis over the vesting period to 
operating profit.
Revenue recognition
Revenue comprises:
•	 fees for various advisory and fund management services which are recognised in the statement of comprehensive income 
when the related services are performed and when considered recoverable; and
•	 licence fees which are recognised in full upon signing once all the Group’s obligations have been completed, in accordance 
with the substance of the agreement.
Corporate operating expenses
Corporate operating expenses reflect the costs associated with running the central functions of the Group. The costs are 
contained within the Parent Company, Fusion IP plc and the two wholly owned subsidiaries; Fusion IP Sheffield Limited and 
Fusion IP Cardiff Limited.
Subsidiary spin-out operating expenses
Subsidiary spin-out operating expenses reflect the costs associated with running the early stage spin-out companies in the 
period from when they are first incorporated through to when they have completed third-party venture capital funding which 
then dilutes the Group’s holding below 50% of the equity or voting rights. At this stage the spin-out company is then de-
consolidated and accounted for as a financial asset at held fair value.
3. Financial risk management
In the normal course of business, the Group uses certain financial instruments including cash, equity investments and loans to 
its portfolio of spin-out companies. Loans to spin-out companies are treated on the same basis as equity for valuation purposes. 
Risk management objectives
The Group is exposed to a number of risks through the performance of its normal operations. The most significant are liquidity 
and market price risk. Income from surplus funds is dependent on market interest rates.
The Group’s main objective in using financial instruments is to promote the commercialisation of IP held by technology 
businesses through the raising and investing of funds for this purpose. The Group’s policies in calculating the nature, amount 
and timing of investments are determined by planned future investment activity.
Due to the nature of the Group’s activities, the Directors do not consider it necessary to use derivative financial instruments to 
hedge the Group’s exposure to fluctuations in interest rates, as these exposures have not been significant during the period 
covered by this report.
Interest rate risk profile of financial liabilities
The Group’s trade and other payables consist of short-term payables, therefore disclosures have been excluded. The amounts 
owed to related parties falling due after more than one year generally relates to loan notes and accrued interest due to the 
University of Sheffield and Cardiff University arising from the purchase of the Group’s interest in its portfolio of spin-out 
companies. These amounts are interest bearing at a rate which tracks the London Interbank Offered Rate (LIBOR).
Borrowing facilities
The Group had no undrawn committed borrowing facilities available during the period.
Currency exposures
The Group occasionally enters into transactions in currencies other than Sterling. Any exposure to fluctuations in market 
currency exchange rates is considered immaterial from a Group perspective. Therefore no sensitivity analysis has been prepared 
in relation to this risk. 30
Fusion IP plc Annual Report and Accounts 2011
Notes to the Consolidated Financial Statements continued
for the year ended 31 July 2011
3. Financial risk management continued
Interest rate risk
The Group has directly maintained special interest bearing accounts with corporate banks at variable rates of interest related to 
LIBOR. These deposits are made on a daily basis with minimal balances held on current account. Fixed rate deposits for periods 
of up to three months are placed with corporate banks where surplus funds in excess of £1m exist and interest rates above 
LIBOR are available.
The Group’s cash and cash deposits as at 31 July 2011 amounted to £1,962,000 (2010: £4,610,000).
Liquidity risk
The Group seeks to manage financial risk, and in particular liquidity risk, ensuring that sufficient liquidity is available to meet 
foreseeable requirements and to invest surplus cash in low risk instruments with reputable institutions. 
Market price risk
The Group is exposed to risk in respect of equity investments and loans to spin-out companies. The Group seeks to mitigate this 
risk by routinely monitoring the performance of the spin-out companies. The Group uses a rigorous investment appraisal process 
prior to deciding on investment. Regular spin-out company updates are provided to the Board on the status and valuation 
of investments. Most spin-out companies also have a Fusion IP plc Executive Director on their board who closely monitors 
the performance of the company against strategic milestones. The value of early stage technology and life science spin-out 
companies is affected by the ability to attract strategic industrial partners and venture capital institutions to invest in follow-on 
funding rounds, which is ultimately determined by the general economic environment and the performance of the international 
equity markets.
Capital management
The capital structure of the group is a mixture of cash balances and equity comprising issued share capital and reserves as 
detailed in note 18. The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going 
concern in order to provide returns for shareholders and benefits for other stakeholders. 
The Group does not currently utilise debt within its capital structure. Additional cash and cash equivalents for operating and 
investment requirements are generated through the issue of new shares when required.
There were no changes in the Group’s approach to capital management during the year. 
4. Critical accounting estimates and judgements
In the process of applying the Group’s accounting policies, which are set out in note 2, the Directors have made certain 
judgements that have a significant effect on the amounts recognised in the financial statements. The Group makes estimates 
and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual 
results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of 
assets and liabilities within the next financial year are described below.
Valuation of unquoted equity investments
The judgements required to determine the appropriate valuation methodology of unquoted equity investments means there is a 
risk of material adjustment to the carrying amounts of assets and liabilities. These judgements include a decision whether or not 
to impair valuations.
Valuations of unquoted equity investments are based on the last external funding round where one has taken place, otherwise 
at cost, less any provision for impairment if the most recent external funding round establishes a valuation lower than the cost to 
the Group.
Where unquoted equity investments are trading profitably and cash generative they will be valued using either DCF or price-
earnings multiples, which will be discounted to reflect non-marketability and other risks inherent to businesses in early stages 
of operation. The estimates included in these valuations are described in the accounting policy for financial assets at fair value 
through profit or loss. These valuations will be reviewed on a regular basis based on the trading performance of the companies 
and decisions on whether to increase or impair the carrying value will be reviewed by the Directors. 31
Fusion IP plc Annual Report and Accounts 2011
Valuation of intangible IP rights
It is Group policy to test, at least annually, whether the IP rights have suffered any impairment. There are a number of variable 
assumptions set out in note 14. The Directors consider that for each of these variables there is a wide range of reasonably 
possible alternative values, which result in a wide range of fair value estimates for the IP rights agreement. None of these 
estimates of fair value is considered more appropriate or relevant than any other. As a result of this, the Directors’ view is that the 
IP rights should be amortised over the ten-year life of the agreement with provision made for any impairment when required. 
Subsidiaries and spin-out investments
At the point of investing in a new spin-out company the Directors consider the definitions of a subsidiary and a spin-out 
investment as set out in note 2. The judgements over control of the company are assessed through:
•	 proportion of voting rights held;
•	 power to govern policies of the entity; and
•	 power to appoint a majority of board members.
5. Operating segments
For the year ended 31 July 2011 and the year ended 31 July 2010 the Group’s revenue and profit or loss was derived from its 
principal activity which encompasses technology transfer, company incubation and early stage venture capital. The Group’s Board, 
which is considered to be the Group’s chief operating decision maker, have undertaken a review of the Group’s operations and its 
associated business risks and consider the performance of the business as one reportable segment. The portfolio of investments 
is reviewed with no differentiation made based on the market sector of the company or whether the company originated from the 
Sheffield or Cardiff IP pipeline. No distinction is made between the assessment of subsidiaries and spin-out companies.
The principal activity of the Group is based solely within the UK hence no geographical analysis is presented.
The disclosures for the reportable segment is therefore given by the primary financial statements and related notes.There are 
no material differences between the segment information as presented to the chief operating decision maker, and the financial 
information is presented under IFRS as adopted by the EU.
6. Results from operating activities
Results from operating activities have been arrived at after charging/(crediting) the following operating expenses:
 2011
£000
 2010
£000
Depreciation on property, plant and equipment 26 177
Profit on disposal of property, plant and equipment – (19)
Amortisation of intangible assets 1,995 1,998
Employee costs (see note 8) 1,139 1,349
Operating leases – property 50 63
Payments to the University of Sheffield/Cardiff University for IP mining 313 249
Research, development and patent costs 452 1,039
Cost of raw materials and consumables 39 –
Legal, professional, insurance and advisory costs 546 726
Administration and marketing costs 350 374
4,910 5,956 32
Fusion IP plc Annual Report and Accounts 2011
Notes to the Consolidated Financial Statements continued
for the year ended 31 July 2011
7. Auditors’ remuneration
During the year the Group obtained the following services from the Group’s auditors:
 2011
£000
 2010
£000
Fees payable to the Company’s auditors for the audit of the Company’s annual accounts 18 19
Fees payable to the Company’s auditors and their associates for other services:
– the audit of the Company’s subsidiary spin-out companies 4 7
8. Employee costs
 2011 
£000
 2010 
£000
Wages and salaries 926 1,095
Social security costs 114 132
Pension costs – contributions to money purchase plans 64 65
Share-based payments 35 57
1,139 1,349
Average monthly number of persons (including Directors) employed:
 2011 
Number
 2010 
Number
Central corporate functions 13 14
Subsidiary spin-out companies 3 5
16 19
9. Share-based payments
No share options or share warrants were exercised during the period. During the year no new share warrants or options were issued.
Details of the share options held by Directors are set out within the Report on the Directors’ Remuneration.
The fair value of any outstanding share-based options and warrants are recognised as an expense through the profit and loss 
account over the relevant vesting periods. The charge in the current year was £35,000 (2010: £57,000).
The fair values are determined by using the Black-Scholes option pricing model and the assumptions used at the fair value 
measurement date are shown in the table below.
Employees Employees Employees Directors Directors
Fair value at grant date 47.24p 15.65p 14.43p 47.24p 15.65p
Share price at grant 150.00p 33.50p 33.50p 150.00p 33.50p
Dividend yield 0.00% 0.00% 0.00% 0.00% 0.00%
Expected volatility 18.52% 42.20% 42.17% 18.52% 42.20%
Term to maturity 5.5 years 5.5 years 4.5 years 5.5 years 5.5 years
Risk free interest rate 4.46% 3.00% 3.00% 4.46% 3.00%
Number of shares under option 33,333 50,000 400,000 99,999 150,000
The expected volatility was benchmarked against the FTSE AIM All Share Index on those options issued on 31 July 2010 and 
for the previous options against an index of similar companies in the Biotech Index as no historic data was available for the 
Company at the grant date. 33
Fusion IP plc Annual Report and Accounts 2011
10. Finance income and costs
 2011
£000
 2010
£000
Finance income
Interest income on short-term bank deposits 18 19
Interest income on loans to spin-out investments 100 36
118 55
Finance expenses
Interest payable on loans from related parties (56) (62)
(56) (62)
Net finance income/(costs) 62 (7)
11. Taxation
2011
£000
2010
£000
Current tax – –
Deferred tax – –
– –
Deferred tax assets of £3,055,628 (2010: £1,855,000) from unutilised tax losses have not been recognised as the Directors consider 
there to be sufficient uncertainty over the availability of future taxable profits from which the trading losses can be deducted.
The Directors believe that the Group will qualify for the Substantial Shareholder Exemption (SSE) and therefore no deferred tax is 
provided for in respect of the fair value uplifts in valuation of certain of the equity investments. 
Corporation tax is calculated at a pro-rata of 20% and 21% (2010: 21%) of the estimated assessable profit for the period. On 
the 1 April 2011, the Small Profits Rate of corporation tax was reduced from 21% to 20%. The calculations in the accounts are 
based on a pro-rata application of these rates across the financial year. 
The charge for the year can be reconciled to the profit/(loss) per the income statement as follows:
 2011 
£000
 2010 
£000
Profit/(Loss) before tax 1,046 (1,600)
Current tax pro-rated across the year at 20% and 21% 216 (336)
Effects of:
– expenses not deductible for tax purposes (199) 150
– depreciation in excess of capital allowances 27 24
– UK research and development tax credits (44) (38)
– adjustments in respect of prior years – 1
– tax losses carried/(brought) forward – 199 
Total current charge – – 34
Fusion IP plc Annual Report and Accounts 2011
Notes to the Consolidated Financial Statements continued
for the year ended 31 July 2011
12. Earnings per share
2011 2010
Profit/(Loss) attributable to the equity holders of the parent £1,370,000 (£789,000)
Weighted average number of Ordinary shares in issue 54,242,850 50,213,222
Basic and fully diluted profit/(loss) per share 2.53p (1.57)p
Basic earnings per share is calculated by dividing the profit or loss attributable to equity holders of the parent by the weighted 
average number of Ordinary shares in issue during the year.
Diluted earnings per share is calculated by adjusting the weighted average number of Ordinary shares outstanding to assume 
conversion of all dilutive potential Ordinary shares according to IAS 33. Dilutive potential Ordinary shares include granted 
share options and warrants where the exercise price is less than the average market price of the Company’s Ordinary shares 
during the year.
IAS 33 requires presentation of diluted earnings per share when a company could be called upon to issue shares that would 
decrease net profit or increase net loss per share. Only options or warrants that are “in the money” are treated as dilutive and 
net loss per share would not be increased by the exercise of such options or warrants. Therefore no adjustment has been made 
to dilute profit/(loss) per share for any outstanding shares, options or warrants.
13. Property, plant and equipment
Office and
computer
 equipment
£000
Prototypes and 
laboratory 
equipment
£000
Total
£000
Cost
At 1 August 2010 81 251 332
Additions 4 1 5
Disposals (6) (252) (258)
At 31 July 2011 79 – 79
Accumulated depreciation
At 1 August 2010 (52) (222) (274)
Charge for the year (15) (11) (26)
Disposals 4 233 237
At 31 July 2011 (63) – (63)
Net book value
At 31 July 2011 16 – 16
Cost
At 1 August 2009 85 394 479
Additions 15 57 72
Disposals (19) (200) (219)
At 31 July 2010 81 251 332
Accumulated depreciation
At 1 August 2009 (55) (173) (228)
Charge for the year (16) (161) (177)
Disposals 19 112 131
At 31 July 2010 (52) (222) (274)
Net book value
At 31 July 2010 29 29 58 35
Fusion IP plc Annual Report and Accounts 2011
14. Intangible assets
IP rights and
 patents/licences
 £000
Goodwill 
£000
Total 
£000
Cost
At 1 August 2010 19,978 13 19,991
Disposals (85) (13) (98)
At 31 July 2011 19,893 – 19,893
Accumulated amortisation
At 1 August 2010 (6,484) – (6,484)
Amortisation charge (1,995) – (1,995)
Disposals 28 – 28
At 31 July 2011 (8,451) – (8,451)
Net book value
At 31 July 2011 11,442 – 11,442
Cost
At 1 August 2009 19,984 65 20,049
Additions 31 – 31
Disposals (37) (52) (89)
At 31 July 2010 19,978 13 19,991
Accumulated amortisation
At 1 August 2009 (4,523) (52) (4,575)
Amortisation charge (1,998) – (1,998)
Disposals 37 52 89
At 31 July 2010 (6,484) – (6,484)
Net book value
At 31 July 2010 13,494 13 13,507
Recoverable amount of the University of Sheffield and Cardiff University IP pipeline rights
The following key variables are relevant in determining a recoverable amount for the IP pipeline rights:
•	 the timing and number of spin-out companies from both universities;
•	 dilution of percentage shareholding rates as a result of financing related spin-out companies in the future;
•	 disposal values and timings; and
•	 discount factors of 6-8% (2010: 6-8%).
Each year the Directors review the IP pipeline rights for any evidence of impairment. This review is based on a discounted cash 
flow model which looks at historic information based on the key variables noted above and projects forwards over the remaining 
life of the IP pipeline rights and through to the exit of the spin-out companies. Based on the review this year, the Directors 
believe that there is no impairment of the IP rights and that the most appropriate treatment is for the IP rights to be amortised 
over the ten-year life of the agreement with provision made for any impairment when required, consistent with the treatment in 
the prior year. The carrying value of the Cardiff University IP rights amounted to £8,681,000 (2010: £10,275,000). The carrying 
value of the University of Sheffield IP rights amounted to £2,739,000 (2010: £3,130,000). 36
Fusion IP plc Annual Report and Accounts 2011
Notes to the Consolidated Financial Statements continued
for the year ended 31 July 2011
15. Investments
Spin-out 
companies
£000
Loans
£000
Total
£000
Fair value
At 1 August 2010 9,675 1,113 10,788
Additions 592 1,002 1,594
Transfers 1,182 – 1,182
Change in fair value in the year 3,604 (400) 3,204
At 31 July 2011 15,053 1,715 16,768
Change in fair value in the year
Fair value gains 3,983 – 3,983
Fair value losses (379) (400) (779)
3,604 (400) 3,204
Fair value
At 1 August 2009 4,990 1,407 6,397
Additions 1,022 779 1,801
Transfers 62 (62) –
Change in fair value in the year 3,601 (1,011) 2,590
At 31 July 2010 9,675 1,113 10,788
Change in fair value in the year
Fair value gains 3,671 – 3,671
Fair value losses (70) (1,011) (1,081)
3,601 (1,011) 2,590
The total fair value of investments of £16,768,000 (2010: £10,788,000) has been determined using two valuation methods:
•	 Level 1 – inputs other than quoted prices that are observable for the assets - £12,802,000 (2010: £8,806,000)
•	 Level 2 – inputs for the asset that are not based on observable market data - £3,966,000 (2010: £1,982,000)
During the year, the disposal of subsidiary undertakings, whereby the Group’s holdings in Diurnal Limited and Phase Focus 
Limited dropped below 50% following third party funding rounds, resulted in a gain of £1,679,000 (2010: £545,000 gain). 37
Fusion IP plc Annual Report and Accounts 2011
At 31 July 2011, the Group had investments where it holds 20% or more of the issued share capital as follows:
Principal 
activity Holding
Class of
shares held
Phase Focus Limited Lensless microscopy 49% Ordinary
Magnomatics Limited Magnetic devices 48% Ordinary
Seren Photonics Limited High brightness LEDs 48% Ordinary
Progenteq Limited Cartilage replacement therapies 48% Ordinary
Demasq Limited Bone and soft tissue imaging products 48% Ordinary
Mesuro Limited Radio frequency design and test instrumentation 47% Ordinary
Asalus Medical Instruments Limited Medical devices 45% Ordinary
Diurnal Limited Hormone replacement 43% Ordinary
Iterate Control Limited Advance control testing software 40% Ordinary
Asterion Limited Cytokine therapies 38% Ordinary
Medaphor Limited Medical training solutions 38% Ordinary
Adjuvantix Limited Vaccine adjuvants 35% Ordinary
Perlemax Limited Industrial gas processes 35% Ordinary
Art of Xen Limited Medical use of xenon gas 32% Ordinary
I2L Research Limited Pesticide testing 31% Ordinary
Abcellute Limited Cell stabilising technology 29% Ordinary
Simcyp Limited Drug metabolism 21% Ordinary
At 31 July 2011, the Group had investments where it holds 20% or less of the issued share capital as follows:
Principal 
activity Holding
Class of
shares held
Muscagen Limited Drug discovery 13% Ordinary
Morvus Technology Limited Oncology therapies 10% Ordinary
Bitecic Limited Clinical research and support 10% Ordinary
Zilico Limited Cervical cancer detection 6% Ordinary
Regenerative Medicine Assets Limited Regenerative medicine 4% Ordinary
Q Chip Limited Life science and therapeutic products 2% Ordinary
All companies are incorporated in England and Wales. 38
Fusion IP plc Annual Report and Accounts 2011
Notes to the Consolidated Financial Statements continued
for the year ended 31 July 2011
16. Trade and other receivables
 2011
£000
 2010
£000
Trade receivables 44 9
Amounts due from related parties 268 26
Other tax and social security 9 24
Payments on account 241 278
Prepayments and accrued income 51 65
613 402
The Directors consider that the carrying amount of trade and other receivables approximates their fair value.
The amounts due from related parties are detailed in note 24. 
Payments on account represent the transfer of funds in advance to the University of Sheffield, details of which are set out in the 
accounting policy for “payments on account”.
Credit risk
The Directors believe that given the majority of trade and other receivables are with related parties (primarily public sector 
organisations) there is little risk to credit quality.
Ageing of trade receivables
No trade receivables are past their due date and no impairment provision was considered necessary in the current or 
preceeding years.
17. Cash and cash equivalents
2011
£000
2010
£000
Cash and cash equivalents 1,962 4,610
1,962 4,610
Cash and cash equivalents comprise cash held by the Group and short-term bank deposits with an original maturity of three 
months or less. The carrying amount of these assets approximates their fair value.
18. Share capital and premium
2011
£000
2010
£000
Allotted, called up and fully paid
54,242,850 (2010: 54,242,850) Ordinary shares of 1p each 542 542
Share premium 39,034 39,034
The Company has one class of Ordinary shares which carry equal voting rights, equal rights to income and distribution of assets 
on liquidation or otherwise and no right to fixed income.
19. Other reserves
The other reserves totalling £3,000 (2010: £3,000) comprise a capital redemption reserve of £1,000 (2010: £1,000) and a 
capital reserve of £2,000 (2010: £2,000) arising from the Company’s admission to AIM in 2005 and the resulting differences  
on consolidation under merger accounting. 39
Fusion IP plc Annual Report and Accounts 2011
20. Non-controlling interests
 2011
£000
 2010
£000
At 1 August – 139
Disposal of subsidiary undertakings 424 487
Share of profit/(loss) in year (324) (811)
Non-controlling interests attributable to Group (100) 185
At 31 July – –
The disposal of subsidiary undertakings reflects the change of the Group’s holdings in Phase Focus Limited and Diurnal Limited 
following investment monies received from funding rounds involving third parties.
21. Non-current liabilities
 2011
£000
 2010
£000
Other payables – 85
Amounts owed to University of Sheffield 731 713
Amounts owed to Cardiff University 1,485 1,449
Amounts owed to Sheffield University Enterprises Limited – 84
Deferred consideration owed to University of Sheffield 973 973
Amounts owed to related parties 3,189 3,219
3,189 3,304
The amount owed to the University of Sheffield and Cardiff University relate to loan notes and accrued interest due arising from 
the purchase of the Group’s interest in its portfolio of spin-out companies. These amounts are repayable on the earlier of the sale 
by Fusion IP of the underlying share capital in the company, or the company making dividend payments, or ten years from the day 
of issue. These amounts are only payable to the extent that any gain or dividend is received by Fusion IP and can be cancelled by 
Fusion IP by the return of the shares to which they relate to the University of Sheffield or Cardiff University respectively.
The deferred consideration owed to the University of Sheffield relates to the expanded Sheffield Agreement and represents 
785,609 Ordinary shares (2010: 785,609 Ordinary shares) which will be issued to the University of Sheffield. The Ordinary 
shares will only be issued once additional Ordinary shares are issued and only to the extent that the holding of the University 
of Sheffield in the Company does not exceed 29.9% of the issued share capital.
The amounts owed to Sheffield University Enterprises Limited related to a loan and accrued interest repayable by the former 
subsidiary undertaking, Diurnal Limited. 
Maturity analysis
Due to the repayment terms described above, the date of maturity of these loans is uncertain.
Other payables represented preference shares issued by the former subsidiary undertaking, Diurnal Limited to third party investors. 
22. Trade and other payables 
 2011
£000
 2010
£000
Trade creditors 105 108
Other creditors 31 –
Other tax and social security 2 40
Accruals and deferred income 242 187
380 335 40
Fusion IP plc Annual Report and Accounts 2011
Notes to the Consolidated Financial Statements continued
for the year ended 31 July 2011
23. Operating lease commitments
 2011
£000
 2010
£000
Minimum commitments under non-cancellable operating leases on property expiring:
– no later than one year 17 10
– later than one year and no later than five years – 30
17 40
The lease payments represent amounts payable by the Group for its offices, accommodation and laboratory requirements in the UK.
24. Related party transactions
During the year, the Group purchased administrative and other services from Sheffield University Enterprises Limited (SUEL), 
a wholly owned subsidiary of the University of Sheffield, totalling £49,326 (2010: £59,317). At 31 July 2011 the balance due to 
SUEL was £1,446 (2010: £nil).
Fusion IP Sheffield Limited purchased IP from the University of Sheffield during the year with a total value of £nil (2010: £31,797). 
These payments were taken against payments on account. 
Under the terms of the agreement dated January 2007 Fusion IP Cardiff Limited paid Cardiff University £210,000 
(2010: £210,000) as payments to support the management of the IP pipeline. At 31 July 2011 the balance due to Cardiff 
University was £nil (2010: £nil).
Under the terms of the agreement dated January 2009 Fusion IP Sheffield Limited paid Sheffield University £78,750 (2010: £nil). 
During the year, Fusion IP has continued to accrue interest due on loans in respect of the purchase of the original portfolio 
companies from both the University of Sheffield and Cardiff University. The total amounts due are set out in note 21.
During the year, Fusion IP supplied management services to companies in which it held a participating interest totalling 
£451,554 (2010: £180,440). At 31 July 2011 the amount owed to Fusion IP was £66,207 (2010: £26,087).
During the year, companies in which Fusion IP held a participating interest contracted for £441,575 (2010: £380,323) of 
research services combined from the University of Sheffield and Cardiff University. At 31 July 2011 the combined amount owed 
to the universities for these contracted research services was £88,402 (2010: £190,334).
During the year, IP Group invested £495,207 (2010: £147,350) in companies in which Fusion IP held a participating interest.
During the year, directors of Fusion IP invested £19,821 (2010: £5,000) in companies in which Fusion IP held a participating interest. 41
Fusion IP plc Annual Report and Accounts 2011
Company Balance Sheet 
as at 31 July 2011
Note
2011
£000
2010
£000
Fixed assets
Tangible assets 3 11 17
Investments 4 2 2
13 19
Current assets
Debtors 5 40,416 40,410
40,416 40,410
Creditors: amounts falling due within one year 6 (71) (71)
Net current assets 40,345 40,339
Creditors: amounts falling due after one year 7 (973) (973)
Net assets 39,385 39,385
Capital and reserves
Called up share capital 8 542 542
Share premium 8 39,034 39,034
Capital redemption reserve 8 1 1
Retained deficit 8 (192) (192)
Equity shareholders’ funds 39,385 39,385
These financial statements were approved by the Board of Directors on 10 October 2011 and were signed on its behalf by  
the Chairman.
Doug Liversidge CBE
Chairman
Fusion IP plc – registered number 5275732 42
Fusion IP plc Annual Report and Accounts 2011
Notes to the Company Financial Statements
for the year ended 31 July 2011
1. Accounting policies
The Company financial statements have been prepared under the historical cost convention in accordance with applicable 
UK Accounting Standards and the Companies Act 2006. A summary of the Company accounting policies, which have been 
consistently applied throughout the year, are set out below.
Tangible assets
All tangible assets are shown at cost less depreciation and impairment. Depreciation is provided to write off the cost, less the 
estimated residual value by equal instalments over the estimated useful economic lives as follows:
Computer/office equipment – 3 to 4 years
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date. 
Investments in subsidiary undertakings
Investments in subsidiary undertakings are stated at historic cost less any provision for impairment in value.
Fixed asset investments
Unlisted investments are held at historic cost less any provision for impairment in value.
Loans to subsidiary undertakings
All inter-company loans are initially recognised at cost. As all inter-company loans are repayable on demand, their carrying value 
approximates to their fair value. 
Cash flow statement
The Company has taken advantage of the exemption in FRS 1 “Cash Flow Statements”, which provides that where a company is 
a member of a group and a consolidated cash flow statement is published, the company does not have to present an individual 
cash flow statement.
2. Results for the Parent Company
The Directors have taken advantage of the exemption available under Section 408 of the Companies Act 2006 and have not 
presented a profit and loss account for the Parent Company. The Parent Company’s result for the year was a profit of £nil  
(2010: £nil) after recharges. 
Details of the auditors’ remuneration are disclosed in note 7 to the consolidated financial statements.
Full details of Directors’ remuneration and employee information can be found in the Report on the Directors’ Remuneration on 
pages 12 to 14.
3. Tangible assets
Computer and office equipment
2011
£000
2010
£000
Cost
At 1 August 37 52
Additions 3 4
Disposals – (19)
At 31 July 40 37
Depreciation
At 1 August (20) (29)
Charge for year (9) (10)
Disposals – 19
At 31 July (29) (20)
Net Book Value 11 17 43
Fusion IP plc Annual Report and Accounts 2011
4. Investments
 2011
£000
2010
£000
Investments in subsidiary undertakings 1 1
Fixed asset investments 1 1
2 2
Details of the subsidiary undertakings at 31 July 2011 are as follows:
Principal
activity Holding
Class of 
shares held
Fusion IP Sheffield Limited Holding company 100% Ordinary
Fusion IP Cardiff Limited Holding company 100% Ordinary
All companies are incorporated in England and Wales.
5. Debtors
 2011
£000
 2010
£000
Prepayments and accrued income 25 22
Loans to subsidiary undertakings 40,391 40,388
40,416 40,410
Loans to subsidiary undertakings represent amounts advanced to Fusion IP Sheffield Limited and Fusion IP Cardiff Limited in 
respect of the IP pipeline agreements with the University of Sheffield and Cardiff University respectively. No interest has been 
charged on these loans and there is no fixed repayment term.
6. Creditors – amounts falling due within one year
 2011
£000
2010
£000
Accruals and deferred income 71 71
7. Creditors – amounts falling due after one year
 2011
£000
2010
£000
Deferred consideration owed to University of Sheffield 973 973
The deferred consideration owed to the University of Sheffield relates to the expanded Sheffield Agreement and represents 
785,609 Ordinary shares (2010: 785,609 Ordinary shares) which will be issued to the University of Sheffield. The Ordinary 
shares will only be issued once additional Ordinary shares are issued and only to the extent that the holding of the University of 
Sheffield in the Company does not exceed 29.9% of the issued share capital.
8. Share capital and reserves
Share
capital
£000
Share
premium
£000
Capital
redemption 
reserve
£000
 Retained
 deficit
£000
Total
£000
At 1 August 2010 542 39,034 1 (192) 39,385
Issue of share capital – – – – –
At 31 July 2011 542 39,034 1 (192) 39,385
Details of the Company’s alloted share capital can be found in note 18 to the consolidated financial statements. 44
Fusion IP plc Annual Report and Accounts 2011
Notice is hereby given that the Annual General Meeting of Fusion IP plc (the “Company”) will be held at the offices of Ashurst 
LLP, Broadwalk House, 5 Appold Street, London EC2A 2HA on 25 November 2011 at 10.30 a.m. to consider and, if thought fit, 
pass the following resolutions. It is intended to propose Resolution 5 as a special resolution and all other resolutions as ordinary 
resolutions. Voting on all resolutions will be on a show of hands unless a poll is validly demanded.
1.  To receive the accounts including the Report on the Directors’ Remuneration for the financial year ended 31 July 2011, 
together with the reports of the Directors and auditors thereon (Resolution 1).
2. To re-appoint KPMG Audit Plc as auditors of the Company (Resolution 2).
3. To authorise the Directors to set the remuneration of the auditors (Resolution 3).
4.  That, in substitution for all previously granted but unutilised authorities, the Directors be generally and unconditionally 
authorised for the purposes of Section 551 of the Companies Act 2006 (the “Act”), to exercise all the powers of the Company 
to allot shares and grant rights to subscribe for, or convert any security into, shares:
 (a)  up to an aggregate nominal amount (within the meaning of section 551(3) and (6) of the Act) of £180,809.50 (such 
amount to be reduced by the nominal amount allotted or granted under (b) below in excess of such sum); and 
 (b)  comprising equity securities (as defined in section 560 of the Act) up to an aggregate nominal amount (within the 
meaning of section 551(3) and (6) of the Act) of £361,619 (such amount to be reduced by any allotments of grants made 
under (a) above) in connection with or pursuant to an offer or invitation by way of a rights issue in favour of holders of 
ordinary shares in proportion (as nearly as practicable) to the respective number of ordinary shares held by them on the 
record date for such allotment (and holders of any other class of equity securities entitled to participate therein or if the 
Directors consider it necessary, as permitted by the rights of those securities), but subject to such exclusions or other 
arrangements as the Directors may consider necessary or appropriate to deal with fractional entitlements, treasury shares, 
record dates or legal, regulatory or practical difficulties which may arise under the laws of, or the requirements of, any 
regulatory body or stock exchange in any territory or any other matter whatsoever,
  these authorisations to expire at the conclusion of the next Annual General Meeting of the Company (save that the Company 
may before such expiry make any offer or agreement that would or might require shares to be allotted or rights to be granted, 
after such expiry and the Directors may allot shares, or grant rights to subscribe for or to convert any security into shares in 
pursuance of any such offer or agreement as if the authorisations conferred hereby had not expired) (Resolution 4).
5.  That subject to the passing of Resolution 4 set out above, the Directors be given power pursuant to sections 570 and 573 of 
the Act to:
 (a)  allot equity securities (as defined in section 560 of the Act) of the Company for cash pursuant to the authorisations 
conferred by Resolution 4; 
 (b) sell ordinary shares (as defined in section 560(1) of the Act) held by the Company as treasury shares for cash,
  as if section 561 of the Act did not apply to any such allotment or sale, provided that this power shall be limited to the 
allotment of equity securities for cash and the sale of treasury shares:
  (i)  in connection with or pursuant to an offer or invitation (but in the case of the authorisation granted under Resolution 
4(b) above, by way of a rights issue only) in favour of holders of ordinary shares in proportion (as nearly as practicable) 
to the respective number of ordinary shares held by them on the record date for such allotment or sale (and holders of 
any other class of equity securities entitled to participate therein or if the Directors consider it necessary, as permitted 
by the rights of those securities) but subject to such exclusions or other arrangements as the Directors may consider 
necessary or appropriate to deal with fractional entitlements, treasury shares, record dates or legal regulatory or 
practical difficulties which may arise under the laws of or the requirements of any regulatory body or stock exchange 
in any territory or any other matter whatsoever; and
Notice of Annual General Meeting 45
Fusion IP plc Annual Report and Accounts 2011
  (ii)  in the case of the authorisation granted under Resolution 4(a) above (or in the case of any transfer of treasury shares), 
and otherwise than pursuant to paragraph (i) of this resolution, up to an aggregate nominal amount of £27,121.42,
  and shall expire at the conclusion of the next Annual General Meeting of the Company, save that the Company may before 
such expiry make any offer or agreement that would or might require equity securities to be allotted, or treasury shares to be 
sold, after such expiry and the Directors may allot equity securities, or sell treasury shares, in pursuance of any such offer or 
agreement as if the power conferred hereby had not expired (Resolution 5).
By order of the Board
Richard Birtles
Company Secretary
10 October 2011 
Registered in England and Wales number 5275732
Registered Office: 
The Sheffield Bioincubator 
40 Leavygreave Road  
Sheffield S3 7RD
Notes
1.  Pursuant to Regulation 41 of the Uncertificated Securities Regulations 2001, the Company specifies that in order to have the 
right to attend and vote at the Annual General Meeting (and also for the purpose of determining how many votes a person 
entitled to attend and vote may cast), a person must be entered on the register of members of the Company at 6 p.m. on 23 
November 2011 or, in the event of any adjournment, at 6.00 p.m. on the date which is two working days before the adjourned 
meeting. Changes to entries on the register of members after this time shall be disregarded in determining the rights of any 
person to attend or vote at the meeting.
2.  A member is entitled to appoint another person as his proxy to exercise all or any of his or her rights to attend, to speak and 
to vote at the Annual General Meeting. A member may appoint more than one proxy in relation to the meeting, provided that 
each proxy is appointed to exercise the rights attached to a different share or shares held by him or her. A proxy need not be 
a member of the Company. A form of proxy for the meeting is enclosed. 
3.  To be valid any form of proxy or other instrument appointing a proxy must be received by post or by hand (during normal 
business hours only) by our registrar Capita Registrars at PXS, 34 Beckenham Road, Beckenham, Kent BR3 4TU by no 
later than 10.30 a.m. on 23 November 2011 (or, if the meeting is adjourned, 48 hours before the time fixed for the meeting, 
excluding non-working days). 
4.  Any corporation which is a member can appoint one or more corporate representatives who may exercise on its behalf all of 
its powers as a member provided that they do not do so in relation to the same shares.
5.  Copies of service agreements under which Directors of the Company are employed, and copies of the terms and conditions 
of appointment of Non-executive Directors are available for inspection at the Company’s registered office during normal 
business hours from the date of this notice until the date of the Annual General Meeting and will be available for inspection at 
the place of the Annual General Meeting for at least 15 minutes prior to and during the meeting.
6.  You may not use any electronic address (within the meaning of section 333(4) of the Companies Act 2006) provided in this 
notice of Annual General Meeting (or in any related documents including the proxy form) to communicate with the Company 
for any purposes other than those expressly stated. 46
Fusion IP plc Annual Report and Accounts 2011
Notice of Annual General Meeting continued
Explanatory Notes to the Resolutions to be proposed at the Annual General Meeting
Resolution 1 – Report and Accounts
The Directors will present the audited financial statements of the Company for the year ended 31 July 2011 together with the 
Directors’ Report and Auditors’ Report on those financial statements. 
Resolution 2 – Re-appointment of Auditors 
The Company is required to appoint auditors at each Annual General Meeting at which accounts are laid before shareholders, 
to hold office until the next such meeting. The resolution proposes that KPMG Audit Plc be re-appointed as auditors for the 
current year.
Resolution 3 – Fixing of Auditors’ Remuneration 
The resolution proposes that the Directors be authorised to set the fees of the auditors. 
Resolution 4 – Authority to Allot Shares
The Directors may allot shares and grant rights to subscribe for, or convert any security into, shares only if authorised to do so 
by shareholders. Accordingly, Resolution 4 will be proposed as an ordinary resolution to grant new authorities to allot shares and 
grant rights to subscribe for, and convert any securities into, shares. If given, these authorities will expire at the conclusion of the 
Company’s Annual General Meeting in 2012. 
Paragraph (a) of Resolution 4 will allow the Directors to allot ordinary shares up to a maximum nominal amount of £180,809.50, 
representing approximately one third (33.33 per cent.) of the Company’s existing issued share capital and calculated as at 
1 October 2011 (being the latest practicable date prior to publication of this notice). In accordance with the latest issued 
institutional guidelines, Paragraph (b) of Resolution 4 will allow the Directors to allot, including the ordinary shares referred to in 
paragraph (a) of Resolution 4, further ordinary shares in connection with a pre-emptive offer by way of a rights issue to ordinary 
shareholders up to a maximum nominal amount of £361,619, representing approximately two thirds (66.67 per cent.) of the 
Company’s existing issued share capital calculated as at 1 October 2011. 
As at the date of this notice the Company holds no treasury shares.
Resolution 5 – Authority to Allot Shares for Cash
The Directors also require a power from shareholders to allot equity securities or sell treasury shares where they propose to do 
so for cash and otherwise than to existing shareholders pro rata to their holdings. Resolution 5 will be proposed as a special 
resolution to grant such a power. Apart from offers or invitations in proportion to the respective number of shares held, the 
power will be limited to the allotment of equity securities and sales of treasury shares for cash up to an aggregate nominal value 
of £27,121.42 (being five per cent of the Company’s issued ordinary share capital at 1 October 2011, the latest practicable date 
prior to the publication of this notice). If given, this power will expire at the conclusion of the Company’s Annual General Meeting 
in 2012. 47
Fusion IP plc Annual Report and Accounts 2011
Form of Proxy
Before completing this form, please read the explanatory notes below
I/We (name(s) in full)
 
of (address(es))
 
being (a) member(s) of the Company appoint the Chairman of the meeting 
 
as my/our proxy to attend, speak and vote on my/our behalf as directed below at the Annual General Meeting of the Company  
to be held at the offices of Ashurst LLP, Broadwalk House, 5 Appold Street, London EC2A 2HA on 25 November 2011 at  
10.30 a.m. and at any adjournment thereof. 
 
Tick box if one of a multiple proxy appointment (see note 4).
Please indicate in the boxes below how you wish your votes to be cast.
For Against
Withheld 
Vote
Resolution 1: To receive the accounts and reports of the Directors and 
auditors for the year ended 31 July 2011
Resolution 2: To re-appoint KPMG Audit Plc as auditors of the Company
Resolution 3: To authorise the Directors to set the remuneration of the auditors
Resolution 4: To give the Directors the authority to allot shares pursuant to  
section 551 of the Companies Act 2006
Resolution 5: To give the Directors the authority to disapply pre-emption rights  
pursuant to sections 570 and 573 of the Companies Act 2006
I/We would like my/our proxy to vote on the resolutions proposed at the Annual General Meeting as indicated on this form. 
Unless otherwise instructed, the proxy may vote or abstain as he or she sees fit in relation to any business of the meeting.
Signature   48
Fusion IP plc Annual Report and Accounts 2011
Notes to the form of proxy
1.  As a member of the Company you are entitled to appoint a proxy to exercise all or any of your rights to attend, speak and 
vote at a general meeting of the Company. You can only appoint a proxy using the procedures set out in these notes.
2.  Appointment of a proxy does not preclude you from attending the meeting and voting in person. If you have appointed a 
proxy and attend the meeting in person, your proxy appointment will automatically be terminated.
3.  A proxy does not need to be a member of the Company but must attend the meeting to represent you. To appoint as your 
proxy a person other than the Chairman of the meeting, delete the words “the Chairman of the meeting” and insert your 
proxy’s name in the space provided. If you sign and return this form of proxy with no name inserted in the space provided, 
the Chairman of the meeting will be deemed to be your proxy. Where you appoint as your proxy someone other than the 
Chairman, you are responsible for ensuring that they attend the meeting and are aware of your voting intentions. If you wish 
your proxy to make any comments on your behalf, you will need to appoint someone other than the Chairman and give them 
the relevant instructions directly.
4.  You may appoint more than one proxy provided each proxy is appointed to exercise rights attached to different shares. You 
may not appoint more than one proxy to exercise rights attached to any one share. If you wish to appoint more than one 
proxy using this form, please photocopy this form or contact Capita Registrars for further forms of proxy. When you submit 
the form of proxy, please indicate on each copy the name of the proxy and the number of shares in respect of which the 
proxy is appointed. Please also indicate by ticking the box provided if the proxy is one of multiple instructions being given. 
All forms of proxy must be signed and should be returned together in the same envelope. You should send all proxies to 
Capita Registrars at PXS, 34 Beckenham Road, Beckenham, Kent, BR3 4TU.
5.  To direct your proxy how to vote on the resolutions, mark the appropriate box with an “X”. To abstain from voting on a 
resolution, select the relevant “Vote withheld” box. A vote withheld is not a vote in law, which means that the vote will not be 
counted in the calculation of votes for or against the resolution. If no voting indication is given, your proxy will vote or abstain 
from voting at his or her discretion. Your proxy will vote (or abstain from voting) as he or she thinks fit in relation to any other 
matter which is put before the meeting.
6.  To appoint a proxy using this form, this form must be:
   
completed and signed; 
 
sent or delivered to Capita Registrars at PXS, 34 Beckenham Road, Beckenham,  
Kent BR3 4TU; and
  
received by Capital Registrars no later than 10.30 a.m on 23 November 2011(or, in the case of an adjourned meeting,  
48 hours before the time fixed for the meeting, excluding non-working days).
7.  In the case of a member which is a company, this proxy form must be executed under its common seal or signed on its 
behalf by an officer of the company or an attorney for the company.
8.  Any power of attorney or any other authority under which this proxy form is signed (or duly certified copy of such power or 
authority) must be included with the proxy form.
9.  In the case of joint holders, where more than one of the joint holders purports to appoint a proxy, only the appointment 
submitted by the most senior holder will be accepted. Seniority is determined by the order in which the names of the joint 
holders appear in the Company’s register of members in respect of the joint holding (the first-named being the most senior).
10.  If you submit more than one valid proxy appointment, the appointment received last before the latest time for the receipt of 
proxies will take precedence.
Form of Proxy continued 49
Fusion IP plc Annual Report and Accounts 2011
Company secretary
Richard Birtles
Company number
5275732
Registered office
The Sheffield Bioincubator 
40 Leavygreave Road 
Sheffield S3 7RD
Independent auditor
KPMG Audit Plc
1 The Embankment 
Neville Street 
Leeds LSI 4DW 
Solicitor
Ashurst LLP
Broadwalk House 
5 Appold Street 
London EC2A 2HA
Banker
Barclays
Cambridge Business Centre 
28 Chesterton Road 
Cambridge CB4 3UT
Nominated advisor and broker
Seymour Pierce
20 Old Bailey 
London EC4M 7EN
Registrar
Capita Registrars
Northern House 
Woodsome Park 
Fenay Bridge 
Huddersfield HD8 0GA 
designed and produced by
UNCOVERING CORPORATE CHARISMA
Brand | Literature | On-line | Reporting 
www.fulton-design.co.uk Sheffield office
The Sheffield Bioincubator
40 Leavygreave Road
Sheffield S3 7RD
Cardiff office
8th Floor
Eastgate House
35–43 Newport Road 
Cardiff CF24 0AB
www.fusionip.co.uk