Manchester Innovation Limited - Limited company accounts 18.2

REGISTERED NUMBER: 01594344 (England and Wales)

Directors' Report and

Audited Financial Statements for the Year Ended 31 July 2019

for

Manchester Innovation Limited

Page

Company Information

1

Directors' Report

2

Statement of Directors' Responsibilities

3

Independent Auditors' Report

4

Statement of Comprehensive Income

6

Statement of Financial Position

8

Statement of Changes in Equity

9

Notes to the Financial Statements

10

DIRECTORS:

Mrs L V A Bissell

Mr S B Dauncey

REGISTERED OFFICE:

Manchester Incubator Building

48 Grafton Street

Manchester

M13 9XX

REGISTERED NUMBER:

01594344 (England and Wales)

AUDITORS:

Ernst & Young LLP, Statutory Auditor

1 Colmore Square

Birmingham

B4 6HQ

BANKERS:

National Westminister Bank Plc

Manchester University Union Branch

323 Oxford Road

Manchester

Greater Manchester

M13 9PS

The directors present their report with the financial statements of the company for the year ended 31 July 2019.

PRINCIPAL ACTIVITY

Manchester Innovation Limited owns a building which is currently managed by one of the other group companies.

The decision has been made to transfer the building to The University of Manchester during the year ending 31 July 2020. The

University has also taken over the management of the building with effect from 1 August 2019. The intention is then to wind up the

company as soon as practically possible.

GOING CONCERN

Due to the plans to close Manchester Innovation Limited, these accounts have not been prepared on a going concern basis.

As a result of ceasing to apply the going concern basis, all debt due after more than one year has been reclassified as due within

one year.

REVIEW OF BUSINESS

The results for the year are shown on page 6 of the financial statements.

The position at the year end was satisfactory.

RESULTS AND DIVIDENDS

The loss for the year after taxation amounted to £405,269 (2018: loss £307,588).

The directors do not recommend the payment of a dividend (2018: £nil) leaving a loss of £405,269 (2018: £307,588) to be

transferred from reserves.

DIRECTORS

The directors shown below have held office during the whole of the period from 1 August 2018 to the date of this report.

Mrs L V A Bissell

Other changes in directors holding office are as follows:

Mr S B Dauncey - appointed 8 March 2019 (The University of Manchester Nominated Representative)

Mr C G Rowland - resigned 6 January 2019

STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORS

So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information, being

information needed by the auditor in connection with preparing its report, of which the company's auditors are unaware. Having

made enquiries of fellow directors and the auditor, each director has taken all the steps that he or she ought to have taken as a

director in order to make himself or herself aware of any relevant audit information and to establish that the company's auditors

are aware of that information.

AUDITORS

Ernst & Young LLP, have indicated their willingness to be re-appointed for another term and appropriate arrangements have been

put in place for them to be deemed re-appointed as auditors in the absence of an Annual General Meeting.

This report has been prepared in accordance with the provisions of Part 15 of the Companies Act 2006 relating to small companies.

ON BEHALF OF THE BOARD:

Director

13 November 2019

The directors are responsible for preparing the Report of the Directors and the financial statements in accordance with applicable

law and regulations.

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have

elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United

Kingdom Accounting Standards and applicable law), including Financial Reporting Standard 102. 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

company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are

required to:

- select suitable accounting policies and then apply them consistently;

- make judgements and accounting estimates that are reasonable and prudent;

- prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue

in business;

- state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and

explained in the financial statements.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company's

transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure

that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the

company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The directors are responsible for the maintenance and integrity of the corporate and financial information included on the

company's website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may

differ from legislation in other jurisdictions.

Opinion

We have audited the financial statements of Manchester Innovation Limited (the 'company') for the year ended 31 July 2019 which

comprise the Statement of Comprehensive Income, Statement of Financial Position, Statement of Changes in Equity and the related

notes 1 to 15, including a summary of significant accounting policies The financial reporting framework that has been applied in

their preparation is applicable law and United Kingdom Accounting Standards including FRS 102 "The Financial Reporting Standard

applicable in the UK and Republic of Ireland" (United Kingdom Generally Accepted Accounting Practice).

In our opinion the financial statements:

-	give a true and fair view of the state of the company's affairs as at 31 July 2019 and of its loss for the year then ended;

-	have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and

-	have been prepared in accordance with the requirements of the Companies Act 2006.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our

responsibilities under those standards are further described in the Auditors' responsibilities for the audit of the financial statements

section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our

audit of the financial statements in the UK, including the FRC's Ethical Standard, and we have fulfilled our other ethical

responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and

appropriate to provide a basis for our opinion.

Conclusions relating to going concern

Conclusions relating to basis of preparation; financial statements prepared on a basis other than going concern

We draw attention to note 2 to the financial statements and the Director's Report which explains that the directors intend to

liquidate the company and therefore do not consider it to be appropriate to adopt the going concern basis of accounting in

preparing the financial statements. Accordingly the financial statements have been prepared on a basis other than going concern as

described in note 2. Our opinion is not modified in this respect of this matter.

Other information

The directors are responsible for the other information. The other information comprises the information in the Directors' Report

and the Statement of Directors' Responsibilities, but does not include the financial statements and our Auditors' Report thereon.

Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated

in our report, we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so,

consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the

audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material

misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material

misstatement of the other information. If, based on the work we have performed, we conclude that there is a material

misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of the audit:

-	the information given in the Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and

-	the Directors' Report has been prepared in accordance with applicable legal requirements.

Matters on which we are required to report by exception

In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have

not identified material misstatements in the Directors' Report.

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, or returns adequate for our audit have not been received from branches not

visited by us; or

- the 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; or

- the directors were not entitled to prepare the financial statements in accordance with the small companies regime and take

advantage of the small companies exemptions in preparing directors' report and from the requirement to prepare a Strategic

Report.

Responsibilities of directors

As explained more fully in the Statement of Directors' Responsibilities set out on page three, the directors are responsible for the

preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as

the directors determine necessary to enable the preparation of financial statements that are free from material misstatement,

whether due to fraud or error.

In preparing the financial statements, the directors are responsible for assessing the company's ability to continue as a going

concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the

directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.

Auditors' responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material

misstatement, whether due to fraud or error, and to issue an Auditors' Report that includes our opinion. Reasonable assurance is a

high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material

misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the

aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial

statements.

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's

website at www.frc.org.uk/auditorsresponsibilities. This description forms part of our Auditors' Report.

Use of our report

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.

Stephen Clark (Senior Statutory Auditor)

for and on behalf of Ernst & Young LLP, Statutory Auditor

Birmingham

3 December 2019

TURNOVER

3

-

155,556

155,556

Administrative expenses

-

(560,825

)

(560,825

)

OPERATING LOSS

5

-

(405,269

)

(405,269

)

LOSS BEFORE TAXATION

-

(405,269

)

(405,269

)

Tax on loss

6

-

-

-

LOSS FOR THE FINANCIAL YEAR

-

(405,269

)

(405,269

)

OTHER COMPREHENSIVE INCOME

-

TOTAL COMPREHENSIVE LOSS FOR THE YEAR

(405,269

)

TURNOVER

3

-

155,556

155,556

Administrative expenses

-

(463,144

)

(463,144

)

OPERATING LOSS

5

-

(307,588

)

(307,588

)

LOSS BEFORE TAXATION

-

(307,588

)

(307,588

)

Tax on loss

6

-

-

-

LOSS FOR THE FINANCIAL YEAR

-

(307,588

)

(307,588

)

OTHER COMPREHENSIVE INCOME

-

TOTAL COMPREHENSIVE LOSS FOR THE YEAR

(307,588

)

FIXED ASSETS

Tangible assets

7

24,513,569

24,778,692

CURRENT ASSETS

Debtors

8

4,895

5,867

Cash in hand

95,766

182,669

100,661

188,536

CREDITORS

Amounts falling due within one year

9

(7,401,224

)

(1,671,838

)

NET CURRENT LIABILITIES

(7,300,563

)

(1,483,302

)

TOTAL ASSETS LESS CURRENT LIABILITIES

17,213,006

23,295,390

CREDITORS

Amounts falling due after more than one year

10

-

(5,677,115

)

NET ASSETS

17,213,006

17,618,275

CAPITAL AND RESERVES

Called up share capital

11

1,500,000

1,500,000

Revaluation reserve

12

4,284,622

4,365,847

Retained earnings

12

11,428,384

11,752,428

SHAREHOLDERS' FUNDS

17,213,006

17,618,275

The financial statements have been prepared in accordance with the provisions applicable to companies subject to the small companies regime.

The financial statements were approved by the Board of Directors on 13 November 2019 and were signed on its behalf by:

Mrs L V A Bissell - Director

Called up

share

Retained

Revaluation

Total

capital

earnings

reserve

equity

£

£

£

£

Balance at 1 August 2017

1,500,000

11,978,791

4,447,072

17,925,863

Changes in equity

Total comprehensive loss

-

(307,588

)

-

(307,588

)

Transfer from revaluation

reserve

-

81,225

(81,225

)

-

Balance at 31 July 2018

1,500,000

11,752,428

4,365,847

17,618,275

Changes in equity

Total comprehensive loss

-

(405,269

)

-

(405,269

)

Transfer from revaluation

reserve

-

81,225

(81,225

)

-

Balance at 31 July 2019

1,500,000

11,428,384

4,284,622

17,213,006

1.	STATEMENT OF COMPLIANCE

These financial statements have been prepared in accordance with Financial Reporting Standard 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland" including the provisions of Section 1A "Small Entities" and the Companies Act 2006. Manchester Innovation Limited is a private company, limited by shares, incorporated in England and Wales. The registered office is The Incubator Building, 48 Grafton Street, Manchester, M13 9XX.

2.	ACCOUNTING POLICIES

Basis of preparing the financial statements

These financial statements have been prepared in accordance with Financial Reporting Standard 102 (FRS102) "The

Financial Reporting Standard applicable in the UK and Republic of Ireland" and the Companies Act 2006. The financial

statements have been prepared under the historical cost convention.

The following accounting policies have been applied consistently in dealing with items which are considered material in

relation to the company's financial statements.

Financial reporting standard 102 - reduced disclosure exemptions

The company has taken advantage of the following disclosure exemption in preparing these financial statements, as

permitted by FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland":

- the requirements of Section 7 Statement of Cash Flows.

Significant judgements and estimates

In the process of applying these accounting policies, the company is required to make certain estimates, judgements and

assumptions that management believe are reasonable based on the information available. These are reviewed on a regular

basis by the management team. Significant estimates and material judgements used in the preparation of the financial

statements are as follows:

Impairments

Management make judgements as to whether any indicators of impairment are present for any of the company's assets.

Taxation

The company establishes provisions based on reasonable estimates, for possible consequences of audits by the tax

authorities of the respective countries in which it operates. The amount of such provisions is based on various factors,

such as experience with previous tax audits and differing interpretations of tax regulations by the taxable entity and the

responsible tax authority.

Management estimation is required to determine the amount of deferred tax assets that can be recognised, based upon

likely timing and level of future taxable profits together with an assessment of the effect of future tax planning strategies.

Further details are contained in note 6.

Turnover

Turnover represents income derived from the waiver of the loan from the University in recognition of the provision of

rental space.

Going concern

Due to plans to close Manchester Innovation Limited as soon as practicable, these accounts have not been prepared on a

going concern basis.

Adjustments have been made as a consequence, specifically in relation to the reclassification of long term liabilities to

current liabilities.

Tangible fixed assets

Depreciation is provided to write off the cost less the estimated residual value of tangible fixed assets by equal instalments

over their estimated useful economic lives as follows:

Tangible fixed assets are stated at cost, net of depreciation and any provision for impairment.

Buildings

- 57.75 years

Plant & Machinery

- 10 years

Fixtures & Fittings

- 5 years

Residual value is calculated on prices prevailing at the date of acquisition.

Revaluation reserve

The company has taken advantage of a transitional provision under FRS102 to revalue its land and buildings as at the date

of transition and use this as deemed cost. An external valuation was undertaken by Gerald Eve LLP as at 31 July 2014.

The subsequent uplift in value has been allocated to a revaluation reserve in line with the Companies Act. An adjustment

equivalent to depreciation on the revalued amount held in the revaluation reserve is released to retained earnings on a

straight line basis over the remaining useful life of the building.

Taxation

Current tax is recognised for the amount of income tax payable in respect of the taxable profit for the current or past

reporting periods using the tax rates and laws that that have been enacted or substantively enacted by the reporting date.

Deferred tax is recognised in respect of all timing differences at the reporting date, except as otherwise indicated.

Deferred tax assets are only recognised to the extent that it is probable that they will be recovered against the reversal of

deferred tax liabilities or other future taxable profits.

If and when all conditions for retaining tax allowances for the cost of a fixed asset have been met, the deferred tax is

reversed.

Deferred tax is calculated using the tax rates and laws that that have been enacted or substantively enacted by the

reporting date that are expected to apply to the reversal of the timing difference.

With the exception of changes arising on the initial recognition of a business combination, the tax expense (income) is

presented either in profit or loss, other comprehensive income or equity depending on the transaction that resulted in the

tax expense (income).

Deferred tax liabilities are presented within provisions for liabilities and deferred tax assets within debtors. Deferred tax

assets and deferred tax liabilities are offset only if:

- the group has a legally enforceable right to set off current tax assets against current tax liabilities, and

- the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same taxation authority on either

the same taxable entity or different taxable entities which intend either to settle current tax liabilities and assets on a net

basis, or to realise the assets and settle the liabilities simultaneously.

Post retirement benefits

The company is a member of The University of Manchester Superannuation Scheme (UMSS). UMSS is a defined benefit

scheme which is externally funded and contracted out of the State Second Pension (S2P).

Contributions to the scheme are charged to the statement of comprehensive income as though the scheme was a defined

contribution scheme. This is in accordance with the accounting for multi-employer pension schemes whereby the assets

and liabilities of the scheme cannot be readily split between the participating members. The liabilities of the scheme are

recognised within the financial statements of the ultimate parent company, the University of Manchester.

For defined contribution schemes, the amount charged to the statement of comprehensive income is the contributions

payable in the period.

Related party disclosure

As the company is a wholly owned subsidiary of The University of Manchester, the company has taken advantage of the

exemption contained in FRS102 section 33.1a, and has therefore not disclosed transactions or balances with entities which

form part of the group. The consolidated financial statements of The University of Manchester, within which this company

is included, can be obtained from the address given in note 14.

3.

TURNOVER

Turnover and (loss)/profit on ordinary activities before taxation are wholly attributable to the principal activity of the

company and arise wholly in the United Kingdom.

4.	DIRECTORS' EMOLUMENTS

There were no staff costs during the year (2018: £Nil).

The directors who held office during the year were employees of The University of Manchester and its other subsidiaries

and were remunerated by these entities.

5.	OPERATING LOSS

Operating loss from continuing operations is stated after

2019

2018

charging/(crediting):

£

£

Fees payable to the company's auditor

- audit of these financial statements pursuant to legislation

1,423

1,373

Depreciation of tangible fixed assets - owned

480,857

459,650

Release of contribution from The University of Manchester

(155,556

)

(155,556

)

6.

TAXATION

Analysis of the tax charge

No liability to UK corporation tax arose for the year ended 31 July 2019 nor for the year ended 31 July 2018.

Reconciliation of total tax charge included in profit and loss

The tax assessed for the year is higher than the standard rate of corporation tax in the UK. The difference is explained

below:

2019

2018

£

£

Loss before tax

(405,269

)

(307,588

)

Loss multiplied by the standard rate of corporation tax in the UK of 19% (2018 - 19%)

(77,001

)

(58,442

)

Effects of:

Income not taxable for tax purposes

(29,556

)

(29,556

)

provided

Group relief surrendered

10,765

664

Fixed asset differences

95,792

87,334

Total tax charge

-

-

Factors that may affect future tax charges

A deferred tax asset amounting to £54,468 (2018: £54,468) for revenue losses has not been recognised because in the

opinion of the directors there will be no suitable taxable gains available in the foreseeable future.

7.	TANGIBLE FIXED ASSETS

Fixtures

Long

Plant and

and

leasehold

machinery

fittings

Totals

£

£

£

£

COST

At 1 August 2018

26,544,800

7,383

65,109

26,617,292

Additions

-

215,482

23,564

239,046

Disposals

-

(23,312

)

-

(23,312

)

At 31 July 2019

26,544,800

199,553

88,673

26,833,026

DEPRECIATION

At 1 August 2018

1,838,600

-

-

1,838,600

Charge for year

459,650

6,652

14,555

480,857

At 31 July 2019

2,298,250

6,652

14,555

2,319,457

NET BOOK VALUE

At 31 July 2019

24,246,550

192,901

74,118

24,513,569

At 31 July 2018

24,706,200

7,383

65,109

24,778,692

The long leasehold property was valued on a fair value basis as at 31 July 2014 by an external valuer, Gerald Eve LLP, a

regulated firm of Chartered Surveyors. As the property is a specialised property it was valued by reference to Depreciated

Replacement Cost. The valuation was performed in accordance with RICS valuation- Professional Standards April 2015. In

accordance with the FRS 102 transitional provisions these revised values are now used as the deemed cost of the buildings

going forward.

Depreciation commences from the month after that in which the asset is purchased.

8.

DEBTORS: AMOUNTS FALLING DUE WITHIN ONE YEAR

2019

2018

£

£

Other debtors

4,895

5,867

9.

CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR

2019

2018

£

£

Trade creditors

32,376

59,624

Amounts owed to group undertakings

7,365,570

1,607,736

Other creditors

3,278

4,478

7,401,224

1,671,838

10.

CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR

2019

2018

£

£

Amounts owed to group undertakings

-

5,677,115

As the decision has been made to close the company, all of the outstanding debt due to The University of Manchester has

been reclassified as due within one year.

11.	CALLED UP SHARE CAPITAL

Allotted, issued and fully paid:

Number:

Class:

Nominal

2019

2018

value:

£

£

1,500,000

Ordinary

£1

1,500,000

1,500,000

12.

RESERVES

Retained earnings

Revaluation reserve

Total

£

£

£

At 1 August 2018

11,752,428

4,365,847

16,118,275

Loss for the year

(405,269

)

-

(405,269

)

Transfer from revaluation reserve

81,225

(81,225

)

-

At 31 July 2019

11,428,384

4,284,622

15,713,006

13.	EMPLOYEE BENEFIT OBLIGATIONS

The company participated in one pension scheme in the year. Details are as follows:

The University of Manchester Superannuation Scheme (UMSS)

The company is a member of The University of Manchester Superannuation Scheme providing benefits based on final

pensionable pay. Because the company is unable to identify its share of the scheme assets and liabilities on a consistent

and reasonable basis, as permitted by FRS 102, the scheme is accounted for by the company as if the scheme was a defined

contribution scheme, the cost recognised within the statement of comprehensive income being equal to the contributions

payable to the scheme for the period. As the company has no employees, there is no cost.

The latest full actuarial valuation was carried out at 31 July 2016 and was updated for FRS 102 purposes to 31 July 2019 by

a qualified independent actuary. At the last full actuarial valuation, the deficit was £207.4 million and as at 31 July 2019 it

was £138.0m on an FRS basis. Further details can be found in The University of Manchester financial statements (see note

14).

14.	ULTIMATE PARENT UNDERTAKING

The company is a wholly owned subsidiary undertaking of The University of Manchester, a University incorporated by Royal

Charter. The largest and smallest group in which the results of the company are consolidated is that headed by The

University of Manchester.

The University of Manchester is the ultimate controlling party and ultimate parent of the company.

Copies of the group financial statements can be obtained from that University's registered office, which is The University of

Manchester, Oxford Road, Manchester, M13 9PL and are also available on the University's website.