Слайд 2
Agenda
0840 Introducing RSM Terry McAdam
Robust project selection Terry McAdam
0910 Financial project appraisal Julian
Caplin
0940 Selecting the right project Derek Young
1015 Coffee
1030 Group case study exercise Terry McAdam
1130 Tax
planning opportunities re R&D Julian Caplin
1145 CFO forum Tom Early
1230 Lunch
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SPEAKERS
Serial inventor and entrepreneur
Derek Young CEO of
i360medical
Highly accomplished and respected financial expert.
Julian Caplin Partner
Performance
improvement expertise – technology strategy and deployment allied to process automation
Terry McAdam Partner
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Every RSM firm,
wherever they are in the
world, shares the same high standard of quality
37,500 MINDS,
730 OFFICES, 110 COUNTRIES, 1 NETWORK.
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RSM IRELAND
About us
Formerly Baker Tilly Ryan Glennon
An Irish
Top 10 firm of accountants and business advisors (no.
8)
Specialist in the mid-market
Mid-market client base – Domestic & International
13 Partners
Specialist & sector led
One of the fastest growing Irish mid-tier firms - 130 staff
Offices in Dublin, Birr and Portlaoise
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RSM IRELAND
Terry McAdam
Management Consulting Partner
Terry leads a team
of experienced performance improvement consultants
Deliver operational improvement which yields
tangible results
Investment in technology and process automation/enhancement
Over twenty years experience
Guided organisations, of varying scale, through the successful design and execution of complex projects or work programmes
Delivering projects nationally and internationally on an ongoing basis
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EVERY RSM FIRM,
WHEREVER THEY ARE IN THE
WORLD, SHARES THE SAME HIGH STANDARD
OF QUALITY
Слайд 9
SELECTING YOUR PROJECT
Terry McAdam
Слайд 10
SELECTING YOUR PROJECT
Contents
Rationalisation of existing projects/initiatives
The business case
Resourcing
the project
Project governance
Continuous improvement
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RATIONALISATION OF EXISTING PROJECTS/INITIATIVES
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SELECTING YOUR PROJECT (cont.)
Rationalisation of existing projects/initiatives
Prior to
launching a new project, prudent to review existing project
portfolio and its performance.
Project gateway approach ensures investments and projects are consistently reviewed to verify they are delivering expected outcomes
Ensure planned/on-going projects and investments remain aligned with the strategic goals of the business
Introduces decision points across life of a project where business can “get off the project bus”
Consistently non-performing projects are continuously monitored and brought to a controlled end early in their life
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SELECTING YOUR PROJECT (cont.)
Stage Gate Review - Process
Overview
It is an independent confirmation by the Stage Gate
Review Team to the governance body that all required project reviews have been successfully conducted
The team ensures that the project manager has produced all the required deliverables and addressed all exit criteria for a given phase to permit the project’s advancement to the subsequent phase
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SELECTING YOUR PROJECT (cont.)
Stage Gate Review - Process
Overview
The emphasis of the Stage Gate Review is on
the:
successful accomplishment of phase objectives
plans for the next life cycle phase and
risks associated with moving into the next life cycle phase.
Recommended actions arising from the review are issued to the governance body.
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SELECTING YOUR PROJECT (cont.)
Building Blocks
Outputs from the review
include a decision (i.e. approved, conditionally approved, or not
approved) and a clear path forward
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Phase-driven go/no-go decision points are identified across the
life of the project where activity is reviewed to
provide assurance that appropriate organisational and strategic objectives continue to be observed and achieved.
SELECTING YOUR PROJECT (cont.)
Decision Points
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SELECTING YOUR PROJECT (cont.)
Best Practice – Review Process
Clearly
defined roles and responsibilities:
define roles and responsibilities so
that all project participants are clear with regard to expectations and the overall process
Stage Gate Review preparation:
Prior to attending a Stage Gate Review meeting, all in attendance must have reviewed all pertinent documentation and have a good understanding of the project and its performance, the organisational context in which it is operating and the exit criteria for the relevant stage gate
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SELECTING YOUR PROJECT (cont.)
Best Practice - Review Process
Clear
and concise decision comes from the governance body or
delegated authority:
Stage Gate Review outputs must be clearly documented and communicated;
Outputs include a decision (i.e. approved, conditionally approved, or not approved) and a clear path forward; and,
A plan of action and milestones for corrective action, if required, should be defined along with a clear understanding of the oversight process that will be applied to support the implementation of the additional controls sought
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SELECTING YOUR PROJECT (cont.)
The Business Case
Why do the
project? What is the payback period?
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SELECTING YOUR PROJECT (cont.)
The Business Case (cont.)
Requires business
to consider proposed project in some depth. Aids buy-in
of key management and people
Assumptions re potential impact of project are critical
Consider financial and non-financial benefits (risk mitigation, better communication, enhanced quality)
Beware of drive for false precision within projects causing paralysis/delay
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SELECTING YOUR PROJECT (cont.)
Resourcing the project
If project worth
doing then must allocate your best people
Consider all
your options to ensure ‘Business as Usual’ not impacted
Temporary external resources can be allocated to some project roles but proceed with care
Monitor and anticipate project resourcing issues continuously. Ad hoc resourcing decisions can prove expensive.
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SELECTING YOUR PROJECT (cont.)
Resourcing the project (cont.)
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SELECTING YOUR PROJECT (cont.)
Project governance
Project sponsor
Project steering group
Project
manager
Project team (including subject matter experts)
Checkpoint/Steering group meetings
Checkpoint/final reporting
Escalation
procedures/reporting lines
Stage gate reviews
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SELECTING YOUR PROJECT (cont.)
Define project scope, key roles,
responsibilities and reporting structures in a Project Initiation Document
(PID)
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SELECTING YOUR PROJECT (cont.)
Project governance (cont.)
Seek to embed
a culture, across the business, that allows project managers
to declare issues early
Forward looking reporting details the expected activity (and risks) over the upcoming period
Provides a summary of the latest expected outturn – financial and operational
Report formats are defined and not negotiable, once agreed
Project reporting sources are consistent with the finance function reporting
One page narrative accompanies every project financial report template
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CONTINUOUS IMPROVEMENT
Identifying and agreeing processes which provide the
basis for continuous improvement
developing a set of relevant key
performance indicators will drive the required behaviours over the longer term
continuous improvement is an on-going internal, and often multi-disciplinary, effort seeking incremental performance improvement over time
sustained focus on waste eradication and quality
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FINAL THOUGHTS
We are all constantly undertaking projects.
Need to
create environment which gives project best chance
Projects are
resource hungry. Internal costs are often significant
Identifying key processes and datasets is the best starting point to de-risk projects
Underperforming projects are identified early and brought to an organised end
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FINAL THOUGHTS
The approach to delivering projects in a
business should be standardised and repeatable
Consider a Project Management
Office (PMO) model if need to manage multiple projects centrally
Progress at the pace which is right for the business. Controlled, organised and profitable change is the goal
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FINANCING YOUR PROJECT
Julian Caplin
Слайд 36
RSM IRELAND
Julian Caplin
Consulting Partner
Leading financial advisor, providing corporate
finance, business, commercial and financial advice to a wide
range of businesses.
Financial advisory services – MNA, funding structures, strategic financial advise and financial diligence.
Former Director of The Pensions Board (Irish Pension Regulator) and has been involved in arbitration strategies at state level.
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PROJECT APPRAISAL
Overview
Project’s viability
Financial appraisal
Use of financial assumptions
Multiple issues
outside financial appraisal
Consider all aspects in project appraisal
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IDEATION STAGE
Sourcing ideas…
Personal experience
Career development
Universities
Innovation hubs
Слайд 41
EARLY STAGE RESOURCES
Reliance on friends and family
Angel investors
Support
from industry, i.e. research foundations, universities, etc.
Government incentives, e.g.
EI, IDA, etc.
Venture funds from larger corporates
Слайд 43
PROJECT APPRAISAL
Early Stage
Less sophisticated methods
Emotion led
Projections highly speculative
Point
of return on investment less defined
Investor fatigue
Слайд 44
PROJECT APPRAISAL (cont.)
LATE STAGE
Projections more sophisticated and reduced
speculation
Key ratios:
- Debt ratio
- Liquidity ratio
- Profitability
- Cash flow
Formal valuation methods, including
- Discounted
cash flow
- Net present value (NPV)
- Internal rate of return (IRR)
- Payback period
- Scenario analysis
Слайд 45
PROJECT APPRAISAL (cont.)
INVESTOR CONSIDERATIONS
Economic environment.
Risk levels associated with
R&D
Prototype
Proven track record - Pre-sales / feasibility studies
Tax Incentives
Слайд 47
FUNDING R&D PROJECTS
Funding Agencies
Often government department or agencies
Criteria
based, often employment driven, innovation, environment, etc.
Start-up company criteria
may differ – particular funds
Examples include, Enterprise Ireland, the Department of Jobs, Enterprise & Innovation
Benefits include expertise, not seeking pre-determined return on investment, access to information and expertise particularly if doing business abroad
Can be restrictive in terms of criteria, predicated on other events e.g. level of equity from other investors, employment prospects, etc.
Слайд 48
FUNDING R&D PROJECTS (cont.)
Venture Capital and Private Equity
Private
funding and government led initiatives
Criteria based and can include,
sector, location, deal size, stage of development
Willing to lend where banks will not, rates relevant to risk
Examples include, Kernal Capital, BlueBay Asset Management, ESB Novusmodus
Benefits include external knowledge, exhausted more conventional financing, sectoral expertise can open new markets and opportunities and potential access to further funding
Can be expensive, early definition of exit strategy, perceived interference in company
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FUNDING R&D PROJECTS (cont.)
Private Investors
Looking at investment opportunities
Can
bring expertise to company through board representation
Often willing to
grow with the company
Benefits from not being a corporate which can bring flexibility, varying degrees of involvement depending on agreements and potential access to further funding
Can lead to issues of money versus invention, involvement in the business can seep, lack of corporate type access to markets / knowledge
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RSM IRELAND
Derek Young
CEO, i360medical
Derek is a inventor
and entrepreneur with a background in Mechanical Engineering, Surgical
Innovation and Business Development from the Austin Waldron and Dublin Institute of Technology.
Specialties
Development of Business Strategy for small to medium companies.
Raising investment through Venture capitalist and Government Grants for start-ups and Projects.
Acquisitions for existing company.
Excellent interactive and interpersonal skills both in terms of staff motivation and teamwork involvement, customer communication and service. Liaising successfully with internal/external Surgeons, customers, consultancies, and contractors thus facilitating teamwork and partnerships.
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i360medical
A Healthcare Innovation Company
2015
“To generate and commercialise
new world-class medical technology
solutions, in pursuit of enhanced
patient care”
Please Contact Derek Young
Tel:+353 (0)86 8281551 IRL Dublin Office
Tel: +1 516 491 5163 USA New York Office
Email: derekyoung@i360medical.com
Слайд 53
i360medical Ideation, Development & Commercialisation Ecosystem
i360medical In-House
Healthcare Ideation
Clinician
Inventor ideas
Healthcare Professional ideas
Academic Inventor ideas
Engineering Inventor ideas
i360 Multistage
Process
Activities include:
Innovation eco system development
Ideation & & Sourcing
International Clinical insights
Ideation & Concept validation
IP Development
Final Device design & development
HIT software development
CE & FDA trials & regulatory approval & reimbursement to commercialisation
Investment Partners
$/€ Externally Managed
aligned Commercial fund. Comprising Private & Institutional Investors.
Healthcare System Partners for Ideation & Qualification to Start-Up
_____________________
Irish private Health
Health HSE
Industry Partners
i360medical maintain relations at ‘C Suite’ level with 11 acquisitive Healthcare MNCs interested in sourcing novel licensing, product and start-up acquisition opportunities.
IP, License, Acquisition Opportunities, Novel Products, SPV/Start-Ups
SJH
1
Слайд 54
i360medical Board of Directors
Derek Young Irl
Prof. Oscar Traynor
Irl
Eamonn Fitzgerald Irl
Hermitage Clinic
Fergus Clancy Irl
Mater Hosp Private
Prof. Paul
Neary Irl
Dr Sean Lyden US
Cleveland Clinic
Dr. Richard Stack US
Bill Starling US
i360medical Board
Слайд 55
Some Examples of Clinical Experience and inventions include
HALs, NOTES, Laparoscopic , Neuro, SILS, bariatric surgery, urology,
orthopedics, cardiology, interventional radiology, kidney, gastrointestinal endoscopy, surgical education and training.
Endopath Dextrus
Exit: Ethicon Endo Surgery
Omniport
Exit: Covidien
MediTract
Exit: Davol CR Bard
GelPort
Exit: Applied Medical
Intromit
Exit: TFX Medical
Retractable stent
Exit: Boston Scientific
Triport
Exit: Olympus
Medical device exits with key International Healthcare Multinationals
ProMIS
Exit: CA Health Care
Space-OR
Exit: Johnson & Johnson
xxxxx
A Sample of i360medicals Success and Track Record .
Ideation Phases Commercialisation Phases
↓ Ideation Partner Finances ↓ Internal & External Grants ↓ Commercial Funding ↓
Why i360medical?
Our practical experience & expertise and track record. Our global clinical & industry network. We form a ‘bridge for new ideas’.
Benefits of our approach
Accelerates validated ideas & concepts. “Fail quickly” where appropriate.
Independent & Global, objective & detailed analysis. Detailed & practical development roadmaps.
An innovation ecosystem to optimise ROI. A ‘turn key’ for accelerated device commercialization.
Eco system & Identification of new ideas
Assessment of Ideas
Generation of clinical & Commercial opinions globally
Assessment product pipelines / portfolio
Idea categorisation & prioritisation
Brainstorming
Idea selection
Initial Design
Proof of Concept
Clinical, Technical and Market Assessment (CTM)
Initial IP
Design and Prototyping verification
Develop CE & FDA Plan
GLP Wet Labs Trials
Design Freeze
Design to manufacture product
Validation of the Design/product
Development and scale Manufacturing
First-in-Man trial
Initiate CE and FDA plan
Reimbursement plan
Full Multisite Clinical Trial (with partner)
CE & FDA approval
Pre-sell to industry, exit/partner licensee.
Spin Outs, Joint Ventures
Healthcare Innovation Partnership
Formalised Medical Device ‘Idea to Commercialization Process
IDEATION RETAINER+
PROJECT START SPV
PROJECT MID TERM SPV
PROJECT SPV @ FIM
SPV to START UP
START UP
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i360medical Innovation Retainer Model for a Hospital/Health
System example
Idea Eco System Development
i360medical
Innovation Engineering Team
US,IRL
Physicians
Clinicians Hospitals
Non Contracted Physicians
& Researchers
Idea Sourcing
Validation
Brainstorm
CTM Review Report & Next Steps
i360medical
Engineering Team US,IRL
i360medical Clinical Team
100 + Inventor Clinicians
Heads of 5- 12 Clinical Depts.
Idea Concept
Development Plan
Budget
CTM Assessment Report & Next Steps
i360medical
Engineering Team US,IRL
i360medical Clinical Team
30 + Inventor Clinicians
Heads of 5 -12 Clinical Depts.
↓ Ideation Partner Finances Internally & Externally Funds ↓
↓ Financed by i360medical 3 Yr. Retainer
3
Слайд 58
A Bridge between Clinical and Commercial World
:
Inventive Physician Cohort
Bridges and Connects
Potential Acquirers of your Ideas
Identify Project Funding
Hospital/Health System
Research/OTT/
Innovation Centre
Слайд 59
Example output from one of i360medicals US Outreach
Innovation Programs
Since inception of the program, this Outreach Innovation
program has with in 18 months
Established internal ecosystem for:
Disclosing circa 150 ideas and innovations
Engineering support for ideation
Evaluating value proposition
Underwriting intellectual property
Funding translational activities
Three projects prioritized in 2015
Cardiology, General Surgery & Urology
Secured pre-seed project funding for advancing:
Prototypes and validation
Provisional patent filings
Development for Commercial Seed funding
Identified three new Projects in 2016
Innovations % by Speciality
Слайд 60
Clinical Leads
EU
USA
Middle East
Australasia
Each Clinical speciality, Clinical
Leads manage i360medical Clinical Opinion and Idea Providers from
EU,USA, Middle East and Australasia.
Our Clinical Leads and Opinion Providers
Слайд 61
Clinical Technical & Market Focus
10
Слайд 62
Ideation, IP and Projects; Global Eco System
CCI
Start Ups
Feinstein Institute
Cincinnati Children's Health
Irish Healthcare System
Ideation
Academia & Engineers
Irish
Private & Public Hospitals
DOH & HSE
OTT
Children's
ROW Government Agencies
US Gov & State Agencies
Influential Board of Directors
Finance & Investment Partners
FDA Approval
CE Mark
Multinationals
Healthcare Medical Devices
Global Healthcare Systems
Слайд 63
Innovation; Strategic Structure
Australasian Healthcare Systems
Irish Healthcare
System
Finance & Investment Partners
FDA Approval
CE Mark
US
Gov &
State Agencies
Influential Board of Directors
Australasian Agencies
EU Agencies
Слайд 64
Thanks
Please Contact Derek Young
Tel:+353 (0)86 8281551 IRL
Tel:
+1 516 491 5163 USA
Email: derekyoung@i360medical.com
Слайд 66
PLANNING OPPORTUNITIES - INNOVATION INCENTIVES
Слайд 67
Planning Opportunities – Innovation Incentives
Research and Development Tax
Credit
Knowledge Development Box
IP Capital Allowances
Typical Structuring
Слайд 68
R&D Tax Credit Overview
€25 credit / cash refund
for every €100 spent
Utilisation
Offset against corporation tax liability in
the year in which the claim is made
Carry back and offset against corporation tax in prior year
Cash refund issued in 3 instalments over following 3 years
Refund Mechanism Limitations
Limited to CT paid during 10 previous accounting periods, or
Payroll taxes for period of claim and payroll taxes for preceding year (in certain circumstances)
Refund Mechanism Instalments
Year 1 – 33% of R&D tax credit during the period
Year 2 – 50% of remaining R&D credit carried forward
Year 3 – Remaining 50% of R&D credit carried forward
Слайд 69
R&D Tax Credit Overview
Qualifying Criteria
Systematic, investigative or experimental
activities
Within an approved field of science or technology
Being basic
research / applied research / experimental development
Involve the resolution of scientific or technological uncertainty
Seek to achieve scientific or technological advancement
Eligible Expenditure
Salary
Plant and machinery
Raw materials consumed as part of the R&D process
Subcontracted R&D
Power consumed as part of the R&D process
R&D Buildings
Revenue’s Interpretation of Qualifying Expenditure
Allowable Indirect Costs 2011 Guidelines v Allowable Indirect Costs 2015 Guidelines
Appointment of Expert in Revenue Audit Situation
Слайд 71
KDB Overview
6.25% tax rate on qualifying profits
Entitled to
allowance equal to 50% of qualifying profits
Allowance treated as
trading expense of the trade
Modified Nexus Approach
The relief is linked to the proportion of R&D carried on by the Irish company as a percentage of Group R&D
Irish entity must earn income from the exploitation of IP
Income generated from the IP must be recognised in the same entity that undertakes the R&D
Applies to accounting period commencing on or after 1 January 2016
Filing a claim
Irrevocable election into the KDB is made in the CT1 in the year the asset brought within the KDB
Company has 24 months from end of accounting period for electing for KDB treatment to apply to a qualifying asset
Inventions coming off patent can continue to avail of KDB as election is irrevocable
Слайд 72
KDB Overview
Main categories of IP covered by KDB
are:
Qualifying Patent / Supplementary protection certificated for medicinal products
/ Plant protection certificated / Plant breeder’s rights / Copyrighted Software
IP for SME’s
IP which is “patentable but not yet patented”
Certified as “novel, non-obvious and useful”
Irish Patent Office to make the certification
Documentary Evidence
Слайд 74
IP Capital Allowances Overview
C.A.’s for costs incurred in
acquiring “specified intangible assets” – 3rd party or related
party
Qualifying asserts include patents, registered designs, trademarks and names, brand names, domain names, copyrights, know-how, licenses etc. and any goodwill directly attributable to these assets
Acquired from a related party - amount qualifying for relief cannot exceed the market value of the asset
The relief is claimed under one of the following methods:
7% straight line for 14 years followed by 2% straight line in the 15th year
Depreciation/amortisation/impairment charge in the Statement of Comprehensive Income
Restriction on the amounts of allowance that can be offset
The capital allowances can only be offset against income from “relevant activities”
Unutilised capital allowances are carried forward for future offset against relevant trade income
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Split of TradeCo. and IPCo.
Parent
TradeCo.
3rd party customers
License of
IP
Contracts with 3rd Parties
IPCo.
Scenario
The IPCo. owns the rights to
the intellectual property.
R&D Employees and Outsourced R&D in IPCo.
The IPCo. licenses the use of the IP rights to the TradeCo. in return for an arm’s length fee.
The TradeCo. contracts directly with third party customers.
Irish Tax Outcome
IPCo. trading profits generally should be taxed at a rate of 6.25% (KDB) / 12.5% provided sufficient skilled workers and management of IP in IPCo.
IP is held in separate company from trading company should there be:
IP Sale only
Trade Sale only
Protects value of IP should there be litigation against TradeCo.
Potential S626B exemption on sale of IPCo if parent in Ireland.
If parent is resident outside of Ireland, any gain on a sale of IPCo is outside the scope of Irish taxation
R&D Employees
Outsourced R&D
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Split of TradeCo. and IPCo - Variation
Irish Tax
Outcome
Potential to significantly reduce the cost of conducting R&D
by outsourcing to related party in low cost jurisdiction
However, IPCo cannot avail of R&D tax credit on such outsourced expenditure
IreCo will be entitled to a tax deduction for cost of remunerating related party for undertaking R&D
Arm’s length rate must be agreed with related party
Compare costs of carrying out R&D in Ireland and availing of R&D Tax Credit v outsourcing R&D to related party and not availing of relief
Parent
TradeCo.
3rd party customers
License of IP
Contracts with 3rd Parties
IPCo.
R&D Employees
Outsourced R&D
Outsourced R&D (Related Party)
