IP Group plc (LSE: IPO), the developer of intellectual property based businesses, today issues this Interim Management Statement, which provides an update on the Group’s progress for the period from 30 June 2014 to date.
Alan Aubrey, Chief Executive of IP Group, said:
“I am pleased to report another successful period for the Group, which has seen it establish a partnership with FedIMPACT to work with leading DOE Laboratories in the US, Medaphor float on AIM, and four of our quoted and unquoted companies raise total new capital of £95m. IP Group has a solid balance sheet, a diverse and maturing portfolio, an international pipeline of opportunities and remains well placed for future growth.”
Portfolio update
As at 11 November 2014, the fair value of the Group’s portfolio was £342.5m compared to £319.6m at 30 June 2014. This represents a net unrealised fair value increase of £5.0m, excluding the investments and realisations described below. This net fair value increase was primarily driven by a £17.8m fair value gain as a result of Oxford Nanopore Technologies Limited’s £35m fundraising in August 2014, combined with positive movements in the quoted portfolio, notably Xeros Technology Group plc (£2.4m), Ilika plc (£1.6m) and Medaphor Group plc (£1.4m). These were partially offset by decreases in the fair values of the Group’s holdings in Applied Graphene Materials plc (£5.7m) and Avacta Group plc (£5.5m), as a result of share price decreases.
The Group’s portfolio now consists of holdings in 88 intellectual property based companies, compared to 86 companies as at 30 June 2014. From 1 July 2014 to 11 November 2014, the Group provided incubation, seed and development capital totalling £22.4m to 22 portfolio companies. Last year, during the period covered by the Group’s Q3 IMS, a total of £14.2m was provided to 18 companies. The Group also generated cash proceeds of £4.6m (Q3 2013 IMS: £0.6m), primarily as a result of the realisation of the Group’s holding in Synairgen plc.
Significant developments in the Group’s portfolio companies since 30 June 2014 have included:
• In October, Oxford Nanopore Technologies Limited (“Oxford Nanopore”), a spin-out company from the University of Oxford that specialises in nanopore-based electronic molecular analysis systems, released details of its PromethION product, a tablet-sized bench-top instrument, which is designed to be scalable to high throughput if required and is complementary to existing products. This followed the completion in August of a significantly oversubscribed £35m fundraising, with funds being used to further develop Oxford Nanopore’s commercial and manufacturing infrastructure that has been serving early customers through its MinION Access Programme. The financing resulted in a fair value uplift in the Group’s resultant 19.9% interest of £17.8m.
• In August, IP Group led a tranched £6m financing into Diurnal Limited to support a Phase III clinical trial for its lead Chronocort® programme, contributing up to £4.1m. Having been the subject of a positive Phase II trial in the treatment of Congenital Adrenal Hyperplasia earlier this year, the company has already commenced Phase III activities as it seeks to progress Chronocort towards market authorisation, with the pivotal trial due to commence in the first half of 2015. At 11 November 2014, the Group’s 46.2% interest in Diurnal was valued at £6.8m.
• In September, Retroscreen Virology Group plc (“Retroscreen”), a spin-out from Queen Mary University of London, raised £33.6m before expenses through an oversubscribed placing. The Group contributed £4.0m towards the placing. Retroscreen, which pioneered the commercialisation of the hVIVO Human Challenge Models of disease, seeks to leverage its hVIVO platform as a powerful tool in biomarker discovery and in the development of new disease models. The Group’s 17.5% interest in Retroscreen was valued at £32.0m at 11 November 2014.
• Ceres Power Holdings plc (“Ceres”), a world-leading developer of low cost, next generation fuel cell technology for use in distributed generation and other applications, announced in October that it had signed a joint development agreement with a leading global Japanese power systems company following a successful period of extensive testing both in the UK and Japan during the past year. This followed the raising of £20.0m (gross of expenses) for working capital purposes by way of an oversubscribed placing in July, of which IP Group committed £4.0m. The fair value of the Group’s 23.2% interest in Ceres was valued at £13.5m at 11 November 2014.
• In August, MedaPhor Group plc (“Medaphor”), the global provider of advanced ultrasound education and training for medical professionals, gained admission to AIM and raised gross proceeds of £4.7m in a placing. In September, Medaphor announced in its half-year financial report that its sales had increased by 10% to £662,000; that it had established a US subsidiary, MedaPhor North America Inc.; the expansion of its UK and US sales teams; the launch of a new radiology training simulator platform, and the strengthening of its management team as part of its IPO. The Group’s 47.2% interest was valued at £5.4m at 11 November 2014.
Operational update
On 6 November 2014, the Group announced that it had formed a pilot initiative with FedIMPACT to identify and develop early-stage technologies from a select group of US Department of Energy (“DOE”) Laboratories. The initiative includes technologies in materials, clean technology, life science, medical and human sciences, information technology, electronics, communications and robotics. FedIMPACT will seek early-stage technologies from an initial pilot group of DOE Laboratories, including Pacific Northwest National Laboratory and the National Renewable Energy Laboratory.
Balance sheet update
At 11 November 2014, the Group had cash of £107m, a diversified portfolio valued at £343m and net assets of £528m, representing 110p per share. Excluding intangible assets and the Oxford Equity Rights asset, the Group’s “hard” net assets were £452m or 94p per share.
Board changes
On 29 October 2014, the Group announced that Dr Bruce Smith, CBE, had indicated that he wished to step down from his position as Non-executive Chairman and a director of the Group after more than 12 years of service once a suitably qualified and experienced successor has been appointed. A further announcement will be made by the Group in due course once Dr Smith’s replacement has been selected.
For more information, please contact:
IP Group plc
Alan Aubrey, Chief Executive Officer
+44 (0) 20 7444 0050
Greg Smith, Chief Financial Officer
Liz Vaughan-Adams, Communications
+44 (0) 20 7444 0062 / +44 (0) 7979 853 802
FTI Consulting
+44 (0) 20 3727 1000
James Melville-Ross/Simon Conway/
Victoria Foster Mitchell
This statement is intended to give an indication of material transactions and events that have taken place since 30 June 2014 and their impact on the financial position of the Group. These indications reflect the Board’s current view, are subject to a number of material risks and uncertainties and could change in the future. Factors which could cause or contribute to such changes include, but are not limited to, the general economic climate and market conditions, as well as specific factors relating to the financial or commercial prospects or performance of individual portfolio companies with the Group’s portfolio. Unless otherwise stated, the Group’s holdings in portfolio companies reflect the undiluted beneficial equity interest excluding debt.
Notes for editors
About IP Group
IP Group is a leading UK intellectual property commercialisation company, developing technology innovations primarily from its research intensive partner universities. The Group offers more than traditional venture capital, providing its companies with access to business building expertise, networks, recruitment and business support.
IP Group’s portfolio comprises holdings in around 90 early-stage to mature businesses across the Healthcare, Biotech, Cleantech and Technology sectors. These businesses include Oxford Nanopore Technologies, the DNA sequencing development company, Revolymer, best known for its removable chewing gum and Xeros, which has received many accolades for its revolutionary clothes washing techniques with a much reduced requirement for water.
For more information, please visit our website at www.ipgroupplc.com.
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