August 26, 2010 IP Group plc (LSE: IPO), the developer of intellectual property based businesses, today announces its half-yearly results for the six months ended 30 June 2010.
Financial and operational highlights
· Net assets at 30 June 2010: £167.4m (HY09: £169.5m; FY09: £171.0m)
· Investment in portfolio companies increased to £3.1m (HY09: £1.6m; FY09: £5.7m)
· Portfolio realisations increased to £0.7m (HY09: £0.1m; FY09: £0.5m)
· Revenue from services increased to £1.1m (HY09: £0.8m; FY09: £1.5m)
· Net cash and deposits at 30 June 2010: £23.9m (HY09: £30.6m; FY09: £28.1m)
· Launch of £25m North East Technology Fund managed by the Group in January 2010
Portfolio highlights
· Fair value of investment portfolio: £101.3m (HY09: £97.1m; FY09: £101.3m)
· Value of ten largest holdings: £74.2m (HY09: £73.1m; FY09: £72.9m)
· Tissue Regenix Group plc and Ilika plc achieve listings on AIM, raising £4.5m and £5.2m respectively
· Oxford Nanopore Technologies Limited completes further £17.4m private financing
· Further industry validation for portfolio companies’ technology in the form of direct investment and commercial partnerships
Commenting on the Group’s half-yearly results, Alan Aubrey, Chief Executive of IP Group, said:
“Overall, the technical and commercial progress made by the Group’s portfolio companies towards key milestones has been strong in the period to date with commercial validation by industry having been particularly encouraging. The valuation of the portfolio has remained broadly stable despite a challenging financing and operating environment for small capitalisation technology based businesses. This valuation has benefited from the completion of a number of further external financings, including the first two portfolio companies joining AIM since 2007, although this has been offset by downward pressure on valuations of other holdings. Cash balances remain strong, our pipeline of activity is healthy and this, coupled with the portfolio’s progress to date, continues to give us confidence that the Group will generate long term returns for shareholders.”
For more information, please contact:
IP Group plc Alan Aubrey, Chief Executive Officer 020 7444 0050 Mike Townend, Director of Capital Markets 020 7444 0050 Greg Smith, Group Financial Controller 020 7444 0050 Liz Vaughan-Adams, Communications 020 7444 0062 / 07979 853 802
Further information on IP Group is available on our website: www.ipgroupplc.com
Financial Dynamics Ben Atwell, John Dineen 020 7831 3113
This half-yearly results release may contain forward-looking statements. These statements 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 within the Group’s portfolio of investments.
INTERIM MANAGEMENT REPORT
PORTFOLIO REVIEW
Overview
IP Group’s core business is the commercialisation of intellectual property primarily originating from leading research intensive universities. We seek to provide our companies with more than just capital, providing access to networks, experience, methodology and support.
At 30 June 2010, the value of the Group’s portfolio was stable at £101.3m (HY09: £97.1m; FY09: £101.3m), after net investment and the fair value movements set out below, and consisted of interests in 64 companies (HY09: 65; FY09: 63). During the period the Group made total investments of £3.1m, increased from £1.6m for the equivalent period in 2009, and realised a total of £0.7m cash proceeds (HY09: £0.1m).
A summary of the gains and losses across the portfolio is as follows:
HY2010 £m HY2009 £m FY2009 £m Unrealised gains on the revaluation of investments 8.3 9.8 15.3 Unrealised losses on the revaluation of investments (10.6) (12.4) (16.7) Net fair value losses (2.3) (2.6) (1.4) Gains/(losses) on disposals of equity investments 0.1 (0.1) (0.8) Change in fair value of limited partnership investments 0.1 (0.1) (0.1) Total (2.1) (2.8) (2.3)
Unrealised gains on the revaluation of investments principally arose from share price increases of Oxford Catalysts Group plc (£1.5m) and Tissue Regenix plc (£3.9m), the latter following its reversal onto AIM in June and concurrent £4.5m placing. In addition, in January, Oxford Nanopore Technologies Limited raised £17.4m resulting in a £2.2m fair value gain and valuing the Group’s 24.6% shareholding at £25.6m. This financing round included two new US based technology investors, illustrating the global interest in Oxford Nanopore’s technology.
Unrealised losses on the revaluation of investments included the impact of the negative share price performance of a number of the Group’s quoted companies, including Modern Water plc (£1.9m), Oxford Advanced Surfaces Group plc (£1.7m) and Proximagen Group plc (£1.4m). Ilika plc achieved the first cleantech IPO on AIM in 2010, raising £5.2m, however the price at which the IPO was achieved resulted in a fair value loss for the Group of £2.0m.
Since the period end, movements in the share prices of a number of quoted portfolio companies has resulted in a net fair value increase for the portfolio of £5.1m.
Investments and realisations
During the period, the Group’s rate of investment has increased, with a total of £3.1m being invested as follows:
Cash investment analysis by company stage HY2010 £m HY2009 £m FY2009 £m Incubation projects 0.1 0.3 0.3 Seed businesses 0.7 0.5 1.2 Post-seed businesses 1.3 0.6 0.8 Quoted businesses 1.0 0.2 3.4 Total 3.1 1.6 5.7
Proceeds from sales of equity investments 0.7 0.1 0.5
During the period to date, the Group has invested in 17 projects (HY09: 14; FY09: 20). Five new incubation projects received initial funding (HY09: three, FY09: three) and three incubation projects received new seed financing (HY09: two; FY09: two). These projects included two opportunities from the Group’s co-investment agreement with Fusion IP plc, which was established in November 2009. The average investment per company increased to £180,000 from £110,000 for the equivalent period in 2009.
Seed businesses are those which have received financing from the Group, generally up to £0.5m in total, while post-seed businesses are those which have received some level of further funding from co- investors external to the Group, with total funding generally having exceeded £0.5m. Quoted businesses consist of those which are quoted on either AIM or PLUS Markets.
The Group realised £0.7m of cash during the period, increased from £0.1m during the corresponding six months in 2009, and, as its portfolio businesses continue to mature, will pursue and assess further opportunities to realise cash when market conditions and/or specific circumstances make it attractive to do so. Following the period end, COE Group plc, which specialises in bringing innovative products to the video surveillance market, announced it had reached agreement on a recommended cash offer by Digital Barriers plc, valuing COE at £3.3m, and had received irrevocable undertakings in respect of 62.9% of its shares. The Group is expected to receive cash proceeds of £1.2m from the sale of its 34.8% equity holding in COE upon completion of the transaction.
