Final Results
IP Group PLC
26 February 2008
('IP Group' or 'the Group' or 'the Company')
IP Group Preliminary Results
Substantial growth in value and scale of portfolio
26 FEBRUARY 2008: IP Group plc (LSE: IPO), the UK's leading university
intellectual property commercialisation company, today announces its preliminary
results for the year ended 31 December 2007.
Financial highlights
• Strong rise in net assets: £213.8m (2006: £179.2m)
• Substantial increase in fair value of equity investments in portfolio:
£126.1m (2006: £87.4m)
• Profit after taxation: £30.5m (2006: £40.1m)
• Cash invested in portfolio companies: £6.8m (2006: £8.5m)
• Cash proceeds from sales of equity investments: £8.0m (2006: £3.1m)
• Cash balance at 31 December 2007: £46.0m (2006: £51.3m)
Portfolio and Operational highlights
• Portfolio of companies in which the Group has a fair value holding of £3m
or above at year end expanded to 12 (2006: 8 companies)
• Over £70m of capital raised by portfolio companies during the year, of
which over £30m was raised in private financing rounds
• Successful AIM flotation of two portfolio companies, as well as successful
reversals on to AIM and PLUS Markets of two portfolio companies
• IP Venture Fund completes second closing with total commitments of £31m
and makes 11 investments into Group portfolio companies
• Significant operational and developmental advances made by portfolio
companies during 2007
Commenting on the Group's preliminary results, Alan Aubrey, Chief Executive of
IP Group, said:
'IP Group's unparalleled access to commercialisable university intellectual
property and proven business building methodology has resulted in a substantial
improvement in the value, quality and scale of our portfolio of companies during
2007.
'The portfolio of companies in which the Group has a holding worth above £3m has
grown and this is backed by a large and diverse pool of other opportunities.
Together with its strong cash position, the Group is well positioned to realise
significant shareholder value over the long term.'
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 020 7831 3113
Ben Atwell, Rob Bailhache, Sanjeev Pandya
CHAIRMAN'S STATEMENT
This is my first statement as Chairman since IP Group moved to the Official List
from AIM and I am pleased to report that there has been good overall progress
across the business during 2007, reflected by the strong growth in the
portfolio. The Group has performed in line with the Board's expectations,
maintaining its market leadership position in university intellectual property
commercialisation in the UK.
Through its ten university partners in the UK, the Group has unrivalled access
to a strong pipeline of investment opportunities as well as research capability
and is uniquely placed at the forefront of commercialising UK innovation. IP
Group continues to work with its university partners to source, develop and
invest in world-leading technologies and then grow these businesses
post-investment through to significant value creation.
During 2007, we focused on integrating our most recent university partnerships,
five of which were established during 2006, continuing to develop our longer
established partnerships and on rolling out our proprietary commercialisation
methodology and best practices across the Group. The Group's portfolio is
increasingly diverse with exposure to a number of key sectors: Energy &
Renewables, Healthcare & Life Sciences (Therapeutics and Non-therapeutics), IT &
Communications and Chemicals & Materials. These technologies are developed
through many years of research at the Group's partner universities.
We also strengthened our fund management operations during the year, completing
a second closing of the IP Venture Fund at £31 million, which provides an
additional potential source of financing for our portfolio companies. The fund
has now made a total of 13 investments in IP Group portfolio companies.
The Group also further developed its own internal third-party fund-raising
capability during the year, with the establishment of a dedicated Capital
Markets team. As global financial markets have deteriorated, we have already
seen the benefits of this strategy. Indeed, it is particularly encouraging to
note that the Group's portfolio companies raised over £30 million in private
financings during the year. This demonstrates not only the strength of the
business model but also the Group's resilience in testing times.
There have been a number of changes to the Board this year. I am delighted to
have resumed the role of Non-Executive Chairman. I have been a director of the
Group for five years and was Chairman when the Group floated on AIM. David
Norwood, the Group's founder and previous Executive Chairman, has moved to the
position of Special Projects Director. David remains an Executive Director and
is actively involved with shareholder relations, strategic issues and
fund-raisings. He also acts as chairman or non executive director of a number of
our portfolio companies. In addition, Mike Townend joined us from Lehman
Brothers as Director of Capital Markets.
Outlook
Looking ahead, and against the current backdrop of global economic uncertainty,
your Directors believe that the Group remains well positioned and are confident
of further progress during 2008. IP Group has a strong balance sheet and will
continue its policy of prudent cash management while ensuring risk remains
diversified within the portfolio.
The portfolio is maturing and the Directors expect the Group's portfolio
companies to make further significant progress in 2008 with a number preparing
product launches or due to reach other critical milestones.
The Group's most recent corporate transactions, which include two substantial
private fund-raisings, demonstrate the continuing success of our strategy to
widen our distribution platform. The Board remains committed to maintaining this
balance particularly in the light of the recent illiquidity in global equity
markets.
IP Group is well placed in a number of key sectors through its ten exclusive
long term relationships with UK universities and its growing and diverse spread
of portfolio companies. Although the current volatility in the equity markets
is likely to lead to a reduction in financings through the public markets in
2008, the Group will increasingly utilise alternative fund raising options for
its portfolio companies. With a strong cash position, a broad portfolio and
unrivalled sources of future technology, IP Group is well positioned to create
long-term shareholder value.
I would like to thank all of our staff for their hard work and commitment as
well as our shareholders, university partners and all of our associates for
their ongoing support.
DR BRUCE SMITH
Chairman
26 February 2008
CHIEF EXECUTIVE'S STATEMENT
The Group has again delivered a strong performance in 2007, substantially
increasing the underlying value of the portfolio and increasing net assets to
£213.8m during the year (2006: £179.2m). The Group generated a profit before tax
of £30.5m, in line with the Board's expectations, and largely driven by gains in
the value of the Group's portfolio. It is noteworthy that revenues from
services, in the form of fund management and consultancy fees, rose to £2.0m
(2006: £1.8m) and cash proceeds generated from the sale of equity investments
during the period rose significantly to £8.0m (2006: £3.1m). The Group's cash
position remained strong with £46.0m cash at year end (2006: £51.3m) whilst the
Group continued to invest in the portfolio and the Modern franchise, and invest
in the infrastructure required to support the new partnerships established in
2006 and the growing portfolio.
Companies in the Group's portfolio continue to make good technical and
commercial progress, with a number announcing significant developments in the
year. During 2007 the Group's portfolio increased in value by 44% to £126.1m
from £87.4m. The Group ended the year with 12 portfolio companies in which it
has a holding valued at £3m or above, as well as stakes in 53 other businesses,
and these are analysed in greater detail in the Portfolio Review below.
Operational Review
University partnership business
During 2007, the Group has been focused on developing the five new relationships
with UK universities established in the prior year as well as continuing to
develop our longer established partnerships. Our ten university partnerships now
represent a significant proportion of the scientific research base in the UK. I
am pleased to report that these more recent relationships are already bearing
fruit in the form of a total of seven spin out companies formed from the
University of Surrey, Queen Mary, University of London, the University of Bath,
the University of York and the University of Glasgow.
The breadth of our university partnerships provides us with an excellent
pipeline of technology-based development opportunities which remains unmatched
by any other intellectual property commercialisation company in the UK. IP
Group's success depends on its ability to work with its university partners to
identify opportunities from the concepts and ideas generated from this research
base and to progress those opportunities through to value creation in various
forms. To that end we have continued to successfully develop our investment and
business building methodology during the year.
The companies in the Group's portfolio have continued to make significant
progress towards their commercial and technological goals during the year.
Below, I highlight a few notable examples:
In September 2007, Revolymer Limited, a spin-out from the University of Bristol
in the Chemicals & Materials sector that develops new polymers with enhanced
physical properties, announced that it had completed development of its new
non-stick chewing gum. Revolymer announced that the 'Clean Gum' had both good
taste and in field tests could be easily removed from shoes, clothes, pavements
and hair.
Retroscreen Virology Limited in the Healthcare & Life Sciences
(Non-therapeutics) sector is one of Europe's leading contract Virology research
companies and has grown revenues to £3.1m for the year to 31 July 2007 from just
£1.1m in 2005. IP Group has a 22.9% stake in the business.
Green Chemicals plc, which develops speciality chemicals with more benign
environmental footprints than existing products, announced in April 2007 that
initial results from industrial trials of its Perachem FR flame retardant
treatment were progressing ahead of expectations. In December 2007, the Company
announced the signing a letter of intent with Good Hair Days to develop an
exclusive range of environmentally friendly hair lightening and colouring
products.
In July 2007 Photopharmica (Holdings) Limited ('Photopharmica'), a University of
Leeds spin-out company in the Healthcare & Life Sciences (Therapeutics) sector,
announced the successful completion of the first ever Phase II
placebo-controlled clinical trial using topical photodynamic therapy for the
treatment of microbial disease in wounds.
Finally, in November 2007, the Group announced that Tracsis plc ('Tracsis'), an
IT & Communications company providing resource optimisation software to major
transport companies in the passenger rail and bus industries, had been admitted
to the Alternative Investment Market ('AIM') raising £2m by way of the placing.
Tracsis was the eleventh Group business to float on AIM or PLUS markets, and is
a good example of the profitable, cash-generative businesses created through the
Group's university partnership model, which enabled it to complete an IPO
successfully in a difficult market.
Fund management business
The Group's fund management business contributed total income of £1.2m during
2007 (2006: £1.5m).
In August 2007, the Group announced that it had completed a second closing of IP
Venture Fund ('the IPVF'), the venture capital fund established in July 2006 in
partnership with the European Investment Fund, one of the leading venture
capital investors in Europe. The second close was over-subscribed and attracted
a further £15.5m with participation by a number of new respected institutional
investors taking total commitments to £31m. The IPVF has the ability to invest
up to 25% in post seed financings in the Group's portfolio of spin-out companies
and during the year invested a total of £6.9m (2006: £0.7m) into eleven (2006:
two) IP Group portfolio companies. With the second close now complete, the fund
provides an excellent prospective source of follow on funding for present and
future spin-outs in the IP Group portfolio.
'Modern' Businesses
The Group's strategy of creating businesses to address specific global issues,
led by world-class management teams seeking to access and exploit a portfolio of
intellectual property based investments within a particular sector, has seen
continued success in 2007.
As previously announced, the Group launched its latest subsidiary in this field,
Modern Waste Limited ('Modern Waste') in May 2007. IP Group committed £2m to
Modern Waste, which will develop and exploit innovative waste and recycling
technologies. Modern Waste is headed by Executive Chairman John Shepherd and in
January 2008 Victor Cocker CBE, the founder Chairman of WRAP and former CEO of
Severn Trent plc, and Michael Averill, the former CEO of Shanks Group plc joined
the board as Non-Executive Directors. Modern Waste has established a strong
pipeline of initial opportunities.
The Group's drug development subsidiary, Modern Biosciences plc ('Modern
Biosciences'), has also made good progress in the year. In April 2007, Dr Sam
Williams became CEO. Sam is an award-winning biotechnology analyst with over ten
years' experience in the sector and joined Modern Biosciences from Lehman
Brothers. In June 2007, Dr Clive Dix became Chairman. Clive was previously CEO
of PowderMed Ltd, overseeing its sale to Pfizer in 2006, and was a Board member
of PowderJect Pharmaceuticals plc which was acquired by Chiron for £550m in
2003. He has more than 22 years' experience in the pharmaceutical and
biotechnology industries. During the year, Modern Biosciences concluded two
development agreements, Rimcazole, a new treatment for cancer from the
University of Dundee, and an exclusive worldwide licence with the University of
Aberdeen to develop new, oral, disease-modifying molecule treatments for
rheumatoid arthritis.
Finally, as announced earlier in the year, Modern Water plc ('Modern Water')
became the first of the Group's Modern businesses to be successfully floated on
AIM, raising £30m (before expenses) of new capital and valuing the company at
approximately £70m on admission. Modern Water was established in 2006 to source,
develop and deploy technology-based solutions to meet the growing demand for the
economic availability of fresh water and treatment of waste water.
Financial Review
Income statement
A summary analysis of the Group's performance for the year is as follows:
2007 2006
£'m £'m
_____ _____
Portfolio gains 35.0 40.2
Other income 2.0 1.8
Administrative expenses - Modern Businesses & Photopharmica (2.6) (0.3)
Administrative expenses - All Other Businesses (6.6) (3.9)
Finance income 2.7 2.3
_____ _____
Profit for the period 30.5 40.1
_____ _____
As described in more detail in the Portfolio Review below, the portfolio gains
are largely attributable to gains on Oxford Advanced Surfaces plc (£11.5m),
Modern Water (£10.9m), Green Chemicals plc (£7.1m) and Photopharmica (£6.5m).
These gains were offset to some degree by a reduction in the value of our
holdings in certain companies in the quoted portfolio, most significantly Avacta
Group plc (£4.3m).
The existing quoted portfolio generated net fair value losses of £7.6m during
2007 (2006: £0.9m), which the Board believes is reflective of a general
deterioration in market conditions during the year, and the stage of development
and lack of news-flow surrounding these companies, rather than a lack of
underlying technical or commercial progress. The Board remains confident that
the breadth and quality of the quoted portfolio is such that it will generate
shareholder returns over the medium term.
The Group generated £2.0m (2006: £1.8m) of other income during 2007 and this
consisted primarily of fund management income, as described above, and fees from
consultancy services.
As anticipated at the end of 2006, the Group incurred increased administrative
expenses for 2007 of £9.2m (2006: £4.2m). The increase was largely a result of
two factors. Firstly additional staff costs brought about by the doubling of the
number of University partnerships and also the strengthening of the central
management team to support this expansion and the growth of the portfolio.
Secondly, the consolidation of costs incurred in portfolio companies that,
because IP Group's shareholding is more than 50%, are accounted for as
subsidiary undertakings. These companies comprised Modern Biosciences, Modern
Water (until its IPO in June 2007), Modern Waste and Photopharmica (until its
private placing in December 2007). The net expenses incurred by these businesses
that have been consolidated into the income statement of the Group amounted to
£2.6m (2006: £0.3m).
Portfolio performance
In 2007, the Group recorded £34.5m of net fair value gains and gains on deemed
disposals of investments (2006: £38.2m). An analysis of these gains is as
follows:
2007 2006
£'m £'m
_____ _____
Gains on the revaluation of investments 38.1 47.8
Losses on the revaluation of investments (11.7) (9.6)
_____ _____
Net fair value gains 26.4 38.2
Gains on deemed disposal of subsidiaries 8.1 -
_____ _____
Total 34.5 38.2
_____ _____
A detailed analysis of these gains and losses is given in the Portfolio Report
below.
In 2007, the Group ceased to control Modern Water as a result of its issuing
additional share capital during its placing on AIM, and Photopharmica as a
result of an additional funding round completed in December. As a result of
these transactions, Modern Water and Photopharmica ceased to be subsidiaries and
accordingly are no longer consolidated. The Group recognised a gain on disposal
of £8.1m (2006: £nil).
Proceeds on disposal of equity investments
Reflecting the increasing maturity of the Group's investment portfolio, the
Group generated a significant increase in cash proceeds on the sale of equity
investments of £8.0m, compared to the £3.1m during 2006.
Of this, the Group generated £5.4m as the result of sales of 2,671,765 ordinary
shares in Offshore Hydrocarbon Mapping plc ('OHM') and a further £2.6m as a
result of the sale of 2,136,664 ordinary shares in Oxford Catalysts Group plc ('
OCG'). As at 31 December 2007, the Group has realised total cash proceeds of
£6.3m from its total investment of £0.2m in OHM and the value of its remaining
0.8% holding in the company is £0.6m. Aggregate cash proceeds of £4.6m have been
generated by the Group from its total investment in OCG of £0.4m and its
remaining 16.7% holding in the company is worth £9.7m at 31 December 2007.
Cash
At 31 December 2007 the Group had total cash of £46.0m (2006: £51.3m). The
principal constituents of the movement in cash in the year can be summarised as
follows:
2007 2006
£'m £'m
_____ _____
Net cash used in operating activities (2.6) (1.4)
Net cash used in investing activities (2.9) (6.2)
Issued share capital 0.2 19.0
_____ _____
Movement during period (5.3) 11.4
_____ _____
The Group invested £6.8m (2006: £8.5m) in the portfolio as well as £0.7m (2006:
£0.2m) investment in the IP Venture Fund. As described above, the Group
generated cash proceeds of £8.0m (2006: £3.1m) on disposals of equity stakes.
However, there was a net cash outflow from investing activities of £2.9m (2006:
£6.2m) mainly as a result of the acquisition and subsequent deemed disposal of
Photopharmica in the year, as well as the deemed disposal of Modern Water.
During 2007 the Group issued new share capital for cash proceeds of £0.2m (2006:
£19.0m) as a result of the exercise of employee unapproved share options.
At 31 December 2007, the Group had £36.7m ring-fenced for seed round financing
of new spin-out companies from its university partners (2006: £40.5m). As a
result of the second closing of the IP Venture Fund in August 2007, the Group
has £2.2m of undrawn commitments for investments in the fund at 31 December 2007
(2006: £1.2m).
It is the Group's current policy to place any cash surplus to near term working
capital requirements on short-term and overnight deposits. The Group has no
foreign currency deposits.
Share based payments
During May 2007, the Group introduced a new Long Term Incentive Plan ('LTIP') in
which shares were granted to certain executive directors and key employees which
vest after a three year period depending on the achievement of certain key
performance measures. The accounting for share allotments to employees of this
nature is accounted for under IFRS 2, 'Share Based Payments' and accordingly a
charge of £0.3m for the period (2006: nil) has been recognised in the income
statement.
Taxation
The Group's directors continue to believe that the Group qualifies for the
Substantial Shareholdings Exemption ('SSE') on chargeable gains arising on
disposal of qualifying holdings. During 2007 the Group obtained a
post-transaction clearance from HM Revenue & Customs under Code of Practice 10
(CoP10) that SSE applied to the Group's disposal of shares in OHM. The Group has
therefore not recognised any deferred tax provision on net gains arising on its
portfolio of equity investments.
Portfolio Review
During 2007 the Group's portfolio made strong progress on all levels, increasing
in value by 44% from £87.4m across 53 companies to £126.1m across 65 companies.
Following the admission to AIM of Tracsis in November 2007 and the reversal on
to AIM and concurrent placing of Oxford Advanced Surfaces plc ('OAS') during
December 2007, twelve of the Group's university spin out companies have been
admitted to either AIM or PLUS Markets (2006: eight). Outside of the public
markets arena, ten portfolio companies completed successful funding rounds,
raising a total of £31.3m.
Portfolio analysis by investment stage
The portfolio businesses in the Group's portfolio are at varying stages of
development, which we analyse into three categories: 'Pre-seed & Incubation', '
Portfolio Businesses <£3m' and 'Portfolio Businesses >£3m'. The former category
consists of any portfolio companies which have yet to receive seed investment
and which are being incubated, while the latter two categories consist of more
mature businesses. These are further analysed based on the current value of the
Group's holding at a given date. An analysis of the Group's portfolio by
investment stage is as follows:
As at 31 Dec 2007
Fair Value Number
Company stage £m % %
_____ _____ _____ _____
Pre-seed & Incubation 0.6 0% 14 22%
Portfolio businesses <£3m 28.6 23% 39 60%
Portfolio businesses >£3m 96.9 77% 12 18%
_____ _____ _____ _____
All portfolio businesses 126.1 100% 65 100%
_____ _____ _____ _____
(continued from table above)
As at 31 Dec 2006
Fair Value Number
Company stage £m % %
_____ _____ _____ _____
Pre-seed & Incubation 0.5 1% 10 19%
Portfolio businesses <£3m 26.7 31% 35 66%
Portfolio businesses >£3m 60.2 68% 8 15%
_____ _____ _____ _____
All portfolio businesses 87.4 100% 53 100%
_____ _____ _____ _____
Largest portfolio businesses ('Portfolio businesses >£3m')
It has been a good year for our largest portfolio businesses during 2007, with a
number of companies completing successful financing rounds on both public and
private markets. Further details of these portfolio businesses are shown in the
table below.
In December, OAS, a spin-out company from the University of Oxford specialising
in coatings and materials, reversed into an AIM listed company and completed a
placing raising £3m. At 31 December 2007, the Group's 15.7% stake realised a
fair value gain of £11.5m on a mark-to-market basis.
Photopharmica, the University of Leeds spin-out company, which is developing
pharmaceutical products using photodynamic therapy (PDT), announced the
completion of a £6m private financing round in December. At 31 December 2007,
the Group had a 49.9% stake and recognised a fair value gain in the year of
£6.5m.
In addition, during the year the Group recognised a fair value gain of £7.1m on
its 24.5% holding in Green Chemicals plc, following its reversal on to PLUS
Markets in January and recognised fair value gains of £2.4m and £1.2m on iQur
Limited and Ilika Technologies Limited respectively, with both companies
completing successful private funding rounds in the second half of 2007.
Movements in the market prices of quoted companies Summit Corporation plc,
Synairgen plc and Avacta Group plc resulted in a reduction in value of £7.1m for
the year, partially offset by a £1.2m fair value gain on Proximagen Neuroscience
plc.
Other portfolio businesses
Of the 39 portfolio businesses in which the Group has a fair value stake of less
than £3m at 31 December 2007, seven were seeded by the Group during the year
with a total investment of £2.0m (2006: eleven companies, £3.8m). In addition,
seven companies in this category completed successful private follow-on
fundings, raising a total of £14.9m.
The admission to AIM in November of Tracsis, as noted above, valued the company
at £7.0m. The Group recognised a fair value gain of £0.1m on its 20.9% stake on
a mark-to-market basis.
In the Pre-seed & Incubation category, fourteen new businesses were created
during 2007 (2006: sixteen).
Portfolio analysis by sector
At 31 December 2007, the Group has built a portfolio that is well diversified by
sector. The Group analyses its portfolio businesses by sector based on their
principal activity.
As at 31 Dec 2007
All portfolio businesses Fair Value Number
Sector £m % %
_____ _____ _____ _____
Energy & Renewables 25.4 20% 8 12%
Healthcare & Life Sciences: Non Therapeutics 28.5 23% 17 26%
Healthcare & Life Sciences: Therapeutics 35.0 28% 12 19%
IT & Communications 5.2 4% 11 17%
Chemicals & Materials 32.0 25% 17 26%
_____ _____ _____ _____
126.1 100% 65 100%
_____ _____ _____ _____
(Continued from table above)
As at 31 Dec 2006
All portfolio businesses Fair Value Number
Sector £m % %
_____ _____ _____ _____
Energy & Renewables 22.4 26% 9 17%
Healthcare & Life Sciences: Non Therapeutics 27.8 32% 12 23%
Healthcare & Life Sciences: Therapeutics 21.5 24% 12 23%
IT & Communications 4.5 5% 7 13%
Chemicals & Materials 11.2 13% 13 24%
_____ _____ _____ _____
87.4 100% 53 100%
_____ _____ _____ _____
Largest portfolio businesses ('Portfolio businesses >£3m')
Company name Description Quoted/
Unquoted
Avacta Group plc Advanced molecular detection and analysis technologies for the Quoted
biopharmaceutical, homeland security, defence and medical
diagnostics industries
Green Chemicals plc Environmentally friendly textiles and bleaching chemicals Quoted
Ilika Technologies Limited Development and application of high throughput, combinatorial R&D Unquoted
techniques for the discovery of new materials
iQur Limited Diagnosis and treatment of liver disorders Unquoted
Modern Water plc Water technologies to address problems of the availability of Quoted
freshwater and the treatment and disposal of wastewater
Oxford Advanced Surfaces plc Development & commercialisation of technology which enables the Quoted
modification of the surface properties of a broad range of materials
Oxford Catalysts Group plc Speciality catalysts for the generation of clean fuels, from both Quoted
conventional fossil fuels and renewable sources such as biomass
Oxford NanoLabs Limited Diagnostic company developing highly innovative products for Unquoted
application in genomics, pharmacogenomics and high throughput drug
discovery
Photopharmica (Holdings) Develops novel photosensitisers as products for medical use & has Unquoted
Limited opened up new applications of topical photodynamic therapy
Proximagen Neuroscience plc Developing drugs for the treatment of neurodegenerative diseases Quoted
Summit Corporation plc Using whole organism phenotypic screens for drug discovery and Quoted
development
Synairgen plc Developing drugs for respiratory diseases with a focus on asthma and Quoted
chronic obstructive pulmonary disease
(continued from table above)
Company value Group Stake Fair Value of Group holding at:
31 Dec 07 31 Dec 07 31 Dec 07 31 Dec 06
Company name £m % £m £m
_____ _____ _____ _____
Avacta Group plc 28.8 23.9% 6.9 10.5
Green Chemicals plc 30.7 24.5% 7.5 0.4
Ilika Technologies Limited 29.5 23.6% 7.0 5.7
iQur Limited 23.3 17.7% 4.1 1.2
Modern Water plc 53.0 23.0% 12.2 -
Oxford Advanced Surfaces plc 76.5 15.7% 12.0 0.7
Oxford Catalysts Group plc 58.0 16.7% 9.7 12.9
Oxford NanoLabs Limited 27.8 41.6% 11.6 11.6
Photopharmica (Holdings) Limited 26.0 49.9% 13.0 0.2
Proximagen Neuroscience plc 23.1 23.5% 5.4 4.2
Summit Corporation plc 49.6 8.1% 4.0 5.4
Synairgen plc 11.9 29.6% 3.5 5.0
ALAN AUBREY
Chief Executive Officer
26 February 2008
CONSOLIDATED INCOME STATEMENT
For the year ended 31 December 2007
Note 2007 2006
£'m £'m
_____ _____
Revenue
Change in fair value of equity investments 26.4 38.2
Gains on deemed disposal of subsidiaries 8.1 -
Gains on disposal of equity investments 0.5 1.9
Dividends received - 0.1
Revenue from services 2.0 1.8
_____ _____
37.0 42.0
_____ _____
Administrative expenses
Employee bonus costs (1.3) (0.3)
Research and development costs (0.7) -
Share based payment charge (0.3) -
Other administrative expenses (6.9) (3.9)
_____ _____
(9.2) (4.2)
_____ _____
Operating profit 27.8 37.8
Finance income - interest receivable 2.7 2.3
_____ _____
Profit before taxation 30.5 40.1
Taxation - -
_____ _____
Profit for the year 30.5 40.1
_____ _____
Profit attributable to:
Equity holders of the parent 30.5 40.1
Minority interest - -
_____ _____
30.5 40.1
_____ _____
Basic earnings per ordinary share (p) 2 12.25 16.84
_____ _____
Diluted earnings per ordinary share (p) 2 12.25 16.81
_____ _____
CONSOLIDATED BALANCE SHEET
As at 31 December 2007
2007 2006
Note £'m £'m
_____ _____
ASSETS
Non-current assets
Intangible assets:
Goodwill 18.7 18.7
Acquired intangible assets 0.3 0.5
Property, plant and equipment 0.5 0.1
Equity rights and related acquisition costs 20.2 20.3
Equity investments 4 126.1 87.4
Financial asset 1.1 1.1
Investment in limited partnerships 1.0 0.3
_____ _____
Total non-current assets 167.9 128.4
_____ _____
Current assets
Trade and other receivables 2.1 2.2
Cash and cash equivalents 46.0 51.3
_____ _____
Total current assets 48.1 53.5
_____ _____
Total assets 216.0 181.9
_____ _____
EQUITY AND LIABILITIES
Equity attributable to equity holders of the parent
Share capital 5.0 4.9
Share premium account 96.7 92.0
Merger reserve 12.8 12.8
Retained earnings 99.0 69.2
_____ _____
Total shareholders' equity 213.5 178.9
_____ _____
Minority interest in equity 0.3 0.3
_____ _____
Total equity 213.8 179.2
_____ _____
Non-current liabilities
Provisions - 0.1
_____ _____
Total equity and non-current liabilities 213.8 179.3
_____ _____
Current liabilities
Trade and other payables 2.2 2.6
_____ _____
Total equity and liabilities 216.0 181.9
_____ _____
CONSOLIDATED CASH FLOW STATEMENT
For the year ended 31 December 2007
2007 2006
£'m £'m
_____ _____
Operating activities
Profit before taxation 30.5 40.1
Adjusted for:
Finance income - interest receivable (2.7) (2.3)
Fair value movements in equity investments (26.4) (38.2)
Depreciation of tangible non-current assets 0.1 -
Amortisation of intangible non-current assets 0.2 0.2
Profit on disposal of equity investments (0.5) (1.9)
Gains on deemed disposal of subsidiaries (8.1) -
Equity allocated to staff 1.3 2.1
Share-based payment charge 0.3 -
Changes in working capital
Increase in trade and other receivables (0.3) (0.7)
Decrease in trade and other payables and provisions (0.1) (2.6)
Operating cash flows
Dividends classified as investing activities cash flows - (0.1)
Interest received 3.1 2.0
_____ _____
Net cash outflow from operating activities (2.6) (1.4)
_____ _____
Investing activities
Purchase of property, plant and equipment (0.1) -
Purchase of equity investments (6.8) (8.5)
Investment in Limited Partnership Funds (0.7) (0.2)
Financial asset - 0.1
Acquisition of subsidiaries net of cash acquired (1.7) (0.8)
Proceeds from sale of equity investments 8.0 3.1
Deemed disposal of subsidiaries net of cash disposed (1.6) -
Dividend received - 0.1
_____ _____
Net cash outflow from investing activities (2.9) (6.2)
_____ _____
Financing activities
Proceeds from issue of share capital 0.2 19.0
_____ _____
Net increase in cash and cash equivalents (5.3) 11.4
Cash and cash equivalents at the beginning of the year 51.3 39.9
_____ _____
Cash and cash equivalents at the end of the year 46.0 51.3
_____ _____
NOTES
BASIS OF PREPARATION
The preliminary results for the year ended 31 December 2007 have been extracted
from audited accounts which have not yet been delivered to the Registrar of
Companies. The financial information set out in this announcement does not
constitute statutory accounts for the year ended 31 December 2007 or 31 December
2006. The financial information for the year ended 31 December 2006 is derived
from the statutory accounts for that year. The reports of the auditors on the
statutory accounts for the years ended 31 December 2007 and 31 December 2006
were (i) unqualified, (ii) did not include references to any matters to which
the auditors drew attention by way of emphasis without qualifying their reports,
and (iii) did not contain statements under section 237 (2) or (3) of the
Companies Act 1985. The statutory accounts for the year ended 31 December 2006
have been delivered to the registrar, while the statutory accounts for the year
ended 31 December 2007 will be delivered to the registrar following the
Company's Annual General Meeting.
EARNINGS PER SHARE
The basic and diluted profit per ordinary share is based on profits attributable
to ordinary shareholders for the year of £30.5m (2006: £40.1m). The basic
profit per share is based on the weighted average number of ordinary shares of
248,952,170 in issue during the year (2006: 238,155,846). The diluted profit
per ordinary share in 2007 is based on the weighted average number of ordinary
shares plus the potentially dilutive options over ordinary shares, totalling
248,952,170 (2006: 241,190,446).
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Attributable to equity holders of the Company
Share Share Merger Retained Other Total
capital premium reserve earnings reserve
£'m £'m £'m £'m £'m £'m
_____ _____ _____ _____ _____ _____
At 1 January 2006 4.6 73.3 12.8 29.1 - 119.8
Consolidated profit for the year - - - 40.1 - 40.1
Issue of share capital in the 0.3 18.7 - - - 19.0
year
Minority interest acquired with - - - - - -
subsidiary
_____ _____ _____ _____ _____ _____
At 1 January 2007 4.9 92.0 12.8 69.2 - 178.9
Consolidated profit for the year - - - 30.5 - 30.5
Pre acquisition reserves - - - (0.4) - (0.4)
attributable to the Group
Liabilities acquired in excess - - - - (2.3) (2.3)
of net interest in subsidiary
Partial disposal of subsidiary - - - (0.6) - (0.6)
investments to minority
interests
Disposal of subsidiary - - - - 2.3 2.3
undertakings
Issue of share capital in the 0.1 4.7 - - - 4.8
year
Share based payment charge - - - 0.3 - 0.3
Minority interest acquired with - - - - - -
subsidiary
_____ _____ _____ _____ _____ _____
At 31 December 2007 5.0 96.7 12.8 99.0 - 213.5
_____ _____ _____ _____ _____ _____
(Continued from table above)
Minority interest Total Equity
£'m £'m
_____ _____
At 1 January 2006 - 119.8
Consolidated profit for the year - 40.1
Issue of share capital in the year - 19.0
Minority interest acquired with subsidiary 0.3 0.3
_____ _____
At 1 January 2007 0.3 179.2
Consolidated profit for the year - 30.5
Pre acquisition reserves attributable to the - (0.4)
Group
Liabilities acquired in excess of net - (2.3)
interest in subsidiary
Partial disposal of subsidiary investments 0.6 -
to minority interests
Disposal of subsidiary undertakings (0.9) 1.4
Issue of share capital in the year - 4.8
Share based payment charge - 0.3
Minority interest acquired with subsidiary 0.3 0.3
_____ _____
At 31 December 2007 0.3 213.8
_____ _____
EQUITY INVESTMENTS - DESIGNATED AS 'AT FAIR VALUE THROUGH PROFIT OR LOSS'
Group Quoted spin Unquoted spin Other
out companies out companies investments Total
£'m £'m £'m £'m
_____ _____ _____ _____
At 1 January 2006 24.6 18.3 1.4 44.3
Investments during the year 0.7 7.8 - 8.5
Reclassifications during the year 1.5 (1.5) - -
Disposal during the year (0.6) (0.5) - (1.1)
Change in fair value in the year 22.5 15.4 0.3 38.2
Equity allocated to staff - (2.1) - (2.1)
Adjustment arising on consolidation of Poseidon (0.4) (0.4)
Water Ltd
_____ _____ _____ _____
At 1 January 2007 48.7 37.0 1.7 87.4
Investments during the year 0.5 6.3 - 6.8
Reclassifications during the year 2.3 (2.3) - -
Reclassification of subsidiaries as equity 9.2 5.4 - 14.6
investments during the year
Change in fair value in the year 13.8 12.5 0.1 26.4
Equity allocated to staff - (1.4) (0.2) (1.6)
Disposal during the year (7.5) - - (7.5)
_____ _____ _____ _____
At 31 December 2007 67.0 57.5 1.6 126.1
_____ _____ _____ _____
AVAILABILITY OF STATUTORY ACCOUNTS
Copies of the full statutory accounts will be available from the registered
office at 24 Cornhill, London, EC3V 3ND from 31 March 2008 and will also be
available on the Group's website at www.ipgroupplc.com.
ANNUAL GENERAL MEETING
The Annual General Meeting will be held at 3pm on 29 April 2008 at IP Group plc,
24 Cornhill, London, EC3V 3ND.
This information is provided by RNS
The company news service from the London Stock Exchange
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