Interim Management Statement

RNS Number : 1624H

IP Group PLC

15 May 2014

 



FOR RELEASE ON

15 MAY 2014

("IP Group" or "the Group")

IP Group: Interim Management Statement

IP Group plc (LSE: IPO), the developer of intellectual property based businesses, today issues its Interim Management Statement in accordance with FCA Disclosure and Transparency Rule 4.3.

This statement provides an update on the Group's progress for the period from 31 December 2013 to date.

Alan Aubrey, Chief Executive of IP Group, said:

"I am pleased to report another busy period for the Group, throughout which we have built on the considerable successes of 2013. The current year has so far seen the Group complete a £100m equity capital raise and the acquisition of Fusion IP plc, a company with a highly complementary business and management team. In addition, the Group agreed a pilot IP commercialisation collaboration with Princeton University and extended its agreement with The University of Manchester to include graphene. These achievements, combined with the successful admission of two of our portfolio companies to AIM, an increased pipeline of opportunities, and a strong cash and financial position, provide us with a solid platform from which to generate significant value for shareholders over the long term."

Operational update

In February, the Group competed an equity capital raise that, due to significant demand from new and existing shareholders, was increased in size to £100m (before expenses). This will enable the Group to accelerate growth by increasing its overall rate of capital deployment into both its existing portfolio and into new early stage opportunities, in the UK and internationally, as well as to broaden its access to world class IP.

In March, the Group completed the acquisition of the remaining 79.9% shareholding in Fusion IP plc ("Fusion") not already owned by the Group in an all-paper transaction effected by way of a scheme of arrangement. This creates a business with an enlarged specialised team and greater breadth of coverage, enabling access to a wider pool of intellectual property and improving the service offering to existing and potential research institutions both in the UK and internationally.  

In April, the Group announced that it had signed an IP commercialisation agreement with Princeton University. The collaboration, which has an initial pilot phase of 18 months, will focus on developing early-stage, proof of principle opportunities based on intellectual property developed at Princeton. The agreement covers all materials and clean technology; all life, medical and human sciences; information technology; as well as electronics, communications and robotics. The collaboration with Princeton is our third IP commercialisation agreement with a US university, having signed agreements with Columbia University and the University of Pennsylvania in 2013.

The Group announced in January that it had extended its commercialisation agreement with The University of Manchester through its technology transfer company, UMI3 Ltd, to include proof of principle funding for graphene projects. In addition, the Group committed a further £2.5m of funding, bringing the total to £7.5m, under the revised terms of the agreement, which was extended to 2019.

Portfolio update

As at 13 May 2014, the fair value of the Group's portfolio was £317.2m compared to £285.9m at 31 December 2013. This represents a net unrealised fair value increase of £17.3m excluding the investments and realisations described below and those holdings acquired through the acquisition of Fusion. This net fair value increase was primarily driven by an £11.6m fair value gain as a result of an increase in the share price of Actual Experience plc following its admission to AIM and increases in the share prices of a number of the Group's quoted portfolio companies during the period, totalling £13.7m. These were partially offset by decreases in the fair values of the Group's holdings in AIM-quoted Getech Group plc (£2.3m), Ceres Power Holdings plc (£2.3m) and Modern Water plc (£1.7m), as a result of share price decreases.

The Group's portfolio now consists of holdings in 87 intellectual property based companies following the acquisition of Fusion, compared to 72 companies as at 31 December 2013. From 1 January 2014 to 13 May 2014, the Group provided incubation, seed and development capital totalling £10.6m to 24 portfolio companies. Last year, during the period covered by the Group's Q1 IMS, a total of £9.4m was provided to 22 companies. The Group generated proceeds of £2.7m, primarily as a result of the acquisition of Leeds spin-out company Rock Deformation Research Limited by Schlumberger during the period (Q1 2013 IMS: £2.8m).

Significant developments in the Group's portfolio companies since 31 December 2013 have included:

·      In February, Actual Experience plc, an "analytics as a service" spin-out from Queen Mary University of London, gained admission to AIM. Actual Experience's technology enables the measurement of the digital world as users experience it, enabling customers to measure and improve the performance of the business applications that they provide to their staff and their own clients, reducing costs while improving the experience of the user. The Group's 29.7% interest in Actual Experience was valued at £16.3m at 13 May 2014.

·      In March, Xeros Technology Group plc ("Xeros"), a spin-out from the University of Leeds that has developed a patented polymer bead cleaning system, gained admission to AIM and raised gross proceeds of £27.6m in a placing. Admission and the fundraising are expected to allow Xeros to accelerate roll-out of its technology in commercial laundry and to fund the research and development process through to commercialisation in other identified applications, not least domestic laundry. The Group committed £2.2m to the placing and its 11.9% interest in Xeros was valued at £6.8m at 13 May 2014.

·      In May, Avacta Group plc ("Avacta"), a global provider of innovative diagnostic tools, consumables and reagents for human and animal healthcare, announced that it had raised, subject to certain conditions, £10.1m before expenses. The proceeds will be used to accelerate Avacta's development and commercialisation of Affimers.  This acceleration will comprise the scaling up of the company's resources to identify and supply Affimer reagents to replace or complement antibodies as general Life Sciences reagents and to resource the early stage commercialisation of such reagents through commercial partnerships as well as direct sales of custom reagents. The Group committed £2.5m to the placing and its 27.6% interest in Avacta was valued at £12.4m at 13 May 2014.  

Balance sheet update

At 13 May 2014, the Group had cash of £129m, a diversified portfolio valued at £317m and net assets of £530m, representing 110p per share. Excluding intangible assets and the Oxford Equity Rights asset, the Group's "hard" net assets were £450m or 94p per share.

Board changes

The Group has announced four changes to its Board since 31 December 2013. In March, Professor Lynn Gladden CBE joined the Board as Non-executive Director. Professor Gladden is Pro-Vice-Chancellor for Research for the University of Cambridge, the Shell Professor of Chemical Engineering and the former Head of the Department of Chemical Engineering and Biotechnology. In the same month, David Baynes, previously Chief Executive Officer of Fusion, joined the Board as an Executive Director and Doug Liversidge, previously Chairman of Fusion, joined as a Non-Executive Director. In April, David Baynes was appointed to the role of Chief Operating Officer and Charles Winward stepped down from the Board to pursue other opportunities.

For more information, please contact:

IP Group plc
Alan Aubrey, Chief Executive Officer	[phone]
Greg Smith, Chief Financial Officer
Liz Vaughan-Adams, Communications	[phone] / [phone]
FTI Consulting	[phone]
John Dineen

This statement is intended to give an indication of material transactions and events that have taken place since 31 December 2013 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 ("IP") 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.

The Company's portfolio comprises holdings in over 80 companies including 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.

The portfolio includes early stage to mature businesses and has exposure to five main sectors - Energy & Renewables, Healthcare, Biotech, IT & Communications and Chemicals & Materials.

For more information, please visit our website at www.ipgroupplc.com.

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