Interim Management Statement

RNS Number : 8336E

IP Group PLC

16 May 2013

 



FOR RELEASE ON

16 MAY 2013

("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 2012 to15 May 2013.

Alan Aubrey, Chief Executive of IP Group, said:

"The Group has continued to make good progress to date during 2013. The fair value of the Group's portfolio has increased from £181.8m to £201.9m, largely as a result of a net increase in the value of the Group's holdings in quoted companies. During the year to date, spin-out companies have collectively raised in excess of £30m with the Group participating in every fundraising, in-line with its continued commitment to maintaining or increasing its stakes in post-seed portfolio companies through subsequent financing rounds."

Portfolio update

As at 15 May 2013, the fair value of the Group's portfolio was £201.9m compared to £181.8m as at 31 December 2012, a net unrealised fair value increase of £13.5m (excluding the investments and realisations described below). The Group's portfolio now consists of holdings in 71 intellectual property based companies, compared to 67 companies as at 31 December 2012, as a result of four additions during the period.

During the period from 1 January 2013 to 15 May 2013, the Group provided incubation, seed and development capital totalling £9.4m to 22 portfolio companies (last year a total of £14.5m was provided to 18 companies). The Group generated proceeds of £2.8m (2012: £nil) as a result of the partial sale of its holding in Oxford Catalysts Group plc.

Significant developments in the Group's portfolio companies since 31 December 2012 have included:

·      In April, Retroscreen Virology Group plc ("Retroscreen") announced its first full-year results since its AIM admission in 2012. The company saw revenue of £14.4m to 31 December 2012, an increase of 237% compared to the prior year, gross profit of £3.7m (2011: £0.61m) and an improvement in gross margin to 25.7% (2011:14.4%). The Group's 22.7% interest in Retroscreen was valued at £25.6m at 15 May 2013.

·      Modern Water plc ("MW"), a company that develops leading water technologies focused on addressing the scarcity of fresh water and the monitoring of water quality, announced in March that it had raised gross proceeds of £10.0m which included a £1.7m investment by the Group. The net proceeds of the placing will enable the company to pursue opportunities to commercialise its forward osmosis technology, particularly across China and the Middle East, and also to grow its monitoring business by licensing and acquiring innovative, proven products to leverage its international distribution network. IP Group's 20.0% beneficial holding in MW was valued at £8.3m at 15 May 2013.

·      Fusion IP plc ("Fusion"), the university IP commercialisation company, completed a placing in April raising gross proceeds of £20.0m. Fusion also announced that it had signed memoranda of understanding with two additional universities, the University of Nottingham and Swansea University. Following the Group's £1.7m participation in Fusion's placing, its 20.1% beneficial holding in the company was valued at £12.3m at 15 May 2013.

·      Also in March, Xeros Limited ("Xeros"), the environmentally-friendly cleaning company, successfully completed a £10.0m fundraising from new and existing investors, including a £0.8m investment by the Group. The funding will be used to accelerate the roll-out of the Xeros commercial laundry cleaning system and finalise the development of a household system to replace conventional washing machines. The Group's 14.8% beneficial holding in Xeros is currently valued at £3.2m.

·      Ceres Power Holding plc ("Ceres"), an AIM-quoted company developing clean, efficient, cost-effective fuel cell technology for use in distributed generation and other applications, completed a placing and open offer raising gross proceeds of £9.5m in March, in which the Group provided further capital of £2m. The funds raised are intended to take Ceres through its next stage of Original Equipment Manufacturer ("OEM") engagements and that, following the deployment of these funds, the Ceres core cell and fuel cell module technology platform will be proven to be suitable for product development programmes with several OEMs in multiple geographies. The fair value of the Group's 24.7% holding in Ceres Power was valued at £10.6m at 15 May 2013.

·      Tracsis plc, a leading provider of operational planning software to passenger transport industries, announced in March a recommended cash offer for the entire issued share capital of AIM-quoted Sky High plc, the largest provider of traffic analysis and surveys within the UK, and in April won Small Cap Company of the Year at the 2013 Small Cap Awards. The Group's 12.5% holding in Tracsis was valued at £5.3m at 15 May 2013.

Operational update

In February, the Group announced that it had signed a commercialisation agreement with The University of Manchester, one of the country's major research universities. Under the terms of the agreement, IP Group will create a Proof of Principle funding facility of up to £5m for the identification and formation of new spin-out companies. In return, the Group will receive equity stakes in such spin-out companies on pre-agreed terms as well as the right to invest further in these companies as they progress.

As announced earlier this year, Professor Graham Richards retired from the Group's board on 14 May 2013 after more than eleven years' service. Professor Richards has agreed to remain as an advisor to the Group.

Balance sheet update

At 15 May 2013, the Group had no borrowings, cash of £40m, a diversified portfolio valued at £202m and net assets of £274m, representing 73p per share. Excluding intangible assets and the Oxford Equity Rights asset, the Group's net assets were £249m or 67p per share.

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]
Ben Atwell, John Dineen

This statement is intended to give an indication of material transactions and events that have taken place since 31 December 2012 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.

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 Group's portfolio comprises holdings in over 70 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, Medical Equipment & Supplies, Pharma & Biotech, IT & Communications and Chemicals & Materials. To date, fifteen of the portfolio companies IP Group has backed have listed on the AIM market of the London Stock Exchange and one on ISDX.

Founded in 2001, IP Group listed on AIM in October 2003 and moved to the Official List in June 2006.

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

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