Interim Results

IP2IPO Group PLC 08 September 2004 For Immediate Release 8 September 2004 IP2IPO Group plc Interim results for the half year ended 30 June 2004 IP2IPO Group plc (AIM: IPO), the intellectual property company that commercialises university technology, is pleased to announce its interim results for the half year ended 30 June 2004. Highlights • Maiden pre-tax profits of £1.2 million (for the six month period to 30 June 2003: pre-tax loss of £292,000) • Substantial increase in turnover at £379,000 (for the six month period to 30 June 2003: £39,000) • Offshore Hydrocarbon Mapping, in March 2004, became the first company from the IP2IPO portfolio to float, endorsing the Group's business model • Investments in four, new spin out companies were made during the half year, bringing to 17 the number of private companies in the IP2IPO portfolio • Acquisition of Top Technology Ventures Limited, an investment manager of early stage venture capital funds, on 30 June 2004 for a maximum consideration of £2.4 million • £2 million investment to acquire 20% of Techtran Group Limited, the technology transfer company at the University of Leeds • Net cash at 30 June 2004 of £37.3 million Commenting on the results, Graham Richards, IP2IPO's Chairman, said: 'The first half of 2004 has been successful for IP2IPO. For the remainder of the year we will seek to build on this success by continuing to focus on driving value from within our portfolio of spin out companies without relinquishing our commitment to disciplined cost control.' For more information please contact: IP2IPO David Norwood, Chief Executive Officer 020 7071 4348 Buchanan Communications Mark Court, Mary-Jane Johnson 020 7466 5000 Chairman's half yearly statement During the 6 months ended 30 June 2004, IP2IPO developed significantly. In March 2004 Offshore Hydrocarbon Mapping plc ('OHM') became the first company from the IP2IPO portfolio to float when it listed its shares on the Alternative Investment Market of the London Stock Exchange plc. At that time, IP2IPO disposed of 588,235 OHM shares to realise gross proceeds of £1 million. IP2IPO continues to hold approximately 3 million OHM shares, representing 10.4% of OHM's share capital. As at 30 June 2004, this holding was worth £7.1m. IP2IPO was instrumental in the creation of OHM in June 2002, at which time IP2IPO invested £150,000 in OHM and received a 26.3% stake in the company. The successful flotation of OHM, some 21 months after its formation, is a major milestone for IP2IPO. As a result of making its first realisation from the disposal of shares in a spin out company, and as a result also of growth in IP2IPO's income from the provision of advisory services, operating profit for the 6 months ended 30 June 2004 was £440,000. Profit after taxation in the period was £1,202,000. Your Company has continued to acquire interests in spin out companies with four new investments added to the IP2IPO portfolio in the six month period to 30 June 2004. These additions include investments in the first two spin out companies formed under IP2IPO's partnership with King's College London. As at 30 June 2004, IP2IPO had interests in 17 private companies formed as a result of its long-term university partnerships. Five of these companies secured second round finance during the period. On 30 June 2004, IP2IPO acquired Top Technology Ventures Limited ('Top Technology'), an investment management company of early stage venture capital funds. The maximum consideration payable of £2.4 million is made up of a combination of cash, shares and deferred cash payment. The acquisition is an important strategic step for IP2IPO and will combine your Company's proven ability to create new ventures based on world leading university intellectual property and Top Technology's expertise in early stage investments. Subsequent to the period end, IP2IPO invested £2 million to acquire 20% of the share capital of Techtran Group Limited ('Techtran'). This is another significant development for your Company. Techtran is a technology transfer company that has a long-term technology commercialisation contract with the University of Leeds, one of the UK's largest and best regarded research-led universities. Under the terms of this contract, Techtran provides technology commercialisation services to the University of Leeds and in return, Techtran receives a significant (30%) interest in spin out companies and licences based on intellectual property created at the University. At 30 June 2004, Techtran had interests in 15 spin out companies. The first half of 2004 has been successful for IP2IPO. For the remainder of the year, your Company will seek to build on this success by continuing to focus on driving value from within its portfolio of spin out companies without relinquishing its commitment to disciplined cost control. Graham Richards Chairman Consolidated Profit and Loss Account Unaudited Unaudited Audited six months six months 12 months to 30 to 30 to 31 June June December 2004 2003 2003 Note £'000 £'000 £'000 Turnover 379 39 222 Administrative expenses - Provision against fixed asset investments - - (109) - Other (863) (418) (1,170) - Total (863) (418) (1,279) Surplus on disposal of fixed asset investments 924 - - Operating profit (loss) 440 (379) (1,057) Interest receivable and similar income 762 87 474 Profit (loss) on ordinary activities before taxation 1,202 (292) (583) Tax on profit (loss) on ordinary activities - - - Profit (loss) on ordinary activities after taxation 1,202 (292) (583) Basic profit (loss) per ordinary share 2 2.96p (1.1p) (1.9p) Diluted profit (loss) per ordinary share 2 2.86p (1.1p) (1.9p) Consolidated Balance Sheet Unaudited Unaudited Audited at 30 at 30 at 31 June June December 2004 2003 2003 Note £'000 £'000 £'000 Fixed assets Intangible fixed assets - Goodwill 3 2,919 - - - Other 14 - 12 Tangible fixed assets 59 33 27 Investments - Equity rights 3 17,371 17,532 17,556 - Equity investments 3 7,379 3,771 5,804 24,750 21,303 23,360 27,742 21,336 23,399 Current assets Debtors 501 75 170 Cash at bank and in hand 37,344 9,703 38,245 37,845 9,778 38,415 Creditors: Amounts falling due within one year (2,417) (67) (774) Net current assets 35,428 9,711 37,641 Total assets less current liabilities 63,170 31,047 61,040 Creditors: Amounts falling due after more than one (383) - (383) year Provisions for liabilities and charges (128) - - Net assets 62,659 31,047 60,657 Capital and reserves Called up share capital 4,081 2,919 4,064 Share premium account 59,755 30,216 58,972 Profit and loss account (deficit) (1,177) (2,088) (2,379) Total equity shareholders' funds 62,659 31,047 60,657 Consolidated Cash Flow Statement Unaudited Unaudited Audited six months six months 12 months to 30 to 30 to 31 June June December 2004 2003 2003 Note £'000 £'000 £'000 Net cash outflow from operating activities 5 (620) (395) (708) Returns on investments and servicing of finance Interest received 762 87 474 Net cash inflow from returns on investment and servicing of finance 762 87 474 Taxation - - - Capital expenditure and financial investment Purchase of intangible fixed assets (2) - (12) Purchase of tangible fixed assets (3) - (5) Purchase of fixed asset investments (1,353) (402) (1,818) Sale of fixed asset investments 965 - - Net cash outflow from capital expenditure and financial investments (393) (402) (1,835) Acquisitions Purchase of subsidiary undertaking (880) - - Net cash acquiried with subsidiary 230 - - (650) - - Net cash outflow before financing (901) (710) (2,069) Financing Issue of ordinary shares - 6,250 37,738 Share issue costs - (225) (1,812) Net cash inflow from financing - 6,025 35,926 (Decrease) Increase in cash 5 (901) 5,315 33,857 1. Basis of preparation The results for the half-year are unaudited. They have been prepared on the same basis as the accounts for the year ended 31 December 2003. The financial information in this interim announcement does not constitute statutory accounts within the meaning of Section 240(5) of the Companies Act 1985. The statutory accounts of IP2IPO Group plc for the year ended 31 December 2003 have been reported on by the company's auditors and have been delivered to the Registrar of Companies. The report of the auditors was unqualified and did not contain a statement under Section 237(2) or 272(3) of the Companies Act 1985. 2. Earnings per share calculation The basic profit per share has been calculated by dividing the profit for the period of £1,202,000 (for the period ended 30 June 2003: loss of £292,000; for the year ended 31 December 2003: loss of £583,000) by the weighted average number of shares of 40,638,910 in issue during the six month period to 30 June 2004 (for the six month period ended 30 June 2003: 26,038,012; for the year ended 31 December 2003: 30,031,187). The diluted profit per share has been calculated by dividing the profit for the period of £1,202,000 by 41,991,935, the sum of the weighted average number of shares in issue adjusted for the conversion of the dilutive potential shares, weighted for the period they were outstanding. The diluted earnings per share for the year ended 31 December 2003 and period ended 30 June 2003 are equal to the basic earnings per share for these periods as IP2IPO Group plc recorded a loss for these periods. 3. Intangibles Goodwill of £2,919,000 had been recognised in respect of the acquisition of Top Technology Ventures Limited on 30 June 2004, representing consideration of £2.4 million plus the net liabilities of that company at completion. 4. Fixed asset investments Equity rights University of Oxford chemistry Acqui- department sition equity rights costs Total £'000 £'000 £'000 Cost At 31 December 2003 17,256 354 17,610 Transfer to equity investments (175) - (175) Additions - - - At 30 June 2004 17,081 354 17,435 4. Fixed asset investments continued University of Oxford chemistry Acqui- department sition equity rights costs Total £'000 £'000 £'000 Aggregate amortisation of acquisition costs At 31 December 2003 - (54) (54) Charge for the period - (10) (10) At 30 June 2004 - (64) (64) Net book value At 30 June 2004 17,081 290 17,371 At 31 December 2003 17,256 300 17,556 Equity investments University University King's of of South- College Oxford ampton London Amaethon spin outs spin outs spin outs Limited Other Total £'000 £'000 £'000 £'000 £'000 £'000 Cost At 31 December 2004 2,672 1,802 - 1,150 1,826 7,450 Investment in spin out 475 392 661 - - 1,528 companies Assets acquired with Top - - - - 88 88 Technology Disposals in spin out - (41) - - - (41) companies At 30 June 2004 3,147 2,153 661 1,150 1,914 9,025 Provision for impairment At 31 December 2003 - - - - 1,646 1,646 Charge for the period - - - - - - At 30 June 2004 - - - - 1,646 1,646 Net book value At 30 June 2004 3,147 2,153 661 1,150 268 7,379 At 31 December 2003 2,672 1,802 - 1,150 180 5,804 4. Fixed asset investments continued Disposals in spin out companies relates to the disposal of 588,235 shares in Offshore Hydrocarbon Mapping plc, a spin out company from the University of Southampton, on its admission to the Alternative Investment Market on 11 March 2004. 5. Notes to the cash flow statement i. Net cash flow from operating activities Unaudited Unaudited Audited six months six months 12 months to 30 to 30 to 31 June June December 2004 2003 2003 £'000 £'000 £'000 Operating profit (loss) 440 (379) (1,057) Depreciation of tangible fixed assets 10 14 25 Amortisation of acquisition costs 10 9 20 Profit on disposal of fixed asset investments (924) - - Increase in debtors and accrued income (240) (28) (123) Increase (decrease) in creditors 84 (6) 318 Other non-cash movement - (5) - Provision against fixed asset investments - - 109 Net cash flow from operating activities (620) (395) (708) ii. Reconciliation of net cash flow to movement in net funds Unaudited Unaudited Audited six months six months 12 months to 30 to 30 to 31 June June December 2004 2003 2003 £'000 £'000 £'000 Movement in cash in the year (901) 5,315 33,857 Changes in net funds resulting from cash flows (901) 5,315 33,857 Movement in net funds in the year (901) 5,315 33,857 Opening net funds 38,245 4,388 4,388 Closing net funds 37,344 9,703 38,245 Independent Review Report to IP2IPO Group plc Introduction We have been instructed by the company to review the financial information for the six months ended 30 June 2004. We have read the other information contained in the interim report and considered whether it contains any apparent misstatements or material inconsistencies with the financial information. Our report has been prepared in accordance with the terms of our engagement to assist the company in meeting the requirements of the London Stock Exchange for companies trading securities on the Alternative Investment Market and for no other purpose. No person is entitled to rely on this report unless such a person is a person entitled to rely upon this report by virtue of and for the purpose of our terms of engagement or has been expressly authorised to do so by our prior written consent. Save as above, we do not accept responsibility for this report to any other person or for any other purpose and we hereby expressly disclaim any and all such liability. Directors' responsibilities The interim report, including the financial information contained therein, is the responsibility of, and has been approved by the directors. Where a company is fully listed, the directors are responsible for preparing the interim report in accordance with the Listing Rules of the Financial Services Authority which require that the accounting policies and presentation applied to the interim figures should be consistent with those applied in preparing the preceding annual accounts except where any changes, and the reasons for them, are disclosed. The directors of IP2IPO Group plc have voluntarily complied with this requirement in preparing the interim report. Review work performed We conducted our review in accordance with guidance contained in Bulletin 1999/4 issued by the Auditing Practices Board for use in the United Kingdom by auditors of fully listed companies. A review consists principally of making enquiries of group management and applying analytical procedures to the financial information and underlying financial data and based thereon, assessing whether the accounting policies and presentation have been consistently applied unless otherwise disclosed. A review excludes audit procedures such as tests of controls and verification of assets, liabilities and transactions. It is substantially less in scope than an audit performed in accordance with United Kingdom Auditing Standards and therefore provides a lower level of assurance than an audit. Accordingly we do not express an audit opinion on the financial information. Review conclusion On the basis of our review we are not aware of any material modifications that should be made to the financial information as presented for the six months ended 30 June 2004. BDO STOY HAYWARD LLP Chartered Accountants Southampton 31August 2004 This information is provided by RNS The company news service from the London Stock Exchange

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