TIDMIPO
RNS Number : 6003G
IP Group PLC
09 August 2016
FOR RELEASE ON 9 August 2016
("IP Group" or "the Group" or "the Company")
Half-yearly results
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 2016.
HALF YEAR HIGHLIGHTS
Financial and operational update
- Net assets excluding intangibles of GBP683.5m (HY15: GBP700.6m; FY15: GBP714.3m)
- Adjusted loss before tax of GBP31.1m (HY15: profit of
GBP70.1m; FY15: profit of GBP82.4m), excluding amortisation of
intangible assets
- Portfolio realisations: GBP14.5m (HY15: GBP0.4m; FY15: GBP0.6m)
- Net cash and deposits at 30 June 2016: GBP174.7m (HY15: GBP219.6m; FY15: GBP178.8m).
Portfolio update
- Fair value of portfolio: GBP525.7m (HY15: GBP478.2m; FY15: GBP552.2m)
- Capital provided to portfolio companies and projects: GBP12.8m
(HY15: GBP15.1m; FY15: GBP75.9m)
- Group's portfolio companies raised approximately GBP38m of new capital during the half year
- Oxford Nanopore Technologies Limited announces significant
technical and commercial progress, including the launch of a number
of new products and services, and delivers its first PromethION
instrument
Post-period end update
- Diurnal reports positive headline data from European Infacort(R) Phase III pivotal study.
Commenting on the Group's half-yearly results, Alan Aubrey,
Chief Executive Officer of IP Group, said: "It is pleasing to
report that a number of our portfolio companies have made excellent
commercial progress during the period across all four of our
sectors - Healthcare, Technology, Cleantech and Biotech - although
broader economic conditions have had an impact on the value of some
of our AIM-quoted holdings. The Group's US business continues to
develop, with the Group having signed agreements with the
University of Washington and The Johns Hopkins University to
explore opportunities to commercialise the universities'
intellectual property.
It is clear that the UK is facing a period of uncertainty
following the EU referendum and ahead of the conclusion of
subsequent negotiations. While in the shorter term there may be
some impact on specific portfolio company financing rounds, the
Board believes that the fundamentals of the business are strong and
that the case for the commercialisation of science remains
compelling. IP Group has partnerships with 14 of the UK's and 5 of
the US's leading research universities, a portfolio worth
GBP525.7m, a strong cash balance of GBP174.7m, an experienced
management team and a healthy pipeline of new opportunities. This
leaves the Group well positioned to respond effectively to, and
capitalise on, opportunities in the second half of the year."
For more information, please contact:
IP Group plc www.ipgroupplc.com
Alan Aubrey, Chief
Executive Officer
Greg Smith, Chief
Financial Officer
Liz Vaughan-Adams,
Communications +44 (0) 20 7444 0050
Charlotte Street Partners
Andrew Wilson +44 (0) 7810 636995
Further information on IP Group is available on our website:
www.ipgroupplc.com
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 that 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. Throughout this half-yearly results release the
Group's holdings in portfolio companies reflect the undiluted
beneficial equity interest excluding debt, unless otherwise
explicitly stated.
Interim management report
Summary
IP Group's aim is to evolve great ideas into world-changing
businesses to provide attractive returns over the long term for all
of our stakeholders. While market conditions have had an impact on
the value of some of our AIM-quoted holdings, it is pleasing to
report that the commercial performance of many of our portfolio
companies has been outstanding in the period.
Further, total realisations in the first half of the year were
GBP14.5m (HY15: GBP0.4m; FY15: GBP0.6m). The most significant
contribution came from the sale of the Group's holding in Tracsis
plc, which generated GBP13.1m of cash proceeds. Including
dividends, the Group's total proceeds from Tracsis were GBP14.3m,
representing a multiple of approximately 38 times the Group's total
cost of GBP0.4m.
At 30 June 2016, the fair value of the Group's portfolio was
GBP525.7m (HY15: GBP478.2m; FY15: GBP552.2m). This reflects a net
fair value decrease of GBP24.5m during the period largely as a
result of a reduction in the value of the Group's holdings in three
AIM-listed portfolio companies - Avacta Group plc (GBP7.1m), Xeros
Technology Group plc (GBP7.1m) and hVIVO plc (GBP4.4m). These were
partly offset by positive contributions from other companies in the
portfolio including, notably, Ceres Power Holdings plc
(GBP4.2m).
In the first six months of the year, the Group provided
incubation, seed and further capital totalling GBP12.8m to 29
distinct portfolio companies and opportunities (HY15: GBP15.1m, 31
opportunities; FY15: GBP75.9m, 53 opportunities) and had gross cash
and deposits of GBP174.7m (HY15: GBP219.6m; FY15: GBP178.8m).
The Group's portfolio now comprises holdings in 83 companies in
addition to strategic stakes in three multi-sector platform
businesses and 16 de minimis holdings (HY15: 77, 3, 17; FY15: 82,
3, 15).
The first half of the year has been characterised by major
commercial developments in our key assets with strong progress
across all four of our sectors - Healthcare, Technology, Cleantech
and Biotech. Notable highlights are as follows:
In Healthcare, Oxford Nanopore Technologies Limited hosted its
flagship 'London Calling' conference in May and made a number of
key announcements including announcing a new pipeline product,
SmidgION, the smallest ever sequencing device that can be plugged
into a smartphone and is expected in 2017, project Zumbador, a
project to create a disposable device that includes both sample
prep and library prep and noting that VolTRAX, the automated,
programmable library prep device, will go into early access in the
second half of the year. Oxford Nanopore also introduced a new
nanopore, R9, into all its products which is superior to the now
obsolete R7 nanopore and announced it had delivered its first
PromethION instrument to a customer.
hVIVO plc announced favourable results from PrEP Biopharm's
PrEP-001 Phase IIa influenza disease prevention study. PrEP
Biopharm is a UK biotech company for respiratory infectious disease
products in which hVIVO acquired a significant equity stake in
November 2015.
In Technology, the division's most valuable company holding,
Actual Experience plc, announced a five-year framework agreement
with Vodafone, adding to the contract wins announced during 2015
which included a major three-year partnership with Verizon. Mirriad
Advertising Limited, which has developed an innovative, patented
computer vision technology that can retrospectively insert
advertising and branded products into existing video content,
announced that its most recent $15m financing round, led by IP
Group had included participation from Unilever Ventures, the
venture capital and private equity arm of Unilever, one of the
world's largest spenders on advertising.
In Cleantech, Ceres Power Holdings plc had an exceptional start
to the year announcing a two-year joint development agreement with
Honda for power equipment applications in January. This was
followed in June by the announcement of a project with Nissan aimed
at developing a compact, on-board solid oxide fuel cell stack for
range extension of electric vehicles. These new programmes in power
equipment and automotive complement its existing work on prime
power and domestic combined heat and power with Cummins and KD
Navien respectively. The Nissan development is particularly
encouraging, as it will be the first significant work for the
company in automotive applications.
In Biotech, our drug discovery subsidiary, Modern Biosciences
plc, continued to make good progress in its development of MBS2320,
a novel agent for the treatment of rheumatoid arthritis. MBS2320 is
partnered with Janssen Biotech Inc. and is currently in Phase 1
clinical studies. Elsewhere, in July the division's most valuable
holding, Diurnal Group plc, announced positive headline data from
its European Phase 3 study for Infacort(R) in the treatment of
paediatric Adrenal Insufficiency (AI), several months ahead of
schedule. Since floating on AIM in December 2015, Diurnal has
continued to hit all developmental milestones, with the European
Phase 3 study for its largest potential product, Chronocort,
initiated in January.
More detail on the performance of the sectors is contained in
the portfolio review below.
US
During the period, the Group continued to deepen its
foundational partnerships with the University of Pennsylvania (two
new opportunities), Princeton University (one new opportunity) and
Columbia University (one new opportunity). Two recent opportunities
from this group of partners, Uniformity Labs, Inc. (Princeton
University) and Lumiode, Inc. (Columbia University) were presented
at the Group's recent capital markets day in London. In addition,
the Group signed agreements with the University of Washington and
The Johns Hopkins University. Both universities have consistently
ranked in the top ten of all US universities with regards to the
quantum of their annual R&D budgets (2016: $2.1bn and $1.1bn
respectively) and are known for the quality and breadth of their
technical output.
Outlook
While it is clear that the UK and its economy are facing a
period of uncertainty following the outcome of the UK's referendum
on its membership of the EU, which may impact on specific funding
rounds for companies, it is important to stress that IP Group is
seeing excellent progress across the portfolio, has a strong
balance sheet and operations in both the UK and the US.
IP Group was founded on the belief that modern economies need to
support innovation in science and technology and to commercially
leverage such innovation, and we believe that this remains the
case. Further, the Board believes that the fundamentals of our
business are strong and that the need for the commercialisation of
science remains key.
IP Group has partnerships with 14 of the UK's and 5 of the US's
leading research universities, a portfolio valued at GBP525.7m,
gross cash and deposits of GBP174.7m, an experienced management
team and a healthy pipeline of new opportunities. This leaves the
Group well positioned to respond effectively to, and capitalise on,
opportunities in the second half of the year.
Portfolio review
Overview
During the six months ended 30 June 2016, the value of the
Group's portfolio decreased to GBP525.7m (HY15: GBP478.2m; FY15:
GBP552.2m), reflecting a net unrealised fair value loss of
GBP24.5m, excluding the investments and realisations set out below.
The portfolio consists of interests in 83 companies, strategic
stakes in three multi-sector platform businesses as well as a
further 16 de minimis holdings (HY15: 77, 3, 17; FY15: 82,3,15).
During the period, the Group provided capital to portfolio
companies totalling GBP12.8m (HY15: GBP15.1m; FY15: GBP75.9m) and
made total cash realisations of GBP14.5m (HY15: GBP0.4m; FY15:
GBP0.6m).
A summary of the gains and losses across the portfolio is as
follows:
Six months Six months
ended ended Year ended
30 June 30 June 31 December
2016 2015 2015
GBPm GBPm GBPm
----------------------------------------- ---------- ---------- ------------
Unrealised increases in fair
value of equity and debt investments 6.8 84.2 115.3
Unrealised decreases in fair
value of equity and debt investments (31.5) (10.5) (29.0)
----------------------------------------- ---------- ---------- ------------
Net unrealised fair value (losses)/gains (24.7) 73.7 86.3
Effects of movement in exchange
rates 0.2 - 0.1
Loss on disposals of equity
investments (0.4) (0.1) (0.2)
Change in fair value of limited
and limited liability partnership
interests (0.2) 0.9 0.4
----------------------------------------- ---------- ---------- ------------
Total (25.1) 74.5 86.6
----------------------------------------- ---------- ---------- ------------
Unrealised decreases in the fair value of equity and debt
investments principally arose from the decreases in the share
prices of Avacta Group plc (GBP7.1m), Xeros Technology Group plc
(GBP7.1m), and hVivo plc (GBP4.4m). Further unrealised fair value
decreases arose from the decreases in the share prices of Cronin
Group (GBP1.9m), and Revolymer (GBP1.7m). These unrealised losses
were partially offset by increases in the share prices of Ceres
Power Holdings plc and Tissue Regenix Group plc, which increased
the fair value of the Group's holdings by GBP4.2m and GBP1.0m
respectively.
Investments and realisations
During the first half of 2016, the Group deployed GBP12.8m of
capital into 29 portfolio companies and projects (HY15: GBP15.1m,
31; FY15: GBP75.9m, 53). The Group provided initial seed or
incubation capital to eight opportunities (HY15: six; FY15: 13).
The Group exited its interest in four companies (HY15: two; FY15:
three) and realised total cash proceeds during the period of
GBP14.5m (HY15: GBP0.4m; FY15: GBP0.6m). The majority of these
proceeds arose from the disposal of Group's holding in Tracsis plc,
for which the Group received net cash proceeds of GBP13.1m from the
sale, bringing total proceeds to date, including dividends, to
GBP14.3m. This represented an Internal Rate of Return of
approximately 58% and a multiple of approximately 38 times the
Group's investment of GBP0.4m.
Portfolio analysis - by sector
The Group's portfolio consists of companies operating in four
key sectors, being Healthcare, Technology, Cleantech and Biotech,
strategic stakes in multi-sector platform businesses, as well as a
number of de minimis holdings. An analysis of the portfolio by
sector is as follows:
As at 30 June 2016 As at 31 December
2015
-------------
Fair value Number Fair Value Number
Sector GBPm % % GBPm % %
------------- -------- ---- --- ---- -------- ---- --- ----
Healthcare 274.0 57% 26 31% 277.6 55% 27 33%
Technology 79.7 17% 28 34% 91.6 18% 27 33%
Cleantech 65.7 13% 19 23% 69.0 14% 19 23%
Biotech 61.7 13% 10 12% 68.4 13% 9 11%
------------- -------- ---- --- ---- -------- ---- --- ----
Total 481.1(1) 100% 83 100% 506.6(1) 100% 82 100%
------------- -------- ---- --- ---- -------- ---- --- ----
Multi-sector
platforms 44.2 - 3 - 45.2 - 3 -
De minimis
holdings 0.4 - 16 - 0.4 - 15 -
------------- -------- ---- --- ---- -------- ---- --- ----
525.7 - 102 - 552.2 - 100 -
------------- -------- ---- --- ---- -------- ---- --- ----
(1) Total fair value includes GBP8.7m (FY15: GBP8.5m) not
attributable to equity holders represented by third party limited
partners in the consolidated fund, IPVFII.
Healthcare
Six months to
30 June 2016
--------------- -------------------- ---------- -------- ------------ ---------
Fair Fair
value value
Group of Group of Group
stake holding holding
at at Net at
30
June 31 December investment/ 30 June
Fair
value
Quoted/ 2016(i) 2015 (divestment) movement 2016
Company
name Description Unquoted % GBPm GBPm GBPm GBPm
--------------- -------------------- ---------- -------- ------------ ------------- --------- ---------
Single-molecule
detection.
Oxford 1st application
Nanopore in 3rd generation
Technologies DNA sequencing
Limited ("$1000 genome") Unquoted 19.6% 193.0 - - 193.0
--------------- -------------------- ---------- -------- ------------ ------------- --------- ---------
Viral challenge
and "virometrics"
specialist
("conquering
hVIVO plc viral disease") Quoted 16.7% 29.0 - (4.4) 24.6
--------------- -------------------- ---------- -------- ------------ ------------- --------- ---------
Regenerative
Tissue dCELL(R) soft
Regenix tissue body
Group plc parts Quoted 13.6% 15.5 - 1.0 16.5
--------------- -------------------- ---------- -------- ------------ ------------- --------- ---------
Quantum
Imaging Quantum cardiac
Limited imaging technology Unquoted 47.4% 6.5 - - 6.5
--------------- -------------------- ---------- -------- ------------ ------------- --------- ---------
Medical devices
to improve
the safety
and efficiency
Alesi Surgical of laparoscopic
Limited surgery Unquoted 58.8% 6.5 - - 6.5
--------------- -------------------- ---------- -------- ------------ ------------- --------- ---------
Platform for
analysis and
interpretation
Genomics of genomic
plc sequence data Unquoted 18.7% 4.8 - - 4.8
--------------- -------------------- ---------- -------- ------------ ------------- --------- ---------
Ultrasound
simulation,
Medaphor education
Group plc and training Quoted 37.2% 4.2 0.8 (0.8) 4.2
--------------- -------------------- ---------- -------- ------------ ------------- --------- ---------
Other companies (19
companies) 13.2 0.9 (1.0) 13.1
------------------------------------- ---------- -------- ------------ ------------- --------- ---------
Value not attributable
to equity holders 4.9 0.4 (0.5) 4.8
------------------------------------- ---------- -------- ------------ ------------- --------- ---------
Total 277.6 2.1 (5.7) 274.0
------------------------------------------------- -------- ------------ ------------- --------- ---------
(i) Represents the Group's undiluted beneficial economic equity
interest (excluding debt) including the relevant share of any
IPVFII holdings attributable to the Group
The first half of 2016 saw a series of exciting announcements
and material news from the IP Healthcare portfolio. Oxford Nanopore
Technologies Limited hosted its flagship 'London Calling'
conference in May where speakers convened to discuss research
carried out using nanopore sequencing technology. Arguably, the
highlight was the announcement of the new pipeline product
SmidgION, the smallest ever sequencing device which can be plugged
into a smartphone and is expected in 2017. Other headlines included
the delivery of the first PromethION instrument to a customer, the
introduction of a superior nanopore, R9, into all its products
which provides performance enhancements to the now obsolete R7
nanopore and a building body of evidence around the utility of the
MinION portable DNA sequencer. During the period, Oxford Nanopore
also responded robustly to a patent lawsuit filed against them by
Illumina, Inc., strongly asserting that it did not anticipate any
disruption to ongoing commercial progress as a result of Illumina's
action, which it stated was without merit. Since the period end,
public court filings confirm that the parties have entered into a
settlement agreement.
Moving onto quoted companies, hVIVO plc announced favourable
results from PrEP Biopharm's PrEP-001 Phase IIa influenza disease
prevention study. PrEP Biopharm is a UK biotech company for
respiratory infectious disease products in which hVIVO acquired a
significant equity stake in November 2015. hVIVO also announced a
joint venture investment with the SEEK Group to develop clinical
phase vaccines against flu and Zika infections. Despite this, the
fair value of the Group's holding reduced by GBP4.4m.
Two other quoted companies, Tissue Regenix Group plc and
Medaphor Group plc, demonstrated commercial traction in the US.
Tissue Regenix confirmed sales of $1.2m in 2016 for its DermaPure
wound-care product, that it had been granted clearance by the FDA
for its hernia implant and that it completed clinical trial
enrolment for its porcine meniscus product. Meanwhile, Medaphor
entered into a deal with the American Board of Obstetrics and
Gynaecology to use its ScanTrainer platform within its
certification exams; a de facto kite mark for the technology.
Medaphor went on to complete a GBP3.2m placing during the period,
that will allow it to develop its US-based direct sales team and
fund the continued growth of the existing business. The immediate
gloss was taken off these announcements when a competitor alleged
patent infringement in the US, a claim vigorously denied by
Medaphor.
The most significant private company transaction was the
follow-on GBP2.5m equity financing of Oxford University digital
healthcare spin-out Oxehealth Limited which followed news of a
global technology partnership with Hanwha Techwin for health
monitoring cameras.
Genomics plc, which has a unique platform for genomic data
analysis and interpretation, further demonstrated commercial
progress through deals with Vertex and DNAnexus, while Ubiquigent
Limited announced a partnership with Horizon Discovery in the
Ubiquitin space, an emerging biological pathway for disease
intervention which has generated a lot of attention following the
significant funding of Mission Therapeutics in February 2016.
We remain confident that there will be a continued need for
healthcare technology to allow increased access to care and to
respond to cost reduction pressure. Growing populations and
consumer wealth are increasing demand for healthcare services but
ageing societies and chronic diseases are forcing healthcare payers
to make difficult decisions on benefit levels. We believe some
historic business models and approaches will no longer suffice and
so continue to focus on major trends that could impact stakeholders
along the global healthcare value chain as we assess which
portfolio companies to form and support.
Technology
Six months to
30 June 2016
------------- ---------------------------- ---------- -------- ------------ ---------
Fair Fair
value value
Group of Group of Group
stake holding holding
at at Net at
30
June 31 December investment/ 30 June
Fair
value
Quoted/ 2016(i) 2015 (divestment) movement 2016
Company
name Description Unquoted % GBPm GBPm GBPm GBPm
------------- ---------------------------- ---------- -------- ------------ ------------- --------- ---------
Optimising
the human
Actual experience
Experience of networked
plc applications Quoted 25.0% 23.8 - 0.5 24.3
Resource optimisation
software for
Tracsis the transport
plc industry Quoted - 14.6 (14.6) - -
Contactless
haptic technology
Ultrahaptics "feeling without
Limited touching" Unquoted 33.3% 7.9 - - 7.9
Applied
Graphene Producer of
Materials speciality
plc graphene materials Quoted 21.0% 6.0 2.0 (1.3) 6.7
Native in-video
Mirriad advertising
Advertising allowing post-production
Limited ad placement Unquoted 40.0% 4.5 - - 4.5
Micro-Electrical-Mechanical
systems to
generate power
Perpetuum from vibrational
Limited energy Unquoted 29.3% 3.4 0.7 - 4.1
Other companies (23
companies) 29.0 3.7 (2.9) 29.8
------------------------------------------- ---------- -------- ------------ ------------- --------- ---------
Value not attributable
to equity holders 2.4 - - 2.4
------------------------------------------- ---------- -------- ------------ ------------- --------- ---------
Total 91.6 (8.2) (3.7) 79.7
------------------------------------------------------- -------- ------------ ------------- --------- ---------
(i) Represents the Group's undiluted beneficial economic equity
interest (excluding debt) including the relevant share of any
IPVFII holdings attributable to the Group
The sale of the Group's stake in Tracsis plc yielded net cash
proceeds of GBP13.1m, bringing total proceeds to date, including
dividends, to GBP14.3m, a multiple of approximately 38 times the
Group's investment. IP Group was instrumental in establishing
Tracsis as a business from its origins in the University of Leeds
and supported the company throughout its early stages of growth. We
are sad to end our involvement with Tracsis but proud of all that
has been achieved in building a profitable company that we believe
will continue to generate value for shareholders.
Elsewhere in the portfolio, March saw the announcement of more
promising news from the division's most valuable asset, Actual
Experience plc, in the form of a five-year framework agreement with
Vodafone, adding to the contract wins announced during 2015 which
included a major three-year partnership with Verizon. Whilst it
takes time to gather momentum with multinational organisations, the
agreements announced so far represent major milestones and we
believe that they have the potential to yield significant financial
benefit in the medium term.
The first half of the year also brought news of further
commercial developments at Mirriad Advertising Limited, an exciting
company with an innovative, patented computer vision technology
that can retrospectively insert advertising and branded products
into existing video content. An expansion of the company's
partnership with Havas Media Group and an implementation with Vice
Media complemented similar progress elsewhere, including a
blossoming partnership with YouKu in China. In February, the
company announced that its most recent funding round, led by the
Group, had included the participation of Unilever Ventures, the
venture capital and private equity arm of Unilever. Unilever is one
of the world's largest spenders on advertising and so we see their
investment as a significant endorsement of the Mirriad value
proposition.
Positive developments continue apace at remote haptic feedback
pioneer Ultrahaptics Limited. The University of Bristol spin-out is
increasingly being seen as one of the UK's most promising
early-stage technology start-ups. Revenue is growing as customers
pay for technology customisation work and we are optimistic that
early royalty revenue will follow by 2017.
The end of the half-year period brought news that speciality
chemicals business Revolymer plc had agreed to acquire US company
Itaconix Corporation, in parallel with a GBP4m placing and a
potential transfer of its nicotine gum business. We view all three
announcements as positive developments for the business.
Cleantech
Six months to
30 June 2016
----------------- ------------------- ---------- -------- ------------ ---------
Fair Fair
value value
Group of Group of Group
stake holding holding
at at Net at
30
June 31 December investment/ 30 June
Fair
value
2016(i) 2015 (divestment) movement 2016
Company Quoted/
name Description Unquoted % GBPm GBPm GBPm GBPm
----------------- ------------------- ---------- -------- ------------ ------------- --------- ---------
Ceramic fuel
Ceres Power cell technology
Holdings for distributed
plc generation Quoted 23.4% 12.2 - 4.2 16.4
Xeros Technology Polymer bead
Group plc cleaning systems Quoted 11.5% 23.4 - (7.1) 16.3
New methodology
First Light for achieving
Fusion extreme intensity
Limited cavity collapse Unquoted 34.9% 13.9 - - 13.9
Other companies (16
companies) 18.2 2.1 (2.7) 17.6
-------------------------------------- ---------- -------- ------------ ------------- --------- ---------
Value not attributable
to equity holders 1.3 0.2 - 1.5
-------------------------------------- ---------- -------- ------------ ------------- --------- ---------
Total 69.0 2.3 (5.6) 65.7
-------------------------------------------------- -------- ------------ ------------- --------- ---------
(i) Represents the Group's undiluted beneficial economic equity
interest (excluding debt) including the relevant share of any
IPVFII holdings attributable to the Group
There have been a number of highly encouraging commercial
developments in the Cleantech division's companies. Ceres Power
Holdings plc announced a two-year joint development agreement with
Honda R & D Co Limited ("Honda") to jointly develop Solid Oxide
Fuel Cell stacks using its unique metal supported Steel Cell
technology for a range of potential power equipment applications.
This represents a deepening of the relationship between Honda and
Ceres Power and is a huge endorsement of its technology. Further,
Ceres announced it had finalised all agreements to begin its new
relationship with Nissan Motor Manufacturing (UK) Limited
("Nissan") and M-Solv, as part of the funding arrangement from
Innovate UK and The Office for Low Emission Vehicles. The
consortium's aim is to develop a compact, on-board solid oxide fuel
cell stack for range extension of electric vehicles. These new
programmes in power equipment and automotive complement the
company's existing work on prime power and domestic combined heat
and power with Cummins and KD Navien respectively.
Xeros Technology Group plc also made significant commercial
progress. The company is accelerating the roll-out of its
commercial washing machines with the total fleet numbering 200 at
end of February 2016. The company's proprietary technology
platform, from the University of Leeds, has a number of potential
applications including leather processing, currently a very
water-intensive process using toxic chemicals. Full-scale leather
processing trials have taken place in a European leather tannery,
as part of Xeros' joint development agreement with LANXESS. Having
raised GBP40m in December 2015, the company is well capitalised to
capture these opportunities and additional applications are
currently being investigated.
The most valuable company in the private portfolio, Oxford
spin-out First Light Fusion Limited, has continued its impressive
scientific process following the GBP23m fund raise last year. The
company has moved to new facilities and significantly strengthened
its numerical and experimental science teams, drawing in
world-class talent from the Rutherford Appleton laboratory,
Imperial College and Formula 1. The company has launched a
collaboration programme with leading inertial confinement fusion
scientists around the UK and has brought Nobel Prize winner and
former US Secretary of Energy Professor Steven Chu onto its
advisory board.
Elsewhere in the private portfolio, Azuri Technologies Limited,
which markets home solar energy systems in Africa, is making
excellent commercial progress. The company has now sold over 70,000
units principally in Kenya, Tanzania, Ethiopia and Ghana. Its
off-grid customers are able to finance modern solar and storage
technology for lighting, phone-charging and radio through weekly
payments, saving money and displacing polluting current solutions
like kerosene.
The outlook for the Cleantech sector remains very positive. IP
Cleantech companies are developing products for global markets and
have seen significant commercial traction in the US and Asia, which
are currently seeing the greatest levels of investment in
alternative energy.
Biotech
Six months to
30 June 2016
----------- -------------------- ---------- -------- ------------ ---------
Fair Fair
value value
Group of Group of Group
stake holding holding
at at Net at
30
June 31 December investment/ 30 June
Fair
value
2016(i) 2015 (divestment) movement 2016
Company Quoted/
name Description Unquoted % GBPm GBPm GBPm GBPm
----------- -------------------- ---------- -------- ------------ ------------- --------- ---------
Novel treatments
Diurnal of hormone
Group plc deficiency Quoted 45.0% 39.6 - (1.4) 38.2
Avacta Bio-therapeutic
Group plc affimer technology Quoted 23.1% 21.1 - (7.1) 14.0
Other companies(ii)
(8 companies) 7.7 1.8 - 9.5
--------------------------------- ---------- -------- ------------ ------------- --------- ---------
Value not attributable
to equity holders - - - -
--------------------------------- ---------- -------- ------------ ------------- --------- ---------
Total 68.4 1.8 (8.5) 61.7
--------------------------------------------- -------- ------------ ------------- --------- ---------
(i) Represents the Group's undiluted beneficial economic equity
interest (excluding debt) including the relevant share of any
IPVFII holdings attributable to the Group
(ii) Simm Investments Limited has been reclassified from
Multi-sector platforms to Biotech; 2015 comparatives have been
restated.
The Biotech division supports the discovery and development of
breakthrough therapeutics via the in-house development of
proprietary programmes and the financing and support of portfolio
companies. Diurnal Group plc, is an example of the latter, with two
products in Phase 3 trials. Since floating on AIM in December 2015,
Diurnal has continued to hit all developmental milestones, with the
European Phase 3 study for its largest potential product,
Chronocort(R), initiated in January. In early July, Diurnal
announced positive headline data from its European Phase III study
for Infacort(R) in the treatment of paediatric Adrenal
Insufficiency (AI), several months ahead of schedule.
A spin-out company from the University of Sheffield, Diurnal
reported that initial analysis of the results confirms the trial
met its primary endpoint, demonstrating a statistically significant
(p<0.0001) increase in cortisol values following administration
of Infacort(R) compared to the pre-dose values. No serious adverse
events were reported.
Elsewhere, Avacta Group plc, the division's other listed asset,
has met significant commercial and developmental milestones in its
transition from services business to therapeutics development, with
the appointment of Philippe Cotrel, previously of Affymetrix and
Abcam, as Chief Commercial Officer, and continued demonstration of
the speed and robustness of the Affimer platform in generating
potential drug leads. Despite this, share price weakness led to a
GBP7.1m reduction in the fair value of the Group's
shareholding.
Lastly, Glythera Limited's body of data demonstrating the
advantages of its PermaLink technology in the field of
antibody-drug conjugates (ADCs) and oncology is growing rapidly. In
July, Avacta and Glythera announced a collaboration to develop a
novel, potentially highly potent drug class using a combination of
Avacta's Affimers and Glythera's PermaLink conjugation chemistry.
The Group's 32.2% holding in Glythera is valued at GBP2.3m at 30
June 2016.
As an example of in-house drug discovery, the Group's subsidiary
Modern Biosciences plc ("MBS") continues to make good progress in
its development of MBS2320, a novel agent for the treatment of
rheumatoid arthritis. MBS2320 is partnered with Janssen Biotech
Inc. and is currently in Phase 1 clinical studies. IP Group holds
an undiluted beneficial interest of 61.1% in Modern Biosciences
and, as a result, its income and expenses are consolidated into
those of the Group.
Similarly, Asterion Limited, the Group's second
majority-controlled drug discovery asset, is moving its recombinant
growth-hormone fusion for the treatment of acromegaly-related
growth disorder towards clinical trials, supported by a GBP2.4m
Medical Research Council grant.
During the course of the second half of the year, the Biotech
division will seek several new exciting single-asset discovery
programmes and spin-out companies addressing significant unmet
medical needs.
Portfolio analysis - by investment stage
At 30 June 2016, the Group's portfolio fair value of GBP525.7m
comprises holdings in businesses that are distributed across stages
of maturity as follows:
As at 30 June 2016 As at 31 December 2015
-------------
Fair value Number Fair Value Number
Stage GBPm % % GBPm % %
------------- -------- ---- --- ---- ---------- ----- --- ----
Focus 411.8 85% 18 22% 435.8 86% 18 22%
Development 50.8 11% 31 37% 57.6 11% 34 41%
Early-stage 18.5 4% 34 41% 13.2 3% 30 37%
Total 481.1(1) 100% 83 100% 506.6(1) 100% 82 100%
------------- -------- ---- --- ---- ---------- ----- --- ----
Multi-sector
platforms 44.2 - 3 - 45.2 - 3 -
De minimis
holdings 0.4 - 16 - 0.4 - 15 -
------------- -------- ---- --- ---- ---------- ----- --- ----
525.7 - 102 - 552.2 - 100 -
------------- -------- ---- --- ---- ---------- ----- --- ----
(1) Total fair value includes GBP8.7m (FY15: GBP8.5m) not
attributable to equity holders represented by third party limited
partners in the consolidated fund, IPVFII.
Early-stage companies include both incubation and seed
opportunities. Incubation opportunities comprise businesses or
pre-incorporation projects that are generally at a very early stage
of development, at most within three years since the Group's first
financing, and have received at least one stage of funding.
Opportunities at this stage usually involve capital of less than
GBP0.2m from IP Group, predominantly allowing for proof of concept
work to be carried out. Seed businesses are those that have
typically received financing of up to GBP1m in total, primarily
from the Group, in order to continue to progress towards agreed
commercial and technology milestones and to enable the recruitment
of management teams and early commercial engagement.
Portfolio companies which are classed as being in the Focus
stage are those portfolio companies (excluding multi-sector
platform companies) in which the Group's holdings have a fair value
in excess of GBP4.0m.
The Development stage group includes other businesses to which
the Group has provided in excess of GBP0.5m as principal investor,
or in excess of GBP1.0m of funding in conjunction with other
significant investors. Although each business can vary
significantly in its rate and manner of development, such
additional funding is generally used to progress towards key
milestones and commercial validation, to build senior level
capability in the business and to attract experienced non-executive
directors to their boards.
The multi-sector platform companies in which the Group has taken
a strategic stake operate a similar business model of sourcing and
developing university spin-outs, typically from a single
institution.
Those companies which either do not progress beyond the
incubation stage within three years of the Group's initial funding
and/or whose value has subsequently fallen to below GBP0.1m but
remain as an operating business are classed as de minimis
holdings.
Six months Six months
ended ended Year ended
30 June 30 June 31 December
Cash investment analysis 2016 2015 2015
by company stage GBPm GBPm GBPm
------------------------- ---------- ---------- --------------
Focus 3.7 7.4 60.0
Development 4.1 4.3 10.7
Early Stage 5.0 3.4 5.2
Total 12.8 15.1 75.9
------------------------- ---------- ---------- --------------
Multi-sector platforms - 40.0 40.0
------------------------- ---------- ---------- --------------
Total purchase of equity
and debt investments 12.8 55.1 115.9
------------------------- ---------- ---------- --------------
Cash proceeds from sales
of equity investments 14.5 0.4 0.6
------------------------- ---------- ---------- --------------
Financial and operational review
Consolidated statement of comprehensive income
Overall, the Group recorded a loss for the period of GBP33.9m
(HY15: GBP66.4m profit; FY15: GBP75.1m profit) and a negative
return on Hard NAV, i.e. the Group's net assets excluding goodwill
and intangible assets, of GBP31.1m (HY15: GBP70.1m positive; FY15:
GBP82.4m positive).
A summary analysis of the Group's performance is provided
below:
Six months Six months Year ended
ended ended 31 December
30 June 30 June 2015
2016 2015 GBPm
GBPm GBPm
------------------------------------- ----------- ----------- -------------
Net portfolio (losses)/gains (25.1) 74.5 86.6
Licensing income 0.1 3.1 8.1
Other income 0.9 1.3 3.6
Amortisation of intangible
assets (1) (2.8) (3.7) (7.3)
Administrative expenses -
Modern Biosciences (0.7) (1.8) (2.5)
Administrative expenses -
other consolidated portfolio
companies (0.4) (0.1) (0.3)
Administrative expenses -
performance-based staff incentives
and share-based payments charge (0.4) (2.0) (3.4)
Administrative expenses -
central operations (5.9) (5.5) (11.0)
Net finance income 0.4 0.6 1.3
------------------------------------- ----------- ----------- -------------
(Loss)/profit for the period (33.9) 66.4 75.1
------------------------------------- ----------- ----------- -------------
(1) 2015 comparatives include the change in fair value of the
Group's Oxford Equity Rights contract, which has now expired.
Net portfolio gains consist primarily of realised and unrealised
fair value gains and losses from the Group's equity and debt
holdings in spin-out businesses, which are analysed in detail in
the portfolio analysis above, as well as movements in the fair
value of the Group's interests in limited and limited liability
partnerships.
Other income totalled GBP0.9m; a decrease on the previous half
year (HY15: GBP1.3m; FY15: GBP3.6m) largely due to the end of the
investment period for North East Technology Fund ("NETF") in
December 2015, resulting in a lower management fee being charged in
the current period. Other income comprises fund management fees, as
well as consulting and similar fees, typically chargeable to
portfolio companies for services including executive search and
selection as well as legal and administrative support. Fund
management fees are received from the Group's three managed funds,
two of which, IP Venture Fund ("IPVF") and NETF, also have the
potential to generate performance fees from successful investment
performance. The results of the Group's third managed fund, IP
Venture Fund II ("IPVFII"), are consolidated into those of the
Group and accordingly the fund management fees received are not
reflected in the consolidated statement of comprehensive
income.
As described in the portfolio review, the results of the Group's
drug-development subsidiary, MBS, are consolidated into those of
the Group. MBS continues to make good progress in its lead MBS2320
programme, partnered with Janssen Biotech, Inc. The timing of
payments under this partnership are linked to the development of
the programme and none were scheduled or paid during the
period.
Included within the Group's administrative expenses are costs in
respect of a small number of other portfolio companies. Typically,
the Group owns a non-controlling interest in its portfolio
companies however, in certain circumstances the Group will take a
controlling stake and hence consolidate the results of a portfolio
company into the Group's financial statements. The administrative
expenses included in the Group's results for such companies
primarily comprise staff costs, R&D and other operating
expenses.
Other central administrative expenses, excluding
performance-based staff incentives and share-based payments
charges, have increased to GBP5.9m during the period (HY15:
GBP5.5m; FY15: GBP11.0m), primarily as a result of an increase in
staffing costs as we continue to develop our teams in the US and
UK.
Administrative expenses resulting from performance-based staff
incentives and share-based payment charges decreased significantly
to GBP0.4m during the period (HY15: GBP2.0m; FY15 GBP3.4m),
primarily as the Group's return on Hard NAV during the period is
below the minimum threshold for any payments to be made (or
accrued) under the Group's Annual Incentive Scheme.
Consolidated statement of financial position
Net assets in the period decreased to GBP748.5m (HY15:
GBP771.8m; FY15: GBP781.9m) largely as a result of the GBP24.5m net
fair value decrease in the Group's holdings in portfolio companies,
the Group's operating expenses, and the amortisation of intangible
assets in the period.
The Group's diversified portfolio of holdings in private and
publicly listed companies is valued at GBP525.7m (HY15: GBP478.2m;
FY15: GBP552.2m). "Hard" net assets, i.e. total net assets less
intangibles (and the Oxford Equity Rights asset in 2015), totalled
GBP683.5m at 30 June 2016 (HY15: GBP700.6m; FY15: GBP714.3m).
Cash, cash equivalents and short-term deposits ("Cash")
The principal constituents of the movement in Cash during the
period are as follows:
Six months Six months Year ended
ended 30 ended 30 31 December
June 2016 June 2015 2015
GBPm GBPm GBPm
---------------------------- ----------- ----------- -------------
Net Cash used in operating
activities (5.8) (2.4) 2.3
Net Cash used in investing
activities 1.6 (54.1) (114.6)
Net Cash from financing
activities - 178.8 193.7
Effect of foreign
exchange rate changes 0.1 - 0.1
---------------------------- ----------- ----------- -------------
Movement during period (4.1) 122.3 81.5
---------------------------- ----------- ----------- -------------
At 30 June 2016, the Group's Cash totalled GBP174.7m, a decrease
of GBP4.1m from a total of GBP178.8m at 31 December 2015,
reflecting a net inflow from the Group's investing activities as
disposal proceeds were higher than capital invested in the
period.
Cash used in operations has increased from the comparable period
in 2015, largely due to the receipt in early 2015 of the initial
GBP3.0m payment under MBS's agreement with Janssen Biotech which
had been recognised in debtors as at 31 December 2014.
As described in the Portfolio review, the Group saw cash
realisations of GBP14.5m (HY15: GBP0.4m; FY15: GBP0.6m) and
distributions from investments in limited partnerships of GBPnil
(HY15: GBP0.6m; FY15: GBP0.6m) offset by the provision of GBP12.8m
of capital to new and existing portfolio companies (HY15: GBP55.1m;
FY15: GBP115.9m).
Taxation
Since the Group's activities are predominantly trading in
nature, the Directors continue to believe that the Group qualifies
for the Substantial Shareholdings Exemption on chargeable gains
arising on the disposal of qualifying holdings and, as such, the
Group has continued not to recognise a provision for deferred
taxation in respect of uplifts in value on those equity holdings in
portfolio businesses that meet the qualifying criteria.
Principal risks and uncertainties
A detailed explanation of the principal risks and uncertainties
faced by the Group, and the steps taken to manage them, is set out
in the Corporate Governance section of the Group's 2015 Annual
Report and Accounts. The principal risks and uncertainties are
summarised as follows:
-- it may be difficult for the Group and its early-stage companies to attract capital;
-- the returns and cash proceeds from the Group's early-stage companies can be very uncertain;
-- universities or other research-intensive institutions may
terminate their partnerships or other
collaborative relationships with the Group;
-- the Group may lose key personnel or fail to attract and integrate new personnel;
-- macroeconomic conditions may negatively impact the Group's
ability to achieve its strategic objectives; and
-- there may be changes to, impacts from, or failure to comply
with, legislation, government policy and regulation.
There have been no significant changes in the nature of these
risks that will affect the next six months of the financial year,
and thus the risks noted above are applicable to the forthcoming
six months.
Condensed consolidated statement of comprehensive income
For the six months ended 30 June 2016
Unaudited Unaudited Audited
six months six months year
ended ended ended
30 June 30 June 31 December
2016 2015 2015
Note GBPm GBPm GBPm
--------------------------------------- ---- ----------- ----------- ------------
Portfolio return and revenue
Change in fair value of equity
and debt investments (24.5) 73.7 86.4
Loss on disposal of equity investments (0.4) (0.1) (0.2)
Change in fair value of limited
and limited liability partnership
interests (0.2) 0.9 0.4
Other portfolio income - - 0.2
Licensing income 0.1 3.1 8.1
Revenue from services and other
income 0.9 1.3 3.4
--------------------------------------- ---- ----------- ----------- ------------
(24.1) 78.9 98.3
--------------------------------------- ---- ----------- ----------- ------------
Administrative expenses
Research and development (0.4) (1.4) (2.0)
Share-based payment charge (0.4) (0.4) (1.5)
Change in fair value of Oxford
Equity Rights asset - (0.7) (1.3)
Amortisation of intangible assets 5 (2.8) (3.0) (6.0)
Other administrative expenses (6.6) (7.6) (13.7)
--------------------------------------- ---- ----------- ----------- ------------
(10.2) (13.1) (24.5)
--------------------------------------- ---- ----------- ----------- ------------
Operating profit (34.3) 65.8 73.8
Net finance income 0.4 0.6 1.3
--------------------------------------- ---- ----------- ----------- ------------
Profit before taxation (33.9) 66.4 75.1
Taxation - - -
--------------------------------------- ---- ----------- ----------- ------------
(Loss)/profit for the period (33.9) 66.4 75.1
--------------------------------------- ---- ----------- ----------- ------------
Other comprehensive income
Exchange differences on translating
foreign operations 0.1 - 0.1
--------------------------------------- ---- ----------- ----------- ------------
Total comprehensive income for
the period (33.8) 66.4 75.2
--------------------------------------- ---- ----------- ----------- ------------
Attributable to:
Equity holders of the parent (33.4) 66.7 73.9
Non-controlling interest (0.4) (0.3) 1.3
--------------------------------------- ---- ----------- ----------- ------------
(33.8) 66.4 75.2
--------------------------------------- ---- ----------- ----------- ------------
Earnings per share
Basic (p) 2 (5.92) 12.92 13.66
Diluted (p) 2 (5.92) 12.89 13.63
--------------------------------------- ---- ----------- ----------- ------------
Condensed consolidated statement of financial position
As at 30 June 2016
Unaudited Unaudited Audited
30 June 30 June 31 December
2016 2015 2015
Note GBPm GBPm GBPm
--------------------------------- ---- --------- --------- ------------
ASSETS
Non-current assets
Intangible assets:
Goodwill 6 57.1 57.1 57.1
Acquired intangible asset 5 7.9 13.5 10.5
Property, plant and equipment 0.2 0.2 0.2
Oxford Equity Rights asset
and related contract costs - 0.6 -
Portfolio:
Equity investments 3 516.6 473.0 543.1
Debt investments 3 9.1 5.2 9.1
Limited and limited liability
partnership interests 4.3 4.9 4.4
Contingent value rights 1.4 1.4 1.4
--------------------------------- ---- --------- --------- ------------
Total non-current assets 596.6 555.9 625.8
--------------------------------- ---- --------- --------- ------------
Current assets
Trade and other receivables 2.2 5.6 3.2
Deposits 25.0 50.0 70.0
Cash and cash equivalents 149.7 169.6 108.8
--------------------------------- ---- --------- --------- ------------
Total current assets 177.6 225.2 182.0
--------------------------------- ---- --------- --------- ------------
Total assets 773.5 781.1 807.8
--------------------------------- ---- --------- --------- ------------
EQUITY AND LIABILITIES
Equity attributable to owners
of the parent
Called up share capital 11.3 11.3 11.3
Share premium account 504.7 504.7 504.7
Merger reserve 12.8 12.8 12.8
Retained earnings 218.6 243.3 251.6
--------------------------------- ---- --------- --------- ------------
Total equity attributable
to equity holders 747.4 772.1 780.4
--------------------------------- ---- --------- --------- ------------
Non-controlling interest 1.1 (0.3) 1.5
--------------------------------- ---- --------- --------- ------------
Total equity 748.5 771.8 781.9
--------------------------------- ---- --------- --------- ------------
Current liabilities
Trade and other payables 2.5 4.0 3.9
--------------------------------- ---- --------- --------- ------------
Non-current liabilities
EIB debt facility 14.9 - 14.9
Loans from limited partners
of consolidated funds 7.6 5.1 7.1
Contingent loans from university
partners - 0.2 -
--------------------------------- ---- --------- --------- ------------
Total equity and liabilities 773.5 781.1 807.8
--------------------------------- ---- --------- --------- ------------
Condensed consolidated statement of cash flows
For the six months ended 30 June 2016
Unaudited Unaudited Audited
six months six months year
ended ended ended
30 June 30 June 31 December
2016 2015 2015
GBPm GBPm GBPm
------------------------------------------ ----------- ----------- ------------
Operating activities
Operating (loss)/profit (34.3) 65.8 73.8
Adjusted for:
Change in fair value of equity
and debt investments 24.5 (73.7) (86.4)
Change in fair value of limited
and limited liability partnership
interests 0.2 (0.9) (0.4)
Loss on disposal of equity investments 0.4 0.1 0.2
Depreciation of property, plant
and equipment - - 0.1
Amortisation of intangible non-current
assets 2.8 3.0 6.0
Change in fair value of Oxford
Equity Rights asset - 0.7 1.3
Fees settled in the form of equity - - (0.7)
Share-based payment charge 0.4 0.4 1.5
Other portfolio income classified
as investing activities cash flows - - (0.1)
Changes in working capital:
Decrease/(increase) in trade and
other receivables 0.7 (0.5) 2.2
Increase/(decrease) in trade and
other payables (1.6) 1.9 1.9
Increase in non-current liabilities 0.5 0.5 2.2
Net cash flow from/(to) deposits 45.0 (20.0) (40.0)
Other operating cash flows:
Net interest received 0.6 0.3 0.7
------------------------------------------ ----------- ----------- ------------
Net cash inflow/(outflow) from
operating activities 39.2 (22.4) (37.7)
------------------------------------------ ----------- ----------- ------------
Investing activities
Purchase of property, plant and - - -
equipment
Purchase of equity and debt investments (12.8) (55.1) (115.9)
Investment in limited and limited
liability partnerships (0.1) - -
Proceeds from sale of equity investments 14.5 0.4 0.6
Distributions from limited and
limited liability partnerships - 0.6 0.6
Other portfolio income received - - 0.1
------------------------------------------ ----------- ----------- ------------
Net cash inflow/(outflow) from
investing activities 1.6 (54.1) (114.6)
------------------------------------------ ----------- ----------- ------------
Financing activities
Proceeds from the issue of share
capital - 178.8 178.8
Proceeds from drawdown of EIB facility - - 14.9
------------------------------------------ ----------- ----------- ------------
Net cash inflow from financing
activities - 178.8 193.7
------------------------------------------ ----------- ----------- ------------
Net increase in cash and cash equivalents 40.8 102.3 41.4
Cash and cash equivalents at the
beginning of the period 108.8 67.3 67.3
Effect of foreign exchange rate
changes 0.1 - 0.1
Cash and cash equivalents at the
end of the period 149.7 169.6 108.8
------------------------------------------ ----------- ----------- ------------
Condensed consolidated statement of changes in equity
For the six months ended 30 June 2016
Attributable to equity holders
of the parent
Share Share Merger Retained Non-controlling Total
capital premium reserve earnings Total interest equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------------------------ -------- -------- -------- --------- ------ --------------- -------
At 31 December 2014 (audited) 9.6 327.6 12.8 176.2 526.2 - 526.2
Equity-settled share-based
payments - - - 0.4 0.4 - 0.4
Issue of equity 1.7 177.1 - - 178.8 - 178.8
Comprehensive income - - - 66.7 66.7 (0.3) 66.4
At 30 June 2015 (unaudited) 11.3 504.7 12.8 243.3 772.1 (0.3) 771.8
Equity-settled share-based
payments - - - 1.1 1.1 - 1.1
Issue of equity - - - - - 0.2 0.2
Comprehensive income - - - 7.2 7.2 1.6 8.8
At 31 December 2015 (audited) 11.3 504.7 12.8 251.6 780.4 1.5 781.9
Share-based payment charge - - - 0.4 0.4 - 0.4
Comprehensive income - - - (33.4) (33.4) (0.4) (33.8)
------------------------------ -------- -------- -------- --------- ------ --------------- -------
At 30 June 2016 (unaudited) 11.3 504.7 12.8 218.6 747.4 1.1 748.5
------------------------------ -------- -------- -------- --------- ------ --------------- -------
Notes to the half-yearly condensed set of financial
statements
1. Operating segments
For each of the periods referenced below, the Group's revenue
and profit/loss before taxation were derived almost entirely from
its principal activities within the UK. Though the Group has
initiated operations in the US, the associated revenues and costs
are currently immaterial and accordingly, no additional
geographical disclosures are given. For management reporting
purposes, the Group is currently organised into three operating
segments: (i) the commercialisation of intellectual property via
the formation of long-term partner relationships with universities;
(ii) the management of venture funds focusing on early-stage UK
technology companies; and (iii) the in-licensing of drugable
intellectual property from research intensive institutions.
University Venture
partnership capital fund In-licensing
Six months ended 30 June 2016 business management activity Consolidated
(unaudited) GBPm GBPm GBPm GBPm
------------------------------------ ------------ ------------- ------------ ------------
STATEMENT OF COMPREHENSIVE
INCOME
Portfolio return and revenue
Change in fair value of equity
and debt investments (24.5) - - (24.5)
Loss on disposal of equity
investments (0.4) - - (0.4)
Change in fair value of limited
and limited liability partnership
investments (0.2) - - (0.2)
Other portfolio income - - - -
Licensing income 0.1 - - 0.1
Revenue from services and
other income 0.4 - - 0.4
Revenue from fund management
services - 0.5 - 0.5
Change in fair value of Oxford
Equity Rights asset - - - -
Amortisation of intangible
assets (2.8) - - (2.8)
Administrative expenses (5.7) (1.0) (0.7) (7.4)
------------------------------------ ------------ ------------- ------------ ------------
Operating profit (33.1) (0.5) (0.7) (34.3)
Net finance income 0.4 - - 0.4
------------------------------------ ------------ ------------- ------------ ------------
Profit before taxation (32.7) (0.5) (0.7) (33.9)
Taxation - - - -
------------------------------------ ------------ ------------- ------------ ------------
Loss for the period (32.7) (0.5) (0.7) (33.9)
------------------------------------ ------------ ------------- ------------ ------------
Exchange differences on translating
foreign operations 0.1 - - 0.1
------------------------------------ ------------ ------------- ------------ ------------
Total comprehensive income
for the period (32.6) (0.5) (0.7) (33.8)
------------------------------------ ------------ ------------- ------------ ------------
STATEMENT OF FINANCIAL POSITION
Assets 755.3 11.5 6.7 773.5
Liabilities (24.9) (0.1) - (25.0)
------------------------------------ ------------ ------------- ------------ ------------
Net assets 730.4 11.4 6.7 748.5
------------------------------------ ------------ ------------- ------------ ------------
Other segment items
Capital expenditure - - - -
Depreciation - - - -
------------------------------------ ------------ ------------- ------------ ------------
University Venture
partnership capital fund In-licensing
Six months ended 30 June 2015 business management activity Consolidated
(unaudited) GBPm GBPm GBPm GBPm
----------------------------------- ------------ ------------- ------------ ------------
STATEMENT OF COMPREHENSIVE
INCOME
Portfolio return and revenue
Change in fair value of equity
and debt investments 73.7 - - 73.7
Loss on disposal of equity
investments (0.1) - - (0.1)
Change in fair value of limited
and limited liability partnership
investments 0.9 - - 0.9
Other portfolio income - - - -
Licensing income 0.1 - 3.0 3.1
Revenue from services and
other income 0.5 0.1 - 0.6
Revenue from fund management
services - 0.7 - 0.7
Change in fair value of Oxford
Equity Rights asset (0.7) - - (0.7)
Amortisation of intangible
assets (3.0) - - (3.0)
Administrative expenses (7.2) (0.4) (1.8) (9.4)
----------------------------------- ------------ ------------- ------------ ------------
Operating profit 64.2 0.4 1.2 65.8
Net finance income 0.6 - - 0.6
----------------------------------- ------------ ------------- ------------ ------------
Profit before taxation 64.8 0.4 1.2 66.4
Taxation - - - -
----------------------------------- ------------ ------------- ------------ ------------
Profit and comprehensive income
for the period 64.8 0.4 1.2 66.4
----------------------------------- ------------ ------------- ------------ ------------
STATEMENT OF FINANCIAL POSITION
Assets 767.2 9.8 4.1 781.1
Liabilities (9.2) - (0.1) (9.3)
----------------------------------- ------------ ------------- ------------ ------------
Net assets 758.0 9.8 4.0 771.8
----------------------------------- ------------ ------------- ------------ ------------
Other segment items
Capital expenditure - - - -
Depreciation - - - -
----------------------------------- ------------ ------------- ------------ ------------
University Venture
partnership capital fund In-licensing
Year ended 31 December 2015 business management activity Consolidated
(audited) GBPm GBPm GBPm GBPm
------------------------------------ ------------ ------------- ------------ ------------
STATEMENT OF COMPREHENSIVE
INCOME
Portfolio return and revenue
Change in fair value of equity
and debt investments 86.4 - - 86.4
Loss on disposal of equity
investments (0.2) - - (0.2)
Change in fair value of limited
and limited liability partnership
interests 0.4 - - 0.4
Other portfolio income 0.2 - - 0.2
Licensing income 0.1 - 8.0 8.1
Revenue from services and
other income 0.9 1.1 - 2.0
Revenue from fund management
services - 1.4 - 1.4
Change in fair value of Oxford
Equity Rights asset (1.3) - - (1.3)
Amortisation of intangible
assets (6.0) - - (6.0)
Administrative expenses (13.9) (0.8) (2.5) (17.2)
------------------------------------ ------------ ------------- ------------ ------------
Operating profit 66.6 1.7 5.5 73.8
Net finance income 1.3 - - 1.3
------------------------------------ ------------ ------------- ------------ ------------
Profit before taxation 67.9 1.7 5.5 75.1
Taxation - - - -
------------------------------------ ------------ ------------- ------------ ------------
Profit for the year 67.9 1.7 5.5 75.1
------------------------------------ ------------ ------------- ------------ ------------
Exchange differences on translating
foreign operations 0.1 - - 0.1
------------------------------------ ------------ ------------- ------------ ------------
Total comprehensive income
for the period 68.0 1.7 5.5 75.2
------------------------------------ ------------ ------------- ------------ ------------
STATEMENT OF FINANCIAL POSITION
Assets 788.8 11.3 7.7 807.8
Liabilities (25.5) (0.1) (0.3) (25.9)
------------------------------------ ------------ ------------- ------------ ------------
Net assets 763.3 11.2 7.4 781.9
------------------------------------ ------------ ------------- ------------ ------------
Other segment items
Capital expenditure - - - -
Depreciation (0.1) - - (0.1)
------------------------------------ ------------ ------------- ------------ ------------
2. Earnings per share
Unaudited
Unaudited six
six months months Audited
ended ended year ended
30 June 30 June 31 December
2016 2015 2015
Earnings GBPm GBPm GBPm
--------------------------------- ----------- --------- ------------
Earnings for the purposes of
basic and dilutive earnings per
share (33.4) 66.7 73.9
--------------------------------- ----------- --------- ------------
Unaudited
six
Unaudited months Audited
six months ended year ended
ended 30 June 31 December
30 June 2015 2015
2016 Number Number Number
Number of shares of shares of shares of shares
------------------------------------ ------------ ----------- ------------
Weighted average number of ordinary
shares for
the purposes of basic earnings
per share 564,897,747 516,340,803 540,681,647
Effect of dilutive potential
ordinary shares:
Options or contingently issuable
shares - 1,188,606 1,237,274
------------------------------------ ------------ ----------- ------------
Weighted average number of ordinary
shares for
the purposes of diluted earnings
per share 564,897,747 517,529,409 541,918,921
------------------------------------ ------------ ----------- ------------
Potentially dilutive ordinary shares include contingently
issuable shares arising under the Group's LTIP arrangements, and
options issued as part of the Group's Share-Save Scheme and
Deferred Bonus Share Plan (for annual bonuses deferred under the
terms of the Group's annual incentive scheme). As the Group made a
loss for the period the potentially dilutive shares outstanding at
the period end are not considered when calculating the diluted
earnings per share.
3. Investment portfolio
The accounting policies in regards to valuations in these
half-yearly results are the same as those applied by the Group in
its audited consolidated financial statements for the year ended 31
December 2015 and which will form the basis of the 2016 Annual
Report and Accounts. Investments are designated as fair value
through profit or loss and are initially recognised at fair value
and any gains or losses arising from subsequent changes in fair
value are presented in profit or loss in the statement of
comprehensive income in the period in which they arise.
The Group classifies financial assets using a fair value
hierarchy that reflects the significance of the inputs used in
making the related fair value measurements. The level in the fair
value hierarchy within which a financial asset is classified is
determined on the basis of the lowest level input that is
significant to that asset's fair value measurement. The fair value
hierarchy has the following levels:
Level Quoted prices in active markets.
1 -
Level Inputs other than quoted prices that are observable,
2 - such as prices from market transactions. These
are mainly based on prices determined from
recent investments in the last twelve months.
Level One or more inputs that are not based on observable
3 - market data.
Level Level
1 Level 2 3
------------ --------------------------
Equity Equity Unquoted Equity
investments investments debt investments
in quoted in unquoted investments in unquoted
spin-out spin-out in spin-out spin-out
companies companies companies companies Total
GBPm GBPm GBPm GBPm GBPm
------------------------------------ ------------ ------------ ------------ ------------ ------
At 31 December 2014 138.2 193.2 4.0 14.5 349.9
Investments during the period 4.0 48.7 2.3 0.1 55.1
Transaction-based reclassifications
during
the period - 0.2 (0.2) - -
Other transfers between
hierarchy levels during
the period - (13.3) - 13.3 --
Disposals during the period - - (0.2) (0.3) (0.5)
Change in fair value in
the period 27.2 50.9 (0.7) (3.7) 73.7
------------------------------------ ------------ ------------ ------------ ------------ ------
At 30 June 2015 (unaudited) 169.4 279.7 5.2 23.9 478.2
Investments during the period 22.2 33.6 4.8 0.2 60.8
Transaction-based reclassifications
during
the period 2.3 (1.6) (0.7) - -
Other transfers between
hierarchy levels during
the period 24.6 (37.6) 0.1 12.9 -
Disposals during the period - - (0.1) (0.2) (0.3)
Fees settled via equity - 0.7 - - 0.7
Change in fair value in
the period (17.2) 33.7 (0.2) (3.6) 12.7
Exchange differences on
translating foreign currency
investments - 0.1 - - 0.1
------------------------------------ ------------ ------------ ------------ ------------ ------
At 31 December 2015 201.3 308.6 9.1 33.2 552.2
Investments during the period 3.0 7. 2 2.6 - 12.8
Transaction-based reclassifications
during
the period - 0.6 (0.6) - -
Other transfers between
hierarchy levels during
the period - (3.6) - 3.6 -
Disposals during the period (14.6) (0.1) (0.1) - (14.8)
Change in fair value in
the period (21.8) (0.7) 0.1 (2.3) (24.7)
Exchange differences on
translating foreign currency
investments - 0.2 - - 0.2
------------------------------------ ------------ ------------ ------------ ------------ ------
At 30 June 2016 (unaudited) 167.9 312.2 11.1 34.5 525.7
------------------------------------ ------------ ------------ ------------ ------------ ------
Fair values of unquoted spin-out companies classified as Level 3
in the fair value hierarchy have been determined in part or in full
by valuation techniques that are not supported by observable market
prices or rates. Investments in 30 companies have been classified
as Level 3 and the individual valuations for each of these have
been arrived at using the following valuation method:
Where fair values are based upon the most recent market
transaction, but that transaction occurred more than twelve months
prior to the balance sheet date, the investments are classified as
Level 3 in the fair value hierarchy. The fair values of investments
categorised as Level 3 are analysed on a monthly basis to consider
indicators which may make the most recent investment no longer a
representation of fair value. Due to the nature of the investments,
observable market inputs are not commonly available, therefore
consideration of indicators of a change in fair value focus on the
companies' performance and achievement of technical and commercial
milestones.
Where indicators of a change in fair value against the most
recent market transaction are identified, any adjustment to arrive
at fair value is based on objective data from the company and the
experience and judgement of the Group.
If the fair value of all Level 3 investments were to decrease by
10%, the net assets figure would decrease by GBP3.5m, with a
corresponding increase if the unobservable inputs were to increase
by 10%.
For assets and liabilities that are recognised at fair value on
a recurring basis, the Group determines whether transfers have
occurred between levels in the hierarchy by reassessing
categorisation (based on the lowest level input that is significant
to the fair value measurement as a whole) at the end of each
reporting period. Transfers between tiers are then made as if the
transfer took place on the first day of the period in question.
If the assumptions used in the valuation techniques for the
Group's holding in each company are varied by using a range of
possible alternatives, there is no material difference to the
carrying value of the respective spin-out company. The effect on
the consolidated statement of comprehensive income for the period
is also not expected to be material.
Transfers between Level 2 and 1 occur when a previously unquoted
investment undertakes an initial public offering, resulting in its
equity becoming quoted on an active market. In the current period
there were no transfers of this nature.
Transfers between Level 1 and Level 2 would occur when a quoted
investment's market becomes inactive. There have been no such
instances in the current period.
Transfers between Level 3 and Level 2 occur when an investment,
for which the penultimate funding round occurred more than twelve
months before the prior period end, undertakes an investment round
during the period that results in an observable market price. In
the current period, transfers of this nature amounted to
GBP6.4m.
Transfers between Level 2 and Level 3 occur when the balance
sheet date becomes more than twelve months after an investment's
most recent funding round, at which point the price is deemed to be
unobservable. In the current period, transfers of this nature
amounted to GBP10.0m.
The fair value changes in Level 3 investments have amounted to a
loss of GBP2.3m in the period, recognised as change in fair value
of equity and debt investments in the condensed consolidated
statement of comprehensive income.
4. Share capital
Unaudited Unaudited Audited
30 June 30 June 31 December
2016 2015 2015
GBPm GBPm GBPm
-------------------------------- --------- --------- ------------
Issued and fully paid:
565,207,667 ordinary shares
of 2p each (HY15: 564,619,369;
FY15: 564,648,168) 11.3 11.3 11.3
-------------------------------- --------- --------- ------------
In April 2016, the Company issued 457,877 new ordinary shares in
order to settle conditional awards made under the Group's 2013 LTIP
that achieved their vesting conditions and consequently became
issuable to the Group's employees.
Additionally, in May 2016, the Company issued 101,622 new
ordinary shares following the exercise of nil-cost options awarded
under the Group's Deferred Bonus Share Plan by certain of the
Group's employees.
The Company has one class of ordinary shares, each with a par
value of 2p and carrying equal voting rights, equal rights to
income and distributions of assets on liquidation, or otherwise,
and no right to fixed income.
5. Intangible assets
Total
GBPm
---------------------------------- -----
Cost
At 30 June 2015, 31 December 2015 21.4
---------------------------------- -----
Additions 0.2
At 30 June 2016 21.6
---------------------------------- -----
Accumulated amortisation
At 1 January 2015 4.9
Charge for the period 3.0
------------------------- ----
At 30 June 2015 7.9
Charge for the period 3.0
------------------------- ----
At 31 December 2015 10.9
Charge for the period 2.8
------------------------- ----
At 30 June 2016 13.7
------------------------- ----
Net book value
------------------------- ----
At 30 June 2015 13.5
------------------------- ----
At 31 December 2015 10.5
------------------------- ----
At 30 June 2016 7.9
------------------------- ----
The intangible assets represent contractual arrangements and
memorandums of understanding with four UK universities acquired
through acquisition of a subsidiary. The contractual arrangements
have fixed terms and, consequently, the intangible assets have
finite lives that align with the remaining terms which, at the end
of the period, range from 17 months to 38 months. The individual
contractual arrangements are amortised in a straight line over the
remainder of their terms with the expense being presented directly
on the primary statements.
6. Goodwill
GBPm
---------------------------------------------- ----
At 30 June 2015, 31 December 2015 and 30 June
2016 57.1
---------------------------------------------- ----
Goodwill represents the excess of the cost of an acquisition
over the fair value of the net identifiable assets of acquired
subsidiaries at the date of acquisition. Included in the balance
sheet of the Group, at 30 June 2016, is goodwill of GBP57.1m. This
arose from the Group's acquisition of Top Technology Ventures
Limited in June 2004 (GBP2.1m), Techtran Group Limited in January
2005 (GBP16.3m) and the acquisition of Fusion IP plc in March 2014
(GBP38.7m). Goodwill is allocated from the acquisition date to each
of the Group's cash-generating units ("CGUs") that are expected to
benefit from the business combination. Goodwill may be allocated to
CGUs in both the acquired business and in the existing
business.
The Group conducts annual impairment tests on the carrying value
of goodwill, based on the recoverable amount of the CGUs to which
the goodwill has been allocated. The goodwill allocated to each CGU
is summarised in the table below. A number of both value-in-use and
fair-value-less-costs-to-sale calculations are used to assess the
recoverable values of the CGUs, details of which are specified in
the audited consolidated financial statements for the year ended 31
December 2015.
Unaudited Unaudited Audited
30 June 30 June 31 December 2015
2016 2015 GBPm
GBPm GBPm
--------------------------- --------- --------- -----------------
University partnership CGU 55.0 55.0 55.0
Fund management CGU 2.1 2.1 2.1
--------------------------- --------- --------- -----------------
57.1 57.1 57.1
--------------------------- --------- --------- -----------------
During the period to 30 June 2016, no factors indicating
potential impairment of goodwill were noted and, as a result, no
impairment review was deemed necessary.
7. Related party transactions
The Group has various related parties arising from its key
management, subsidiaries, equity stakes in portfolio companies and
management of certain Limited Partnership funds.
a) Limited partnerships
The Group manages a number of investment funds structured as
Limited Partnerships. Group entities have a Limited Partnership
interest (see note 1) and act as the general partners of these
Limited Partnerships. The Group therefore has power to exert
significant influence over these Limited Partnerships. The
following amounts have been included in respect of these Limited
Partnerships:
Unaudited Unaudited
six months six months Audited
ended ended year ended
30 June 30 June 31 December
2016 2015 2015
Income statement GBPm GBPm GBPm
---------------------- ----------- ----------- ------------
Revenue from services 0.5 0.7 1.3
---------------------- ----------- ----------- ------------
Unaudited Unaudited Audited
30 June 30 June 31 December
2016 2015 2015
Statement of financial position GBPm GBPm GBPm
----------------------------------- --------- --------- ------------
Investment in limited partnerships 2.9 3.6 3.1
----------------------------------- --------- --------- ------------
b) Key management transactions
The following key management held shares in the following
spin-out companies as at 30 June 2016:
Number Number
of shares of
acquired/ shares
Number of (disposed) held
shares held in at
at 1 January the 30 June
Director Company name 2016 period 2016 %
-------------- ------------------------------------- ------------- ----------- --------- -----
Alan Aubrey Alesi Surgical Limited 18 - 18 0.3%
Amaethon Limited - A Shares 104 - 104 3.1%
Amaethon Limited - B Shares 11,966 - 11,966 1.0%
Amaethon Limited - Ordinary shares 21 - 21 0.3%
Avacta Group plc(i) 202,761 - 202,761 0.3%
Boxarr Limited 1,732 - 1,732 0.3%
Capsant Neurotechnologies Limited 11,631 - 11,631 0.8%
Cloud Sustainability Limited 26 - 26 0.7%
Cronin Group plc 2,172,809 - 2,172,809 0.4%
Crysalin Limited 1,447 - 1,447 0.1%
Diurnal Group plc 15,000 - 15,000 <0.1%
EmDot Limited 15 - 15 0.9%
Evocutis plc 767,310 - 767,310 0.1%
Getech Group plc 15,000 - 15,000 <0.1%
Green Chemicals plc 108,350 - 108,350 0.9%
hVivo plc 37,160 - 37,160 <0.1%
Ilika plc 69,290 - 69,290 0.1%
Karus Therapeutics Limited 223 - 223 <0.1%
Mirriad Advertising Limited 33,333 - 33,333 <0.1%
MDL 2016 Limited(ii) - Ordinary
shares 3,226 - 3,226 0.4%
MDL 2016 Limited(ii) - A shares 229 - 229 0.5%
Modern Biosciences plc 1,185,150 - 1,185,150 1.7%
Modern Water plc 519,269 - 519,269 0.7%
Oxford Advanced Surfaces Limited - 8,402 8,402 0.1%
Oxford Nanopore Technologies Limited 101,208 - 101,208 0.4%
Oxtox Limited 25,363 (25,363) - 0.0%
Revolymer plc 88,890 - 88,890 0.2%
Salunda Limited 53,639 - 53,639 <0.1%
Structure Vision Limited 212 - 212 1.0%
Surrey Nanosystems Limited 453 - 453 0.3%
Tissue Regenix Group plc 2,389,259 - 2,389,259 0.3%
Tracsis plc 121,189 - 121,189 0.5%
Xeros Technology Group plc 40,166 - 40,166 <0.1%
Zeetta Networks Limited 212 - 212 0.2%
---------------------------------------------------- ------------- ----------- --------- -----
Mike Townend Amaethon Limited - A Shares 104 - 104 3.1%
Amaethon Limited - B Shares 11,966 - 11,966 1.0%
Amaethon Limited - Ordinary shares 21 - 21 0.3%
Applied Graphene Materials plc - 7,619 7,619 <0.1%
Avacta Group plc(i) 9,313 - 9,313 <0.1%
Capsant Neurotechnologies Limited 11,282 - 11,282 0.8%
Cloud Sustainability Limited 25 9 34 0.6%
Cronin Group plc 932,944 - 932,944 0.2%
Crysalin Limited 1,286 - 1,286 0.1%
Diurnal Group plc 15,000 - 15,000 <0.1%
EmDot Limited 14 - 14 0.8%
Getech Group plc 20,000 - 20,000 <0.1%
Green Chemicals plc 113,222 - 113,222 0.9%
hVivo plc 37,160 - 37,160 <0.1%
Ilika plc 10,000 - 10,000 <0.1%
Mirriad Advertising Limited 25,000 - 25,000 <0.1%
MDL 2016 Limited(ii) 1,756 - 1,756 0.1%
Modern Biosciences plc 1,185,150 - 1,185,150 1.7%
Modern Water plc 575,000 - 575,000 0.7%
Oxford Advanced Surfaces Limited 5,000 - 5,009 <0.1%
Oxford Nanopore Technologies Limited 30,967 - 30,967 0.1%
Oxtox Limited 25,363 (25,363) - 0.0%
Quantum Imaging Limited 117 - 117 <0.1%
Revolymer plc 35,940 - 35,940 <0.1%
Structure Vision Limited 212 - 212 1.0%
Surrey Nanosystems Limited 404 - 404 0.2%
Tissue Regenix Group plc 1,950,862 - 1,950,862 0.3%
Tracsis plc 25,430 (25,430) - 0.0%
Ultrahaptics Limited 35 - 35 <0.1%
Xeros Technology Group plc 35,499 - 35,499 <0.1%
---------------------------------------------------- ------------- ----------- --------- -----
Greg Smith Alesi Surgical Limited 2 - 2 <0.1%
Avacta Group plc(i) 3,904 - 3,904 <0.1%
Capsant Neurotechnologies Limited 896 - 896 <0.1%
Cloud Sustainability Limited 8 - 8 0.2%
Crysalin Limited 149 - 149 <0.1%
Diurnal Group plc 15,000 - 15,000 <0.1%
EmDot Limited 4 - 4 0.2%
Encos Limited 5,671 - 5,671 0.4%
Getech Group plc 8,000 - 8,000 <0.1%
Green Chemicals plc 4,830 - 4,830 <0.1%
hVivo plc 61,340 - 61,340 <0.1%
Mirriad Advertising Limited 16,667 - 16,667 <0.1%
MDL 2016 Limited(ii) - Ordinary
shares 361 - 361 <0.1%
MDL 2016 Limited(ii) - A shares 28 - 28 <0.1%
Modern Biosciences plc 313,425 - 313,425 0.5%
Modern Water plc 7,250 - 7,250 <0.1%
Oxford Nanopore Technologies Limited 1,581 - 1,581 <0.1%
Revolymer plc 4,500 - 4,500 <0.1%
Summit Therapeutics plc 798 - 798 <0.1%
Surrey Nanosystems Limited 88 - 88 <0.1%
Tissue Regenix Group plc 50,000 - 50,000 <0.1%
Xeros Technology Group plc 1,392 - 1,392 <0.1%
---------------------------------------------------- ------------- ----------- --------- -----
David Baynes Alesi Surgical Limited 4 - 4 <0.1%
Arkivum Limited 377 - 377 <0.1%
Diurnal Group plc 73,000 - 73,000 0.1%
Mirriad Advertising Limited 16,667 - 16,667 <0.1%
Oxford Nanopore Technologies Limited 144 - 144 <0.1%
Quantum Imaging Limited 46 - 46 <0.1%
Ultrahaptics Limited 26 - 26 <0.1%
Zeetta Networks Limited 212 - 212 0.2%
---------------------------------------------------- ------------- ----------- --------- -----
Angela Leach Alesi Surgical Limited 2 - 2 <0.1%
Avacta Group plc(i) 1,897 - 1,897 <0.1%
Boxarr Limited 102 - 102 <0.1%
Capsant Neurotechnologies Limited 1,858 - 1,858 0.1%
Cloud Sustainability Limited 10 - 10 0.3%
Cronin Group plc 68,101 - 68,101 <0.1%
Diurnal Group plc 11,500 - 11,500 <0.1%
Evocutis plc 7,990 - 7,990 <0.1%
First Light Fusion Limited 17 - 17 <0.1%
hVivo plc 25,903 - 25,903 <0.1%
Getech Group plc 2,083 - 2,083 <0.1%
Mirriad Advertising Limited 16,667 - 16,667 <0.1%
MDL 2016 Limited(ii) - Ordinary
Shares 606 - 606 <0.1%
MDL 2016 Limited(ii) - A Shares 102 - 102 <0.1%
Modern Water plc 15,570 - 15,570 <0.1%
Modern Biosciences plc 322,923 - 322,923 0.5%
Oxford Nanopore Technologies Limited 1,721 - 1,721 <0.1%
Quantum Imaging Limited 23 - 23 <0.1%
Revolymer plc 4,500 - 4,500 <0.1%
Structure Vision Limited 21 - 21 0.1%
Surrey Nanosystems Limited 90 - 90 <0.1%
Tissue Regenix Group plc 329,172 - 329,172 <0.1%
Ultrahaptics Limited 5 - 5 <0.1%
Xeros Technology Group plc 5,666 - 5,666 <0.1%
---------------------------------------------------- ------------- ----------- --------- -----
(i) Avacta Group plc consolidated its outstanding shares by
100:1 during the period. The opening position has been
restated.
(ii) Mode Diagnostics Limited was renamed MDL 2016 Limited on 19 July 2016
c) Portfolio companies
The Group earns fees from the provision of business support
services and corporate finance advisory to portfolio companies in
which the Group has an equity stake. Through the lack of control
over portfolio companies these fees are considered arm's length
transactions. The following amounts have been included in respect
of these fees:
Unaudited Unaudited
six months six months Audited
ended ended Year ended
30 June 30 June 31 December
2016 2015 2015
Statement of comprehensive income GBPm GBPm GBPm
---------------------------------- ----------- ----------- ------------
Revenue from services 0.4 0.5 2.0
---------------------------------- ----------- ----------- ------------
Unaudited Unaudited Audited
30 June 30 June 31 December
2016 2015 2015
Statement of financial position GBPm GBPm GBPm
-------------------------------- --------- --------- ------------
Trade receivables 1.3 1.3 1.5
-------------------------------- --------- --------- ------------
d) Subsidiary companies
Subsidiary companies that are not 100% owned either directly or
indirectly by the parent company have intercompany balances with
other Group companies totalling as follows:
Unaudited Unaudited Audited
30 June 30 June 31 December
2016 2015 2015
GBPm GBPm GBPm
--------------------------------- --------- --------- ------------
Intercompany balances with other
Group companies 10.5 8.4 10.5
--------------------------------- --------- --------- ------------
These intercompany balances represent funding loans provided by
Group companies that are interest free, repayable on demand and
unsecured.
General information
The comparative financial information presented herein for the
year ended 31 December 2015 does not constitute full statutory
accounts within the meaning of the Companies Act 2006. The Group's
Annual Report and Accounts for the year ended 31 December 2015 have
been delivered to the Registrar of Companies. The Group's
independent auditor's report on those accounts was unqualified, did
not include references to any matters to which the auditor drew
attention by way of emphasis without qualifying their report and
did not contain a statement under Section 498(2) or 498(3) of the
Companies Act 2006.
Accounting policies
Basis of preparation
The financial information presented in these half-yearly results
constitutes the condensed consolidated financial statements of IP
Group plc, a company incorporated in Great Britain and registered
in England and Wales, and its subsidiaries (together, the "Group")
for the six months ended 30 June 2016.
The condensed consolidated financial statements have been
prepared in accordance with IAS 34 Interim Financial Reporting and
should be read in conjunction with the Annual Report and Accounts
for the year ended 31 December 2015, which have been prepared in
accordance with International Financial Reporting Standards as
adopted for use in the EU ("IFRS"). The financial information in
these half-yearly results, which were approved by the Board and
authorised for issue on 8 August 2016, is unaudited but has been
subject to a review by the Group's independent auditor.
Accounting estimates and judgements
The preparation of the half-yearly results requires management
to make judgements, estimates and assumptions that affect the
application of accounting policies and the reported amounts of
assets and liabilities, income and expenses. Estimates and
judgements are continually evaluated and are based on historical
experience and other factors, such as expectations of future
events, and are believed to be reasonable under the circumstances.
Actual results may differ from these estimates. In preparing these
half-yearly results, the significant judgements made by management
in applying the Group's accounting policies and the key sources of
estimation uncertainty were the same as those applied to the
audited consolidated financial statements for the year ended 31
December 2015.
Going concern
After making enquiries, the Directors have a reasonable
expectation that the Group has adequate resources to continue in
operational existence for the foreseeable future. Accordingly, they
continue to adopt the going concern basis in preparing the
condensed consolidated half-year financial statements.
Accounting policies
The accounting policies applied by the Group in these
half-yearly results are the same as those applied by the Group in
its audited consolidated financial statements for the year ended 31
December 2015 and which will form the basis of the 2016 Annual
Report and Accounts. No new standards that have become effective in
the period have had a material effect on the Group's financial
statements.
Statement of Directors' responsibilities
The Directors confirm to the best of their knowledge that:
a. the half-yearly results have been prepared in accordance with
IAS 34 as adopted by the European Union; and
b. the interim management report includes a fair review of the
information required by the FCA's Disclosure and Transparency Rules
(4.2.7 R and 4.2.8 R).
The Directors of IP Group plc and their functions are listed
below.
By order of the Board
Mike Humphrey Alan Aubrey
Chairman Chief Executive Officer
8 August 2016
Independent review report
To IP Group plc
Introduction
We have been engaged by the Company to review the condensed set
of financial statements in the half-yearly financial report for the
six months ended 30 June 2016 which comprises the condensed
consolidated statement of comprehensive income, condensed
consolidated statement of financial position, condensed
consolidated statement of cash flows, condensed consolidated
statement of changes in equity and the related explanatory notes.
We have read the other information contained in the half-yearly
financial report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the condensed set of financial statements.
This report is made solely to the Company in accordance with the
terms of our engagement to assist the Company in meeting the
requirements of the Disclosure and Transparency Rules ("the DTR")
of the UK's Financial Conduct Authority ("the UK FCA"). Our review
has been undertaken so that we might state to the Company those
matters we are required to state to it in this report and for no
other purpose. To the fullest extent permitted by law, we do not
accept or assume responsibility to anyone other than the Company
for our review work, for this report, or for the conclusions we
have reached.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and
has been approved by, the Directors. The Directors are responsible
for preparing the half-yearly financial report in accordance with
the DTR of the UK FCA.
As disclosed in the accounting policies note, the annual
financial statements of the Group are prepared in accordance with
IFRSs as adopted by the EU. The condensed set of financial
statements included in this half-yearly financial report has been
prepared in accordance with IAS 34 Interim Financial Reporting as
adopted by the EU.
Our responsibility
Our responsibility is to express to the Company a conclusion on
the condensed set of financial statements in the half-yearly
financial report based on our review.
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410 Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity issued by the Auditing Practices Board for use in the
UK. A review of interim financial information consists of making
enquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit
conducted in accordance with International Standards on Auditing
(UK and Ireland) and consequently does not enable us to obtain
assurance that we would become aware of all significant matters
that might be identified in an audit. Accordingly, we do not
express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the six months ended 30
June 2016 is not prepared, in all material respects, in accordance
with IAS 34 as adopted by the EU and the DTR of the UK FCA.
Jonathan Mills
for and on behalf of KPMG LLP
Chartered Accountants
15 Canada Square
London
E14 5GL
8 August 2016
This information is provided by RNS
The company news service from the London Stock Exchange
END
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