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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 2018.

HALF-YEAR HIGHLIGHTS

Portfolio highlights

• Net portfolio gains £0.7m (HY17: £28.7m; FY17: £94.2m)
• Fair value of portfolio: £1,163.7m (HY17: £663.0m; FY17: £1,130.6m)
• Capital provided to portfolio companies and projects: £46.9m (HY17: £20.1m; FY17: £71.2m)
• Significant funding rounds completed by Oxford Nanopore Technologies (£100.0m), Crescendo Biologics ($70.0m), Carisma Therapeutics ($53.0m) and Enterprise Therapeutics (£29.0m)
• Microbiotica entered into multi-year strategic collaboration with Genentech, a member of the Roche Group, in a deal worth up to $534.0m
• Ceres Power signed strategic collaboration with China’s Weichai Power comprising both product development and launch, and an equity investment; subsequently announces oversubscribed £20.0m fundraising in July

Financial and operational update

• Net assets of £1,489.8m (HY17: £966.4m; FY17: £1,508.5m)
• Hard NAV¹ of £1,298.5m (HY17: £898.0 m; FY17: £1,326.2m)
• Return on Hard NAV² of negative £13.1m (HY17: £21.3m positive; FY17: £64.1m positive)
• Gross cash and deposits at 30 June 2018: £258.5m (HY17: £263.1m; FY17: £326.3m)

Commenting on the Group’s half-yearly results, Alan Aubrey, Chief Executive Officer of IP Group, said:

“The underlying performance of the Group’s portfolio has been robust in the first half with a number of our companies completing both major fundraisings and collaborations. Our portfolio is well diversified, both by sector and stage of development, with multiple opportunities to crystallise value and there are a number of inflection points for several of our companies over the next six to twelve months. IP Group remains financially sound with a strong balance sheet, net assets of £1.5bn and exposure to the UK, US, Australasia and, increasingly, Asia. The Group remains excited by the opportunities within the portfolio and we look to the second half of the year and beyond with confidence.”

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
Martha Walsh	+44 (0) 7876 245962

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

The first half of 2018 has been characterised by significant progress across the Group’s portfolio with a number of our companies completing both major fundraisings and collaborations. It was also encouraging to see so many of our portfolio companies attract Chinese investors to their share registers including Oxford Nanopore Technologies Limited and Ceres Power Holdings plc, with many also signing significant collaborations in the region. Financial performance was, however, impacted by a net fair value reduction of £23.1m in the quoted portfolio, resulting in net portfolio gains of £0.7m (HY17: £28.7m; FY17: £94.2m) and an overall return on Hard NAV for the period of negative £13.1m (HY17: £21.3m positive; FY17: £64.1m positive).
Operationally, as described in the 2017 Annual Report, the integration of the Touchstone Innovations business in the UK has continued to progress in line with expectations. We have simplified and streamlined our organisational structure by moving to a two-sector model of Life Sciences and Technology and now operate both divisions substantially from one London head office location. Both the Imperial College Technology Transfer Office and Parkwalk, the UK’s leading EIS investor in university spin-outs that joined the Group in 2017, continue to be run as separate entities. Our US business and its portfolio companies continue to mature, and we are building out the initial team for our newly-formed Australasian operation and intend to form our first spin-outs this year.

Portfolio performance

At 30 June 2018, the fair value of the Group’s portfolio was £1,163.7m (HY17: £663.0m; FY17: £1,130.6m). This represents net portfolio gains of £0.7m (HY17: £28.7m; FY17: £94.2m) during the period with net fair value increases from our Life Sciences sector and our US business offsetting a net fair value reduction from our Technology sector.

The single largest portfolio company fair value increase during the period was Diurnal Group plc in the Life Sciences sector. Diurnal hit a major milestone this year, moving it from a pure development company to marketing and sales, after Infacort was approved for marketing by the European Commission (EC). In May, Diurnal announced market launch in Germany under the brand name Alkindi. An increase in the share price of Diurnal resulted in a fair value increase of £10.2m to the Group. Other key positive contributions to the increase in fair value were Uniformity Labs, Inc. (£7.8m increase³), Ceres Power Holdings plc (£7.2m increase), Genomics plc (£4.7m increase), Microbiotica Ltd (£2.8m increase), Tissue Regenix Group plc (£2.3m increase) and Ditto AI Ltd (£2.0m increase).

The largest unrealised fair value decreases were primarily as a result of reductions in the share prices of AIM-quoted companies including Xeros Technology Group plc (£17.7m decrease), Abzena plc (£7.5m decrease), Mirriad Advertising plc (£7.1m decrease), Avacta Group plc (£5.5m decrease) and Circassia Pharmaceuticals plc (£3.9m decrease). Further information on the performance of the Group’s portfolio businesses is provided in the portfolio review below.

In the first six months of the year, the Group provided incubation, seed and further capital totalling £46.9m to its portfolio companies (HY17: £20.1m; FY17: £71.2m). The Group's portfolio now comprises holdings in 155 companies as well as strategic stakes in three multi-sector platform businesses, 38 de minimis holdings and 40 organic holdings (portfolio investments in which the Group has acquired equity, but not invested funds) (HY17: 96, 3, 18, 0; FY17: 155, 3, 42, 39).

North America

Our North American business has continued its momentum into the first six months of the year. The US team identified a number of exciting opportunities from a variety of US-based collaboration partners, three of which have completed ‘series A’ financing rounds with participation from a strong mix of strategic and institutional investors. In addition, they funded their first company in partnership with Johns Hopkins University; Lorem Therapeutics will be focused on developing early-stage therapeutics for cancer indications. Our North American business also added Yale University to the list of exceptional university and federal lab collaboration partners in the US, bringing the total to nine.

Australasia

In Australasia, the Group has been focused on the implementation of the landmark agreements with Australasia’s leading research universities that were announced in 2017. These agreements will see at least A$200m invested in finding and developing companies involved in disruptive innovation. The Group has established a strong pipeline of technologies in Australasia across a wide range of markets, hired its first team members and anticipates making its first investments before the end of 2018.

Greater China / Singapore

Many of our portfolio companies have secured investment and business partnerships in Greater China and Singapore, including Oxford Nanopore, Ceres Power, Mirriad Advertising and Creavo Medical Technologies. The Group considers this geographic area to be strategically important and will continue to facilitate market entry, business partnership and investment discussions between our portfolio companies and relevant Chinese and Singaporean partners. The Group will be hosting its second annual “Global Deep Tech” event in Greater China in September.

Outlook

IP Group’s portfolio remains well-diversified both by sector and stage of development with multiple opportunities to crystallise value. The progress of many of the Group’s largest portfolio companies is positive and there are a number of significant inflection points anticipated for several of our companies over the next six to twelve months. IP Group has a growing business in the US and has established operations in Australasia. While it remains important to consider IP Group as a long-term business where financial results can fluctuate from six-month period to six-month period, the fundamentals of our business remain strong and the Group is financially sound with £258.5m of gross cash and deposits. IP Group remains excited by the opportunities within the portfolio and we look to the second half of the year and beyond with confidence.

Half-yearly results can be viewed in the PDF file format