IP Group news 0

Good progress on exits with more in pipeline; encouraging developments in key portfolio companies, maintaining balance sheet strength remains a priority

IP Group plc (LSE: IPO), which invests in breakthrough science and innovation companies with the potential to create a better future for all, today announces its financial results for the six months ended 30 June 2024.

Good progress on exits with the pipeline of future cash realisations strong through to the end of 2025; the pipeline includes a number of transactions at an advanced stage of negotiation

• Agreed sale of Garrison Technology Ltd (“Garrison”) to Everfox in the period; sale completed in August with £30m proceeds received.
• Cash proceeds⁽ⁱ⁾ of £3.4m in the period with a further £41.2m already received (including Garrison) in the second half (HY23: £32.2m; FY23: £38.6m).
• Further exits expected including several at an advanced stage of negotiation and would be expected to take place at or above 2023 year end carrying values.

Encouraging developments within our maturing portfolio

• £380m of total capital raised by portfolio in the period (HY23: £299m; FY23: £667m).
• Healthier future (Life Sciences): Four companies reported positive clinical trial data; awaiting trial data readout from Istesso Phase 2b for Leramistat in rheumatoid arthritis; Mission and Enterprise closed significant investment rounds to fund the next stage of clinical development.
• Tech-enriched future (Deeptech): Agreed sale of Garrison to US-based cybersecurity firm Everfox for proceeds of £30m; continued strong revenue growth at Featurespace with FY23 revenues increasing 46.5% to £50.4m.
• Regenerative future (Cleantech): Hysata completed its oversubscribed $111m Series B funding round, the largest Series B in Australian cleantech history and which was reflected in our 2023 year end valuation. Refocussed plan at First Light Fusion with management team strengthened by addition of experienced Acting CEO. Record-breaking test of the company’s amplifier technology at leading US fusion lab Sandia.

Focus on maintaining financial strength

• Maintained strong balance sheet and good liquidity with gross cash and deposits⁽ⁱ⁾ of £161.3m (HY23: £250.0m; FY23: £226.9m).
• Net overheads⁽ⁱ⁾ reduced by 16% (£1.6m) to £8.7m.
• Invested £49.1m into the portfolio across 23 companies within our three high-growth sectors.
• NAV per share⁽ⁱ⁾ declined to 104.7p (-9%), driven primarily by a fair value decrease in the market value of listed holding Oxford Nanopore, some of which has reversed in the second half.
• Third party managed funds stood at £637m (HY23: £689m FY23: £650m), with more than £90m available for investment.

Delivering shareholder returns

• Completed £8.1m of the £20m share buyback launched in December 2023 in the period, with the remainder now complete as at the announcement date.
• Announced the intention in increase the Group’s current share buyback programme by a further £10m. Future cash returns expected to be in the form of share buybacks when the share price discount to NAV exceeds 20%.

Post period-end update

• Additional cash proceeds of £41.2m since 30 June; gross cash and deposits of £183.7m as at end August 2024
• Fair value of the Group’s holdings in listed companies experienced a net fair value increase of £52m in the period since 30 June, including ONT increasing by £43m
• More than £10m cash realised from the sale of other stakes in a small number of portfolio companies in July.
• Additional proceeds expected from the announced Intelligent Ultrasound Group plc’s material disposal transaction
• Over £95m of total cash returned to shareholders through dividends and share buybacks since 2021
• We are now seeing strong signs of improvement in the private tech sector, reflected in a strong pipeline of exits and interest in our portfolio.
• Focus on costs has accelerated since the half-year, with a planned reduction in net overheads⁽ⁱ⁾ of over 25% on an annualised basis by the year end.
• Hostplus committed an additional A$125m to the IP Group Hostplus Innovation fund, taking total funds committed to A$435m.

Summary financials

	HY to 30 June 2024 (unaudited)	HY to 30 June 2023 (unaudited)	FY 2023 (audited)
Net Asset Value (NAV)	£1,072.2m	£1,313.6m	£1,190.3m
NAV per share	104.7pps	126.7pps	114.8pps
% Return on NAV (i)	-9%	-4%	-13%
Loss for the period/year	(£109.9m)	(£54.5m)	(£174.4m)
Total portfolio (i)	£1,111.0m	£1,276.1m	£1,164.9m
Gross cash and deposits (i)	£161.3m	£250.0m	£226.9m
Cash proceeds (i)	£3.4m	£32.2m	£38.6m
Portfolio investment (i)	£49.1m	£59.8m	£73.2m

 

(i) Note 12 details the Alternative Performance Measures (“APM”)

Greg Smith, Chief Executive of IP Group, said: “The Group has made progress on delivering cash proceeds in the year to date, and has a strong pipeline of future realisations, some at an advanced stage of negotiation. We are seeing improvement in market sentiment toward private transactions in the areas in which we operate, which has been reflected in our ability to realise investments. Furthermore, we expect these exits to take place at or above their carrying values at the end of last year, validating our prudent approach to portfolio valuation. As a result, the Group remains in a strong financial position with £183.7m of gross cash at the end of August which is particularly important in the current environment.

The Board remains committed to delivering shareholder returns that include a regular cash component from realisations. With a share price discount to NAV of more than 20%, we have not only accelerated our buyback programme in the period and have now bought back £20.0m of shares under our planned programme but also plan to increase it by an additional £10m.

As the UK’s most active investor in university spinouts, we are pleased with the progress in our portfolio in our three thematic sectors, with our portfolio continuing to mature and attract commercial and strategic interest, and we continue to believe we remain well positioned to deliver good financial returns for our shareholders.”

Webinar

IP Group will host a webinar for analysts and investors today, 17 September, at 09:00am. For more details or to register as a participant please visit https://www.investormeetcompany.com/ip-group-plc/register-investor.

For more information, please contact:

IP Group plc	www.ipgroupplc.com
Greg Smith, Chief Executive Officer David Baynes, Chief Financial & Operating Officer Liz Vaughan-Adams, Communications	+44 (0) 20 7444 0050 +44 (0) 20 7444 0062/+44 (0) 7967 312125
Portland
Alex Donaldson	+44 (0) 7516 729702

 

Further information on IP Group is available on our website: www.ipgroupplc.com

This half-yearly report 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 Report, the Group’s holdings in portfolio companies reflect the undiluted beneficial equity interest excluding debt, unless otherwise explicitly stated.

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