REG - IP Group PLC - 2024 Annual Results
25/03/2025 07:15
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RNS Number : 9837B IP Group PLC 25 March 2025
FOR RELEASE ON 25 March 2025
("IP Group" or "the Group" or "the Company")
IP Group plc 2024 Annual Results Release
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 annual financial results for the year ended 31 December 2024.
Highlights
Outperformed on exits, despite reduction in NAV per share:
- Total cash proceeds from exits of £183.4m (+ 375%) including:
- £134m: Sale of Featurespace Ltd to Visa (£119m cash received
in the year) - largest ever exit
- £30m: Sale of Garrison Technology Ltd to Everfox
- £9.2m: Sale of Kynos Therapeutics Ltd to Dr Falk Pharma GmbH
- up to £15m: Secondary sale of minority holdings in six
portfolio companies at small premium to NAV
- Strong balance sheet and liquidity with gross cash of £285.6m,
up 26% from £226.9m in 2023
- NAV/share down 15% to 97.7p with closing NAV of £952.5m, driven
by decrease in market value of Oxford Nanopore (ONT) and valuation reductions
for First Light Fusion and Istesso in challenging market conditions
- Raised further £95m of third-party funds (Hostplus &
Parkwalk) - third-party AUM now £678m, up from £650m in 2023
- Total net overheads run rate reduced by 23% by year end, a 12%
reduction for the year
Accelerated buybacks:
- Since January 2024, announced buybacks of up to £80m representing 19% of current market capitalisation
- Completed £30m of share buyback programme during year, with £50m balance ongoing
- 10% of share capital retired to date, increased shareholder authority now sought in order to complete ongoing programme
Significant portfolio and pipeline opportunity:
- £784m of capital raised (up 17%) with £63m invested across 38
companies, reflecting maintained discipline
- Istesso: Phase 2b study of leramistat in rheumatoid arthritis
demonstrated novel mechanism of action and effectiveness in bone repair in
secondary endpoints despite not meeting primary endpoint
- Enterprise Therapeutics and Genomics: Significant investment
rounds closed, to fund next development stage
- 4 companies (Storm, Mission, Kynos and Abliva): reported positive
clinical trial data
- Hysata: Completed oversubscribed $111m Series B funding round, the
largest Series B in Australian cleantech history
- First Light Fusion: Sets pressure record at Sandia National
Laboratories and refocuses business model on revenues
- Strong interest in companies developing faster, more efficient
computing hardware for AI including Instrisic and Lumai
Post period-end update:
- Intention to extend buyback programme by a further £10m,
announced today
- Intention to allocate 50% of 2025 exits to buyback programme,
announced today
- Cash and deposits of £277m as at 21 March following additional
cash proceeds of £24.7m since 31 Dec
- Fair value of Group's holdings in listed companies decreased by
£14.7m in the period since 31 Dec, including £13.8m from ONT
- Hinge Health files for a New York initial public offering
- Istesso notifies shareholders of outcome of Phase 2b trial which
completed in 2024
Summary financials
FY 2024 FY 2023
Net Asset Value (NAV) £952.5m £1,190.3m
NAV per share ((i)) 97.7pps 114.8pps
% change in NAV per share (15%) (14%)
Loss for the year (£207.0m) (£174.4m)
Total portfolio ((i)) £837.4m £1,164.9m
Gross cash and deposits ((i)) £285.6m £226.9m
Cash proceeds((i)) £183.4m £38.6m
Portfolio investment ((i)) £63.0m £73.2m
(i) Note 27 details the Alternative Performance Measures ("APM")
Greg Smith, Chief Executive of IP Group, said: "The Group prioritised
profitable exits during 2024, outperforming a relative lack of liquidity
across the venture capital market, despite our negative NAV per share
performance. These exits included our largest ever cash realisation with the
sale of Featurespace to Visa, alongside a number of other holdings, at or
above carrying values. The £183m of cash proceeds strengthened our liquidity
position and enabled us to significantly increase our share buyback programme
while continuing to invest for growth.
We have already completed a number of exits in the current year with a
promising pipeline of further realisations, giving us confidence in delivering
more than £250m of exits from private company holdings by the end of 2027. We
also noted Hinge Health's recent announcement that it intends to list on the
New York Stock Exchange. Given our share price continues to reflect a
significant discount to NAV per share, during 2025 we intend to increase the
proportion of exits allocated to buybacks to 50%.
As the UK's most active investor in university spin-outs, IP Group has an
exciting and compelling portfolio of companies which is attracting strong
interest from third parties. While the current macro environment remains
challenging, the Board has ensured the Group is appropriately sized and well
financed and continues to focus on delivering returns for shareholders."
Webinar
IP Group will host a webinar for analysts and investors today, 25 March, at
10:00am. For more details or to register as a participant please visit
https://www.investormeetcompany.com/ip-group-plc/register-investor
(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 +44 (0) 20 7444 0050
David Baynes, Chief Financial and Operating Officer
Liz Vaughan-Adams, Communications +44 (0) 20 7444 0062/+44 (0) 7967 312125
Portland
Tristan Peniston-Bird +44 (0) 7772 031886
Alex Donaldson +44 (0) 7516 729702
Further information on IP Group is available on our website:
www.ipgroupplc.com
Notes
(i) Nature of announcement
This Annual Results Release was approved by the Directors on 24 March 2025.
The financial information set out in this Annual Results Release does not
constitute the Company's statutory accounts for 2024 or 2023. Statutory
accounts for the years ended 31 December 2024 and 31 December 2023 have been
reported on by the Independent Auditor. The Independent Auditor's Reports on
the Annual Report and Financial Statements for 2024 and 2023 were unqualified,
did not draw attention to any matters by way of emphasis, and did not contain
a statement under 498(2) or 498(3) of the Companies Act 2006. Statutory
accounts for the year ended 31 December 2023 have been filed with the
Registrar of Companies. The statutory accounts for the year ended 31 December
2024 will be delivered to the Registrar following the Company's Annual General
Meeting.
The 2024 Annual Report and Accounts will be published in April 2025 and a copy
will be posted on the Group's website (www.ipgroupplc.com
(http://www.ipgroupplc.com) ). In accordance with Listing Rule 9.6.1 a copy of
the Annual Report and Accounts will also be submitted to the National Storage
Mechanism on or around this date and will be available for inspection at:
https://data.fca.org.uk/#/nsm/nationalstoragemechanism
(https://data.fca.org.uk/#/nsm/nationalstoragemechanism) from that time.
Throughout this Annual Results Release the Group's holdings in portfolio
companies reflect the undiluted beneficial equity interest excluding debt,
unless otherwise explicitly stated.
(ii) Forward-looking statements
This Annual Report and Accounts 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
companies within the Group's portfolio.
STRATEGIC REPORT
CHAIRMAN'S SUMMARY
As we entered 2024, we recognised that appetite for higher risk and
early-stage assets was likely to remain cautious, given the number and
significance of the elections that were to take place during the year as well
as the disruptions to historic trade and investment flows that were evident
from the major geopolitical tensions and military conflicts that had
escalated. We adjusted our investment plans accordingly, concentrating capital
allocation in our highest potential portfolio companies, in particular those
with good prospects to deliver a cash return in the near to medium term.
Recognising the stubbornness of the gap between our reported Net Asset Value
('NAV') per share and our share price, the Board set management a number of
priorities in 2024 to address this disparity. These included prioritising
realisations to demonstrate value creation from our investment activity;
pursuing third party co-investment transactions to validate our valuation
discipline; attracting third party funds to add capacity to our investing
activity; seeking fresh investors to the plc and improving operational gearing
through better cost performance.
This low appetite for (public market) investments in early-stage assets was
reflected in delayed funding rounds, and where funding rounds did take place,
we witnessed a decline in valuation. As a consequence, we reported a loss for
the year of £207m driven by a £52m decline in the value of our stakes in
listed companies (primarily Oxford Nanopore) and valuation adjustments and
write-offs in the private portfolio of £228m. It is worth noting that in the
latter case, the 3 largest write-downs reflected a £94m reversal of previous
uplifts. In terms of cash flow, we increased our cash and deposits by £59m in
2024 after investing £63m in the portfolio and applying £30m to the
repurchase of our own shares.
In order to achieve this outcome, we had some significant successes. We
delivered the highest value cash realisation in our history from the sale of
our stake in Featurespace, generating disposal proceeds of £134m of which
£119m was received in cash before the end of the year. Total proceeds of
£183.4m were five times that achieved in 2023. Gross cash at 31(st) December
stood at £285.6m against our market capitalisation at that date of £525.7m.
We structured and executed a partial secondary sale of shareholdings in six of
our portfolio companies realising up to £15m in cash, at an aggregate value
modestly ahead of our book carrying value thereby evidencing the integrity of
our valuation processes. We also secured a further A$125m co-investment
commitment from Hostplus, our principal partner through our Australian
business. And we completed a restructuring and reorganisation of our business
that will reduce ongoing costs within the business by £5m, or some 23%. Greg
discusses these events in more detail in his report.
There were inevitably a number of disappointments. Our largest portfolio
investment, Oxford Nanopore fluctuated in value significantly during the year
losing over half its value in the first half and although recovering a decent
portion of this in the second half, was still down by 38% over the year.
Management, with the Board's strong endorsement, and given our position as one
of its largest shareholders, has spent considerable time supporting Oxford
Nanopore on ways to address this volatility and drive a recovery in its value
for all their shareholders.
Although widely anticipated, we were frustrated that Istesso (our second
largest portfolio holding), was not in a position to release any data from its
phase2b Rheumatoid Arthritis (RA) study with its drug leramistat during 2024.
However, on 11(th) February this year Istesso did provide an update which was
both disappointing, yet at the same time, encouraging. The trial results
reinforced leramistat's novel mechanism of action and its effectiveness in
bone protection in people living with RA. Significant improvements were seen
in the key secondary endpoint of bone erosions as well as improvements in
disability and fatigue in patients treated with leramistat, despite it not
meeting the primary endpoint of improvement in ACR20 versus placebo. We
are nevertheless pleased to report that Istesso is sufficiently funded to
conduct the additional studies which the Phase2b results justified. This study
will undertake further evaluation of leramistat's potential to promote tissue
repair in RA, as well as other chronic conditions. Greg discusses this in more
detail in his review.
We spent considerable time in 2024 seeking to attract private capital for a
scale up fund to build on the commitments that many pension funds and others
have made pursuant to the Mansion House compact and other government sponsored
initiatives to support growing innovative UK businesses; while this was not
finalised in 2024 we are optimistic that the work done and discussions in
train will lead to the creation of such a fund in 2025.
Public capital markets in 2024 were not helpful to IP Group, nor indeed to
most of our peer group, as investor appetite for small cap companies was muted
- indeed many funds dedicated to this sector wound down during the year. We
applaud the efforts of the London Stock Exchange to attempt to revitalise this
sector as we believe it is vital to the growth economy the government seeks to
establish. It is incredibly dispiriting that in spite of the ambition of the
Mansion House reforms launched in the previous parliament and the priority
commitment given to the growth agenda by the current government, that there is
little evidence of such change in UK investment markets for our sector.
We enter 2025 with key funding rounds underway for a number of our significant
portfolio companies. Encouragingly, after prolonged gestation periods, there
is evidence that investors are prepared to commit, albeit at discounts to
previous rounds in many cases, a factor which has been reflected in our
year-end valuations. Again, it is worth noting that much of this renewed
interest originates from outside the UK. These funding rounds and any
potential IPOs are encouraging early indications that confidence may be
returning to our sector.
Notwithstanding the significant success in realisations in 2024, our share
price ended the year substantially where it started the year (53.9p versus
58.1p) with the discount to NAV remaining elevated at 45%. Adjusting for net
cash and listed stakes, the discount to the remaining portfolio value was some
81%. We understand and share shareholder frustration and disappointment with
this position, which we recognise has deteriorated further since the year end
following the release of Istesso's trial results. While reducing this gap will
largely come from success in our investment activities, thereby demonstrating
the value within the portfolio, we can and have taken steps to address the
discount by buying back shares. During 2024 we completed a buyback programme
of £30m and we currently intend to supplement this by adding a further £50m.
Outlook
As we enter 2025, the need remains for scientific innovation to address many
of society's urgent challenges, from ageing populations to climate change, to
harnessing the power, while controlling the misuse of AI and understanding
what the unprecedented power of quantum computing will offer. The government
in the UK embraces the ambition to place UK science and technological
excellence at the heart of its growth agenda, yet public markets remain slow
to support this ambition in terms of providing the long-term venture and
scale-up capital needed.
The Board is confident that there is substantial unrecognised value within the
portfolio. Our principal objective in the coming year is to harness what we
believe is a strong desire amongst UK institutions to support this segment of
the UK growth story and configure our business in whatever way is needed to be
successful. If we are mistaken in our belief that there is support in UK
public markets for contributing to the financing of great ideas founded in UK
scientific discovery through to world changing businesses, we shall look
again, with our advisers, at the other options already considered by the
Board, to optimise value for shareholders over the medium term. I look forward
to updating you on progress as the year develops.
Sir Douglas Flint
Chairman
24 March 2025
CHIEF EXECUTIVE'S OPERATIONAL REVIEW
Overview
While the operating environment continued to remain challenging in 2024, the
Group prioritised generating profitable cash realisations and made excellent
progress in this regard. This performance meant the Group finished the year
with a strong liquidity position, having recorded total cash proceeds of
£183.4m, nearly five times the level achieved in 2023, with gross cash and
deposits of £286m at year-end up from £227m. This enabled the Group to
increase its buyback, as well as reinvesting for future growth. Having
delivered a further £25m in realisations to date during 2025, the Group is
today increasing its buyback programme by a further £10m, to a total of up to
£80m.
The continued weaker market environment for early-stage investing did,
however, weigh on private company valuations and quoted portfolio company
share prices, which impacted our NAV per share, down 15% to 97.7pps at the end
of the year (2023: 114.8pps). Accordingly, the Group took decisive action to
adjust our delivery strategy, which enabled us to reduce our operating costs
and ensure the Group remains appropriately sized and well positioned. Further
information is set out in the financial review.
IP Group, including through its market-leading Parkwalk brand, is the UK's
leading science and technology investor, having formed more than 500
science-based businesses. By starting and growing businesses driving improved
health outcomes, the energy transition and the digital transformation, the
Group aims to have a significant impact on some of society's biggest needs and
deliver compelling financial returns for our shareholders.
Combining university relationships with deep sector experience and networks
provides highly differentiated dealflow and the Directors believe the Group
has a compelling portfolio, evidenced by strong commercial progress in many of
our companies. In addition, the Directors are encouraged by the signs of
improvement in the private technology sector following increased interest and
M&A activity in the portfolio.
The Directors believe the Group, one of the largest and most experienced
investors in university IP in the world, is well placed to benefit from a
recovery in the market environment, given its strong liquidity position,
reduced cost base and promising portfolio, with many of our portfolio
companies having the potential for billion-dollar exit valuations.
Delivery against strategic priorities
As noted in the Chairman's Summary, against a challenging backdrop, the Group
made good progress on achieving many of our main strategic priorities in 2024
which comprised delivering cash exits, accessing further capital for the
portfolio and our managed funds and accelerating our share buyback programme.
The challenging environment impacted valuations and share prices in the
period, resulting in a negative return on NAV of 17% or £207.0m (2023:
negative return of 13%, £172.2m). This was driven by substantial write-downs
in a number of our portfolio companies, the largest of which was a £66m fall
in the value of our holding in Oxford Nanopore Technologies plc, followed by a
£40m reduction in the value of our holding in First Light Fusion and a
£33.8m reduction in the value of our holding in Istesso Ltd to reflect the
outcome of its Phase 2b study of leramistat in rheumatoid arthritis (RA).
Although the study did not meet the primary endpoint of improvements in ACR20
versus placebo, leramistat did demonstrate statistically significant
reductions in the key secondary endpoint of bone erosions, as well as
improvements in disability and fatigue. The performance of the Group's
business units is summarised below with further detail in the Portfolio
Review.
All £m unless stated Invested Cash proceeds Net portfolio gain/(loss) Fair value Simple return on capital (%)
at 31 December 2024
Healthier future: Life Sciences (ex ONT) 35.3 28.8 (52.2) 348.5 (14%)
Healthier future: ONT 1.0 1.6 (66.3) 106.6 (38%)
Tech-enriched future: Deeptech 8.5 148.9 10.5 89.4 4%
Regenerative future: Cleantech (Kiko Ventures) 15.7 0.0 (75.1) 215.9 (27%)
Platform investments 2.5 4.1 (11.9) 77.0 (13%)
Total Portfolio 63.0 183.4 (195.0) 837.4 (17%)
Our strategy of 'increased focus' meant that over 55% of our portfolio value
is concentrated in 10 companies, and 83% in 40 companies, across the three
main thematic areas where the Group has deep expertise and experience. The
Group invested in 38 opportunities in 2024 comprising 18 in life sciences, 9
in deeptech and 8 in cleantech. 95% of our capital was invested into the
existing portfolio, with 5% being invested into new opportunities.
Our portfolio also continues to be well-funded with over 82% by value of the
portfolio currently funded into 2026 or beyond. In 2024, our portfolio
companies successfully raised a total of £784m of which IP Group contributed
£63.0m (FY23: £667m, £73.2m). Notable transactions announced in 2024
included the oversubscribed US$111m fundraise by Hysata, the largest Series B
in Australian cleantech history (which was reflected in our 2023 year end
valuation), the £35m raise by Genomics to accelerate the adoption of
polygenetic risk scores, the £26m raise by Enterprise Therapeutics to fund
its P2a clinical proof of concept trial in cystic fibrosis and the £25m
Series D raise by Mission Therapeutics to progress its clinical candidates in
the area of mitophagy.
Cash exits
IP Group performed strongly on cash realisations, generating £183.4m (FY23:
£38.6m), the majority of which came from the sale of portfolio company
Featurespace Ltd to Visa, generating £134m of cash for the Group, a return of
5.9x on the £22.9m invested. The Group received an initial £119m cash in
December 2024 with the balance of £15m expected in 2025 and 2026. This
transaction, which was executed at a 70% premium to our holding value at the
start of the year, represents IP Group's largest ever exit. Having been the
first institutional investor in Featurespace, IP Group invested a total of
£22.9m over seven financing rounds, supporting the company's growth into a
leader in enterprise technology for fraud and financial crime prevention.
Another key exit in the period also came from our deeptech sector with the
sale of Garrison Technology Ltd, a pioneer in hardware-based cybersecurity
solutions, to Everfox, a global leader in high-assurance cybersecurity, which
completed in August, delivering £30m of cash. Garrison develops innovative
"hardsec" technology that protects users from cyber threats such as ransomware
and phishing by creating an electronic barrier between the internet and
devices. IP Group supported Garrison's growth from startup to trusted provider
for ultra-secure government clients, including the UK and US governments, and
commercial organisations like Lloyds Banking Group and Vodafone.
Both of these transactions further validate IP Group's model and our expertise
in identifying and supporting science and technology businesses to successful
exits.
In life sciences, the Group sold Kynos Therapeutics Ltd to Dr. Falk Pharma
GmbH, generating £9.2m of cash at a 2.4x multiple, while two quoted companies
received cash offers. Intelligent Ultrasound Group plc, in which the Group has
a 20.8% holding, received a cash offer from Surgical Science Sweden AB which
valued the business at approximately £45.2m. As a result, IP Group received
£8.8m of cash for its holding in 2025, which represented an uplift of £4.4m
(100%) from the last-reported NAV at 30 June 2024.
Abliva AB, which discovers and develops medicines for the treatment of
mitochondrial disease and in which the Group has a 9.5% stake, received a cash
offer from Pharming Technologies BV which valued that business at
approximately SEK725.3m. Following the completion of the sale in February
2025, IP Group received £5.1m total cash, representing a multiple of 1.6
times cost and an uplift in carrying value of £3.8m (292%) since the
last-reported NAV at 30 June 2024.
The Group also announced in December that it had agreed the sale of minority
holdings in nine portfolio companies across its balance sheet and managed
funds to a new fund managed by Lexham Partners for up to approximately £15m
of cash from the 6 balance sheet holdings included in the transaction. These
sales are expected to be at a small overall premium to the FY23 balance sheet
value.
All of these transactions have been at or above current carrying levels,
validating the balanced valuation approach which underpins our reported NAV.
Accessing further capital under management
IP Group continued to focus on increasing its funds under management and we
are pleased to report that the Group raised £95m of third party managed funds
in 2024 and now manages or advises £678m (FY23: £650m). Approximately
three-quarters of that figure, or £481m, is managed by Parkwalk, the Group's
specialist EIS fund management subsidiary (FY23: £469m), including funds
managed in conjunction with the universities of Oxford, Cambridge, Bristol,
and Imperial College London.
Parkwalk invested £47.2m in 2024 (FY23: £45.1m) in the university spin-out
sector across 38 companies (FY23: 27 companies). Again, a report from market
data provider Beauhurst shows that IP Group and Parkwalk are by far the UK's
leading investor in the sector. Twenty-two new companies joined the Parkwalk
portfolio, one positive exit closed and a further one was announced, and
two escrow releases from previous exits were distributed to underlying
investors. Fourteen portfolio companies closed funding rounds at uplifts in
valuation, five unchanged and ten at lower valuations than the previously
held value. These companies raised c.£140m in funding this year.
Through Parkwalk, we liaised closely with UK Government including HMRC on the
financial ecosystem for knowledge-intensive spin-out companies and across
political parties to ensure science and innovation is at the heart of the UK
Government's growth mission.
Most of our remaining funds are managed by our Australian team and we are also
pleased to report that Hostplus, a top ten Australian Superannuation fund,
allocated a further A$125m to the IP Group Hostplus Innovation Fund in the
period, bringing the total committed to A$435m. This fund has invested in
several of the Group's portfolio companies including Oxford Nanopore,
Genomics, First Light Fusion, Oxa and Hysata, providing additive growth
capital for companies as they scale. TelstraSuper is also investing alongside
IP Group through a co-investment mandate.
The Group continues to focus on increasing funds under management and believes
there is scope to further increase private capital under management this year.
Accelerated buybacks
Delivering returns for shareholders remains paramount including focusing on
narrowing the discount to our NAV per share, which the Directors continue to
believe significantly undervalues the potential within the Group's portfolio.
We are therefore announcing today that we intend to allocate 50% of the
Group's 2025 exits to our ongoing buyback programme and a further extension of
this programme by £10m.
The Group aims to deliver returns to shareholders primarily in the form of
long-term capital appreciation. Pursuant to the Group's capital allocation
policy, a proportion of cash proceeds is reinvested and a proportion is used
to deliver a cash return to shareholders. The Directors regularly consider the
mechanism to be used for such cash returns and have determined that this will
typically be in the form of share buybacks while the share price discount to
NAV exceeds 20%. Since the introduction of this approach in 2021, the Group
has delivered more than £110m of cash returns to our shareholders via
dividends and share buybacks.
Since launching the £20m share buyback programme in December 2023, IP Group
has extended the programme by up to an additional £60m including using 100%
of the proceeds from the secondary sale noted above, and the £10m announced
today, increasing the total to up to £80m.
During 2024, the Group purchased 66,110,008 shares for £29.4m and a further
19,325,177 shares for £9.2m have been purchased so far in 2025. The level of
shares purchased is now approaching the level of authority approved by
shareholders at the Group's 2024 AGM. As a result, the Directors are seeking a
further shareholder buyback authority to ensure the Group retains sufficient
flexibility to execute its current buyback programme between now and the AGM
in June 2025. This authority will be sought at a General Meeting, convened for
24 April 2025, with the Notice of General Meeting being posted to shareholders
today.
Optimising strategy for growth
The Group has many strengths that differentiate it from traditional venture
capital firms, enabling it to deliver long-term value to investors and the
companies it supports. By focusing on breakthrough innovations that are
serving demand driven by global megatrends, the Group is well positioned to
address some of the world's most pressing challenges. With a proven track
record of nurturing transformative technologies and a mission to foster
meaningful impact, our approach combines strategic investment with operational
support to help early-stage businesses succeed.
As referenced in the Chairman's Summary, the Group completed a restructuring
in 2024, reducing ongoing costs by £5m, or some 23%, to ensure the business
is appropriately sized and well positioned. As part of this process, the Group
consolidated its balance sheet investment activities under a single investment
committee, led by Dr Mark Reilly, Managing Partner. The portfolios Dr Reilly
has managed for the past six years have delivered strong growth and cash
realisations and, in his expanded role, he will oversee the Group's balance
sheet portfolio with a focus on further improving our track record.
A key differentiator for the Group is our deep partnerships with leading
research institutions, predominantly through our subsidiary, Parkwalk,
providing access to a pipeline of pioneering scientific research and
high-potential intellectual property from institutions including the
University of Oxford, the University of Cambridge, and Imperial College
London. The EIS funds that are managed by Parkwalk provide a complimentary
source of funding for the earliest stage opportunities and a pipeline of
future investment opportunities for the Group's balance sheet. This, coupled
with IP Group's access to private scale-up capital, particularly that managed
for Hostplus and other Australian superannuation funds, provides a flexible
approach to funding across all stages of company maturity, ensuring we can
support our portfolio companies from inception through growth and scaling.
Outlook
The Directors continue to believe the Group has a compelling portfolio,
evidenced by strong commercial progress in many portfolio companies. In
addition, the Directors are encouraged by some signs of improvement in the
private technology sector following increased interest and M&A activity in
the portfolio during 2024 and signs that appetite for IPOs is starting to
return. So far in 2025 we have delivered £25m of realisations and believe we
have the potential to deliver over £250m of exits by the end of 2027.
IP Group also remains well positioned to benefit from government support for a
number of fiscal and regulatory reforms which support our operating
environment, and we believe there is scope to further increase our funds under
management this year.
While the current macro environment remains challenging, the Group is
appropriately sized, well financed and continues to believe it is well
positioned for an improved appetite for high growth investments while
remaining focused on delivering returns for shareholders.
Greg Smith
Chief Executive Officer
24 March 2025
MANAGING PARTNER'S PORTFOLIO REVIEW
Overview
IP Group invests in innovative breakthrough technologies that address the
profound societal and economic shifts shaping our future. We invest across
three broad themes into companies that contribute to a healthier future (life
sciences), a tech-enriched future (deeptech) and a regenerative future
(cleantech, through our Kiko Ventures platform). In addition, a small number
of investments are categorised as platform investments, which are funds or
portfolio companies that invest in other opportunities.
As at 31 December 2024 As at 31 December 2023
Sector £m % £m %
Healthier future: Life sciences (ex-ONT) 348.5 41% 393.8 33%
Healthier future: Life sciences (ONT) 106.6 13% 173.6 15%
Tech-enriched future: Deeptech 89.4 11% 231.4 20%
Regenerative future: Cleantech (Kiko Ventures) 215.9 26% 275.3 24%
Platform investments 77.0 9% 90.8 8%
Total portfolio 837.4 100% 1,164.9 100%
In 2024, the Group's balance sheet investment activities were consolidated
with the investment team retaining exceptional expertise including the
investment partners who delivered the Group's top portfolio achievements over
the past several years such as Ceres Power, WaveOptics, Featurespace and Hinge
Health. Combining deep scientific knowledge with commercial acumen, the team
is well-positioned to deliver growth in our existing portfolio, identify
transformative technologies and capitalise on emerging opportunities.
By targeting opportunities arising from the world's most significant
socioeconomic megatrends such as the transition to intelligent computing,
climate change, and advancements in healthcare for growing and aging
populations, we aim to support the development of transformative solutions
with global impact. Our portfolio companies are at the forefront of these
changes, leveraging cutting-edge innovations to solve critical challenges and
create sustainable value for society and investors alike.
Performance of key holdings
As detailed in the Chief Executive's Review, the Group's portfolio performed
strongly in terms of cash generation from full and partial exits, the bulk of
which came from the sale of two companies, Featurespace Ltd and Garrison
Technology Ltd, from our deeptech portfolio with the balance from life
sciences.
Despite this success on realisations, 2024 was a poor year overall for NAV
performance with the portfolio recording a fair value reduction of 17%. This
was driven by substantial value reductions in a handful of our most valuable
holdings, the largest of which was a £66m fall in the value of our holding in
Oxford Nanopore Technologies plc. Shares in Oxford Nanopore ended the year 38%
lower than they started, albeit having made an appreciable recovery from the
low point around mid-year.
The following table outlines the performance of the Top 10 constituents of our
portfolio:
Company Name Group Stake at 31 December 2024 Net investment/ (divestment) Net Unrealised + Realised Fair value movement Fair value at 31 December 2024
% £m £m £m
Oxford Nanopore Technologies plc 8.7% (0.7) (66.3) 106.6
Istesso Limited 56.5%(1) 10.0 (31.9) 91.9
Hysata Pty Ltd 37.0% 11.7 (4.9)(2) 76.8
Oxa Autonomy Limited 11.8% - (22.9) 42.7
Hinge Health, Inc. 1.7% - 2.5 36.6
First Light Fusion Limited 27.5% - (39.9) 25.0
Pulmocide Limited 11.8% 3.7 0.2 23.1
Mission Therapeutics Limited 21.2% 3.7 3.0 22.5
Nexeon Limited 5.1% - 7.5 19.4
Artios Pharma Limited 7.3% - 0.1 17.4
Other portfolio n/a (149.2) (42.4) 375.4
Total Portfolio (120.8) (195.0) 837.4
(1) Represents undiluted economic interest. Voting interest is below 50%
(2) Relates to unrealised FX loss
Despite its share price performance, Oxford Nanopore's underlying performance
has remained strong with the company recently reporting underlying revenue
growth of 23% for the year to £179.2m, excluding the impacts of COVID-19
sequencing and the Emirati Genome Program. Gross margin increased by 420 basis
points to 57.5% (FY23: 53.3%), slightly above guidance, driven by margin
improvements across the product portfolio, particularly across both PromethION
Flow Cells and devices. Oxford Nanopore remains well capitalised with £403.8m
in cash, cash equivalents and other liquid investments as at 31 December 2024
(FY23: £472.1m). During the second half of the year, Oxford Nanopore
raised gross proceeds of £80m, which included a new £50m strategic
investment from Novo Holdings A/S, a prominent international life sciences
investor. This strategic partnership is expected to bolster Oxford Nanopore's
position in the biopharmaceutical sector, potentially enhancing its value.
In early 2025, Istesso provided its shareholders with the outcome of its Phase
2b study of leramistat in rheumatoid arthritis (RA) which was completed in
2024. The leramistat Phase 2b study was a 12-week randomised, double-blind,
placebo-controlled trial in adults with moderate-severe RA and an inadequate
response to treatment with methotrexate. Although the study did not meet the
primary endpoint of improvements in ACR20 versus placebo, leramistat did
demonstrate statistically significant reductions in the key secondary endpoint
of bone erosions, as well as improvements in disability and fatigue. Following
the results and reflecting input from our external valuation adviser, we have
taken the decision to reduce the carrying value by £31.9m. Further
information on the valuation approach including sensitivity analysis is
provided in Note 13 within the financial statements.
Istesso highlighted that these findings demonstrate leramistat's unique
mechanism of action (MOA) and support further evaluation of its potential to
promote adaptive tissue repair in combination with existing disease-modifying
anti-rheumatic drugs (DMARDs) in RA, as well as in other chronic conditions.
Istesso also drew attention to the fact that treatment with leramistat
significantly reduced or stopped the progression of bone erosions. Bone
erosions are a central feature of RA and appear early in the course of the
disease. Progression of bone erosions leads to bone damage and is a major
driver of disability and increased mortality in people living with RA.
Istesso will publish full study results in due course and plans further Phase
2 studies to evaluate leramistat's unique potential to promote adaptive tissue
repair in RA, as well as other chronic conditions. Istesso is sufficiently
funded to conduct these studies.
Hysata is continuing to develop its high-efficiency electrolyser for green
hydrogen production with an efficiency of 95%, significantly higher than
existing commercial systems. The company announced in May 2024 that it had
secured a record-breaking $111m Series B funding round, co-led by bp Ventures
and Templewater, with participation from IP Group. This investment is intended
to expand production capacity at Hysata's manufacturing facility in
Wollongong, New South Wales, and to advance their technology towards
gigawatt-scale manufacturing. In December, Hysata entered into Joint
Development Agreements with POSCO Holdings and POSCO E&C to
collaboratively enhance electrolyser development through material research and
engineering, aiming to accelerate the commercialisation of Hysata's
next-generation technology.
While Oxa had a strong year with a number of significant commercial successes,
we have reduced the carrying value to reflect the contraction in comparator
valuations since their last funding round in 2022 and the relative scarcity of
capital compared to that period.
Our innovative nuclear energy company First Light Fusion has not yet succeeded
in raising new capital but has now pivoted its business model to focus on
becoming an IP-rich technology provider, leveraging its amplifier technologies
for inertial confinement fusion (ICF) schemes. This approach has been
supported by successful validation experiments at the Sandia National
Laboratories, breaking performance records and showcasing significant
potential for commercialisation. We expect the company to secure its first
revenues imminently. While the company continues to pursue alternative funding
options and expect to announce developments soon on that front, we have
revised the valuation of our holding to reflect current status.
Aside from Oxford Nanopore, Istesso and First Light, the next largest negative
movement was contributed by a write down for our holding in Ultraleap
(£26.5m) which experienced commercial headwinds due to slower than expected
global uptake of Extended Reality (XR) technologies, though the company
recently announced a partnership to exploit the value of its extensive
foundational patents that has the potential to yield substantial future value
for IP Group if it is successful.
Since the year-end, portfolio company Hinge Health, which we backed from
inception, filed its IPO prospectus with the US Securities and Exchange
Commission. As the founding investor in Hinge Health, IP Group has a 1.8%
holding in the Company, valued by the Group at £36.6m as at 31 December 2024.
Upcoming milestones
Many of the Group's "up and coming" portfolio companies, particularly in life
sciences, have key developmental milestones approaching that could have a
material impact on their value in the next six to eighteen months.
In life sciences, key trial results are expected from Artios over the next 12
months. Artios has a pipeline of novel cancer therapies in development that
target DNA Damage Response (DDR) pathways to specifically destroy certain
cancers that are difficult to treat. Artios has built a platform for
developing novel inhibitors of specific DNA repair enzymes. Its lead programme
(ATR inhibitor) is in Phase 2 for a genetic subtype of cancers (ATM negative)
that is found in several solid tumours including endometrial (uterus) cancer,
colorectal cancer and ovarian cancer. Initial data was reported in late 2023
(several confirmed responses, and tumour marker reductions), and full data is
expected later this year or early 2026. Artios also has a second programme
(PolQ) in Phase 1/2a with data expected in late 2026.
Iksuda, which is developing next-generation Antibody Drug Conjugates (ADCs)
for difficult-to-treat cancers, has two programmes in Phase 1 which are
expected to read out in the second half of the year while Enterprise
Therapeutics is expected to report data from its Phase 2a trial of ETD001 for
cystic fibrosis in the second half. Enterprise Therapeutics is dedicated to
the research and development of novel therapies that target the underlying
mechanisms of mucus congestion in the lungs (one of the main causes of
difficulty in breathing and increased risk of infection in respiratory
diseases such as cystic fibrosis, asthma, and chronic obstructive pulmonary
disease).
Microbiotica, which has a proprietary microbiome profiling platform that
allows it to identify whether specific bacterial strains have clinical
benefits, is also expected to issue data from trials of its most advanced
programmes (MB097 - its Immuno-Oncology Programme, and MB310 - its Ulcerative
Colitis Programme) toward the end of this year/early next year.
Pulmocide, which is developing inhaled medicines for the treatment of
respiratory tract infections, is expected to report data from its Phase 3
study of its lead drug opelconazole for invasive pulmonary aspergillus (IPA),
a life-threatening lung infection in 2026. Opelconazole is a potent inhaled
antifungal agent for the treatment of aspergillus infections of the lung in
patients with asthma, cystic fibrosis or following lung transplantation.
In cleantech, portfolio company Hysata remains on course to demonstrate a
100kW hydrogen system this year which would be a key validation point in
proving the capability to scale their breakthrough technology.
Investment focus areas and opportunities
Our investment team has extensive expertise across science, technology, and
finance, bridging the gap between academic innovation and commercial success,
creating a thriving ecosystem for high-impact businesses. The Group is also
committed to impact-driven investment, with a focus on global challenges like
climate change, healthcare innovation, and resource efficiency.
The team continually assesses new opportunities that have the potential to
have a positive impact and deliver exceptional returns and continues to
develop an exciting portfolio of companies across the three sectors we are
active in.Digital Transformation: The global "digital transformation",
characterised by the comprehensive integration and relentless increase in
sophistication of digital technologies in every aspect of society and
business, is the most profound and pervasive megatrend shaping the future of
our world. Global spending in this area is forecast to reach $3.4 trillion by
2026.
IP Group has been investing for many years in the fundamental technologies
enabling this transition including artificial intelligence, future computing
hardware, human-machine interfaces and next generation communication
innovations. We are particularly interested in the opportunities for
innovation in the compute stack presented by the changing demands of
processing and storage power required for artificial intelligence to operate
at the edge of the network. A good example of a rising star in this field is
our portfolio company Lumai that is pioneering the use of all-optical neural
networks to dramatically accelerate AI computations while reducing energy
consumption, leveraging photonics technology to overcome the limitations of
traditional electronic circuits. Another portfolio company, Intrinsic, is
developing advanced semiconductor memory solutions that could enable faster,
more efficient data processing, critical for AI applications at the network
edge.
The transition to a sustainable, low-carbon economy: In the domain of reducing
humanity's future reliance on fossil fuels, our cleantech investment vehicle
Kiko Ventures is backing breakthrough technologies driving the transition to a
sustainable, low-carbon economy. Its key focus areas include green hydrogen,
energy storage, carbon capture and utilisation, resource efficiency, and
decarbonisation technologies across energy, transportation, and industry. Kiko
has backed up-and-coming start-ups including University of Oxford spin-outs
OxCCU, which is producing sustainable fuels and chemicals by converting carbon
dioxide and hydrogen into high-value products, and Mixergy, which develops
smart hot water tanks.
Healthcare and digital health: Finally, in the healthcare domain we are
continuing to support our therapeutics assets as they mature through clinical
trial phases whilst also seeking new opportunities at the boundaries between
technology and healthcare in the digital health domain, a market that is
already worth $347bn worldwide. A good example in this domain is our portfolio
company Oxehealth, another University of Oxford spin-out, that uses advanced
video analytics to remotely measure human vital signs and activity.
Platform Investments
IP Group's Platform Investments portfolio comprises holdings in funds and
companies that operate in a similar way to IP Group, most significantly our
interest in our US platform, managed by Longview Innovation, Oxford Science
Enterprises Limited, Cambridge Innovation Capital Limited, and the UCL
Technology Fund in all of which IP Group was a founding investor. This
portfolio was valued at £77.0m at 31 December 2024 (2023: £90.8m).
Having been unable to secure additional significant funding from third parties
other than $0.9m which the Group invested in 2024, Longview Innovation has
significantly reduced its cost base and is focused on a number of its most
promising portfolio companies, resulting in a corresponding portfolio fair
value reduction of £9.1m in the year (2023: £42.1m reduction).
Dr Mark Reilly
Managing Partner
24 March 2025
Other portfolio disclosures
Number of investments by sector
As at 31 December 2024 As at 31 December 2023
Sector Number % Number %
Healthier future: Life sciences (ex-ONT) 29 36% 32 37%
Healthier future: Life sciences (ONT) 1 1% 1 1%
Tech-enriched future: Deeptech 27 33% 32 37%
Regenerative future: Cleantech (Kiko Ventures) 20 24% 16 19%
Platform investments 5 6% 5 6%
Total number of portfolio investments (1) 82 100% 86 100%
(1) Excludes de minimis holdings, which have a small value to the Group and
are not actively managed to the same extent as core holdings
Portfolio funding position
The following table lists information on the latest possible funding dates for
portfolio companies where IP Group's investment holding value is greater than
£4m, with the dates reflecting the funding position as at the date of
publication.
Fair value of
Group holding %
Company name at 31 December 2024
£m
Funded to breakeven 207.6 30%
2025 H1 106.0 15%
2025 H2 23.6 3%
2026 315.5 47%
2027 34.3 5%
Total companies > £4m value 687.0 100%
Companies < £4m value 76.0
Interest in Limited Partnerships and Platforms 74.4
Total portfolio 837.4
FINANCIAL REVIEW
• Loss for the period of £207.0m (2023: loss of £174.4m)
• Net assets £952.5m (2023: £1,190.3m)
• Net assets per share 97.7p (2023: 114.8p)
Consolidated statement of comprehensive income
A summary analysis of the Group's performance is provided below:
Year ended 31 December 2024 Year ended 31 December 2023
£m £m
Net portfolio (loss)(1) (195.0) (160.5)
Net overheads(2) (19.8) (22.5)
Foreign exchange 2.7 0.4
Restructuring costs - labour (2.4) -
Restructuring costs - professional (0.3) -
Administrative expenses -share-based payments charge (1.9) (2.6)
Carried interest plan and other deal incentives credit 7.9 4.7
Net finance income 2.1 4.2
Taxation (0.3) 1.9
Loss for the year (207.0) (174.4)
Other comprehensive (expense) (fx on retranslation of foreign subsidiaries) (3.0) (0.4)
Total comprehensive loss for the year (210.0) (174.8)
Exclude:
Share-based payment charge 1.9 2.6
Return on NAV(1) (208.1) (172.2)
(1) Defined in note 27 Alternative Performance Measures.
(2) See net overheads table below and definition in note 27 Alternative
Performance Measures.
Net portfolio gains/(losses) 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.
Fair value movements
A summary of the unrealised and realised fair value gains and losses is as
follows:
2024 2023
£m £m
Quoted equity & debt investments (52.0) (31.8)
Private equity & debt investments (123.5) (83.8)
Investments in Limited Partnerships (13.1) (36.5)
Foreign exchange movements (6.4) (8.4)
Net portfolio losses (195.0) (160.5)
A summary of the largest unrealised and realised fair value gains and losses
by portfolio investment is as follows:
Gains £m Losses £m
Featurespace Limited (realised gain) 56.9 Oxford Nanopore Technologies plc (66.3)
Centessa Pharmaceuticals plc (partial realised gain) 10.3 First Light Fusion Limited (39.9)
Nexeon Limited 7.5 Istesso Limited (31.9)
Kynos Therapeutics Limited (realised gain) 5.7 Ultraleap Holdings Limited (26.5)
Zihipp Limited (realised gain) 4.6 Oxa Autonomy Limited (23.0)
Other quoted (4 companies) 5.5 Other quoted (3 companies) (1.5)
Other private (31 companies) 22.1 Other private (39 companies) (112.0)
Foreign exchange 1.5 Foreign exchange (8.0)
Total 114.1 Total (309.1)
Realised fair value gains
Gains on disposal of equity investments represents the difference between the
fair value of consideration received and the carrying value at the start of
the accounting period for the investment in question. The net portfolio loss
figure above includes £63.7m realised gains, the largest of which relates to
the gain on disposal of Featurespace, along with several other realised gains
marked in the table above.
Net overheads
Year ended 31 December 2024 Year ended 31 December 2023
£m £m
Other income 5.5 5.9
Administrative expenses - all other expenses (22.5) (25.8)
Administrative expenses - annual incentive scheme (2.2) (2.6)
Net overheads (19.2) (22.5)
Other income
Other income comprises fund management fees and licensing and patent income.
In 2024 other income totalled £5.5m (2023: £5.9m), a decrease from 2023
primarily due a reduction in licensing and patent income partially offset by a
£0.4m increase in fund management fees on third party funds.
Other central administrative expenses including restructuring costs
Other central administrative expenses, excluding performance-based staff
incentives and share-based payments charges, have decreased by £2.7m from the
prior year to £22.5m (2023: £25.8m) because of reductions in non-staff cost
across several expense categories following a sustained focus on cost
reduction.
In the second half of the year, we completed a restructuring and
reorganisation of our business, which will reduce our ongoing costs by around
£5m per annum or 23% on an ongoing basis. This resulted in £2.7m
restructuring charge, reflecting the costs of redundancies made and other
restructuring actions taken including the closure of our Hong Kong operations.
The charge of £2.2m (2023: £2.6m) in respect of the Group's Annual Incentive
Scheme, reflects a provisional assessment of performance against 2024 AIS
targets which include Group, Team, and Individual performance elements as
described in the Directors Remuneration Report.
Other income statement items
The share-based payments charge of £1.9m (2023: £2.6m) reflects the
accounting charge for the Group's Restricted Share Plan, Long-Term Incentive
Plan and Deferred Bonus Share Plan. This non-cash charge reflects the fair
value of services received from employees, measured by reference to the fair
value of the share-based payments at the date of award, but has no net impact
on the Group's total equity or net assets.
Carried interest plan credit
The carried interest plan credit of £7.9m (2023: £4.7m credit) relates to
the recalculation of liabilities under the Group's carry schemes, with the
credit in the year reflecting this year's reduction in value of assets within
the scheme. As at 31 December 2024, 65% by value of the Group's equity &
debt investments were included within carry scheme arrangements (2023: 70%).
The liabilities are calculated based upon any excess of current fair value
above cost and hurdle rate of return within each scheme or vintage. Any
payments will only be made following the full achievement of cost and hurdle
via cash realisations and are only paid on the event of a cash realisation.
Consolidated statement of financial position
A summary analysis of the Group's assets and liabilities is provided below:
Year ended 31 December 2024 Year ended 31 December 2023
£m £m
Portfolio 837.4 1,164.9
Other non-current assets 20.4 10.2
Other net current assets/(liabilities) (4.7) (7.5)
Cash and deposits 285.6 226.9
Borrowings (129.1) (135.2)
Other non-current liabilities (57.1) (69.0)
Total Equity or Net Assets ("NAV") 952.5 1,190.3
NAV per share 97.7p 114.8p
The composition of, and movements in, the Group's portfolio are described in
the portfolio review above.
Portfolio valuations
2024 saw an increase in the level of capital raised by the portfolio compared
to 2023, with £784m raised (2023: £667m), with our life sciences portfolio
seeing a particularly active fundraise period. Across 19 fundraises within our
portfolio, 10 were "up" financing rounds (i.e. raised at a higher valuation
than the previous financing rounds), 3 were "flat" rounds and 6 were "down"
rounds. All 6 down rounds had already been reflected in our 2023 valuations,
either reflecting our assessment of setbacks within the businesses in question
leading to valuation adjustments, or due to visibility of the terms of a
forthcoming early-2024 financing. The proportion of down rounds was higher
than has been seen in previous years, reflecting challenging market
conditions. In addition, we have reflected valuation reductions in a number of
cases where valuation rounds have been delayed and which are therefore not
included in the statistics below.
Year ended Year ended
31 December 2024 31 December 2023
Analysis of priced funding rounds in private portfolio Number of companies % Number of companies %
Up round 10 52% 13 62%
Flat round 3 16% 3 14%
Down round 6 32% 5 24%
Total 19 100% 21 100%
The above table reflects priced funding rounds in the private portfolio
(excluding organic and de minimis companies) and excludes debt funding and
funding transactions where a subsequent tranche is drawn based on pre-agreed
pricing.
The table below summarises the valuation basis for the Group's portfolio.
Further details on the Group's valuation policy and approach can be found in
notes 13 and 14.
Year ended 31 December 2024 Audited
£m Year ended
31 December 2023
£m
Quoted 133.1 203.8
Financing transaction (<12 months) 217.8 187.9
Financing transaction (>12 months) 54.9 162.7
Other: Future market/commercial events 60.7 25.0
Other: Adjusted financing price based on past performance - upwards 35.9 99.9
Other: Adjusted financing price based on past performance - downwards 152.7 203.9
Other: Discounted cash flow ("DCF") 97.2 126.6
Other: Revenue multiple 13.1 85.4
Fair Value of Investments 765.4 1,095.2
Statements from LP 58.1 69.7
Assets Held for Sale 13.9 -
Total Portfolio 837.4 1,164.9
Within the 'other: DCF' category above, the largest individual amount relates
to the Group's investment in Istesso Limited. Details of the critical
estimates and valuation sensitivities in respect of this investment are
included in Note 13 within the Group's accounts.
Other assets and liabilities
The majority of other long-term assets relate to amounts receivable on sale of
equity and debt investments, representing deferred and contingent
consideration amounts to be received in more than one year.
Other long-term liabilities relate principally to carried interest (described
above), and loans from LPs of consolidated funds. The Group consolidates the
assets of a fund in which it has a significant economic interest, IP Venture
Fund II LP. Loans from third parties of consolidated funds represent
third-party loans into this partnership. These loans are repayable only upon
these funds generating sufficient realisations to repay the Limited Partners.
Borrowings
On 2 August 2022, the Group signed a Note Placing Agreement ("NPA") to issue a
£120m debt private placement, primarily with Phoenix Group. The notes are
repaid in £40m tranches in December in 2027, 2028 and 2029. The interest rate
is fixed at an average of 5.25%. The Group also has a £9.4m EIB debt facility
which is being repaid between now and January 2026 (£6.3m of the EIB debt
will be repaid within twelve months of the period end).
Under the terms of the NPA, the Group is required to maintain a minimum cash
balance of £25m at any time, equity must be at least £500m and gross debt
less restricted cash must not exceed 25% of total equity as at the Group's 30
June and 31 December reporting dates. The NPA also includes 'Cash Trap'
provisions which stipulate that the Group is required to maintain cash and
cash equivalents of no less than £50m at any time, equity must be at least
£750m, and gross debt less restricted cash must not exceed 20% of total
equity as at the Group's 30 June and 31 December reporting dates. In the event
of the Cash Trap being triggered, the Group is not permitted to pay or declare
a dividend or purchase any of its shares. In addition, investments are
restricted to £2.5m per calendar quarter other than those legally committed
to. The Group is also required to place the net proceeds of all cash proceeds
(over a threshold of £1m) into a blocked bank account. Entering a Cash Trap
does not constitute a default under the NPA.
All covenants have been met throughout the period. For further details of the
Group's loans including covenant details see note 18.
Cash and deposits
At 31 December 2024, the Group's cash and deposits totalled £285.6m, an
increase of £58.7m from a total of £226.9m at 31 December 2023,
predominantly due to realisations of £183.4m.offset by outflows from
portfolio investment of £63.0, a £25.1m net cash outflow from operations and
£29.6m of share buybacks.
The principal constituents of the movement in cash and deposits during the
period are as follows:
Investments and realisations
The Group invested a total of £63.0m across 38 portfolio companies during the
year (2023: £73.2m; 33) and realised cash proceeds of £183.4m (2023:
£38.6m).
Largest investments and realisations by portfolio company:
Investments £m Cash realisations £m
Hysata Pty Ltd 11.7 Featurespace Limited 118.8
Istesso Limited 10.0 Garrison Technology Limited 29.9
Pulmocide Limited 3.7 Centessa Pharmaceuticals plc 10.6
Mission Therapeutics Limited 3.7 Kynos Therapeutics Limited 9.2
Genomics Limited 3.1 Zihipp Limited 4.4
Other 30.8 Other 10.5
Total 63.0 Total 183.4
Treasury policy
It remains the Group's policy to place cash that is surplus to near-term
working capital requirements on short-term and overnight deposits with
financial institutions that meet the Group's treasury policy criteria or in
low-risk treasury funds rated prime or above. The Group's treasury policy is
described in detail in note 3 to the Group financial statements alongside
details of the credit ratings of the Group's cash and deposit counterparties.
Dividend and share buyback
In its 2023 results, the Group reiterated the Board's commitment to making
regular cash returns to shareholders from realisations but announced that, in
light of the prevailing discount between the Company's share price and its NAV
per share, these regular cash returns will normally be made in the form of
share buybacks when the share price discount to NAV exceeds 20%. As a result,
no dividends were paid in the period (HY23: £7.7m, FY23: £13.0m), and
instead the Group has been engaged in a buyback programme since late 2023.
During 2024, the Company purchased 45,280,605 ordinary shares (2023: 200,302
ordinary shares), with an aggregate value of £0.9m (2023: £0.2k) which were
initially held in treasury prior to being cancelled in September 2024 along
with a further 26,493,520 treasury shares held at the start of the year which
were also cancelled at the same time. A further 20,609,101 shares with an
aggregate value of £0.5m were purchased in the period September to December
2024 and immediately cancelled.
In January 2025 the Group launched a further extension by up to £40m of its
buyback programme, which had been announced in December 2024. In March 2025,
as part of the Group's preliminary results statement, the Group announced its
intention to extend the buyback programme by a further £10m.
The Directors are seeking shareholder buyback authority at a General Meeting,
convened for 24 April 2025 to ensure the Group retains sufficient flexibility
to execute its current buyback programme in the intervening period leading up
to the AGM in June 2025, with the Notice of General Meeting being posted to
shareholders today.
Taxation
The Group's business model seeks to deliver long-term value to its
stakeholders through the commercialisation of fundamental research carried out
at its partner universities. To date, this has been largely achieved through
the formation of, and provision of services and development capital to,
spin-out companies formed around the output of such research. The Group
primarily seeks to generate capital gains from its holdings in spin-out
companies over the longer term but has historically made annual net operating
losses from its operations from a UK tax perspective. Capital gains achieved
by the Group would ordinarily be taxed upon realisation of such holdings;
however, since the Group typically holds more than 10% in its portfolio
companies and those companies are themselves trading, most of the portfolio
will qualify for the Substantial Shareholdings Exemption ("SSE") on disposal.
This exemption provides that gains arising on the disposal of qualifying
holdings are not chargeable to UK corporation tax 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 that meet the qualifying criteria.
Gains arising on sales of holdings which do not qualify for SSE will
ordinarily give rise to taxable profits for the Group, to the extent that
these exceed the Group's ability to offset gains against current and brought
forward tax losses (subject to the relevant restrictions on the use of
brought-forward losses). In such cases, a deferred tax liability is recognised
in respect of estimated tax amount payable.
The Group complies with relevant global initiatives including the US Foreign
Account Tax Compliance Act ("FATCA") and the OECD Common Reporting Standard.
Alternative Performance Measures ("APMs")
The Group discloses alternative performance measures, such as NAV per share
and Return on NAV, in this annual report. The Directors believe that these
APMs assist in providing additional useful information on the underlying
trends, performance, and position of the Group. Further information on APMs
utilised by the Group is set out in note 27.
RISK MANAGEMENT
Managing risk: our framework for balancing risk and reward
Governance
Overall responsibility for the risk framework and definition of risk appetite
rests with the Board who, through regular review of risks, ensure that risk
exposure is balanced with an ability to achieve the Group's strategic
objectives. The IP Group Risk Council is the executive body that operates to
establish, recommend and maintain an appropriate risk management framework for
the Group and to oversee the effective application of the framework across the
business. The Risk Council is chaired by the CFOO, its members include the
Company Secretary and Finance Director, and it has representation from
operational business units as required during the year. Risk identification is
carried out through a bottom-up process via operational risk registers
maintained by individual teams, which are updated and reported to the Risk
Council at least annually, with additional top-down input from Executive
Management and with a non-executive review carried out by the Audit and Risk
Committee at least annually.
Risk management process
Ranking of the Group's risks is carried out by combining a scoring of their
impact and likelihood. Operational risks are aggregated into strategic risks,
which identifies key themes, and ultimately informs our principal risks, which
are described in the Principal Risk and Uncertainties section of this report.
The operations of the Group, and the implementation of its objectives and
strategy, are subject to a number of principal risks and uncertainties. Were
more than one of the risks to occur together, the overall impact on the Group
may be compounded.
The design and ongoing effectiveness of the key controls over the Group's
principal risks are documented using a 'risk and control matrix', which
includes an assessment of the design and operating effectiveness of the
controls in question. The key controls over the Group's identified principal
risks are reviewed as part of the Group's risk management process, by
management, the Audit and Risk Committee and the Board during the year.
However, the Group's risk management programme can only provide reasonable,
not absolute, assurance that principal risks are managed to an acceptable
level.
Risk management activity in 2024 included updating the Group's existing
operational, strategic and principal risk registers, updating and testing the
key controls over principal risks and conducting an assessment of the
strategic risks and the appropriateness of our principal risks and discussion
of emerging risks via a Board risk workshop.
Risk Council activity
During 2024, the Risk Council continued to oversee the Group's existing risk
management framework, enhancing risk management and internal control processes
and, in doing so, supported the Board in exercising its responsibility
surrounding risk management.
During the year, one area of focus for the Risk Council was developing an
implementation plan for the revised UK Corporate Governance Code, released in
January 2024, which confirmed changes to UK companies' requirements in respect
of the review and reporting requirements for material controls 'Provision 29
requirements', which will apply to financial years beginning on or after 1
January 2026. This included workshop sessions facilitated by PwC to agree a
controls governance framework and identification of a sub-set of the Group's
risks which would be considered to be material. In 2025 we will move forward
with identifying a corresponding set of material controls whose operation will
form the basis of the Group's Provision 29 requirements.
Other areas of focus for the Risk Council during the year included:
· Review of consolidated operational risk registers following
bi-annual updates
· Monitoring the completion status of remediation points raised by
our internal audit process
· Review of the results of an annual testing of the Group's key
controls performed by PwC's internal audit team
· Oversight of plans to wind-up our Hong Kong operations following
the decision not to proceed with a fund in this geography
· Review of materials used for a Board risk work
· Monitoring of the Group's key risk indicators
· Other procedural matters including overview of the completion
status of e-learning, review of the Gorup's conflicts policy and review of
gifts and hospitality as part of our anti-bribery controls.
The Risk Council was supported during the year by PwC's Internal Audit team
which conducted testing work over the operating effectiveness of the Group's
key controls over its principal risks and advised on the implementation of the
UK Corporate Governance Code 2024 Provision 29 requirements as set out above.
Principal and emerging risks
A summary of the principal risks affecting the Group and the steps taken to
manage these is set out in this section. Further discussion of the Group's
approach to principal risks and uncertainties is given in the Corporate
Governance Statement and in the Audit and Risk Committee Report, while further
disclosure of the Group's financial risk management is set out in note 3 to
the consolidated financial statements. Following the 2024 annual review
process, the heatmap below describes the relative potential risks posed by
each of the Group's identified principal risks ranked in terms of relative
impact and relative likelihood.
Risk appetite
The Group accepts that certain risks are inherent in achieving its strategic
aims, which are set out in the strategy section of the report. The Group
accepts risk provided it is consistent with the Group's purpose and strategy
and where it can be effectively managed and offers an appropriate trade-off
between risk and reward. The Board has determined its risk appetite in
relation to each of its principal risks and considered appropriate metrics to
monitor performance relative to defined thresholds.
Emerging risks
The Group manages its emerging risks through a process of risk identification,
including regular updates to the Group's operational risk registers and
horizon scanning, combined with risk severity scoring. Emerging risk themes
considered by the Group in 2024 included technological risks such as
misinformation and disinformation, adverse outcomes of AI technologies and
cyber insecurity as well as environmental, geopolitical, societal and economic
risks. The board considered that economic risks posed the greatest risk to the
Group in the longer-term and that there was an opportunity for the Group's
portfolio companies to create solutions or alternatives to address emerging
environmental risks.
PRINCIPAL RISKS AND UNCERTAINTIES
RISK APPETITE RATINGS:
VL = Very low
L = Low
B = Balanced
H = High
VH = Very high
01 The Group may have insufficient capital to deliver its investment strategy The Group's business model relies on the recycling of capital for
re-investment from realisations, with a proportion of realisations also being
allocated to shareholder returns. In the longer term, other sources including
debt and equity issues may be used to manage the Group's capital position. The
ability of the Group to deliver realisations and raise additional funding is
influenced by macroeconomic and capital market conditions.
Link to strategy Actions taken by management Risk appetite
3 4 • The Group has significant balance sheet capital and managed funds L
capital to deploy in portfolio opportunities
Access to sufficient capital allows the Group to deliver its investment
strategy thereby delivering attractive financial returns. • The Group regularly forecasts cash requirements of the portfolio
to ensure that the Group's investment plans reflects currently available
capital and expected realisations.
• The Group ensures that sufficient cash is available to maintain
headroom over debt covenants and regulatory capital requirements
Examples of risk Development during the year Change from 2023
• The Group may not be able to provide the necessary capital to key • Cash proceeds totalled £183.4m in 2024 No Change
assets, which may affect the portfolio companies' performance or dilute future
returns of the Group • The Group's raised £95m of third party funds during 2024
• The Group may not be able to realise capital from its portfolio to • The Group continued its investor outreach exercise with the goal of
fund the desired level of investment activity in the portfolio raising a UK scale-up fund
• We continue to maintain a close dialogue with the Group's equity
and debt investors
• The Group's share price continued to trade below NAV during the
year
• The quoted portfolio value saw a fair value reduction of £51.6m
in the year
02 It may be difficult for the Group's portfolio companies to attract sufficient Many of the Group's portfolio companies are in their development or growth
capital phases and will fund their growth through raising additional capital from IP
Group and other co-investors. The ability of portfolio companies to attract
further capital is influenced by their financial and operational performance
and the general economic climate and trading conditions, particularly in the
UK.
Link to strategy Actions taken by management Risk appetite
3 4 • The Group maintains Board representation on the majority of its L
portfolio companies and monitors their funding position and plans
Access to sufficient levels of capital allows the Group's portfolio companies
to invest in technology and commercial opportunities to ensure future • The Group regularly forecasts cash requirements of the portfolio
financial returns. and tracks those with a heightened funding risk
• The Group operates a corporate finance function, which is
experienced in carrying out fundraising mandates for portfolio companies
• The Group maintains close relationships with a wide variety of
co-investors that focus on companies at differing stages of development
Examples of risk Development during the year Change from 2023
• Portfolio companies may not be able to close investment rounds, • The Group's portfolio raised £785m in 2024, with £63.0m (c. 8%) No change
reducing their ability to scale quickly and in extremis leading to company of this funding being provided by IP Group.
failure.
• IP Capital worked on 5 corporate finance engagements during the year
• Reduced investor appetite may lead to lower valuation funding
rounds, resulting in an unrealised fair value loss in the value of the Group's • Excluding the Oxford Nanopore holding, the Group held board seats on
holding. 77.4% of portfolio companies valued at greater than £5m by value
• Lack of investor appetite for IPOs may mean that this is not a • Our third party funds had capital to deploy of £119.1m at year end
viable funding option for portfolio companies in the short to medium term.
• IP Group hosted a flagship investor event which showcased a number
of the Group's portfolio companies to existing and new investors.
• We continued international investor roadshows in the year in the
US, UK, EU and Middle East
03 The returns generated by the Group's portfolio may be insufficient The Group's portfolio of science-based businesses has the potential to deliver
outsize returns, however they are by their nature riskier than more stable,
lower yielding asset classes or companies. The Group may not realise a
sufficient return on its invested capital at an individual company or overall
portfolio level.
Link to strategy Actions taken by management Risk appetite
3 4 • The Group's employees have significant experience in sourcing, B
developing and growing early-stage technology companies to significant value.
Insufficient investment returns reduce the Group's ability to deliver
attractive returns to shareholders and may also limit the Group's ability to • There is a rigorous process for the approval of investments and
raise additional capital. divestments within a delegated authority framework.
• Members of the Group's investment teams typically serve as
non-executive directors to portfolio companies to help identify and remedy
critical issues
• The Group has portfolio company holdings across different sectors
to reduce the impact of a single company failure or sector decline
• The Group employs a capital efficient process deploying low levels
of initial capital to enable identification and mitigation of potential
failures at the earliest possible stage
Examples of risk Development during the year Change from 2023
• Portfolio company failure directly impacts the Group's value and • We completed 5 new balance sheet investments during the year, and a No Change
profitability further 23 within Parkwalk
• Concentration of value within a small numbers of companies could • Excluding the Oxford Nanopore holding, the Group held board seats
exacerbate the impact of any impairment or failure of one or more of these on 77.4% of portfolio companies valued at greater than £5m by value
companies
• Balance sheet investment decision-making was consolidated within a
• The value of the Group's drug discovery and development portfolio single Investment Committee during the year, which we believe will aid
companies may be significantly impacted by a negative clinical trial result investment decision-making compared with previous sector-specific Investment
Committees.
04 The Group may lose key personnel or fail to attract and integrate new The industry in which the Group operates is a specialised area and the Group
personnel requires highly qualified and experienced employees. There is a risk that the
Group's employees could be hired by competitors or other technology-based
companies and organisations or could otherwise choose to leave the Group.
Link to strategy Actions taken by management Risk appetite
2 4 5 • Detailed succession plan in place for all senior employees and L
other selected key-person dependencies
The Group's strategic objectives of developing and scaling a portfolio of
compelling sciences-based businesses capable of delivering attractive • Regular compensation benchmarking carried out for all
financial returns on our assets is dependent on the Group's employees who work employees
with the portfolio companies and those who support them.
• Maintenance of a balanced incentive package comprising a mix
of salary, benefits, performance-based long-term incentives, and benefits such
as flexible working and salary sacrifice arrangements
• The Group encourages employee development and progression
through targeted learning and development activity, coaching and mentoring and
support this through the annual appraisal process
• The Group promotes an open culture of communication and
provides an inspiring and challenging workplace where people are given
autonomy to do their jobs. The Group is fully supportive of flexible working,
empowering employees to work where and how works best to deliver against the
requirements of their role
• An employee forum, "IP Connect" with an appointed designated
Non-executive Director to facilitate dialogue with the Board in both
directions. Part of IP Connect's remit is also to support the evolution of the
culture and continuous improvement of working life at the Group
Examples of risk Development during the year Change from 2023
Loss of key executives and employees of the Group or an inability to attract, • Continued excellent employee engagement scores obtained in the No Change
retain and integrate appropriately skilled and experienced employees could year from employee engagement surveys, with eNPS marginally improving in the
have an adverse effect on the Group's competitive advantage, business, year to +31 (FY23 +27) which is within the 'very high' category
financial condition, operational results and future prospects
• Continued high frequency of employee communications from
Executive Directors and the Head of HR via regular virtual and in-person
all-staff meetings
• Reduction in the overall number of employees as part of the
cost-reduction exercise allows increased focus on the needs, desires and
future development of individual employees, as well as creating short-term
development opportunities within the new structure
• Approximately 64% of employees in place at 31 December 2024
have been with the Company for at least five years
05 Macroeconomic conditions may negatively impact the Group's ability to achieve Adverse macroeconomic conditions including volatility in interest rates and
its strategic objectives inflation could reduce appetite for investment within the sectors in which we
operate. Geopolitical uncertainty including global conflicts may impact the
cost of raw materials, changes to the labour market regulations may reduce the
availability of highly skilled staff within the Gorup's portfolio, and
protectionist policies may reduce trade and cross-border investment.
Link to strategy Actions taken by management Risk appetite
3 • Senior management receive regular capital market and economic H
updates from the Group's capital markets team and its brokers
The Group's strategic objectives of developing a portfolio of commercially
successful portfolio companies and delivering attractive financial returns on • Regular capital allocation process and on-going monitoring against
our assets and third-party funds can be materially impacted by the current agreed budget
macroeconomic environment.
• Regular oversight of upcoming capital requirements of portfolio
from both the Group and third parties
• The Group's Risk Council monitors key macroeconomic trends that
may impact the Group
Examples of risk Development during the year Change from 2023
• The success of those portfolio companies that require significant • Macroeconomic conditions improved in the year, as inflation No Change
external funding may be influenced by the market's appetite for investment in continued to moderate in G8 countries, resulting in central banks starting to
early-stage and growth companies enact interest rate cuts. Annual UK CPI inflation fell from 7.3% in 2023 to
2.5% in 2025 and the UK base rate reduced from 5.25% at the start of the year
• Of the Group's portfolio value, 17.7% is held in companies quoted to 4.75% at year end.
on public markets and therefore subject to market price volatility
• There remains significant uncertainty around whether inflation will
persist in 2025 and result in a slower pace of central bank interest rate
cuts.
• Geopolitical risks including conflicts in Ukraine and the Middle
East continued, with increased trade protectionism also emerging as a theme
during the year
• The Group has maintained significant cash reserves available for
investment and as such is well placed to respond to macroeconomic uncertainty
06 There may be changes to, impacts from, or failure to comply with, legislation, There may be negative impacts from changes in government policy, regulation or
government policy and regulation legislation and taxation. The Group may fail to comply with legislation and
regulation, leading to financial and reputational damage.
Link to strategy Actions taken by management Risk appetite
2 • The Group utilises professional advisors as appropriate to support L
its monitoring of, and response to changes in, tax, insurance or other
The Group's strategic objectives of creating and maintaining a portfolio of legislation
compelling opportunities to deliver attractive returns for shareholders could
be materially impacted by failure to comply with, or adequately plan for, a • The Group delivers regular training in areas including Bribery and
change in legislation, government policy or regulation. Anti-Money Laundering and regulatory compliance.
• The Group has internal policies and procedures to ensure its
compliance with applicable regulations
• The Group maintains directors and officers ("D&O") and
professional indemnity insurance policies
• The Group responds to public consultations and is in dialogue with
UK government in policy areas such as the Enterprise Investment Scheme.
Examples of risk Development during the year Change from 2023
• Changes to tax legislation or the nature of the Group's • Ongoing focus on regulatory compliance, including third-party No Change
activities, in particular in relation to the Substantial Shareholder reviews and utilisation of specialist advisors
Exemption, may adversely affect the Group's tax position and accordingly its
value and operations • The Group submitted a cessation notice for its Hong Kong licenses
during the year as a result of the decision not to pursue fund operations in
• Regulatory changes or breaches could ultimately lead to withdrawal that geography.
of regulatory permissions for the Group's authorised subsidiaries, resulting
in loss of fund management contracts, reputational damage or fines
07 The Group and its portfolio companies may be subjected to cyber attacks A significant cyber/information security breach either within the Group or one
of its portfolio companies could result in financial and reputational damage,
business disruption and the loss of commercially sensitive information.
Link to strategy Actions taken by management Risk appetite
2 • The Group reviews its data and cybersecurity processes with its L
external outsourced IT providers and applies the UK Government's "ten steps"
The Group's strategic objectives of creating and maintaining a portfolio of framework or other national equivalents where relevant
compelling opportunities to deliver attractive returns for shareholders could
be materially impacted by a serious cybersecurity breach at a corporate or • Regular IT management reporting framework in place
portfolio company level.
• Internal and third-party reviews of policies and procedures in
place to ensure appropriate framework in place to safeguard data
• Assessment of third-party suppliers of cloud-based and on-premises
systems in use
• Annual Cyber and IT training is supplemented by regular bite-sized
and interactive cybersecurity training
• Network and infrastructure security systems to respond to emerging
threats
Examples of risk Development during the year Change from 2023
• The Group, or one, or a combination of, its portfolio companies • Ongoing focus on IT security and staff training No Change
could face significant fines from a data security breach
• Continued programme of phishing and penetration testing
• The Group or one of its portfolio companies could be subjected to
a phishing attack, which could lead to invalid payments being authorised or a • Implementation of additional cybersecurity systems to provide
sensitive information leak enhanced threat detection
• A malware or ransomware attack could lead to systems becoming • Onboarded strategic level legal and external communications
non-functioning and impair the ability of the business to operate in the short resource to supplement response resources to a serious cyber incident
term
• A cyber attack simulation was undertaken in the year to rehearse
the response to a serious cyber incident. The exercise revealed several
strengths in IP Group plc's cybersecurity posture and incident response
capabilities. The organization demonstrated robust technical protections.
Incident Management Teams (IMT), including Silver IMT, were activated
promptly, and communication plans were well-executed. The legal team provided
critical guidance on ransom payment decisions and regulatory reporting. The
organization also showed a proactive approach in reviewing access controls for
all portfolio companies.
• Review of key controls by the Group's internal auditors
08 The Group may be negatively impacted by operational issues both from a UK The potential for a negative impact to the Group arising from operational
central and international operations perspective issues such as business continuity and the overseas operations through
non-compliance with local laws and regulations, failure to integrate overseas
operations with the Group, an inability to foresee territory-specific risks
and macro-events. The Group may also fail to establish effective control
mechanisms, considering different working culture and environment, leading to
significant senior management time requirement, distracting from core
day-to-day business.
Link to strategy Actions taken by management Risk appetite
2 5 • Local legal and regulatory advisors have been engaged in the B
establishment phase of overseas operations. International teams typically have
The Group's strategy includes building a portfolio of compelling intellectual their own in-house legal teams and regularly report to the UK-based General
property-based companies across the UK and Australia and New Zealand. The Counsel
scale of the Group's operations, including internationally represents
increased importance of successful execution of its operations. • Business continuity plans are in place for the Group and tested
regularly
• Our executive recruitment function and HR are involved in senior
hires for new territories. Senior international personnel include current and
former UK employees, encouraging a shared culture across territories
• The risk management framework in place across each business unit
has been established in each international territory and is integrated into
the Group's regular risk management processes and reporting
• Third-party suppliers are used for international accounting and
payroll services to reduce the risk of fraud within smaller teams
Examples of risk Development during the year Change from 2023
• A legal or regulatory breach could ultimately lead to the • Continued coordination of risk reporting across Australia, New No Change
withdrawal of regulatory permissions overseas, resulting in loss of trust Zealand and Hong Kong
management contracts, reputational damage and fines
• Decision taken to discontinue Hong Kong operations
• Divergent Group cultures may lead to difficulties in achieving the
Group's strategic aims • Reviewed disaster recovery plans in the year
• Senior management may spend a significant amount of time
overseeing non-UK territories, which could detract from central Group strategy
and operations
STRATEGIC PILLARS
1 Have an impact on the world that counts
2 Develop our unique insight, expertise and access
3 Accelerate value creation
4 Build a truly differentiated reputation
5 Be a home for exceptional talent
Viability statement
The Directors have carried out a robust assessment of the viability of the
Group over a three-year period to December 2027, considering its strategy, its
current financial position and its principal risks. The three-year period
reflects the time horizon reviewed by the Board, and over which the Group
places a higher degree of reliance over the forecasting assumptions used.
The strategy and associated principal risks underpin the Group's three-year
financial plan and scenario testing, which the Directors review and approve at
least annually. As a business which seeks to accelerate the impact of science
for a better future through our portfolio companies, our business model seeks
to balance cash investments, the generation of portfolio returns and portfolio
realisations. The three-year plan is built using a bottom-up model using
assumptions over:
• the level of portfolio investment
• the level of realisations from the portfolio (net of carried
interest payments)
• the financial performance (and valuation) of the underlying
portfolio companies
• the Group's drawdown and repayment of its debt
• the Group's ability to raise further capital
• the level of the Group's net overheads and
• the level of dividends and share buybacks
Of the Group's principal risks, those relating to insufficient capital (both
Group and portfolio companies), insufficient investment returns, and
macroeconomic conditions are deemed to be the most relevant to the Group's
viability assessment due to their potential to impact the Group's liquidity
position and net asset position, both of which directly impact the level of
headroom over the Group's debt covenants. Other principal risks including:
personnel risk; legislation, governance and regulation; cyber and IT and
international operations could have an impact on the Group's performance but
are less likely to have a direct impact on viability within the assessment
period.
To assess the impact of the principal risks highlighted above on the prospects
of the Group, the financial plan is stress-tested by modelling severe but
plausible and intermediate downside scenarios where adverse impacts across the
Group's principal risks relating to insufficient capital, insufficient
investment returns, and macroeconomic conditions were considered as part of
the review. Under the severe downside scenario, a 70% reduction in planned
realisations and a 35% decline in portfolio fair values which were considered
together with a series of mitigating actions, including reducing planned
levels of investment.
Under these stress-testing scenarios, significant reductions to portfolio
investments are made to preserve the Group's remaining cash balances. In all
scenarios modelled, the Group remains solvent throughout the three-year period
with no breach of debt covenants of a "cash trap period" occurring. See note
19 for further details on cash trap arrangements.
Based on this assessment, the Directors have a reasonable expectation that the
Group will continue to operate and meets its liabilities, as they fall due,
up to December 2027.
Strategic Report approval
The Strategic Report as set out above has been approved by the Board.
The financial information set out below has been extracted from the Annual
Report and Accounts of IP Group plc for the year ended 31 December 2024 and is
an abridged version of the full financial statements, not all of which are
reproduced in this announcement. Directors' Responsibilities Statement The
responsibility statement set out below has been reproduced from the Annual
Report and Accounts, which will be published in April 2025, and relates to
that document and not this announcement.
Each of the Directors confirms to the best of their knowledge:
• The Group financial statements have been prepared in accordance with
UK-adopted International Financial Reporting Standards ("UK-adopted IFRS") and
give a true and fair view of the assets, liabilities, financial position and
profit and loss of the Group.
• The Annual Report and Accounts includes a fair review of the development
and performance of the business and the financial position of the Group and
the parent company, together with a description or the principal risks and
uncertainties that they face.
On behalf of The Board
Sir Douglas
Flint
Greg Smith
Chairman
Chief Executive Officer
24 March 2025
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME.
FOR THE YEAR ENDED 31DECEMBER 2024
Note 2024 2023
£m £m
Portfolio return and revenue
Change in fair value of equity and debt investments 13 (246.1) (110.9)
Gain/(loss) on disposal of equity and debt investments 15 63.7 (10.8)
Change in fair value of limited and limited liability partnership interests 14 (12.6) (38.8)
Revenue from services and other income 4 5.5 5.9
(189.5) (154.6)
Administrative expenses
Carried interest plan and other deal incentives credit 22 7.9 4.7
Share-based payment charge 21 (1.9) (2.6)
Other administrative expenses 8 (25.3) (28.0)
(19.3) (25.9)
Operating loss 7 (208.8) (180.5)
Finance income 8.8 9.8
Finance costs (6.7) (5.6)
Loss before taxation (206.7) (176.3)
Taxation 10 (0.3) 1.9
Loss for the year (207.0) (174.4)
Other comprehensive income
Items that may be subsequently reclassified to the income
statement
Exchange differences on translating foreign operations (3.0) (0.4)
Total comprehensive loss for the year (210.0) (174.8)
Attributable to:
Equity holders of the parent (205.6) (171.3)
Non-controlling interest (4.4) (3.5)
(210.0) (174.8)
Loss per share
Basic (p) 11 (19.97) (16.53)
Diluted (p) 11 (19.97) (16.53)
CONSOLIDATED STATEMENT OF FINANCIAL POSITION.
AS AT 31 DECEMBER 2024
Note 2024 2023
£m £m
ASSETS
Non-current assets
Goodwill 0.4 0.4
Property, plant and equipment 0.8 1.4
Joint venture investment 0.6 0.6
Portfolio:
Equity investments 13 713.8 1,011.5
Debt investments 13 51.6 83.7
Limited and limited liability partnership interests 14 58.1 69.7
Receivable on sale of debt and equity investments 15, 17 18.5 7.8
Total non-current assets 843.8 1,175.1
Current assets
Assets held for sale 13 13.9 -
Trade and other receivables 16 6.3 8.2
Receivable on sale of debt and equity investments 15, 17 1.6 1.4
Deposits 3 170.0 126.0
Cash and cash equivalents 3 115.6 100.9
Total current assets 307.4 236.5
Total assets 1,151.2 1,411.6
EQUITY AND LIABILITIES
Equity attributable to owners of the parent
Called up share capital 20 19.5 21.3
Share premium account 102.5 102.5
Capital redemption reserve 20 1.8 -
Retained earnings 842.2 1,075.6
Total equity attributable to equity holders 966.0 1,199.4
Non-controlling interest (13.5) (9.1)
Total equity 952.5 1,190.3
Current liabilities
Trade and other payables 18 12.5 17.1
Borrowings 19 6.3 6.3
Total current liabilities 18.8 23.4
Non-current liabilities
Borrowings 19 122.8 128.9
Carried interest plan liability 22 27.3 38.0
Deferred tax liability 10 4.5 4.8
Loans from limited partners of consolidated funds 19 19.9 19.8
Other non-current liabilities 5.4 6.4
Total non-current liabilities 179.9 197.9
Total liabilities 198.7 221.3
Total equity and liabilities 1,151.2 1,411.6
Registered number: 04204490
The accompanying notes form an integral part of the financial statements. The
financial statements were approved by the Board of Directors and authorised
for issue on 24 March 2025 and were signed on its behalf by:
Greg Smith David Baynes
Chief Executive Officer Chief Financial Officer
CONSOLIDATED STATEMENT OF CASH FLOWS.
FOR THE YEAR ENDED 31 DECEMBER 2024
Note 2024 2023
£m £m
Operating activities
Loss before taxation for the period (206.7) (176.3)
Adjusted for:
Change in fair value of equity and debt investments 13 246.1 110.9
(Gain)/Loss on disposal of equity investments 15 (63.7) 10.8
Change in fair value of limited and limited liability partnership interests 14 12.6 38.8
Carried interest plan and other deal incentives credit 22 (7.9) (4.7)
Carried interest scheme payments 22 (2.5) (1.3)
Share-based payment charge 21 1.9 2.6
Finance income (8.8) (9.8)
Finance costs 6.7 5.6
Depreciation of right-of-use asset, property, plant and equipment 0.6 0.6
Corporate finance fees settled in the form of portfolio company equity - (0.1)
Changes in working capital
(Increase)/Decrease in trade and other receivables 16 (0.7) 1.3
Decrease in trade and other payables 18 (7.3) (0.3)
Drawdowns from limited partners of consolidated funds 0.1 0.3
Other operating cash flows
Interest received 4.5 3.7
Net cash outflow from operating activities (25.1) (17.9)
Investing activities
Purchase of equity and debt investments 13 (60.8) (63.4)
Investment in limited and limited liability partnership funds 14 (2.2) (9.8)
Investment in joint venture - (0.6)
Interest received on deposits 5.9 4.1
Cash flow to deposits (230.0) (191.7)
Cash flow from deposits 186.6 218.4
Proceeds from sale of equity and debt investments 15 182.2 37.7
Distribution from limited partnership funds 14 1.2 0.9
Net cash inflow/(outflow) from investing activities 82.9 (4.4)
Financing activities
Dividends paid 26 - (13.0)
Repurchase of own shares - treasury shares 20 (29.6) (0.1)
Lease principal payment (0.4) (0.5)
Interest paid (6.8) (5.5)
Repayment of EIB loan facility 19 (6.1) (6.2)
Drawdown of loan facility 19 - 60.0
Net cash (outflow)/inflow from financing activities (42.9) 34.7
Net increase in cash and cash equivalents 14.9 12.4
Cash and cash equivalents at the beginning of the year 100.9 88.7
Effect of foreign exchange rate changes (0.2) (0.2)
Cash and cash equivalents at the end of the year 115.6 100.9
The accompanying notes form an integral part of the financial statements.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY.
FOR THE YEAR ENDED 31 DECEMBER 2024
Attributable to equity holders of the parent
Share Share Capital redemption reserve(5) Retained Total Non-controlling Total
capital premium(1) £m earnings(2) £m interest(3) equity
£m £m £m £m
At 1 January 2023 21.3 102.5 - 1,257.9 1,381.7 (5.6) 1,376.1
Total comprehensive income for the period
Loss for the year - - - (170.9) (170.9) (3.5) (174.4)
Currency translation(4) - - - (0.9) (0.9) - (0.9)
Total comprehensive income for the period - - - (171.8) (171.8) (3.5) (175.3)
Transactions with owners, recorded directly in equity
Purchase of treasury shares(5) - - - (0.1) (0.1) - (0.1)
Equity-settled share-based payments(6) - - - 2.6 2.6 - 2.6
Ordinary dividends(7) - - - (13.0) (13.0) - (13.0)
Total contributions by and distributions to owners - - - (10.5) (10.5) - (10.5)
At 1 January 2024 21.3 102.5 - 1,075.6 1,199.4 (9.1) 1,190.3
Total comprehensive income for the period
Loss for the year - - - (202.6) (202.6) (4.4) (207.0)
Currency translation(4) - - - (3.1) (3.1) - (3.1)
Total comprehensive income for the period - - - (205.7) (205.7) (4.4) (210.1)
Transactions with owners, recorded directly in equity
Purchase of treasury shares(5) (1.8) - 1.8 (29.6) (29.6) - (29.6)
Equity-settled share-based payments(6) - - - 1.9 1.9 - 1.9
Ordinary dividends(7) - - - - - - -
Total contributions by and distributions to owners (1.8) - 1.8 (27.7) (27.7) - (27.7)
At 31 December 2024 19.5 102.5 1.8 842.2 966.0 (13.5) 952.5
(1) Share premium - Amount subscribed for share capital in excess of
nominal value, net of directly attributable issue costs.
(2) Retained earnings - Cumulative net gains and losses recognised in
the consolidated statement of comprehensive income net of associated
share-based payments credits and distributions to shareholders.
(3) Non-controlling interest - Share of losses attributable to the
Limited Partners of IP Venture Fund II LP.
(4) Currency translation - Reflects currency translation differences
on reserves non-GBP functional currency subsidiaries. Exchange differences on
translating foreign operations are presented before tax.
(5) Purchase of treasury shares - during 2024, the Company purchased
45,280,605 ordinary shares (2023: 200,302 ordinary shares), with an aggregate
value of £0.9m (2023: £0.1k) which were initially held in treasury. These
were subsequently used to settle employee share based payments of 4,481,489
prior to the remainder being cancelled in September 2024 along with a further
26,493,520 treasury shares held at the start of the year which were also
cancelled at the same time. A further 20,609,101 shares with an aggregate
value of £0.5m were purchased in the period September to December 2024 and
immediately cancelled. The nominal value of the cancelled treasury share has
been added to the Capital redemption reserve.
(6) Equity-settled share-based payments - amounts recognised in
respect of the Group's share-based payments schemes recognised as a subsidiary
investment in the Company accounts with a corresponding entry against equity.
(7) Ordinary dividends - there were no dividends paid in 2024 (2023:
£13.0m total; £13.0m cash). No new shares were issued in respect of the
scrip dividend (2023: no shares issued).
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS.
1. Basis of preparation
A) Basis of preparation
The Annual Report and Accounts of IP Group plc ("IP Group" or the "Company")
and its subsidiary companies (together, the "Group") are for the year ended 31
December 2024. The principal accounting policies adopted in the preparation of
the financial statements are set out below. The policies have been
consistently applied to all the years presented, unless otherwise stated. The
Group financial statements have been prepared and approved by the directors in
accordance with UK-adopted international accounting standards ("UK-adopted
IFRS").
The preparation of financial statements in compliance with IFRS requires the
use of certain critical accounting estimates. It also requires Group
management to exercise judgement in the most appropriate selection of the
Group's accounting policies. The areas where significant judgements and
estimates have been made in preparing the financial statements and their
effect are disclosed in note 2.
The financial statements are prepared on a historic cost bases except that the
following assets and liabilities are stated at their fair value.
Going concern
The financial statements are prepared on a going concern basis. The directors
have completed a detailed financial forecast alongside severe but plausible
scenario-based downside stress-testing, including the impact of declining
portfolio values and a reduced ability to generate portfolio realisations.
At the balance sheet date, the Group had cash and deposits of £285.6m,
providing liquidity for around three years' operating expenses and portfolio
investment at recent levels, and scheduled debt repayments. Furthermore, the
Group has a portfolio of investments valued at around £0.9bn, which is
anticipated to provide further liquidity over the forecast period.
Accordingly, our forecasting indicates that the Group and it's parent company
has adequate resources to enable it to meet its obligations including its debt
covenants and to continue in operational existence for at least the next
twelve months from the approval date of the accounts. For further details see
the Group's viability statement above.
Changes in accounting policies
(i) New standards, interpretations and amendments effective from 1 January
2024
No new standards, interpretations and amendments effective in the year have
had a material effect on the Group's financial statements.
(ii) New standards, interpretations and amendments not yet effective
No new standards, interpretations and amendments not yet effective are
expected to have a material effect on the Group's future financial statements.
The impact of the following is under assessment: IFRS 18 'Primary financial
statements', which will become effective in the consolidated Group financial
statements for the financial year ending 31 December 2027, subject to UK
endorsement.
B) Basis of consolidation
IFRS 10 Investment Entity Exemption
IFRS 10 defines an investment entity as one which:
a. Obtains funds from one or more investors for the purpose
of providing those investors with investment management services
b. Commits to its investors that its business purpose is to
invest funds solely for returns from capital appreciation, investment income
or both
c. Measures and evaluates the performance of substantially
all of its investments on a fair value basis
We believe that IP Group plc does not meet this definition of an investment
entity with the key factors behind this conclusion being:
• the absence of specific exit strategies for
early-stage assets (indicating condition (b) above is not satisfied)
• the ability to hold investments indefinitely
(indicating condition (b) above is not satisfied)
• the flexibility to explore the direct
commercialisation of intellectual property within the Group if that is
determined to be the most attractive means of generating value for
shareholders. (indicating condition (a) above is not satisfied)
Accordingly, we have applied IFRS 10 consolidation principles for each group
of entities as follows:
(i) Subsidiaries
Where the Group has control over an entity, it is classified as a subsidiary.
Typically, the Group owns a non-controlling interest in its portfolio
companies; however, in certain circumstances, the Group takes a controlling
interest and hence categorises the portfolio company as a subsidiary. As per
IFRS 10, an entity is classed as under the control of the Group when all three
of the following elements are present: power over the entity; exposure to
variable returns from the entity; and the ability of the Group to use its
power to affect those variable returns.
In situations where the Company has the practical ability to direct the
relevant activities of the investee without holding the majority of the voting
rights, it is considered that de facto control exists. In determining whether
de facto control exists the Group considers the relevant facts and
circumstances, including:
• The size of the Company's voting rights relative to
both the size and dispersion of other parties who hold voting rights;
• Substantive potential voting rights held by the
Company and by other parties;
• Other contractual arrangements; and
• Historic patterns in voting attendance.
In assessing the IFRS 10 control criteria in respect of the Group's private
portfolio companies, direction of the relevant activities of the company is
usually considered to be exercised by the company's board, therefore the key
control consideration is whether the Group currently has a majority of board
seats on a given company's board, or is able to obtain a majority of board
seats via the exercise of its voting rights. Control is reassessed whenever
facts and circumstances indicate that there may be a change in any of these
elements of control.
The consolidated financial statements present the results of the Company and
its subsidiaries as if they formed a single entity. Intercompany transactions
and balances between Group companies are therefore eliminated in full. The
consolidated financial statements incorporate the results of business
combinations using the acquisition method. In the statement of financial
position, the acquiree's identifiable assets and liabilities are initially
recognised at their fair values at the acquisition date. Contingent
liabilities dependent on the disposed value of an associated investment are
only recognised when the fair value is above the associated threshold. The
results of acquired operations are included in the consolidated statement of
comprehensive income from the date on which control is obtained. They are
consolidated until the date on which control ceases.
(ii) Associates/portfolio companies
The majority of the Group's portfolio companies are deemed to be Associates,
as the Group has significant influence (generally accompanied by a
shareholding of between 20% and 50% of the voting rights) but not control. A
small number of the Group's portfolio companies are controlled and hence
consolidated, as per section (i) above.
As permitted under IAS 28, the Group elects to hold investments in Associates
at fair value through profit and loss in accordance with IFRS 9. This
treatment is specified by IAS 28 Investment in Associates and Joint Ventures,
which permits investments held by a venture capital organisation or similar
entity to be excluded from its measurement methodology requirements where
those investments are designated, upon initial recognition, as at fair value
through profit or loss and accounted for in accordance with IFRS 9 Financial
Instruments. Therefore, no associates are presented on the consolidated
statement of financial position.
Changes in fair value of associates are recognised in profit or loss in the
period of the change. The Group has no interests in Associates through which
it carries on its operating business. During 2023, the Group made a £0.6m
investment into a Joint Venture established in preparation for potential fund
operations in China. Joint ventures are held at fair value with any change in
value recognised through the income statement.
The disclosures required by Section 409 of the Companies Act 2006 for
associated undertakings are included in note 13 of the Company financial
statements. Similarly, those investments which may not have qualified as an
Associate but fall within the wider scope of significant holdings and so are
subject to Section 409 disclosures of the Companies Act 2006 are included in
note 11 of the Company financial statements.
(iii) Limited Partnerships and Limited Liability Partnerships ("Limited
Partnerships")
a) Consolidated Limited Partnership fund holdings
The Group has a holding in the following Limited Partnership fund, which it
determines that it controls and hence consolidates on a line by line basis:
Name Interest in Limited partnership
%
IP Venture Fund II LP ("IPVFII") 33.3
In order to determine whether the Group controls the above funds, it has
considered the IFRS 10 control model and related application guidance. In
respect of IPVFII, the Group has power via its role as fund manager of the
partnership, and exposure to variable returns via its 33.3% ownership
interest, resulting in the conclusion that the Group controls and hence
consolidates the fund.
b) Other non-consolidated Limited Partnership fund holdings
In addition to Limited Partnerships where Group entities act as general
partner and investment manager, the Group has interests in three further
entities which are managed by third parties:
Name Interest in Limited partnership
%
IPG Cayman LP 58.1
UCL Technology Fund LP ("UCL Fund") 46.4
Technikos LLP ("Technikos") 17.8
The rationale for IPG Cayman LP's categorisation as a non-consolidated fund is
considered a significant accounting judgment and is set out in note 2.
The Group has a 46.4% interest in the total capital commitments of the UCL
Fund. The Group has committed £24.8m to the fund alongside the European
Investment Fund ("EIF"), University College London and other investors.
Participation in the UCL Fund provides the Group with the opportunity to
generate financial returns and visibility of potential intellectual property
from across University College London's research base.
The Group has an 17.8% interest in the total capital commitments of Technikos,
a fund with an exclusive pipeline agreement with Oxford University's Institute
of Biomedical Engineering.
See note 25 for disclosure of outstanding commitments in respect of Limited
Partnerships.
iv) Other third-party funds under management
In addition to the Limited Partnership fund IPVFII, described above, the Group
also manages other third-party funds, including within its Parkwalk Advisors
business unit, and on behalf of Australian superannuation fund Hostplus. In
both cases, the Group has no direct beneficial interest in the assets being
managed, and its sole exposure to variable returns relates to management fees
and performance fees payable on exits above a specified hurdle. As a result,
the Group is not deemed to control these managed assets under IFRS10 and they
are not consolidated.
v) Non-controlling interests
The total comprehensive income, assets and liabilities of non-wholly owned
entities are attributed to owners of the parent and to the non-controlling
interests in proportion to their relative ownership interests.
vi) Business combinations
The Group accounts for business combinations using the acquisition method from
the date that control is transferred to the Group (see (i) Subsidiaries
above). Both the identifiable net assets and the consideration transferred in
the acquisition are measured at fair value at the date of acquisition and
transaction costs are expensed as incurred. Goodwill arising on acquisitions
is tested at least annually for impairment. In instances where the Group owns
a non-controlling stake prior to acquisition the step acquisition method is
applied, and any gain or losses on the fair value of the pre-acquisition
holding is recognised in the consolidated statement of comprehensive income.
C) Other accounting policies
Regulated capital
Top Technology Ventures Limited and Parkwalk Advisors Ltd, are Group
subsidiaries which are subject to external capital requirements imposed by the
Financial Conduct Authority ("FCA"). Similarly, the Group's subsidiary in Hong
Kong IP Group Greater China Services Limited is subject to external capital
requirements imposed by the Securities and Futures Commission of Hong Kong
("SFC"). As such these entities must ensure that they have sufficient capital
to satisfy their respective requirements. The Group ensures it remains
compliant with these requirements as described in their respective financial
statements.
Cash flow statement classification of portfolio investments
Cash flow relating to portfolio investments have been presented as investing
cash flows as opposed to cash flows from operating activities. Management
considers this to be an appropriate classification reflecting the fact that
these cashflows are allocated towards resources intended to generate future
income and cash flows, in line with the definition of investing activities
within IAS 7.
2. Significant accounting estimates and judgements
The Directors have made the following judgements and estimates that have had
the most significant effect on the carrying amounts of the assets and
liabilities in the consolidated financial statements. 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. The estimates and assumptions which have the most significant
effects on the carrying amounts of the assets and liabilities in the financial
statements are discussed below.
(i) Valuation of unquoted equity and debt investments and limited partnership
interests (significant estimate)
The Group's accounting policy in respect of the valuation of unquoted equity
and debt investments is set out in note 13, and in respect of limited
partnership interests in note 14. In applying this policy, the key areas over
which judgement are exercised include:
• Consideration of whether a funding round is at arm's length
and therefore representative of fair value.
• The relevance of the price of recent investment as an input
to fair value, which typically becomes more subjective as the time elapsed
between the recent investment date and the balance sheet date increases.
• In the case of companies with complex capital structures,
the appropriate methodology for assigning value to different classes of equity
based on their differing economic rights.
• Where an upwards or downwards calibration adjustment to a
funding transaction valuation to reflect positive or negative developments
within the company in question, the size of the adjustment made.
• Where using valuation methods such as discounted cash flows
or revenue multiples, the assumptions around inputs including the drug
development timeline, probability of clinical trial success, the selection of
relevant comparable deal sizes, the probability of securing a pharmaceutical
partner, drug sales profiles, royalty rates, discount rates and drug
development costs
• Where valuations are based on future events such as sales
processes or future funding rounds, the appropriate level of execution risk to
be applied to the anticipated event when assessing its valuation impact as at
the balance sheet date.
• Debt investments typically represent convertible debt; in
such cases judgement is exercised in respect of the estimated equity value
received on conversion of the loan.
• For limited partnership investments, the above
considerations are applied to the fund in question's equity and debt
investments in determining whether the fund manager's Net Asset Value
statement values are appropriate.
Valuations are based on management's judgement after consideration of the
above and upon available information believed to be reliable, which may be
affected by conditions in the financial markets. Due to the inherent
uncertainty of the investment valuations, the estimated values may differ
significantly from the values that would have been used had a ready market for
the investments existed, and the differences could be material. Note 13
provides disclosure details on sensitivity and estimation uncertainty.
Critical estimates in respect of the Group's investment in Istesso Limited,
including DCF model assumptions in respect of the Phase 2b success rates,
selected pharma partner deal size, pharma partnership probability and royalty
rates including sensitivity disclosures in respect of these estimates are
disclosed in Note 13.
(ii) Application of IFRS 10 in respect of Istesso Limited and IPG Cayman LP
(significant judgement)
The judgments in respect of non-consolidation of Istesso Limited and IPG
Cayman LP remain unchanged from the conclusion of our assessment in the prior
year, and there have been no material changes in the facts and circumstances
during the year. The specific considerations in respect of Istesso Limited and
IPG Cayman LP are set out below:
Istesso Limited
In respect of Istesso Limited, although the Group has a 56.5% undiluted
economic interest in the company, the Group holds a significant proportion of
its equity via non-voting shares resulting in it holding less than 50% of the
voting rights at the company. Under Istesso's Articles of Association,
strategic and day-to-day decisions over running of the business rest with
Istesso's board of directors rather than through shareholder voting rights
attached to direct ownership of equity interests held in the entity. In this
respect, power over Istesso is exercised predominantly through directors'
meetings, on which IP Group is not deemed to have majority representation. As
such, the relationship between Istesso and IP Group is designed in such a way
that "shareholder" voting rights are not the dominant factor in deciding who
directs the investee's relevant activities, but it is the directors who do so.
IP Group does not control the board of Istesso Limited via a majority of board
directors, and is specifically prevented from appointing additional directors
to gain control of the board via restrictions in Istesso's Articles of
Association.
During the year, the Group advanced a further £10m convertible loan to
Istesso Limited, being the second tranche of a total £23.5m convertible loan
which was legally committed in 2023 and whose drawdown therefore did not have
any additional substantive impact. This was in addition to a £10m convertible
loan which was provided in 2022. The terms of the loans contain specific
provisions preventing their conversion where this would result in IP Group
obtaining control of Istesso.
Based on an updated control assessment, including considerations around
whether IP Group has 'de facto' control of Istesso including inter alia the
number of voting shares held by the Group and its connected parties and the
dispersion of other parties' voting rights, we have concluded that the Group
does not control Istesso Limited under IFRS 10.
Had the directors concluded that consolidation in the current year was
appropriate, the impact on the Group Balance Sheet would have been to
recognise Istesso Limited's assets and liabilities and to recognise additional
intangible assets including goodwill based on the fair value of the company at
acquisition. The impact on the Group Income Statement would have been the
recognition of Istesso Limited's costs from the point of acquisition.
Furthermore, any subsequent fair value movements in the debt and equity of
Istesso Limited would not be recognised until the point where IP Group was no
longer deemed to control Istesso Limited.
IPG Cayman LP
The Group's US portfolio is held via a limited partnership fund, IPG Cayman
LP, which was set up in 2018 to facilitate third-party investment into this
portfolio. The fund is managed by Longview Innovations Inc., formerly an
operating subsidiary of the Group. Prior to 2021, the Group was judged to
control both IPG Cayman LP and Longview innovations Inc. under IFRS 10 and
hence both entities were consolidated.
In 2021, several events took place which caused us to reassess the Group's
control of both entities:
• IPG Cayman LP raised additional third-party funds in the
first half of 2021, which reduced the Group's stake in the fund from 80.7% to
58.1% and revised the fund's Limited Partnership Agreement to reduced the
Group's rights to replace the fund manager.
• Investors in the 2021 IPG Cayman LP funding round hold a 5
year option to subscribe additional funds which, if exercised, would result in
IP Group holding less than 50% in the fund.
• In November 2021 the Group disposed of its equity in IPG
Cayman LP's fund manager, Longview Innovations Inc. and hence no longer
controls the fund manager.
As a result of these changes, our control assessment concluded that Longview
Innovations Inc, is acting as an agent on behalf of all investors in the
Cayman LP and not solely IPG plc, therefore the Group no longer controls IPG
Cayman LP. The Group therefore ceased to consolidate it from November 2021.
Arriving at this conclusion required the application of judgement, most
significantly in assessing the application guidance contained in IFRS 10 B19
which suggests that in some instances a special relationship may exist (such
as the fact that we remain the largest individual investor in the fund),
implying that an investor has a more than passive interest in the investee.
Having considered this guidance we have concluded that on balance the Group
does not have power over IPG Cayman LP and hence does not control it.
During 2024, the Group advanced $0.9m into IPG Cayman LP via a Simple
Agreement for Future Equity ("SAFE"). This was in addition to a $10m SAFE
investment made in 2023. The terms of these SAFEs were such that they did not
confer any additional substantive rights to the Group in the normal course of
business and as a result did not change the consolidation conclusion in
respect of IPG Cayman LP.
3. Financial risk management
As set out in the principal risks and uncertainties section above, the Group
is exposed, through its normal operations, to a number of financial risks, the
most significant of which are market, liquidity and credit risks.
In general, risk management is carried out throughout the Group under policies
approved by the Board of Directors. The following further describes the
Group's objectives, policies and processes for managing those risks and the
methods used to measure them. Further quantitative information in respect of
these risks is presented throughout these financial statements.
A) Market risk
(i) Price risk
The Group is exposed to equity securities price risk as a result of the equity
and debt investments, and investments in Limited Partnerships held by the
Group and recognised as at fair value through profit or loss.
The Group mitigates this risk by having established investment appraisal
processes and asset monitoring procedures which are subject to overall review
by the Board.
The Group holds nine investments valued at £140m at 31 December 2024 which
are publicly traded (2023: ten investments; £203.8m), and the remainder of
its investments are not traded on an active market.
The net portfolio loss in 2024 of £195.0m represents a 17% decrease against
the opening balance (2023: loss of 160.5m; 13% decrease). Sensitivity analysis
showing the impact of movements in quoted equity and debt investments is
disclosed in note 13, and movements in Limited and Limited Liability interests
is shown in note 14.
(ii) Foreign exchange risk
The Group's main exposure to foreign currency risk is via its investment
portfolio, which is partially denominated in US dollars, Australian dollars,
Euros and Swedish Krona. Further details of currency exposure in the portfolio
are given in notes 13 and 14.
The Group's US dollar-denominated proceeds included in deferred consideration
at December 2024 was £2.5m (2023: £9.4m).
The Group periodically enters into forward foreign exchange contracts to
mitigate risk of exchange rate exposure in respect of non GBP-denominated
proceeds. As at 31 December 2024 there were no contract forward foreign
exchange contracts outstanding.
(iii) Interest rate risk
The Group holds a debt facility with the European Investment Bank and a loan
note facility primarily with Phoenix Group with the overall balance as at 31
December 2024 amounting to £129.4m (excluding setup costs). These loans all
bear a fixed rate of interest, with the annual average interest rate being
5.09% (2023: 4.99%).
For further details of the Group's loans including covenant details see note
19.
The other primary impact of interest rate risk to the Group is the impact on
the income and operating cash flows as a result of the interest-bearing
deposits and cash and cash equivalents held by the Group.
(iv) Concentrations of risk
The Group is exposed to concentration risk via the significant majority of the
portfolio being UK-based companies and thus potentially impacted by the
performance of the UK economy. In recent years, the Group has decreased the
scale of its operations in the US as a result of the dilution of its holding
in IPG Cayman LP. The group has, however, increased the scale of its
operations in Australia as a result of additional investment in this geography
and portfolio value gains.
The Group mitigates Market risk, in co-ordination with liquidity risk, by
managing its proportion of fixed to floating rate financial assets. The table
below summarises the interest rate profile of the Group.
2024 2023
Fixed rate Floating rate Interest free Total Fixed rate Floating rate Interest free Total
£m £m £m £m £m £m £m £m
Financial assets
Equity investments - - 713.8 713.8 - - 1,011.5 1,011.5
Debt investments - - 51.6 51.6 - - 83.7 83.7
Limited and limited liability partnership interests - - 58.1 58.1 - - 69.7 69.7
Assets held for sale - - 13.9 13.9 - - - -
Trade receivables - - 0.7 0.7 - - 0.6 0.6
Other receivables - - 5.6 5.6 - - 7.6 7.6
Receivable on sale of debt and equity investments - - 20.1 20.1 - - 9.2 9.2
Deposits 170.0 - - 170.0 126.0 - - 126.0
Cash and cash equivalents 10.8 104.4 0.40 115.6 16.8 83.9 0.2 100.9
Total 180.8 104.4 864.2 1,149.4 142.8 83.9 1,182.5 1,409.2
Financial liabilities
Trade payables - - (0.3) (0.3) - - (0.5) (0.5)
Other accruals and deferred income - - (12.2) (12.2) - - (16.5) (16.5)
Borrowings (129.1) - - (129.1) (135.2) - - (135.2)
Carried interest plan liability - - (27.3) (27.3) - - (38.0) (38.0)
Deferred tax liability - - (4.5) (4.5) - - (4.8) (4.8)
Loans from Limited Partners of consolidated funds - - (19.9) (19.9) - - (19.8) (19.8)
Other non-current liabilities - - (5.4) (5.4) - - (6.4) (6.4)
Total (129.1) - (69.6) (198.7) (135.2) - (86.0) (221.2)
At 31 December 2024, if interest rates had been 1% higher/lower, post-tax loss
for the year, and other components of equity, would have been £1.8m (2023:
£2.2m) higher/lower as a result of higher interest received on cash and
deposits.
B) Liquidity risk
The Group seeks to manage liquidity risk, to ensure sufficient liquidity is
available to meet foreseeable needs and to invest cash assets safely and
profitably. The Group's treasury management policy asserts that no more than
60% of the Group's cash and cash equivalents will be placed in fixed-term
deposits with a holding period greater than three months at any one point in
time. Accordingly, the Group only invests working capital in short-term
instruments issued by a pre-approved list of reputable counterparties. The
Group continually monitors rolling cash flow forecasts to ensure sufficient
cash is available for anticipated cash requirements.
C) Credit risk
The Group's credit risk is primarily attributable to its deposits, cash and
cash equivalents, debt investments and trade receivables. The Group seeks to
mitigate its credit risk on cash and cash equivalents by making short-term
deposits with counterparties, or by investing in treasury funds with an "AAA"
credit rating or above managed by institutions. Short-term deposit
counterparties are required to have where applicable, a prime short-term
credit rating at the time of investment (ratings are generally determined by
Moody's or Standard & Poor's). Moody's prime credit ratings of "P1", "P2"
and "P3" indicate respectively that the rating agency considers the
counterparty to have a "superior", "strong" or "acceptable" ability to repay
short-term debt obligations (generally defined as having an original maturity
not exceeding 13 months). An analysis of the Group's deposits and cash and
cash equivalents balance analysed by credit rating as at the reporting date is
shown in the table opposite. All other financial assets are unrated.
Credit rating 2024 2023
£m £m
P1 206.9 158.9
AAAMMF(1) 78.6 66.7
Other(2) 0.1 1.3
Total deposits and cash and cash equivalents 285.6 226.9
1 The Group holds £78.6m (2023: £66.7m) with JP Morgan
GBP liquidity fund, which has a AAAMMF credit rating with Fitch.
2 The Group holds £0.1m (2023: £1.3m) with Arbuthnot
Latham, a private bank with no debt in issue and, accordingly, on which a
credit rating is not applicable. Bloomberg assess Arbuthnot Latham's 1-year
default probability at 0.021279% (2023: 0.020408%).
The Group has no significant concentration of credit risk, with exposure
spread over a large number of counterparties and customers. The Group has
detailed policies and strategies which seek to minimise these associated risks
including defining maximum counterparty exposure limits for term deposits
based on their perceived financial strength at the commencement of the
deposit. The single counterparty limit for fixed term deposits in excess of 3
months at 31 December 2024 was the greater of 60% of total group cash or £50m
(2023: 60%; £50m). In addition, no single institution may hold more than the
higher of 50% of total cash or £50m. (2023: 50%; £50m).
The group's exposure to credit risk on debt investments is managed in a
similar way to equity security price risk, as described above, through the
Group's investment appraisal processes and asset monitoring procedures which
are subject to overall review by the Board. The maximum exposure to credit
risk for debt investments, receivables and other financial assets is
represented by their carrying amount.
4. Revenue from services and other income
Accounting Policy:
Revenue from services and other income is generated primarily from within the
United Kingdom and is stated exclusive of value added tax, with further
revenue generated in the Group's Australian operations. Revenue is recognised
when the Group satisfies its performance obligations, in line with IFRS 15.
Revenue breakdown and disclosure requirements under IFRS 15 have not been
presented as they are considered immaterial. Revenue from services and other
income comprises:
Fund management services
Fund management fees include:
· fund management fees which are earned either as a fixed
percentage of total funds under management or a fixed percentage of capital
subscribed, and are recognised as the related services are provided and
· performance fees payable from realisations in excess of
an agreed return to investors which are recognised upon realisation of assets.
Licence and royalty income
The Group's Intellectual Property licences typically constitute separate
performance obligations, being separate from other promised goods or services.
Revenue is recognised in line with the performance obligations included in the
licence, which can include sales-based, usage-based or milestone-based
royalties.
Advisory and corporate finance fees
Fees earned from the provision of business support services including
executive search services and fees for IP Group representation on portfolio
company boards are recognised as the related services are provided. Corporate
finance advisory fees are generally earned as a fixed percentage of total
funds raised and recognised at the time the related transaction is
successfully concluded. In some instances, these fees are settled via the
issue of equity in the company receiving the corporate finance services at the
same price per share as equity issued as part of the financing round to which
the advisory fees apply.
Revenue from services is derived from the provision of advisory and venture
capital fund management services or from licensing activities, royalty
revenues and patent cost recoveries.
5. Operating segments
For both the year ended 31 December 2024 and the year ended 31 December 2023,
the Group's revenue and profit before taxation were derived largely from its
principal activities within the UK.
For management reporting purposes, the Group is currently organised into five
operating segments:
i. Venture Capital investing within our 'Healthier future'
thematic area
ii. Venture Capital investing within our 'Tech-enriched
future' thematic area
iii. Venture Capital investing within our 'Regenerative
future' thematic area
iv. Venture Capital investing: Other, representing investments
not included within our three thematic areas above, including platform
investments
v. the management of third-party funds and the provision of
corporate finance advice
Reporting line items within Venture Capital investing which are not allocated
by thematic sector are presented in the 'Venture Capital investing: other'
segment. The element of our 'Healthier future' thematic area relating to
Oxford Nanopore Technologies Limited is disclosed separately given its size.
These activities are described in further detail in the strategic report
above.
Year ended 31 December 2024
STATEMENT OF COMPREHENSIVE INCOME Venture capital investing: Healthier future Of which Oxford Nanopore Venture capital investing: Tech-enriched future Venture capital investing: Regenerative future Venture capital investing: Other Venture capital investing: Total Consolidated
£m £m £m £m £m £m Third-party fund £m
management
£m
Portfolio return and revenue
Change in fair value of equity and debt investments (126.0) (65.6) (45.6) (75.1) 0.6 (246.1) - (246.1)
(Loss)/gain on disposal of equity and debt investments 7.5 (0.7) 56.1 - 0.1 63.7 - 63.7
Change in fair value of limited and limited liability partnership interests (12.6) (12.6) - (12.6)
Revenue from services and other income 0.3 0.3 5.2 5.5
(118.5) (66.3) 10.5 (75.1) (11.6) (194.7) 5.2 (189.5)
Administrative expenses(1)
Carried interest plan credit (1) 7.9 7.9 - 7.9
Share-based payment charge(1) (1.6) (1.6) (0.3) (1.9)
Other administrative expenses(1) (19.8) (19.8) (5.5) (25.3)
(13.5) (13.5) (5.8) (19.3)
Operating loss (118.5) (66.3) 10.5 (75.1) (25.1) (208.2) (0.6) (208.8)
Finance income(1) 8.1 8.1 0.7 8.8
Finance costs(1) (6.7) (6.7) - (6.7)
Loss before taxation (118.5) (66.3) 10.5 (75.1) (23.7) (206.8) 0.1 (206.7)
Taxation(1) (0.3) (0.3) - (0.3)
Loss for the year (118.5) (66.3) 10.5 (75.1) (24.0) (207.1) 0.1 (207.0)
STATEMENT OF FINANCIAL POSITION
Assets 463.1 106.6 101.1 215.9 352.0 1,132.1 19.1 1,151.2
Liabilities(1) (191.8) (191.8) (6.9) (198.7)
Net Assets 463.1 106.6 101.1 215.9 160.2 940.3 12.2 952.5
Other segment items
Portfolio Investment (36.3) (1.0) (8.5) (15.7) (2.5) (63.0) - (63.0)
Cash proceeds 30.4 1.6 148.9 - 4.1 183.4 - 183.4
Year ended 31 December 2023
STATEMENT OF COMPREHENSIVE INCOME Venture capital investing: Healthier future Of which Oxford Nanopore Venture capital investing: Tech-enriched future Venture capital investing: Regenerative future Venture capital investing: Other Venture capital investing: Total Consolidated
£m £m £m £m £m £m Third-party fund management £m
£m
Portfolio return and revenue
Change in fair value of equity and debt investments (92.9) (31.9) (7.0) (8.7) (2.3) (110.9) - (110.9)
(Loss)/gain on disposal of equity and debt investments (12.9) - 2.1 - - (10.8) - (10.8)
Change in fair value of limited and limited liability partnership interests (38.8) (38.8) - (38.8)
Revenue from services and other income 1.3 1.3 4.6 5.9
(105.8) (31.9) (4.9) (8.7) (39.8) (159.2) 4.6 (154.6)
Administrative expenses(1)
Carried interest plan credit(1) 4.7 4.7 - 4.7
Share-based payment charge(1) (2.3) (2.3) (0.3) (2.6)
Other administrative expenses(1) (22.6) (22.6) (5.4) (28.0)
(20.2) (20.2) (5.7) (25.9)
Operating loss (105.8) (31.9) (4.9) (8.7) (60.0) (179.4) (1.1) (180.5)
Finance income(1) 9.4 9.4 0.4 9.8
Finance costs(1) (5.6) (5.6) - (5.6)
Loss before taxation (105.8) (31.9) (4.9) (8.7) (56.2) (175.6) (0.7) (176.3)
Taxation(1) 1.9 1.9 - 1.9
Loss for the year (105.8) (31.9) (4.9) (8.7) (54.3) (173.7) (0.7) (174.4)
STATEMENT OF FINANCIAL POSITION
Assets 576.5 173.6 231.4 275.3 310.2 1,393.4 18.2 1,411.6
Liabilities(1) (214.7) (214.7) (6.6) (221.3)
Net Assets 576.5 173.6 231.4 275.3 95.5 1,178.7 11.6 1,190.3
Other segment items
Portfolio Investment (33.9) - (11.9) (17.6) (9.8) (73.2) - (73.2)
Cash proceeds 3.7 - 33.2 0.1 1.6 38.6 - 38.6
(1)These amounts cannot be apportioned to the individual segments of the
venture capital investing business.
6. Auditor's remuneration
Details of the auditor's remuneration are set out below:
2024 2023
£000 £000
Audit of these financial statements (KPMG LLP) 635.9 525.3
Audit of financial statements of funds and subsidiaries of the companies (KPMG 153.5 139.2
LLP)
Audit related assurance services (KPMG LLP) 74.3 72.3
Total assurance services 863.7 736.8
7. Operating loss
Operating loss has been arrived at after charging:
2024 2023
£m £m
Depreciation of right-of-use asset, property, plant and equipment (0.6) (0.6)
Total employee costs (see note 9) (19.0) (19.0)
8. Other administrative expenses
Other administrative expenses comprise:
2024 2023
£m £m
Employee costs (less share-based payment charge) 14.7 16.4
Professional services 3.2 4.2
Depreciation of tangible assets 0.6 0.6
Other expenses 4.1 6.8
22.6 28.0
Restructuring costs - labour 2.4 -
Restructuring costs - professional services 0.3 -
Total 25.3 28.0
9. Employee costs
Accounting Policy:
Employee benefits
Pension obligations
The Group operates a company defined contribution pension scheme for which all
employees are eligible. The assets of the scheme are held separately from
those of the Group in independently administered funds. The Group currently
makes contributions on behalf of employees to this scheme or to employee
personal pension schemes on an individual basis. The Group has no further
payment obligations once the contributions have been paid. The contributions
are recognised as employee benefit expenses when they are due.
Share-based payments
The Group engages in equity-settled share-based payment transactions in
respect of services receivable from employees, by granting employees
conditional awards of ordinary shares subject to certain vesting conditions.
Conditional awards of shares are made pursuant to the Group's Long-Term
Incentive Plan ("LTIP") awards and/or the Group's Annual Incentive Scheme
("AIS"). The fair value of the shares is estimated at the date of grant,
taking into account the terms and conditions of the award, including
market-based performance conditions.
The fair value at the date of grant is recognised as an expense over the
period that the employee provides services, generally the period between the
start of the performance period and the vesting date of the shares. The
corresponding credit is recognised in retained earnings within total equity.
The fair value of services is calculated using the market value on the date of
award and is adjusted for expected and actual levels of vesting. Where
conditional awards of shares lapse, the expense recognised to date is credited
to the statement of comprehensive income in the year in which they lapse.
Where the terms for an equity-settled award are modified, and the modification
increases the total fair value of the share-based payment or is otherwise
beneficial to the employee at the date of modification, the incremental fair
value is amortised over the vesting period.
See the audited section of the Directors' Remuneration Report in the Group's
Annual Report and Accounts and note 21 for further details.
Employee costs (including Executive Directors) comprise:
2024 2023
£m £m
Salaries 10.6 11.3
Defined contribution pension cost 1.1 1.1
Other bonuses accrued in the year 1.8 2.6
Social security 1.2 1.4
Restructuring costs - labour 2.4 -
Employee costs 17.1 16.4
Share-based payment charge (see note 21) 1.9 2.6
Total employee costs 19.0 19.0
The average monthly number of persons (including executive directors) employed
by the Group during the year was 98, all of whom were involved in management
and administration activities (2023: 101). General details of the directors'
remuneration can be found in the audited sections of the Directors'
Remuneration Report in the Group's Annual Report and Accounts.
10. Taxation
Accounting Policy:
Deferred tax
Full provision is made for deferred tax on all temporary differences resulting
from the carrying value of an asset or liability and its tax base. Deferred
tax is determined using tax rates (and laws) that have been enacted or
substantively enacted by the reporting date and are expected to apply when the
related deferred tax asset is realised or deferred tax liability settled.
Deferred tax assets are recognised to the extent that it is probable that the
deferred tax asset will be recovered in the future.
2024 2023
£m £m
Current tax
UK corporation tax on profits for the year - -
Foreign tax - -
- -
Deferred tax charge/(credit) 0.3 (1.9)
Total tax 0.3 (1.9)
The Group primarily seeks to generate capital gains from its holdings in
spin-out companies over the longer term. The majority of these capital gains
qualify for UK Substantial Shareholding Exemption ("SSE") and are therefore
not taxable, resulting in the Group making annual net operating losses from
its operations from a UK tax perspective.
Gains arising on sales of holdings which do not qualify for SSE will
ordinarily give rise to taxable profits for the Group, to the extent that
these exceed the Group's ability to offset gains against current and brought
forward tax losses (subject to the relevant restrictions on the use of
brought-forward losses). In such cases, a deferred tax liability is recognised
in respect of estimated tax amount payable.
The amount for the year can be reconciled to the loss per the statement of
comprehensive income as follows:
2024 2023
£m £m
Loss before tax (206.7) (176.3)
Tax at the UK corporation tax rate of 25% (2023: 23.52%) (51.7) (41.5)
Expenses not deductible for tax purposes (1.8) (1.1)
Income not taxable (15.9) 2.5
Fair value movement on investments qualifying for SSE 65.8 40.9
Movement on share-based payments 0.3 0.6
Movement in tax losses arising not recognised 3.6 0.1
CIR (Corporate Interest Rate) reactivation - (3.1)
Foreign tax - 0.1
Rate change on deferred tax - (0.4)
Total tax charge/(credit) 0.3 (1.9)
At 31 December 2024, deductible temporary differences and unused tax losses,
for which no deferred tax asset has been recognised, totalled £333.0m (2023:
£298.3m). An analysis is shown below:
2024 2023
Amount Deferred Amount Deferred
£m tax £m tax
£m £m
Share-based payment costs and other temporary differences (52.4) (13.1) (48.1) (12.0)
Unused tax losses (279.6) (69.9) (250.2) (62.6)
Total unrecognised deferred tax asset (333.0) (83.0) (298.3) (74.6)
At 31 December 2024, deductible temporary differences and unused tax losses,
for which a deferred tax liability has been recognised, totalled £18.0m
(2023: £18.9m). An analysis is shown below:
2024 2023
Amount Deferred Amount Deferred
£m tax £m tax
£m £m
Temporary timing differences 39.6 9.9 54.1 13.5
Unused tax losses (21.6) (5.4) (35.2) (8.7)
Total recognised deferred tax liability 18.0 4.5 18.9 4.8
11. Earnings per share
Earnings 2024 2023
£m £m
Earnings for the purposes of basic and dilutive earnings per share (202.6) (171.3)
Number of shares 2024 2023
Number of shares Number of shares
Weighted average number of ordinary shares for the purposes of basic earnings 1,014,672,586 1,036,400,406
per share
Effect of dilutive potential ordinary shares:
Options or contingently issuable shares - -
Weighted average number of ordinary shares for the purposes of diluted 1,014,672,586 1,036,400,406
earnings per share
2024 2023
pence pence
Basic (19.97) (16.53)
Diluted (19.97) (16.53)
No adjustment has been made to the basic loss per share in the years ended 31
December 2024 and 31 December 2023, as the exercise of share options would
have the effect of reducing the loss per ordinary share and therefore is not
dilutive.
Potentially dilutive ordinary shares include contingently issuable shares
arising under the Group's LTIP arrangements, and options issued as part of the
Group's Sharesave schemes and Deferred Bonus Share Plan (for annual bonuses
deferred under the terms of the Group's Annual Incentive Scheme).
12. Categorisation of financial instruments
Accounting policy:
Financial assets and liabilities
Financial assets and liabilities are recognised in the balance sheet when the
relevant Group entity becomes a party to the contractual provisions of the
instrument. De-recognition occurs when rights to cash flows from a financial
asset expire, or when a liability is extinguished.
Derivative financial instruments are accounted for at fair value through
profit and loss in accordance with IFRS 9. They are revalued at the balance
sheet date based on market prices, with any change in fair value being
recorded in profit and loss. Derivatives are recognised in the Consolidated
statement of financial position as a financial asset when their fair value is
positive and as a financial liability whey their fair value is negative. The
Group's derivative financial instruments are not designated as hedging
instruments.
Financial assets
In respect of regular way purchases or sales, the Group uses trade date
accounting to recognise or derecognise financial assets.
The Group classifies its financial assets into one of the categories listed
below, depending on the purpose for which the asset was acquired.
At fair value through profit or loss
Held for trading and financial assets are recognised at fair value through
profit and loss. This category includes equity investments, debt investments
and investments in limited partnerships. Investments in associated
undertakings, which are held by the Group with a view to the ultimate
realisation of capital gains, are also categorised as at fair value through
profit or loss. This measurement basis is consistent with the fact that the
Group's performance in respect of investments in equity investments, limited
partnerships and associated undertakings is evaluated on a fair value basis in
accordance with an established investment strategy.
Financial assets at fair value through profit or loss 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 which they arise.
At amortised cost
These assets are non-derivative financial assets with fixed and determinable
payments that are not quoted in an active market. They arise principally
through the provision of services to customers (trade receivables) and are
carried at cost less provision for impairment.
Deposits
Deposits comprise longer-term deposits held with financial institutions with
an original maturity of greater than three months and, in line with IAS 7 are
not included within cash and cash equivalents. Cash flows related to
investments in, and maturities of amounts held on deposit are presented within
investing activities in the consolidated statement of cash flows. Interest
income related to deposits is included within cashflows from operating
activities.
Cash and cash equivalents
Cash and cash equivalents include cash in hand and short-term deposits held
with financial institutions with an original maturity of three months or less.
Interest income related to cash is included within cashflows from operating
activities.
Financial liabilities
Current financial liabilities are composed of trade payables and other
short-term monetary liabilities, which are recognised at amortised cost.
Non-current liabilities are composed of loans from Limited Partners of
consolidated funds, outstanding amounts drawn down from a debt facility
provided by the European Investment Bank, loan notes provided by Phoenix
Group, carried interest plans liabilities, and other liabilities.
Unless otherwise indicated, the carrying amounts of the Group's financial
liabilities are a reasonable approximation to their fair value. Non-current
liabilities are recognised initially at fair value net of transaction costs
incurred, and subsequently at amortised cost.
Financial assets At fair value through profit or loss Amortised cost Total
£m £m £m
Equity investments 713.8 - 713.8
Debt investments 51.6 - 51.6
Limited and limited liability partnership interests 58.1 - 58.1
Assets held for sale 13.9 - 13.9
Trade and other receivables - 6.3 6.3
Receivables on sale of debt and equity investments 20.1 - 20.1
Deposits - 170.0 170.0
Cash and cash equivalents - 115.6 115.6
At 31 December 2024 857.5 291.9 1,149.40
Equity investments 1,011.5 - 1,011.5
Debt investments 83.7 - 83.7
Limited and limited liability partnership interests 69.7 - 69.7
Trade and other receivables - 8.2 8.2
Receivables on sale of debt and equity investments 9.2 - 9.2
Deposits - 126.0 126.0
Cash and cash equivalents - 100.9 100.9
At 31 December 2023 1,174.1 235.1 1,409.2
In light of the credit ratings applicable to the Group's cash and cash
equivalent and deposits, (see note 3 for further details), we estimate
expected credit losses on the Group's receivables to be under £0.1m and
therefore not disclosed further (2023: less than £0.1m), similarly we have
not presented an analysis of credit ratings of trade and other receivable and
receivables on sale of debt and equity investments.
All net fair value gains in the year are attributable to financial assets
designated at fair value through profit or loss on initial recognition (2023:
all net fair value gains in the year are attributable to financial assets
designated at fair value through profit or loss on initial recognition).
Interest income of £nil (2023: £nil) is attributable to financial assets
classified as fair value through profit and loss.
13. Portfolio: Equity and debt investments and Assets Held for Sale
Accounting policy:
Fair value hierarchy
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 1 - Quoted prices in active markets.
Level 2 - Inputs other than quoted prices that are observable, such as prices
from market transactions.
Level 3 - One or more inputs that are not based on observable market data.
Equity investments
Fair value is the underlying principle and is defined as "the price that would
be received to sell an asset in an orderly transaction between market
participants at the measurement date" (IPEV guidelines, December 2022).
Where the equity structure of a portfolio company involves different class
rights in a sale or liquidity event, the Group takes these different rights
into account when forming a view on the value of its investment.
Valuation techniques used
The fair value of unlisted securities is established using appropriate
valuation techniques in line with December 2023 IPEV guidelines. The selection
of appropriate valuation techniques is considered on an individual basis in
light of the nature, facts and circumstances of the investment and in the
expected view of market participants. The Group selects valuation techniques
which make maximum use of market-based inputs. Techniques are applied
consistently from period to period, except where a change would result in
better estimates of fair value. Several valuation techniques may be used so
that the results of one technique may be used as a cross check/corroboration
of an alternative technique.
Valuation techniques used include:
· Quoted bid price: The fair values of quoted investments
are based on bid prices in an active market at the reporting date.
· Funding transaction: The fair value of unquoted
investments which have recently raised equity financing may be calculated with
reference to the price of the recent investment. For investments for which the
capital structure involves different class rights in a sale or liquidity
event, a full scenario analysis via the use of the probability-weighted
expected return method ("PWERM") is used to calculate the implied values of
the existing share classes.
· Other: Future market/commercial events: Scenario
analysis is used, which is a forward-looking method that considers one or more
possible future scenarios. These methods include simplified scenario analysis
and relative value scenario analysis, which tie to the fully diluted
("post-money") equity value. The PWERM method may be utilised for this
valuation technique for investments which have an equity structure which
involves different class rights in a sale or liquidity event.
· Other: Adjusted funding transaction price based on past
performance - upwards/downwards: The milestone approach involves making an
assessment as to whether there is an indication of change in fair value based
on a consideration of the relevant milestones, typically agreed at the time of
making the investment decision.
· Other: Discounted cash flows: deriving the value of a
business by calculating the present value of expected future cash flows.
· Other: Revenue multiple: the application of an
appropriate multiple to a performance measure (such as earnings or revenue) of
the investee company in order to derive a value for the business.
The fair value indicated by a recent transaction is used to calibrate inputs
used with valuation techniques including those noted above. At each
measurement date, an assessment is made as to whether changes or events
subsequent to the relevant transaction would imply a change in the
investment's fair value. The price of a recent investment is not considered a
standalone valuation technique (see further considerations below). Where the
current fair value of an investment is unchanged from the price of a funding
transaction, the Group refers to the valuation basis as 'Funding transaction'.
Price of recent investment as an input in assessing fair value
The Group considers that fair value estimates which are based primarily on
observable market data will be of greater reliability than those based on
assumptions. Given the nature of the Group's investments in seed, start-up and
early-stage companies, where there are often no current and no short-term
future earnings or positive cash flows, it can be difficult to gauge the
probability and financial impact of the success or failure of development or
research activities and to make reliable cash flow forecasts. Consequently, in
many cases the most appropriate approach to fair value is a valuation
technique which is based on market data such as the price of a recent
investment, and market participant assumptions as to potential outcomes.
Calibrating such scenarios or milestones may result in a fair value equal to
price of recent investment for a limited period of time. Often qualitative
milestones provide a directional indication of the movement of fair value.
In applying a calibrated scenario or milestone-approach to determine fair
value, consideration is given to performance against milestones that were set
at the time of the original investment decision, as well as taking into
consideration the key market drivers of the investee company and the overall
economic environment. Factors that the Group considers include, inter alia,
technical measures such as product development phases and patent approvals,
financial measures such as cash burn rate and profitability expectations, and
market and sales measures such as testing phases, product launches and market
introduction.
Where the Group considers that there is an indication that the fair value has
changed, an estimation is made of the required amount of any adjustment from
the last price of recent investment.
Where a deterioration in value has occurred, the Group reduces the carrying
value of the investment to reflect the estimated decrease. If there is
evidence of value creation the Group may consider increasing the carrying
value of the investment; however, in the absence of additional financing
rounds or profit generation it can be difficult to determine the value that a
market participant may place on positive developments given the potential
outcome and the costs and risks to achieving that outcome and accordingly
caution is applied.
Debt investments
Debt investments are generally unquoted debt instruments which are convertible
to equity at a future point in time. Such instruments are considered to be
hybrid instruments containing a fixed rate debt host contract with an embedded
equity derivative. The Group designates the entire hybrid contract at fair
value through profit or loss on initial recognition and, accordingly, the
embedded derivative is not separated from the host contract and accounted for
separately. The price at which the debt investment was made may be a reliable
indicator of fair value at that date depending on facts and circumstances. Any
subsequent remeasurement will be recognised as changes in fair value in the
statement of comprehensive income.
Disclosure of unrealised and realised gains and losses
'Change in fair value of equity and debt investments' per the Group Income
Statement represents unrealised revaluation gains and losses on the Group's
portfolio of investment.
Gains on disposal of equity investments represents the difference between the
fair value of consideration received and the carrying value at the start of
the accounting period for the investment in question.
Changes in fair values of investments do not constitute revenue.
Assets held for sale
During 2024, an element of the Group's investments in Artios Pharma Limited,
Nexeon Limited and Mission Therapeutics Limited were included in a secondary
sale of shares which was agreed within the year but which had not completed at
year end. In addition, the Group had commenced selling a pre-specified
proportion of its shares in Centessa Pharmaceuticals plc prior to year end,
with the share disposal completing in early 2025. Accordingly these
investments met the classification criteria as assets held for sale and were
hence reclassified from Equity Investments to assets held for sale.
Equity and Debt Investments within the Top 10 by holding value
The following table lists information on the debt and equity investments
within the most valuable 10 portfolio company investments, representing 58% of
the total portfolio value (2023: 61%). Detail on the performance of these
companies is included in the portfolio review section of the Strategic Report.
The Group engages third-party valuation specialists to provide valuation
support where required; during the period we commissioned third-party
valuations on four out of the top 10 holdings (2023: 6).
Company name Primary valuation basis Fair value of Group holding at Fair value of Group holding at
31 Dec 2024 31 Dec 2023
£m £m
Oxford Nanopore Technologies plc Quoted bid price 106.6 173.6
Istesso Limited * DCF 91.9 113.8
Hysata Pty Ltd Funding transaction < 12 months, PWERM 76.8 70.0
Oxa Autonomy Limited * Adjusted funding - downwards 42.7 65.7
Hinge Health, Inc.* Adjusted funding - downwards 36.6 34.0
First Light Fusion Limited * Future event 25.0 64.9
Pulmocide Limited Adjusted funding - upwards 23.1 19.2
Mission Therapeutics Limited Funding transaction < 12 months, PWERM 22.5 15.8
Nexeon Limited Future event 19.4 11.8
Artios Pharma Limited Adjusted funding - downwards 17.4 17.4
Total 462.0 586.2
* Third-party valuation specialists used for 31 December 2024 valuation. In
these instances, the valuation basis is management's assessment of the primary
valuation input used by the third-party valuation specialist.
Level 1 Level 3
Equity investments in quoted spin-out companies Unquoted equity investments in spin-out companies Debt investments in unquoted spin-out companies Total
£m £m £m £m
At 1 January 2023 228.7 892.1 38.1 1,158.9
Investments - 32.8 30.6 63.4
Transaction-based reclassifications - 7.8 (7.8) -
Other transfers between hierarchy levels 1.8 (1.8) - -
Disposals (1.6) (7.6) (0.3) (9.5)
Fees settled via equity - 0.1 - 0.1
Other change in portfolio value - (6.8) - (6.8)
Change in fair value(1) (24.5) (103.7) 23.5 (104.7)
Change in FX(1) (0.6) (5.2) (0.4) (6.2)
At 1 January 2024 203.8 807.7 83.7 1,095.2
Investments 1.5 40.9 18.4 60.8
Transaction-based reclassifications 0.3 49.5 (49.8) -
Other transfers between hierarchy levels - - - -
Disposals (11.8) (116.6) (1.0) (129.4)
Reclassification to Assets Held for Sale (7.1) (6.8) - (13.9)
Other change in portfolio value - (1.1) (0.1) (1.2)
Change in fair value(1) (53.7) (187.4) 1.7 (239.4)
Change in FX(1) 0.1 (5.5) (1.3) (6.7)
At 31 December 2024 133.1 580.7 51.6 765.4
(1) The total unrealised change in fair value and FX in respect of Level 3
investments was a loss of £192.5m (2023: loss of £85.8m).
Unquoted equity and debt investment are measured in accordance with IPEV
guidelines with reference to the most appropriate information available at the
time of measurement. Where relevant, several valuation approaches are used in
arriving at an estimate of fair value for an individual asset.
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 re-assessing 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 levels are then made as if the
transfer took place on the first day of the period in question, except in the
cases of transfers between tiers based on an initial public offering ("IPO")
of an investment wherein the changes in value prior to the IPO are calculated
and reported in level 3, and those changes post are attributed to level 1.
Transfers between level 3 and level 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, transfers of this
nature amounted to £nil (2023: £1.8m). Transfers between level 1 and level 3
would occur when a quoted investment's market becomes inactive, or the
portfolio company elects to delist. There have been no instances in the
current year, totalling £nil (2023: one instance, totalling £nil).
Transfers between level 3 debt and level 3 equity occur upon conversion of
convertible debt into equity. In the current year, transfers of this nature
amounted to £49.8m (2023: £7.8m).
In the year, a transfer between level 3 debt and level 1 equity of £0.3m
(2023: nil) occurred when a convertible loan issued to a listed company
(Abliva AB) was converted into listed equity.
The Group has considered the impact of ESG and climate change issues on its
portfolio, including performing a materiality assessment (see summary TCFD
disclosures in the Group's Annual Report and Accounts) which suggested the
Group's portfolio has a relatively low level of climate change risk, and clear
areas of opportunity via the Group's Cleantech investments. For an overview of
the portfolio split by sector, please refer to the Managing Partner's
Portfolio Review. We believe the Group's current valuation approach, reflects
market participant assessment of the ESG and climate risks and opportunities
of our portfolio.
Valuation inputs and sensitivities
Unobservable inputs are typically portfolio company-specific and, based on a
materiality assessment, are not considered significant either at an individual
company level or in aggregate where relevant for common factors such as
discount rates.
The sensitivity analysis table below has been prepared in recognition of the
fact that some of the valuation methodologies applied by the Group in valuing
the portfolio investments involve subjectivity in their significant
unobservable inputs. Furthermore, given that many of the Group's portfolio are
the early stage or growth stage of development, their valuations can be
significantly impacted by factors including, but not limited to, the
availability of financing, technical and commercial setbacks, market
developments and regulatory approvals.
The table illustrates the possible impact on valuation of different
sensitivities. The varying levels of sensitivity applied in the table below
are intended to reflect the relative level of judgment in applying the
valuation approach. Additional analysis for Istesso Limited and Hinge Health,
Inc is provided after the table below, which merit specific focus in light of
the specific facts and circumstances of these investments.
Valuation technique Fair value of investments Variable inputs Variable input sensitivity Positive impact Negative impact Fair value of investments
2024 % £m % of NAV £m % of NAV 2023
£m £m
Quoted 133.1 n/a n/a n/a n/a n/a n/a 203.8
Funding transaction <12 months 217.8 · Inputs used in PWERM models to quantify the impact of funding +/-5 10.9 1.1 (10.9) (1.1) 187.9
transactions on subordinate securities including exit values and timelines.
Funding transaction >12 months 54.9 +/-5 2.7 0.3 (2.7) (0.3) 162.7
Other: Future market/commercial events 60.7 · Estimated impact of future event +/-10 6.1 0.6 (6.1) (0.6) 25.0
· Execution risk discount applied to future event (where positive)
· Scenario probabilities
· Discount rates
· Extent to which future event is indicative of facts and
circumstances in existence at the balance sheet date
Other: Adjusted financing price based on past performance - Upwards* 35.9 · Company-specific milestone analysis resulting in a positive +/-10 3.6 0.4 (3.6) (0.4) 99.9
calibration adjustment versus the previous funding transaction price
Other: Adjusted financing price based on past performance - Downwards* 152.7 · Company-specific milestone analysis resulting in a negative +/-10 15.3 1.6 (15.3) (1.6) 203.9
calibration adjustment versus the previous funding transaction price
Other: Revenue multiple* 13.1 · Estimate of future recurring revenues +/-10 1.3 0.1 (1.3) (0.1) 85.4
· Selection of comparable companies
· Discount/premium to multiple
Other: DCF* 97.2 · Discount rate +/-20 19.4 2.0 (19.4) (2.0) 126.6
· Clinical trial and drug approval success rates
· Estimate of likelihood, value and structure of a potential
pharmaceutical partnership
· Estimate of addressable market
· Market share and royalty rates
· Probability estimation of liquidity event
· Estimate of forward exchange rates
Total 765.4 59.3 6.1 (59.3) (6.1) 1,095.2
* Due to the large number of inputs used in the valuation of these assets,
unobservable inputs are below a size threshold that would warrant disclosure
under IFRS 13, paragraph 93(d). Due to the large number of inputs, any range
of reasonably possible alternative assumptions does not significantly impact
the fair value and hence no valuation sensitivity is required under IFRS 13
paragraph 93(h)(ii).
Within the 'Other: DCF' category is Istesso Limited, in which we value the
equity of IP Group's holding at £55.0m at 31 December 2024 (2023: £86.7m).
The Group was notified of the outcome of Istesso's Phase 2b trial for
Leramistat in February 2025, reflecting information which Istesso Limited had
received prior to 31 December 2024. As a result, the outcome of the trial was
judged by management to be an adjusting post balance sheet event, reflecting
facts and circumstances which were knowable at 31 December 2024.
The valuation of the equity in this company is based on a DCF model which
assesses the value of the future cash flows arising from the continued
development of the company's lead asset Leramistat via an additional focussed
Phase 2b trial, followed by a pharmaceutical partnership, after which the drug
would be taken into a Phase 3 trial followed by regulatory approval. This DCF
model has been updated to reflect the outcome of Istesso's Phase 2b trial,
with the main impact being a delay in market launch of the drug by 3½ years.
The inputs in the DCF model include:
· the drug development timeline, based on the current development
pathway which would see the drug being approved in mid-2031 if successful
· probability of Ph2b and Ph3 clinical trial success, based on
comparable clinical trial success rates within autoimmune indications in Ph2
and Ph2 trials, with an estimate of the overall Ph2 rate split between Ph2a
(now complete) and Ph2b
· the selection of relevant comparable deal sizes, based on
comparable publicly announced deals within the autoimmune space
· the probability of securing a pharmaceutical partner post Ph2b
· Leramistat's sales profile based on a bottom up model which
estimates the number of patients failing 1(st) line biological drug treatment,
with the assumption that Leramistat would address this available patient
population
· royalty rates receivable by Istesso of drug sales, based on
comparable publicly announced deals within the autoimmune space
· discount rate, based on the WACC of a large pharma partner which
would take on development of the drug for Phase 3 and onwards
· The remaining costs to develop Leramistat up until the point of
drug partnership
The valuation is sensitive to the inputs noted above. It is in the Group's
view that the valuation would be impacted by a combination of changes to these
inputs but to provide context to the sensitivity of each input to the
valuation as required IAS 1, the table below sets out the impact on valuation
of changing critical inputs in isolation.
Input Assumption used Sensitivity Impact on IPG equity holding £m Impact % of NAV(1)
Phase 2b success rate 63% +/- 10% £12m +/- 1.2%
Selected pharma partner deal size Bottom quartile Median £60m +6.2%
Pharma partnership probability 90% +/- 10% £7m +/- 0.7%
Royalty rate 15% +/- 5% £14m +/- 1.4%
(1) Being impact on IPG equity holding as a proportion of the Group's Net
Asset Value
Under the DCF methodology, in the event that the drug fails to progress to the
market as a result of trial failures (at either Phase 2b or Phase 3), failure
to receive regulatory approval or failure to partner with a pharmaceutical
partner, the model assumes a zero value outcome.
The modelling approach focuses on a core drug development scenario as outlined
above, however other outcomes such as the requirement to conduct more than one
additional Phase 2b study are possible. In this outcome, the value of the
programme would be materially lower than the concluded fair value estimate.
A valuation range was not calculated in respect of the Group's debt investment
in Istesso Limited, which totals £36.9m (2023: £27.0m). In the event of a
negative outcome in terms of the drug development pathway, this would be
anticipated to have a material negative impact on the value of the Group's
debt investment.
Within the 'Other: Adjusted financing price based on past performance -
Downwards' category is Hinge Health, Inc, whose equity value is £36.6m at 31
December 2024 (2023: £34.0m). The valuation of this company is based on the
last financing round price, with a downwards calibration adjustment applied.
Our estimated range for the value of the Group's equity investment in Hinge
Health, Inc. as at 31 December 2024 is £30m to £38m (2023: £36m to £50m).
In March 2025, the company filed a registration statement with the US SEC for
an intended NYSE IPO; as at the publication date of the accounts the outcome
and pricing range of the IPO is uncertain, but could result in a material post
year end movement in the Group's valuation.
Change in fair value in the year (including fx) 2024 2023
£m £m
Fair value gains 42.7 97.4
Fair value losses (288.8) (208.3)
Total (246.1) (110.9)
The Company's interests in subsidiary undertakings are listed in note 11 to
the Company's financial statements.
Currency risk
Exposure to currency risk through asset allocation, which is calculated by
reference to the currency in which the asset is quoted, is shown below. A
+/-1% sensitivity has been included to demonstrate the effect of fluctuations
in foreign exchange rates. 1% is considered to be appropriate due to the
stable currencies in which we hold cash.
At 31 December 2024
Investments £m Sensitivity +/- 1% £m
US dollar 96.8 1.0
Australian dollar 94.0 0.9
Euro 12.9 0.1
Swedish Krona 5.7 0.1
Total 209.4 2.1
At 31 December 2023
Investments £m Sensitivity +/- 1% £m
US dollar 85.5 0.8
Australian dollar 99.9 1.0
Euro 6.7 0.1
Swedish Krona 1.6 -
Total 193.7 1.9
14. Portfolio: Limited and limited liability partnership interests
Accounting Policy:
Valuations in respect of Limited and Limited Liability Funds are based on IP
Group's share of the Net Asset Value of the fund as per the audited financial
statements prepared by the fund manager. The key judgments in the preparation
of these accounts relate to the valuation of unquoted investments.
Management conduct an analysis of the appropriateness of valuations of
specific equity and debt investments in portfolio companies held within the
fund in question. In making these assessments, the Group has applied a
valuation methodology consistent with that set out in note 13. Where a
significant divergence from the Group's valuation methodology is identified,
an adjustment is made to the fund manager NAV statement to bring the value of
the fund investment in line with the Group's accounting policy in respect of
debt and equity investments.
Investments in these Limited and Limited Liability Partnerships are recognised
at fair value through profit and loss in accordance with IFRS 9.
'Changes in fair value of Limited Partnership investments' per the Group
Income Statement represents revaluation gains and losses on the Group's
investment in Limited Partnership funds.
Fund interests are valued on a net asset basis, estimated based on the
managers' NAVs. Manager's NAVs apply valuation techniques consistent with IFRS
and are subject to audit. Where audited accounts are received in arrears of
the publication of the Group's results hence these are marked as unaudited in
the table below, however a retrospective review of audited accounts versus
earlier unaudited results is carried out. Managers' NAVs are usually published
quarterly, two to four months after the quarter end. The below table analyses
the fund valuations with reference to manager NAV dates used at 31 December.
Limited & Limited Liability Partnerships Functional currency Status 2024 2023
£m £m
IPG Cayman Fund L.P. (Longview Innovation) USD Unaudited 37.7 46.0
UCL Technology Fund L.P. GBP Unaudited 18.0 20.7
Technikos LLP GBP Unaudited 2.4 3.0
Total 58.1 69.7
We reviewed the underlying valuation methodologies adopted by our Fund
managers for all Fund investments of material value. Following our review of
valuation methodologies we were satisfied that the techniques utilised were
appropriate.
Limited & Limited Liability Partnerships movements in year £m
At 1 January 2023 99.6
Investments during the year 9.8
Distribution from Limited Partnership funds (0.9)
Change in fair value during the year (36.5)
Currency revaluation (2.3)
At 1 January 2024 69.7
Investments during the year 2.2
Distribution from Limited Partnership funds (1.2)
Change in fair value during the year (13.1)
Currency revaluation 0.5
At 31 December 2024 58.1
The Group considers interests in limited and limited liability partnerships to
be level 3 in the fair value hierarchy throughout the current and previous
financial years.
The valuation of the Group's interests in limited and limited liability
partnerships is a significant accounting estimate, as management has applied
judgment in considering whether to adjust the NAV estimates provided by the
fund manager. This assessment was based on an analysis of the appropriateness
of valuations of specific equity and debt investments in portfolio companies
held within the fund in question. In making these assessments, the Group has
applied a valuation methodology consistent with that set out in note 13.
Unobservable inputs are portfolio company-specific and, based on a materiality
assessment, are not considered individually significant either at an
individual company level or in aggregate where relevant for common factors
such as discount rates.
15. Gain/(loss) on disposal of equity and debt investments
2024 2023
£m £m
Proceeds from sale of equity and debt investments 182.2 37.7
Movement in amounts receivable on sale of debt and equity investments 10.9 (39.0)
Carrying value of investments (129.4) (9.5)
Gain/(loss) on disposal 63.7 (10.8)
Gain/(loss) on disposal of investments is calculated as disposal proceeds plus
deferred and contingent consideration receivable in respect of the sale, less
the carrying value of the investment at the point of disposal.
The subsequent receipt of deferred and contingent consideration amounts is
reflected in the above table as a positive amount of disposal proceeds and a
negative movement in amounts receivable on sale of debt and equity
investments, resulting in no overall movement in profit on disposal.
16. Trade and other receivables
Current assets 2024 2023
£m £m
Trade debtors 0.7 0.6
Prepayments 0.8 0.8
Interest receivable 1.3 2.9
Other receivables 3.5 3.9
Trade and other receivables 6.3 8.2
The directors consider the carrying amount of trade and other receivables at
amortised cost to approximate their fair value. All receivables are interest
free, repayable on demand and unsecured.
17. Receivable on sale of debt and equity investments
Accounting Policy:
Consideration in respect of the sale of debt and equity investments may
include elements of deferred consideration where payment is received at a
pre-agreed future date, and/or elements of contingent consideration where
payment is received based on, for example, achievement of specific drug
development milestones. In such instances, these amounts are designated at
fair value through profit and loss on initial recognition. Any subsequent
remeasurement will be recognised as changes in fair value in the statement of
comprehensive income.
2024 2023
£m £m
Deferred and contingent consideration (non-current) 18.5 7.8
Deferred and contingent consideration (current) 1.6 1.4
Total deferred and contingent consideration 20.1 9.2
The following table summarises the primary valuation basis used to value the
deferred and contingent consideration:
Investment Primary Valuation Basis 2024 2023
£m £m
Featurespace Discounted sale amount 11.1 -
Oxular Discounted sale amount 1.6 -
Kynos Discounted sale amount 0.5 -
Garrison Discounted sale amount 0.7 -
Enterprise Therapeutics Holdings Limited Probability-weighted DCF model reflecting potential milestone payments 4.4 7.7
Zihipp Limited Probability-weighted DCF model reflecting potential milestone payments 1.8 1.5
Total 20.1 9.2
18. Trade and other payables
Current liabilities 2024 2023
£m £m
Trade payables 0.3 0.5
Social security expenses 0.6 0.6
Bonus accrual 2.7 3.0
Lease liability 1.0 1.4
Payable to Imperial College and other third parties under revenue share 3.4 6.9
obligations
Other accruals and deferred income 4.5 4.7
Trade and other payables 12.5 17.1
19. Borrowings and Loans from Limited Partners of consolidated funds
Current liabilities 2024 2023
£m £m
Borrowings 6.3 6.3
Total 6.3 6.3
Non-current liabilities 2024 2023
£m £m
Loans drawn down from the Limited Partners of consolidated funds 19.9 19.8
Borrowings 122.8 128.9
Total 142.7 148.7
Loans drawn down from the Limited Partners of consolidated funds
Accounting Policy:
The Group consolidates the assets of a co-investment fund, IP Venture Fund II
LP, which it manages. Loans from third parties of consolidated funds represent
third-party LP loans into this partnership. Under the terms of the Limited
Partnership Agreement, these loans are repayable only upon these funds
generating sufficient realisations to repay the Limited Partners. Management
anticipates that the funds will generate the required returns and consequently
recognises the full associated liabilities.
The classification of these loans as non-current reflects the forecast timing
of returns and subsequent repayment of loans, which is not anticipated to
occur within one year.
As at 31 December, loans from Limited Partners of consolidated funds comprised
loans into IP Venture Fund II LP £19.9m (2023: £19.8m).
Borrowings
Accounting Policy:
Borrowings are recognised initially at fair value, net of transaction costs
incurred. Borrowings are subsequently carried at amortised cost; any
difference between the proceeds (net of transaction costs) and the redemption
value is recognised in the consolidated statement of comprehensive income over
the period of the borrowing using the effective interest rate method. Costs
incurred in the course of issuing additional debt are recognised on the
balance sheet and charged to the income statement on a straight line basis
over the term of the borrowings.
In 2023, the Group drew a second £60m tranche of the £120m private placing
it agreed with investors including Phoenix Group in 2022. The terms of the
facilities are summarised below:
Description Initial amount Outstanding amount Date drawn Interest rate Repayment commencement date & terms
EIB Facility £50.0m £9.4m Feb 2017 Fixed 3.026% Repayable over 8 years from Jul 2018
IP Group Series A Notes £20.0m £20.0m Dec 2022 Fixed 5.230% Repayable in full in Dec 2027
IP Group Series B Notes £20.0m £20.0m Dec 2022 Fixed 5.210% Repayable in full in Dec 2028
IP Group Series C Notes £20.0m £20.0m Dec 2022 Fixed 5.300% Repayable in full in Dec 2029
IP Group Series D Notes £20.0m £20.0m Jun 2023 Fixed 5.230% Repayable in full in Dec 2027
IP Group Series E Notes £20.0m £20.0m Jun 2023 Fixed 5.210% Repayable in full in Dec 2028
IP Group Series F Notes £20.0m £20.0m Jun 2023 Fixed 5.300% Repayable in full in Dec 2029
Total £170.0m £129.4m
Loans totalling £129.4m (2023: £135.6m) are subject to fixed interest rates
and are recognised at amortised cost. The fair value of these loans as at 31
December 2024 is £118.7m (2023: £125.3m).
In December 2022, the Group drew down the first Tranche of £60m of a £120m
loan Note Purchase Agreement ("NPA") and a further £60m in June 2023. The NPA
contains the following covenants:
•Total equity must be at least £500m as at the Group's 30 June and 31
December reporting dates
•Gross debt less restricted cash must not exceed 25% of total equity as at
the Group's 30 June and 31 December reporting dates
•The Group must maintain cash and cash equivalents of not less than £25m at
any time
Breach of any of the above covenants constitutes default under the NPA.
The NPA also includes a 'Cash Trap' mechanism, which is triggered based on
conditions listed below. In the event of the Cash Trap being triggered, the
Group is not permitted to pay or declare a dividend or purchase any of its
shares. In addition, investments are restricted to £2.5m per calendar quarter
other than those legally committed to. The Group is also required to place the
net proceeds of all realisations (over a threshold of £1m) into a blocked
bank account. Entering a Cash Trap does not constitute a default under the
NPA.
A Cash Trap period is entered if any of the following conditions are breached.
· Total equity must be at least £750m as at the Group's 30 June
and 31 December reporting dates
· Gross debt less restricted cash must not exceed 20% of total
equity as at the Group's 30 June and 31 December reporting dates
· The Group must maintain cash and cash equivalents of not less
than £50m at any time.
A cash trap period can be remedied by:
· Transferring sufficient cash into the restricted cash account so
that gross debt less restricted cash is less than 20% of total equity
· If because of low equity of high leverage, once these are
restored at a subsequent 30 June or 31 December measurement date
· If because of low liquidity, once two month-ends have passed with
liquidity > £50m
The EIB loan contains a debt covenant requiring that the ratio of the total
fair value of IP Group investments plus cash and qualifying liquidity to debt
should at no time fall below 6:1. The Group must maintain an amount of
unencumbered funds freely available to the Group set with reference to the
outstanding EIB facility which was £9.4m at December 2024 (2023: £15.6m).
The loan also stipulates that on any date, the aggregate of all amounts
scheduled for payment to the EIB in the following six months should be kept in
a separate bank account, which totalled £3.2m on 31 December 2024 (2023:
£3.3m) The Group is required to maintain a minimum cash balance of £5.6m
(2023: £9.4m).
The Group closely monitors that the covenants are adhered to on an ongoing
basis and has complied with these covenants throughout the year. The Group
will continue to monitor the covenants' position against forecasts and budgets
to ensure that it operates within the prescribed limits.
The NPA includes fixed and floating charges over the Company's assets, details
of which are available on Companies House. The EIB loan includes certain
guarantees over assets held by Touchstone Innovations Business LLP.
The maturity profile of the borrowings including undiscounted cash flows and
fixed interest is as follows:
2024 2023
£m £m
Due within 6 months 6.2 6.4
Due 6 to 12 months 6.3 6.4
Due 1 to 5 years 141.8 112.4
Due after 5 years - 42.1
Total(1) 154.3 167.3
The maturity profile of the borrowings was as follows:
2024 2023
£m £m
Due within 6 months 3.1 3.1
Due 6 to 12 months 3.1 3.1
Due 1 to 5 years 123.2 89.4
Due after 5 years - 40.0
Total(1) 129.4 135.6
(1)These are gross amounts repayable and exclude amortised costs of £0.4m
(2023: £0.4m) incurred on obtaining the Phoenix loans, these are amortised on
a straight-line basis over the life of the borrowings.
A reconciliation in the movement in borrowings is as follows:
2024 2023
£m £m
At 1 January 135.2 81.4
Repayment of debt (6.1) (6.2)
New borrowings - 60.0
At 31 December 129.1 135.2
There were no non-cash movements in debt.
20. Share capital
Accounting Policy:
Financial instruments issued by the Group are treated as equity if the holders
have only a residual interest in the Group's assets after deducting all
liabilities. The objective of the Group is to manage capital so as to provide
shareholders with above-average returns through capital growth over the
medium-to-long term. The Group considers its capital to comprise its share
capital, share premium, merger reserve and retained earnings.
Issued and fully paid: 2024 2023
Number £m Number £m
Ordinary shares of 2p each
At 1 January 1,063,188,005 21.3 1,063,188,005 21.3
Shares purchased and cancelled (20,609,101) (0.4) - -
Cancellation of shares held in Treasury (67,292,636) (1.4) - -
Share capital at 31 December 975,286,268 19.5 1,063,188,005 21.3
Existing treasury shares at 1 January (26,493,520) (0.5) (28,110,373) (0.6)
Purchase of treasury shares (45,280,605) (0.9) (220,302) -
Cancellation of treasury shares 67,292,636 1.3 - -
Shares transferred out of treasury for SAYE - - 285,335 -
Settlement of employee share-based payments 4,481,489 0.1 1,551,820 -
Outstanding at 31 December 975,286,268 19.5 1,036,694,485 20.7
The Company has one class of ordinary shares with a par value of 2p ("Ordinary
Shares") which carry equal voting rights, equal rights to income and
distributions of assets on liquidation, or otherwise, and no right to fixed
income.
During 2024, the Company purchased 45,280,605 ordinary shares (2023: 200,302
ordinary shares), with an aggregate value of £0.9m (2023: £0.2k) which were
initially held in treasury. These were subsequently used to settle employee
share based payments of 4,481,489 prior to the remainder being cancelled in
September 2024 along with a further 26,493,520 treasury shares held at the
start of the year which were also cancelled at the same time. A further
20,609,101 shares with an aggregate value of £0.5m were purchased in the
period September to December 2024 and immediately cancelled. The nominal value
of the cancelled treasury share has been added to the Capital redemption
reserve.
Retained profits have been reduced by £29.6m (2023: £0.2k), being the net
consideration paid for the purchase of treasury, including expenses directly
relating to the treasury share purchase.
21. Share-based payments
In 2024, the Group continued to incentivise employees through its RSP and AIS.
The main terms of both are described in more detail in the Directors'
Remuneration Report in the Group's Annual Report and Accounts.
Deferred bonus share plan ("DBSP")
Awards made to employees under the Group's AIS above a certain threshold
include 50% deferred into IP Group equity through the grant of nil-cost
options under the Group's DBSP. The number of nil-cost options granted under
the Group's DBSP is determined by the share price at the vesting date. The
DBSP options are subject to further time-based vesting over two years
(typically 50% after year one and 50% after year two).
An analysis of movements in the DBSP options outstanding is as follows:
Number of options Weighted-average exercise price Number of options Weighted-average exercise price
2024 2024 2023 2023
At 1 January 2,153,379 - 2,556,682 -
AIS deferral shares award during the year 1,578,434 - 1,120,292 -
Exercised during the year (1,593,233) - (1,523,595) -
At 31 December 2,138,580 - 2,153,379 -
Exercisable at 31 December - - - -
1,643,895 shares were transferred from treasury in respect of DBSP scheme
during the year, comprising 1,593,233 DBSP options exercised on 23(rd) April
2024 and a further 50,662 shares relating to dividends accrued on those
options.
The options outstanding at 31 December 2024 had an exercise price of £nil
(2023: £nil) and a weighted-average remaining contractual life of 0.6 years
(2023: 0.5 years).
The weighted average share price at the date of exercise for share options
exercised in 2024 was 48.3p (2023: 61.0p).
As the 2024 AIS financial performance targets were met and as the number of
DBSP options to be granted in order to defer such elements of the AIS payments
as are required under our remuneration policy are based on a percentage of
employees' salary, the share-based payments line includes the associated
share-based payments expense incurred in 2024.
IP Group Restricted Share Plan ("RSP")
As set out in the Remuneration Policy approved by shareholders in 2022, a
Restricted Share Plan was introduced in 2022 to replace the previous LTIP
structure. Vesting of these awards will take place over a three-year period,
with any awards that vest subject to a further two-year holding period. For
2022, 2023 and 2024 awards, a financial underpin exists which may result in
awards lapsing if NAV per share on the vesting date is lower than 100% of NAV
per share on the award date, after making appropriate adjustments for
dividends. Further information on the Group's RSP is set out in the Directors'
Remuneration Report in the Group's Annual Report and Accounts.
The 2024 RSP awards were made on 23 April 2024. The awards will ordinarily
vest on 31 March 2026, to the extent that the performance underpin has been
met.
The movement in the number of shares conditionally awarded under the RSP is
set out below:
Number of options Weighted-average exercise price Number of options Weighted-average exercise price
2024 2024 2023 2023
At 1 January 10,238,863 - 3,458,509 -
Forfeited during the year (1,362,198) - (16,367) -
Notionally awarded during the year 8,833,966 - 6,796,721 -
At 31 December 17,710,631 - 10,238,863 -
Exercisable at 31 December - - - -
The options outstanding at 31 December 2024 had an exercise price of £nil
(2023: £nil) and a weighted-average remaining contractual life of 3.5 years
(2023: 3.9 years).
The fair value of the RSP shares notionally awarded in 2024 was calculated
using the Finnerty pricing model with the following key assumptions:
2024 2023
IP Group share price as of valuation date £0.539 £0.602
Exercise price £nil £nil
Indicated discount for lack of marketability 15% 15%
Adjusted probability assigned for performance conditions 20% 20%
Fair value at grant date £0.21 £0.24
Pre-2022 IP Group Long-Term Incentive Plan ("LTIP")
Awards under the historic LTIP scheme took the form of conditional awards of
ordinary shares of 2p each in the Group which vest over the prescribed
performance period to the extent that performance conditions have been met.
The Remuneration Committee imposes objective conditions on the vesting of
awards and these take into consideration the guidance of the Group's
institutional investors from time to time. General information on the Group's
LTIP is set out in the Directors' Remuneration Report in the Group's Annual
Report and Accounts.
The 2021 LTIP awards were made on 6 May 2021. Following the completion of the
performance period on 31 March 2024, the relevant performance targets for
vesting of the 2021 LTIP award were not met and these options lapsed in full.
Following the lapse of the 2021 awards noted above, and the exercise of vested
options under the 2019 scheme during the year, the only remaining outstanding
conditionally awarded shares relate to the 2020 awards, which vested in 2023
and will be exercised in the first half of 2025 following completion of their
two-year post-vesting mandatory holding period.
The movement in the number of shares conditionally awarded under the LTIP is
set out below:
Number of options Weighted-average exercise price Number of options Weighted-average exercise price
2024 2024 2023 2023
At 1 January 7,728,493 - 14,490,039 -
Lapsed during the year (3,950,040) - (6,759,628) -
Forfeit during the year (10,907) - (1,918) -
Exercised during the year (2,703,041) - - -
At 31 December 1,064,505 - 7,728,493 -
Exercisable at 31 December 1,064,505 - 4,596,014 -
2,837,594 shares were transferred from treasury in respect of the exercise of
2019 LTIPs, comprising 2,703,041 conditionally awarded shares exercised on
23(rd) April 2024 and a further 134,553 shares relating to dividends accrued
on those conditionally awarded shares.
The conditionally awarded shares at 31 December 2024 had an exercise price in
the range of £nil (2023: £nil) and a weighted-average remaining contractual
life of 0.3 years (2023: 0.8 years).
The fair value charge recognised in the statement of comprehensive income
during the year in respect of all share-based payments, including the DBSP,
RSP and LTIP was £1.9m (2023: £2.6m).
The aggregate gain made by directors on the exercise of options in the year
was £0.4m (2023: £0.2m).
22. Long-term incentive carry scheme - Carried interest plan liability
Accounting Policy:
The Group operates a number of Long-Term Incentive Carry Schemes ("LTICS") for
eligible employees which may result in payments to scheme participants
relating to returns from investments.
Under the Group's LTICS arrangements, a profit-sharing mechanism exists
whereby if a specific vintage (being a group investment made within a defined
time period) delivers returns in excess of the base cost of investments
together with an agreed hurdle rate, scheme participants receive a share of
excess returns. Of the Group's total equity and debt investments 65% are
included in LTICS arrangements (2023: 69.0%).
The calculation of the liability in respect of the Group's LTICS is derived
from the fair value estimates for the relevant portfolio investments and does
not involve significant additional judgement (although the fair value of the
portfolio is a significant accounting estimate). The actual amounts of carried
interest paid will depend on the cash realisations of individual vintages, and
valuations may change significantly in the next financial year. Movements in
the liability are recognised in the consolidated statement of comprehensive
income.
2024 2023
£m £m
At 1 January 38.0 44.1
Credit for the year (7.9) (4.7)
Payments made in the year (2.5) (1.3)
Foreign exchange rate movement (0.3) (0.1)
At 31 December 27.3 38.0
23. Related party transactions
The Group has various related parties arising from its key management,
subsidiaries and equity stakes in portfolio companies.
A) Key management transactions
(i) Key management personnel transactions
The following key management held shares in the following spin-out companies
as at 31 December 2024:
Director/PDMR Company name Number of shares held at 1 January Number of shares acquired/ (disposed of) in the period Number of shares held at 31 December 2024 %
2024
Greg Smith Alesi Surgical Limited 2 - 2 <0.1%
Crysalin Limited (dissolved) 149 - - -
Emdot Limited 4 - 4 0.23%
Istesso Limited 313,425 - 313,425 0.37%
Itaconix plc(1) 90 - 90 <0.1%
Mirriad Advertising plc 16,667 - 16,667 <0.1%
Oxa Autonomy Limited 8 - 8 <0.1%
Oxford Nanopore Technologies plc 27,008 - 27,008 <0.1%
Rio AI Limited 144,246 - 144,246 <0.1%
Surrey Nanosystems Limited 88 - 88 <0.1%
Tissue Regenix Group plc 500 - 500 <0.1%
Xeros Technology plc 13 - 13 <0.1%
David Baynes Alesi Surgical Limited 4 - 4 <0.1%
Arkivum Limited 377 - 377 <0.1%
Creavo Medical Technologies Limited (dissolved) 46 - - -
Mirriad Advertising plc 16,667 - 16,667 <0.1%
Oxford Nanopore Technologies plc 2,784 - 2,784 <0.1%
Ultraleap Holdings Limited 2,600 - 2,600 <0.1%
Zeetta Networks Limited 424 - 424 0.11%
Mark Reilly Actual Experience plc(2) 28,000 - 28,000 <0.1%
AudioScenic Limited 53 - 53 <0.1%
Bramble Energy Limited 16 - 16 <0.1%
Diffblue Limited 8,038 - 8,038 <0.1%
Itaconix plc(1) 7,547 - 7,547 <0.1%
Mirriad Advertising plc 66,666 - 66,666 <0.1%
Mixergy Limited 126 - 126 <0.1%
Oxa Autonomy Ltd 8 - 8 <0.1%
Ultraleap Holdings Limited 1,700 - 1,700 <0.1%
From 13 May 2024, Sam Williams ceased to act as a Person Discharging
Management Responsibility. Shares he held in spin-out companies up to this
date are disclosed as follows:
Director/PDMR Company name Number of shares held at 1 January Number of shares acquired/ (disposed of) in the period Number of shares held at 13 May 2024 %
2024
Sam Williams Accelercomm Limited 127 - 127 <0.1%
Alesi Surgical Limited 1 - 1 <0.1%
Centessa Pharmaceuticals plc 3,247 - 3,247 <0.1%
Creavo Medical Technologies Limited (dissolved) 23 - 23 <0.1%
Genomics plc 333 - 333 <0.1%
Ibex Innovations Limited 1,701 - 1,701 <0.1%
Istesso Limited 7,048,368 - 7,048,368 8.29%
Microbiotica Limited 7,000 - 7,000 <0.1%
Mirriad Advertising plc 3,333 - 3,333 <0.1%
Oxa Autonomy Ltd 3 - 3 <0.1%
Oxehealth Limited 65 - 65 <0.1%
Oxford Nanopore Technologies plc 25,609 - 25,609 <0.1%
Topivert Limited(2) 1,000 - 1,000 <0.1%
Ultraleap Holdings Limited 558 - 558 <0.1%
(1) Opening position restated to reflect share consolidation.
(2) Company being closed down.
Policy for Executive Director holdings in Portfolio Companies
The policy for Executive Director shareholdings in portfolio companies
specifies:
• New direct investments in portfolio companies by
executive directors are prohibited, with the exception of the take-up of
pre-emption rights which relate to existing portfolio company shareholdings.
Both Mr Smith and Mr Baynes are covered by this policy.
• Mr Smith and Mr Baynes have voluntarily submitted to
an additional binding condition such that any net proceeds received as a
result of realisations from direct holdings in portfolio companies that exceed
£250,000 will be used to purchase shares in IP Group, until such time as they
meet the Minimum Shareholding Requirement set for their role (currently 350%
of annual salary for Mr Smith, 250% for Mr Baynes).
(ii) Key management personnel compensation
Key management personnel compensation comprised the following:
2024 2023
£000 £000
Short-term employee benefits(1) 2,176 3,091
Post-employment benefits(2) 48 108
Share-based payments(3) 615 1,161
Total 2,839 4,360
(1) Represents key management personnel's base salaries, benefits including
cash in lieu of pension where relevant, and the cash-settled element of the
Annual Incentive Scheme.
(2) Represents employer contributions to defined contribution pension and life
assurance plans.
(3) Represents the accounting charge for share-based payments, reflecting LTIP
and DBSP options currently in issue as part of these schemes. See note 21 for
a detailed description of these schemes.
B) Portfolio companies
(i) Services
The Group earns fees from the provision of business support services and
corporate finance advisory services 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:
Statement of comprehensive income 2024 2023
£m £m
Revenue from services - -
Statement of financial position 2024 2023
£m £m
Trade receivables 0.1 0.1
(ii) Investments
The Group makes investments in the equity and debt of unquoted and quoted
investments where it does not have control but may be able to participate in
the financial and operating policies of that company. It is presumed that it
is possible to exert significant influence when the equity holding is greater
than 20%. The Group has taken the Venture Capital Organisation exception as
permitted by IAS 28 and not recognised these companies as associates, but they
are related parties. The total amounts included for investments where the
Group has significant influence but not control are as follows:
Statement of comprehensive income 2024 2023
£m £m
Net portfolio (losses)/gains (125.7) 31.7
Statement of financial position 2024 2023
£m £m
Equity and debt investments 345.8 566.4
C) Subsidiary companies
Subsidiary companies that are not 100% owned either directly or indirectly by
the parent company have intercompany balances (which are eliminated at a
consolidated level) with other Group companies which are disclosed as follows:
2024 2023
£m £m
Intercompany balances with other Group companies 2.2 2.1
These intercompany balances represent funding loans provided by Group
companies that are interest free, repayable on demand and unsecured.
24. Capital management
The Group's key objective when managing capital, as set out in note 20, is to
safeguard the Group's ability to continue as a going concern so that it can
continue to provide returns for shareholders and employees for other
stakeholders. The Group sets the amount of capital in proportion to risk. The
Group manages the capital structure, and makes adjustments to it, in light of
changes in economic conditions and the risk characteristics of its underlying
assets. In order to maintain or adjust the capital structure, the Group may
adjust the amount of issued share capital, issue or repay debt and dispose of
interests in portfolio companies.
During 2024, the Group's strategy, which was unchanged from 2023, was to
maintain an appropriate level of cash and short-term deposit balances in line
with the Group's capital allocation plans, whilst having sufficient cash
reserves to meet working capital requirements in the foreseeable future.
The Group has external borrowings with associated covenants that are described
in note 19. These include covenants around the Group's minimum equity and
maximum debt/equity ratio. Consideration is given to the level of headroom
against these covenants as part of the Group's capital allocation process
where planning corporate actions such as dividends and share buybacks, which
have an impact on the headroom level.
25. Capital commitments
Commitments to Limited Partnerships
Pursuant to the terms of their Limited Partnership agreements, the Group has
committed to invest the following amounts into Limited Partnerships as at 31
December 2024:
Year ended 31 December 2024 Year of commencement of commitment Commitment Invested Remaining commitment
to date
£m £m £m
IP Venture Fund II LP 2013 10.0 10.0 -
UCL Technology Fund LP 2016 24.8 23.4 1.4
Total at 31 December 2024 34.8 33.4 1.4
Year ended 31 December 2023 Year of commencement of commitment Commitment Invested Remaining commitment
to date
£m £m £m
IP Venture Fund II LP 2013 10.0 9.9 0.1
UCL Technology Fund LP 2016 24.8 23.2 1.6
Total at 31 December 2023 34.8 33.1 1.7
26. Dividends and share buyback
2024 pence per share £m 2023 pence per share £m
Ordinary shares:
Interim dividend - - 0.51 5.3
Final dividend - - 0.76 7.7
Dividends paid to equity owners in the financial year - - 1.27 13.0
Proposed final dividend at financial year end - - - -
There were no dividends paid or proposed in 2024 (2023: £13.0m dividends;
£13.0m settled in cash). Due to the limited take up of scrip dividends the
scheme was discontinuedin prior years.
Share buyback
On 18 December 2023 the Group initiated a share buyback of up to £20 million.
This £20m share buyback tranche completed in September 2024. On 7th October
2024 it was announced to increase the Group's share buyback programme by a
further £10m which was completed on 7 January 2025.
In January 2025 the Group launched a further extension by up to £40m of its
buyback programme, which had been announced in December 2024. In March 2025,
as part of the Group's preliminary results statement, the Group announced
Intention to extend buyback programme by a further £10m.
The Board remains committed to making regular cash returns to shareholders
from realisations. In future these regular cash returns will normally be made
in the form of share buybacks when the share price discount to NAV exceeds
20%. Regular dividend payments will be suspended under such conditions,
including consideration of any final dividend for 2024.
27. Alternative performance measures ("APM")
IP Group management believes that the alternative performance measures
included in this document provide valuable information to the readers of the
financial statements as they enable the reader to identify a consistent basis
for comparing the business' performance between financial periods and provide
more detail concerning the elements of performance which the managers of the
Group are most directly able to influence or are relevant for an assessment of
the Group. They also reflect an important aspect of the way in which operating
targets are defined and performance is monitored by the directors. These
measures are not defined by IFRS and therefore may not be directly comparable
with other companies' APMs, including those in the Group's industry. APMs
should be considered in addition to, and are not intended to be a substitute
for, or superior to, IFRS measurements.
The directors believe that these APMs assist in providing additional useful
information on the underlying trends, performance and position of the Group.
Consequently, APMs are used by the directors and management for performance
analysis, planning, reporting and incentive-setting purposes.
Calculation
APM Reference for reconciliation Definition and purpose 2024 2023
£m £m
NAV per share(1) Primary statements note 20 NAV per share is defined as Net Assets divided by the number of outstanding NAV £952.5m £1,190.3m
shares.
The measure shows net assets managed on behalf of shareholders by the Group
per outstanding share.
NAV per share is a standard measure used within our peer group and can be
directly compared with the Group's share price.
Shares in issue 975,286,268 1,036,694,485
NAV per share 97.7p 114.8p
Return on NAV Primary statements note 4 Return on NAV is defined as the total comprehensive income or loss for the Total comprehensive income (210.0) (174.8)
year excluding charges which do not impact on net assets, specifically
share-based payment charges.
The measure shows a summary of the income statement gains and losses which
directly impact NAV.
Excluding:
Share-based payment charge 1.9 2.6
Return on NAV (208.1) (172.2)
Net portfolio gains/(losses) note 13, 14, 15 Net portfolio gains/(losses) are defined as the movement in the value of Change in fair value of equity and debt investments (246.1) (110.9)
holdings in the portfolio due as a result of realised and unrealised gains and
losses.
The measure shows a summary of the income statement gains and losses which are
directly attributable to the Total Portfolio (see definition above), which is
a headline measure for the Group's portfolio performance.
This is a key driver of the Return on NAV which is a performance metric for
directors' and employees' incentives.
Gain/(loss) on disposal of equity investments 63.7 (10.8)
Change in fair value of LP interests(2) (12.6) (38.8)
Net portfolio (losses) (195.0) (160.5)
Total portfolio(3) Consolidated statement of financial position, Total portfolio is defined as the total of equity investments, debt Equity investments 713.8 1,011.5
investments and investments in LPs.
note 13, 14
This measure represents the aggregate balance sheet amounts which the Group
considers to be its investment portfolio, and which is described in further
detail within the portfolio review section of the strategic report.
Debt investments 51.6 83.7
LP interests 58.1 69.7
Assets held for sale 13.9 -
Total portfolio 837.4 1,164.9
Portfolio investment Primary statements Portfolio investment is defined as the purchase of equity and debt investments Purchase of equity and debt investments (60.8) (63.4)
plus investments into limited partnership interests.
This gives a combined measure of investment into the Group's portfolio.
Investment in limited and limited liability partnerships (2.2) (9.8)
Portfolio investment (63.0) (73.2)
Cash proceeds(1) Primary statements Cash proceeds is defined as the proceeds from the disposal of equity and debt Proceeds from the sale of equity investments 182.2 37.7
investments plus distributions received from limited partnership interests.
Distributions from limited partnership funds 1.2 0.9
Cash proceeds 183.4 38.6
Net overheads(2) Financial review, note 8 Net overheads are defined as the Group's core overheads less operating income. Other income 5.5 5.9
The measure reflects the Group's controllable net operating "cash-equivalent"
central cost base.
Other administrative expenses (25.3) (28.0)
Net overheads exclude items such as share-based payments, restructuring costs
and consolidated portfolio company costs
Excluding:
Non-portfolio foreign exchange movements (2.7) (0.4)
Restructuring costs - labour 2.4 -
Restructuring costs - professional 0.3 -
Net overheads (19.8) (22.5)
Gross cash and deposits Primary statements Cash and deposits is defined as cash and cash equivalents plus deposits. Cash and cash equivalents 115.6 100.9
The measures give a view of the Group's liquid resources on a short-term Deposit 170.0 126.0
timeframe. The Group's Treasury Policy has a maximum maturity limit of 13
months for deposits.
Gross cash and deposits 285.6 226.9
Loss excluding ONT Primary statements (Loss)/profit excluding ONT is defined as the Groups (loss)/profit for the (Loss) for the year (207.0) (174.4)
year (after tax) excluding the (loss)/profit on the investment held in Oxford
Nanopore publicly quoted shares both realised and unrealised.
This measure gives a view of the results of this business excluding this
single investment which, given its size and recent share price volatility, may
be helpful to users of the accounts as a view of the underlying business.
Excluding:
Change in fair value of equity investment in Oxford Nanopore 66.3 31.9
(Loss)/profit excluding ONT (140.7) (142.5)
Simple return on capital (%) Note 27 Defined as net portfolio gains/losses divided by the opening total portfolio Net portfolio (losses) (195.0) (160.5)
value.
This measure gives a view of the size of portfolio gains or losses relative to
the opening portfolio value, giving useful additional context for the value of
gains or losses.
Opening total portfolio value 1,164.9 1,258.5
Simple return on capital (%) -17% -13%
% Return on NAV (%) Note 27 (return on NAV) Primary statements (Net Asset Value) Defined as return on NAV divided by the opening Net Asset Value. Return on NAV (208.1) (172.2)
This measure gives a view of the size of Return on NAV relative to the opening
Net Asset Value, giving useful additional context for the value of returns.
Opening Net Asset Value 1,190.3 1,376.1
Return on NAV (%) -17% -13%
(1) For consistency with how we report investments as the purchase of equity
and debt investments plus investment in limited and limited liability
partnerships, the directors believe that this new measure showing cash
proceeds is defined as the proceeds from the disposal of equity and debt
investments plus distributions received from limited liability partnerships
interests profit represents a useful additional measure for users of the
accounts.
(2) For clarity non-portfolio foreign exchange movements have been excluded
from net overheads, these exchange movements are on intercompany loans and
other balance sheet items including cash, and which do not represent an
ongoing overhead cost for the group. Their exclusion is therefore considered
to give a more accurate view of the underlying net overhead costs of the
business.
(3) At 31 December 2024, the Group was in the process of disposing of a number
of assets, which were accordingly reclassified within current assets as Assets
Held for Sale. These assets are considered to be part of the Group's
investment portfolio and have been managed as such throughout the period.
Accordingly, the APM has been amended to included Assets Held for Sale within
the Group's Total portfolio APM.
28. Post balance sheet events
As at 21 March 2025, unrealised fair value losses in respect of the Group's
quoted portfolio totalled £14.7m, largely in respect of Oxford Nanopore
Technologies plc, which has seen a fair value loss of £13.8m since 31
December 2024.
The Group was notified of the outcome of Istesso's Phase 2b trial for
Leramistat in February 2025, reflecting information which Istesso Limited had
received prior to 31 December 2024.
Since 1 January 2025, the Group has delivered cash proceeds of £24.7m.
In January 2025 the Group launched a further extension by up to £40m of its
buyback programme, which had been announced in December 2024. In March 2025,
as part of the Group's preliminary results statement, the Group announced
Intention to extend buyback programme by a further £10m.
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