REG - IP Group PLC - Half-year Report for IP Group <Origin Href="QuoteRef">IPO.L</Origin> - Part 2
09/08/2016 07:06
- Part 2: For the preceding part double click ID:nRSI6003Ga
Distributions from limited and limited liability partnerships - 0.6 0.6
Other portfolio income received - - 0.1
Net cash inflow/(outflow) from investing activities 1.6 (54.1) (114.6)
Financing activities
Proceeds from the issue of share capital - 178.8 178.8
Proceeds from drawdown of EIB facility - - 14.9
Net cash inflow from financing activities - 178.8 193.7
Net increase in cash and cash equivalents 40.8 102.3 41.4
Cash and cash equivalents at the beginning of the period 108.8 67.3 67.3
Effect of foreign exchange rate changes 0.1 - 0.1
Cash and cash equivalents at the end of the period 149.7 169.6 108.8
Cash and cash equivalents at the end of the period
149.7
169.6
108.8
Condensed consolidated statement of changes in equity
For the six months ended 30 June 2016
At 31 December 2014 (audited) 9.6 327.6 12.8 176.2 526.2 - 526.2
Equity-settled share-based payments - - - 0.4 0.4 - 0.4
Issue of equity 1.7 177.1 - - 178.8 - 178.8
Comprehensive income - - - 66.7 66.7 (0.3) 66.4
At 30 June 2015 (unaudited) 11.3 504.7 12.8 243.3 772.1 (0.3) 771.8
Equity-settled share-based payments - - - 1.1 1.1 - 1.1
Issue of equity - - - - - 0.2 0.2
Comprehensive income - - - 7.2 7.2 1.6 8.8
At 31 December 2015 (audited) 11.3 504.7 12.8 251.6 780.4 1.5 781.9
Share-based payment charge - - - 0.4 0.4 - 0.4
Comprehensive income - - - (33.4) (33.4) (0.4) (33.8)
At 30 June 2016 (unaudited) 11.3 504.7 12.8 218.6 747.4 1.1 748.5
(33.4)
(0.4)
(33.8)
At 30 June 2016 (unaudited)
11.3
504.7
12.8
218.6
747.4
1.1
748.5
Notes to the half-yearly condensed set of financial statements
1. Operating segments
For each of the periods referenced below, the Group's revenue and profit/loss
before taxation were derived almost entirely from its principal activities
within the UK. Though the Group has initiated operations in the US, the
associated revenues and costs are currently immaterial and accordingly, no
additional geographical disclosures are given. For management reporting
purposes, the Group is currently organised into three operating segments: (i)
the commercialisation of intellectual property via the formation of long-term
partner relationships with universities; (ii) the management of venture funds
focusing on early-stage UK technology companies; and (iii) the in-licensing of
drugable intellectual property from research intensive institutions.
STATEMENT OF COMPREHENSIVE INCOME
Portfolio return and revenue
Change in fair value of equity and debt investments (24.5) - - (24.5)
Loss on disposal of equity investments (0.4) - - (0.4)
Change in fair value of limited and limited liability partnership investments (0.2) - - (0.2)
Other portfolio income - - - -
Licensing income 0.1 - - 0.1
Revenue from services and other income 0.4 - - 0.4
Revenue from fund management services - 0.5 - 0.5
Change in fair value of Oxford Equity Rights asset - - - -
Amortisation of intangible assets (2.8) - - (2.8)
Administrative expenses (5.7) (1.0) (0.7) (7.4)
Operating profit (33.1) (0.5) (0.7) (34.3)
Net finance income 0.4 - - 0.4
Profit before taxation (32.7) (0.5) (0.7) (33.9)
Taxation - - - -
Loss for the period (32.7) (0.5) (0.7) (33.9)
Exchange differences on translating foreign operations 0.1 - - 0.1
Total comprehensive income for the period (32.6) (0.5) (0.7) (33.8)
STATEMENT OF FINANCIAL POSITION
Assets 755.3 11.5 6.7 773.5
Liabilities (24.9) (0.1) - (25.0)
Net assets 730.4 11.4 6.7 748.5
Other segment items
Capital expenditure - - - -
Depreciation - - - -
Depreciation
-
-
-
-
STATEMENT OF COMPREHENSIVE INCOME
Portfolio return and revenue
Change in fair value of equity and debt investments 73.7 - - 73.7
Loss on disposal of equity investments (0.1) - - (0.1)
Change in fair value of limited and limited liability partnership investments 0.9 - - 0.9
Other portfolio income - - - -
Licensing income 0.1 - 3.0 3.1
Revenue from services and other income 0.5 0.1 - 0.6
Revenue from fund management services - 0.7 - 0.7
Change in fair value of Oxford Equity Rights asset (0.7) - - (0.7)
Amortisation of intangible assets (3.0) - - (3.0)
Administrative expenses (7.2) (0.4) (1.8) (9.4)
Operating profit 64.2 0.4 1.2 65.8
Net finance income 0.6 - - 0.6
Profit before taxation 64.8 0.4 1.2 66.4
Taxation - - - -
Profit and comprehensive income for the period 64.8 0.4 1.2 66.4
STATEMENT OF FINANCIAL POSITION
Assets 767.2 9.8 4.1 781.1
Liabilities (9.2) - (0.1) (9.3)
Net assets 758.0 9.8 4.0 771.8
Other segment items
Capital expenditure - - - -
Depreciation - - - -
Depreciation
-
-
-
-
Year ended 31 December 2015 (audited) University partnership business £m Venture capital fund management £m In-licensing activity £m Consolidated £m
STATEMENT OF COMPREHENSIVE INCOME
Portfolio return and revenue
Change in fair value of equity and debt investments 86.4 - - 86.4
Loss on disposal of equity investments (0.2) - - (0.2)
Change in fair value of limited and limited liability partnership interests 0.4 - - 0.4
Other portfolio income 0.2 - - 0.2
Licensing income 0.1 - 8.0 8.1
Revenue from services and other income 0.9 1.1 - 2.0
Revenue from fund management services - 1.4 - 1.4
Change in fair value of Oxford Equity Rights asset (1.3) - - (1.3)
Amortisation of intangible assets (6.0) - - (6.0)
Administrative expenses (13.9) (0.8) (2.5) (17.2)
Operating profit 66.6 1.7 5.5 73.8
Net finance income 1.3 - - 1.3
Profit before taxation 67.9 1.7 5.5 75.1
Taxation - - - -
Profit for the year 67.9 1.7 5.5 75.1
Exchange differences on translating foreign operations 0.1 - - 0.1
Total comprehensive income for the period 68.0 1.7 5.5 75.2
STATEMENT OF FINANCIAL POSITION
Assets 788.8 11.3 7.7 807.8
Liabilities (25.5) (0.1) (0.3) (25.9)
Net assets 763.3 11.2 7.4 781.9
Other segment items
Capital expenditure - - - -
Depreciation (0.1) - - (0.1)
2. Earnings per share
Earnings for the purposes of basic and dilutive earnings per share (33.4) 66.7 73.9
Earnings for the purposes of basic and dilutive earnings per share
(33.4)
66.7
73.9
Weighted average number of ordinary shares forthe purposes of basic earnings per share 564,897,747 516,340,803 540,681,647
Effect of dilutive potential ordinary shares:Options or contingently issuable shares - 1,188,606 1,237,274
Weighted average number of ordinary shares forthe purposes of diluted earnings per share 564,897,747 517,529,409 541,918,921
Weighted average number of ordinary shares forthe purposes of diluted earnings
per share
564,897,747
517,529,409
541,918,921
Potentially dilutive ordinary shares include contingently issuable shares
arising under the Group's LTIP arrangements, and options issued as part of the
Group's Share-Save Scheme and Deferred Bonus Share Plan (for annual bonuses
deferred under the terms of the Group's annual incentive scheme). As the Group
made a loss for the period the potentially dilutive shares outstanding at the
period end are not considered when calculating the diluted earnings per
share.
3. Investment portfolio
The accounting policies in regards to valuations in these half-yearly results
are the same as those applied by the Group in its audited consolidated
financial statements for the year ended 31 December 2015 and which will form
the basis of the 2016 Annual Report and Accounts. Investments are designated
as fair value through profit or loss and are initially recognised at fair
value and any gains or losses arising from subsequent changes in fair value
are presented in profit or loss in the statement of comprehensive income in
the period in which they arise.
The Group classifies financial assets using a fair value hierarchy that
reflects the significance of the inputs used in making the related fair value
measurements. The level in the fair value hierarchy within which a financial
asset is classified is determined on the basis of the lowest level input that
is significant to that asset's fair value measurement. The fair value
hierarchy has the following levels:
Level 1 - Quoted prices in active markets.
Level 2 - Inputs other than quoted prices that are observable, such as prices from market transactions. These are mainly based on prices determined from recent investments in the last twelve months.
Level 3 - One or more inputs that are not based on observable market data.
At 31 December 2014 138.2 193.2 4.0 14.5 349.9
Investments during the period 4.0 48.7 2.3 0.1 55.1
Transaction-based reclassifications during the period - 0.2 (0.2) - -
Other transfers between hierarchy levels during the period - (13.3) - 13.3 --
Disposals during the period - - (0.2) (0.3) (0.5)
Change in fair value in the period 27.2 50.9 (0.7) (3.7) 73.7
At 30 June 2015 (unaudited) 169.4 279.7 5.2 23.9 478.2
Investments during the period 22.2 33.6 4.8 0.2 60.8
Transaction-based reclassifications during the period 2.3 (1.6) (0.7) - -
Other transfers between hierarchy levels during the period 24.6 (37.6) 0.1 12.9 -
Disposals during the period - - (0.1) (0.2) (0.3)
Fees settled via equity - 0.7 - - 0.7
Change in fair value in the period (17.2) 33.7 (0.2) (3.6) 12.7
Exchange differences on translating foreign currency investments - 0.1 - - 0.1
At 31 December 2015 201.3 308.6 9.1 33.2 552.2
Investments during the period 3.0 7. 2 2.6 - 12.8
Transaction-based reclassifications during the period - 0.6 (0.6) - -
Other transfers between hierarchy levels during the period - (3.6) - 3.6 -
Disposals during the period (14.6) (0.1) (0.1) - (14.8)
Change in fair value in the period (21.8) (0.7) 0.1 (2.3) (24.7)
Exchange differences on translating foreign currency investments - 0.2 - - 0.2
At 30 June 2016 (unaudited) 167.9 312.2 11.1 34.5 525.7
0.2
-
-
0.2
At 30 June 2016 (unaudited)
167.9
312.2
11.1
34.5
525.7
Fair values of unquoted spin-out companies classified as Level 3 in the fair
value hierarchy have been determined in part or in full by valuation
techniques that are not supported by observable market prices or rates.
Investments in 30 companies have been classified as Level 3 and the individual
valuations for each of these have been arrived at using the following
valuation method:
Where fair values are based upon the most recent market transaction, but that
transaction occurred more than twelve months prior to the balance sheet date,
the investments are classified as Level 3 in the fair value hierarchy. The
fair values of investments categorised as Level 3 are analysed on a monthly
basis to consider indicators which may make the most recent investment no
longer a representation of fair value. Due to the nature of the investments,
observable market inputs are not commonly available, therefore consideration
of indicators of a change in fair value focus on the companies' performance
and achievement of technical and commercial milestones.
Where indicators of a change in fair value against the most recent market
transaction are identified, any adjustment to arrive at fair value is based on
objective data from the company and the experience and judgement of the
Group.
If the fair value of all Level 3 investments were to decrease by 10%, the net
assets figure would decrease by £3.5m, with a corresponding increase if the
unobservable inputs were to increase by 10%.
For assets and liabilities that are recognised at fair value on a recurring
basis, the Group determines whether transfers have occurred between levels in
the hierarchy by reassessing categorisation (based on the lowest level input
that is significant to the fair value measurement as a whole) at the end of
each reporting period. Transfers between tiers are then made as if the
transfer took place on the first day of the period in question.
If the assumptions used in the valuation techniques for the Group's holding in
each company are varied by using a range of possible alternatives, there is no
material difference to the carrying value of the respective spin-out company.
The effect on the consolidated statement of comprehensive income for the
period is also not expected to be material.
Transfers between Level 2 and 1 occur when a previously unquoted investment
undertakes an initial public offering, resulting in its equity becoming quoted
on an active market. In the current period there were no transfers of this
nature.
Transfers between Level 1 and Level 2 would occur when a quoted investment's
market becomes inactive. There have been no such instances in the current
period.
Transfers between Level 3 and Level 2 occur when an investment, for which the
penultimate funding round occurred more than twelve months before the prior
period end, undertakes an investment round during the period that results in
an observable market price. In the current period, transfers of this nature
amounted to £6.4m.
Transfers between Level 2 and Level 3 occur when the balance sheet date
becomes more than twelve months after an investment's most recent funding
round, at which point the price is deemed to be unobservable. In the current
period, transfers of this nature amounted to £10.0m.
The fair value changes in Level 3 investments have amounted to a loss of £2.3m
in the period, recognised as change in fair value of equity and debt
investments in the condensed consolidated statement of comprehensive income.
4. Share capital
Issued and fully paid:
565,207,667 ordinary shares of 2p each (HY15: 564,619,369; FY15: 564,648,168) 11.3 11.3 11.3
565,207,667 ordinary shares of 2p each (HY15: 564,619,369; FY15: 564,648,168)
11.3
11.3
11.3
In April 2016, the Company issued 457,877 new ordinary shares in order to
settle conditional awards made under the Group's 2013 LTIP that achieved their
vesting conditions and consequently became issuable to the Group's employees.
Additionally, in May 2016, the Company issued 101,622 new ordinary shares
following the exercise of nil-cost options awarded under the Group's Deferred
Bonus Share Plan by certain of the Group's employees.
The Company has one class of ordinary shares, each with a par value of 2p and
carrying equal voting rights, equal rights to income and distributions of
assets on liquidation, or otherwise, and no right to fixed income.
5. Intangible assets
Cost
At 30 June 2015, 31 December 2015 21.4
Additions 0.2
At 30 June 2016 21.6
0.2
At 30 June 2016
21.6
Accumulated amortisation
At 1 January 2015 4.9
Charge for the period 3.0
At 30 June 2015 7.9
Charge for the period 3.0
At 31 December 2015 10.9
Charge for the period 2.8
At 30 June 2016 13.7
Net book value
At 30 June 2015 13.5
At 31 December 2015 10.5
At 30 June 2016 7.9
The intangible assets represent contractual arrangements and memorandums of
understanding with four UK universities acquired through acquisition of a
subsidiary. The contractual arrangements have fixed terms and, consequently,
the intangible assets have finite lives that align with the remaining terms
which, at the end of the period, range from 17 months to 38 months. The
individual contractual arrangements are amortised in a straight line over the
remainder of their terms with the expense being presented directly on the
primary statements.
6. Goodwill
At 30 June 2015, 31 December 2015 and 30 June 2016 57.1
At 30 June 2015, 31 December 2015 and 30 June 2016
57.1
Goodwill represents the excess of the cost of an acquisition over the fair
value of the net identifiable assets of acquired subsidiaries at the date of
acquisition. Included in the balance sheet of the Group, at 30 June 2016, is
goodwill of £57.1m. This arose from the Group's acquisition of Top Technology
Ventures Limited in June 2004 (£2.1m), Techtran Group Limited in January 2005
(£16.3m) and the acquisition of Fusion IP plc in March 2014 (£38.7m). Goodwill
is allocated from the acquisition date to each of the Group's cash-generating
units ("CGUs") that are expected to benefit from the business combination.
Goodwill may be allocated to CGUs in both the acquired business and in the
existing business.
The Group conducts annual impairment tests on the carrying value of goodwill,
based on the recoverable amount of the CGUs to which the goodwill has been
allocated. The goodwill allocated to each CGU is summarised in the table
below. A number of both value-in-use and fair-value-less-costs-to-sale
calculations are used to assess the recoverable values of the CGUs, details of
which are specified in the audited consolidated financial statements for the
year ended 31 December 2015.
Unaudited30 June 2016£m Unaudited30 June 2015£m Audited31 December 2015£m
University partnership CGU 55.0 55.0 55.0
Fund management CGU 2.1 2.1 2.1
57.1 57.1 57.1
During the period to 30 June 2016, no factors indicating potential impairment
of goodwill were noted and, as a result, no impairment review was deemed
necessary.
7. Related party transactions
The Group has various related parties arising from its key management,
subsidiaries, equity stakes in portfolio companies and management of certain
Limited Partnership funds.
a) Limited partnerships
The Group manages a number of investment funds structured as Limited
Partnerships. Group entities have a Limited Partnership interest (see note 1)
and act as the general partners of these Limited Partnerships. The Group
therefore has power to exert significant influence over these Limited
Partnerships. The following amounts have been included in respect of these
Limited Partnerships:
Revenue from services 0.5 0.7 1.3
Revenue from services
0.5
0.7
1.3
Investment in limited partnerships 2.9 3.6 3.1
Investment in limited partnerships
2.9
3.6
3.1
b) Key management transactions
The following key management held shares in the following spin-out companies
as at 30 June 2016:
Alan Aubrey Alesi Surgical Limited 18 - 18 0.3%
Amaethon Limited - A Shares 104 - 104 3.1%
Amaethon Limited - B Shares 11,966 - 11,966 1.0%
Amaethon Limited - Ordinary shares 21 - 21 0.3%
Avacta Group plc(i) 202,761 - 202,761 0.3%
Boxarr Limited 1,732 - 1,732 0.3%
Capsant Neurotechnologies Limited 11,631 - 11,631 0.8%
Cloud Sustainability Limited 26 - 26 0.7%
Cronin Group plc 2,172,809 - 2,172,809 0.4%
Crysalin Limited 1,447 - 1,447 0.1%
Diurnal Group plc 15,000 - 15,000 <0.1%
EmDot Limited 15 - 15 0.9%
Evocutis plc 767,310 - 767,310 0.1%
Getech Group plc 15,000 - 15,000 <0.1%
Green Chemicals plc 108,350 - 108,350 0.9%
hVivo plc 37,160 - 37,160 <0.1%
Ilika plc 69,290 - 69,290 0.1%
Karus Therapeutics Limited 223 - 223 <0.1%
Mirriad Advertising Limited 33,333 - 33,333 <0.1%
MDL 2016 Limited(ii) - Ordinary shares 3,226 - 3,226 0.4%
MDL 2016 Limited(ii) - A shares 229 - 229 0.5%
Modern Biosciences plc 1,185,150 - 1,185,150 1.7%
Modern Water plc 519,269 - 519,269 0.7%
Oxford Advanced Surfaces Limited - 8,402 8,402 0.1%
Oxford Nanopore Technologies Limited 101,208 - 101,208 0.4%
Oxtox Limited 25,363 (25,363) - 0.0%
Revolymer plc 88,890 - 88,890 0.2%
Salunda Limited 53,639 - 53,639 <0.1%
Structure Vision Limited 212 - 212 1.0%
Surrey Nanosystems Limited 453 - 453 0.3%
Tissue Regenix Group plc 2,389,259 - 2,389,259 0.3%
Tracsis plc 121,189 - 121,189 0.5%
Xeros Technology Group plc 40,166 - 40,166 <0.1%
Zeetta Networks Limited 212 - 212 0.2%
Mike Townend Amaethon Limited - A Shares 104 - 104 3.1%
Amaethon Limited - B Shares 11,966 - 11,966 1.0%
Amaethon Limited - Ordinary shares 21 - 21 0.3%
Applied Graphene Materials plc - 7,619 7,619 <0.1%
Avacta Group plc(i) 9,313 - 9,313 <0.1%
Capsant Neurotechnologies Limited 11,282 - 11,282 0.8%
Cloud Sustainability Limited 25 9 34 0.6%
Cronin Group plc 932,944 - 932,944 0.2%
Crysalin Limited 1,286 - 1,286 0.1%
Diurnal Group plc 15,000 - 15,000 <0.1%
EmDot Limited 14 - 14 0.8%
Getech Group plc 20,000 - 20,000 <0.1%
Green Chemicals plc 113,222 - 113,222 0.9%
hVivo plc 37,160 - 37,160 <0.1%
Ilika plc 10,000 - 10,000 <0.1%
Mirriad Advertising Limited 25,000 - 25,000 <0.1%
MDL 2016 Limited(ii) 1,756 - 1,756 0.1%
Modern Biosciences plc 1,185,150 - 1,185,150 1.7%
Modern Water plc 575,000 - 575,000 0.7%
Oxford Advanced Surfaces Limited 5,000 - 5,009 <0.1%
Oxford Nanopore Technologies Limited 30,967 - 30,967 0.1%
Oxtox Limited 25,363 (25,363) - 0.0%
Quantum Imaging Limited 117 - 117 <0.1%
Revolymer plc 35,940 - 35,940 <0.1%
Structure Vision Limited 212 - 212 1.0%
Surrey Nanosystems Limited 404 - 404 0.2%
Tissue Regenix Group plc 1,950,862 - 1,950,862 0.3%
Tracsis plc 25,430 (25,430) - 0.0%
Ultrahaptics Limited 35 - 35 <0.1%
Xeros Technology Group plc 35,499 - 35,499 <0.1%
Greg Smith Alesi Surgical Limited 2 - 2 <0.1%
Avacta Group plc(i) 3,904 - 3,904 <0.1%
Capsant Neurotechnologies Limited 896 - 896 <0.1%
Cloud Sustainability Limited 8 - 8 0.2%
Crysalin Limited 149 - 149 <0.1%
Diurnal Group plc 15,000 - 15,000 <0.1%
EmDot Limited 4 - 4 0.2%
Encos Limited 5,671 - 5,671 0.4%
Getech Group plc 8,000 - 8,000 <0.1%
Green Chemicals plc 4,830 - 4,830 <0.1%
hVivo plc 61,340 - 61,340 <0.1%
Mirriad Advertising Limited 16,667 - 16,667 <0.1%
MDL 2016 Limited(ii) - Ordinary shares 361 - 361 <0.1%
MDL 2016 Limited(ii) - A shares 28 - 28 <0.1%
Modern Biosciences plc 313,425 - 313,425 0.5%
Modern Water plc 7,250 - 7,250 <0.1%
Oxford Nanopore Technologies Limited 1,581 - 1,581 <0.1%
Revolymer plc 4,500 - 4,500 <0.1%
Summit Therapeutics plc 798 - 798 <0.1%
Surrey Nanosystems Limited 88 - 88 <0.1%
Tissue Regenix Group plc 50,000 - 50,000 <0.1%
Xeros Technology Group plc 1,392 - 1,392 <0.1%
David Baynes Alesi Surgical Limited 4 - 4 <0.1%
Arkivum Limited 377 - 377 <0.1%
Diurnal Group plc 73,000 - 73,000 0.1%
Mirriad Advertising Limited 16,667 - 16,667 <0.1%
Oxford Nanopore Technologies Limited 144 - 144 <0.1%
Quantum Imaging Limited 46 - 46 <0.1%
Ultrahaptics Limited 26 - 26 <0.1%
Zeetta Networks Limited 212 - 212 0.2%
Angela Leach Alesi Surgical Limited 2 - 2 <0.1%
Avacta Group plc(i) 1,897 - 1,897 <0.1%
Boxarr Limited 102 - 102 <0.1%
Capsant Neurotechnologies Limited 1,858 - 1,858 0.1%
Cloud Sustainability Limited 10 - 10 0.3%
Cronin Group plc 68,101 - 68,101 <0.1%
Diurnal Group plc 11,500 - 11,500 <0.1%
Evocutis plc 7,990 - 7,990 <0.1%
First Light Fusion Limited 17 - 17 <0.1%
hVivo plc 25,903 - 25,903 <0.1%
Getech Group plc 2,083 - 2,083 <0.1%
Mirriad Advertising Limited 16,667 - 16,667 <0.1%
MDL 2016 Limited(ii) - Ordinary Shares 606 - 606 <0.1%
MDL 2016 Limited(ii) - A Shares 102 - 102 <0.1%
Modern Water plc 15,570 - 15,570 <0.1%
Modern Biosciences plc 322,923 - 322,923 0.5%
Oxford Nanopore Technologies Limited 1,721 - 1,721 <0.1%
Quantum Imaging Limited 23 - 23 <0.1%
Revolymer plc 4,500 - 4,500 <0.1%
Structure Vision Limited 21 - 21 0.1%
Surrey Nanosystems Limited 90 - 90 <0.1%
Tissue Regenix Group plc 329,172 - 329,172 <0.1%
Ultrahaptics Limited 5 - 5 <0.1%
Xeros Technology Group plc 5,666 - 5,666 <0.1%
<0.1%
Xeros Technology Group plc
5,666
-
5,666
<0.1%
(i) Avacta Group plc consolidated its outstanding shares by 100:1
during the period. The opening position has been restated.
(ii) Mode Diagnostics Limited was renamed MDL 2016 Limited on 19
July 2016
c) Portfolio companies
The Group earns fees from the provision of business support services and
corporate finance advisory to portfolio companies in which the Group has an
equity stake. Through the lack of control over portfolio companies these fees
are considered arm's length transactions. The following amounts have been
included in respect of these fees:
Revenue from services 0.4 0.5 2.0
Revenue from services
0.4
0.5
2.0
Trade receivables 1.3 1.3 1.5
Trade receivables
1.3
1.3
1.5
d) Subsidiary companies
Subsidiary companies that are not 100% owned either directly or indirectly by
the parent company have intercompany balances with other Group companies
totalling as follows:
Intercompany balances with other Group companies 10.5 8.4 10.5
Intercompany balances with other Group companies
10.5
8.4
10.5
These intercompany balances represent funding loans provided by Group
companies that are interest free, repayable on demand and unsecured.
General information
The comparative financial information presented herein for the year ended 31
December 2015 does not constitute full statutory accounts within the meaning
of the Companies Act 2006. The Group's Annual Report and Accounts for the year
ended 31 December 2015 have been delivered to the Registrar of Companies. The
Group's independent auditor's report on those accounts was unqualified, did
not include references to any matters to which the auditor drew attention by
way of emphasis without qualifying their report and did not contain a
statement under Section 498(2) or 498(3) of the Companies Act 2006.
Accounting policies
Basis of preparation
The financial information presented in these half-yearly results constitutes
the condensed consolidated financial statements of IP Group plc, a company
incorporated in Great Britain and registered in England and Wales, and its
subsidiaries (together, the "Group") for the six months ended 30 June 2016.
The condensed consolidated financial statements have been prepared in
accordance with IAS 34 Interim Financial Reporting and should be read in
conjunction with the Annual Report and Accounts for the year ended 31 December
2015, which have been prepared in accordance with International Financial
Reporting Standards as adopted for use in the EU ("IFRS"). The financial
information in these half-yearly results, which were approved by the Board and
authorised for issue on 8 August 2016, is unaudited but has been subject to a
review by the Group's independent auditor.
Accounting estimates and judgements
The preparation of the half-yearly results requires management to make
judgements, estimates and assumptions that affect the application of
accounting policies and the reported amounts of assets and liabilities, income
and expenses. Estimates and judgements are continually evaluated and are based
on historical experience and other factors, such as expectations of future
events, and are believed to be reasonable under the circumstances. Actual
results may differ from these estimates. In preparing these half-yearly
results, the significant judgements made by management in applying the Group's
accounting policies and the key sources of estimation uncertainty were the
same as those applied to the audited consolidated financial statements for the
year ended 31 December 2015.
Going concern
After making enquiries, the Directors have a reasonable expectation that the
Group has adequate resources to continue in operational existence for the
foreseeable future. Accordingly, they continue to adopt the going concern
basis in preparing the condensed consolidated half-year financial statements.
Accounting policies
The accounting policies applied by the Group in these half-yearly results are
the same as those applied by the Group in its audited consolidated financial
statements for the year ended 31 December 2015 and which will form the basis
of the 2016 Annual Report and Accounts. No new standards that have become
effective in the period have had a material effect on the Group's financial
statements.
Statement of Directors' responsibilities
The Directors confirm to the best of their knowledge that:
a. the half-yearly results have been prepared in accordance with IAS 34 as
adopted by the European Union; and
b. the interim management report includes a fair review of the information
required by the FCA's Disclosure and Transparency Rules (4.2.7 R and 4.2.8
R).
The Directors of IP Group plc and their functions are listed below.
By order of the Board
Mike Humphrey Alan Aubrey
Chairman Chief Executive Officer
8 August 2016
Independent review report
To IP Group plc
Introduction
We have been engaged by the Company to review the condensed set of financial
statements in the half-yearly financial report for the six months ended 30
June 2016 which comprises the condensed consolidated statement of
comprehensive income, condensed consolidated statement of financial position,
condensed consolidated statement of cash flows, condensed consolidated
statement of changes in equity and the related explanatory notes. We have read
the other information contained in the half-yearly financial report and
considered whether it contains any apparent misstatements or material
inconsistencies with the information in the condensed set of financial
statements.
This report is made solely to the Company in accordance with the terms of our
engagement to assist the Company in meeting the requirements of the Disclosure
and Transparency Rules ("the DTR") of the UK's Financial Conduct Authority
("the UK FCA"). Our review has been undertaken so that we might state to the
Company those matters we are required to state to it in this report and for no
other purpose. To the fullest extent permitted by law, we do not accept or
assume responsibility to anyone other than the Company for our review work,
for this report, or for the conclusions we have reached.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been
approved by, the Directors. The Directors are responsible for preparing the
half-yearly financial report in accordance with the DTR of the UK FCA.
As disclosed in the accounting policies note, the annual financial statements
of the Group are prepared in accordance with IFRSs as adopted by the EU. The
condensed set of financial statements included in this half-yearly financial
report has been prepared in accordance with IAS 34 Interim Financial Reporting
as adopted by the EU.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed
set of financial statements in the half-yearly financial report based on our
review.
Scope of review
We conducted our review in accordance with International Standard on Review
Engagements (UK and Ireland) 2410 Review of Interim Financial Information
Performed by the Independent Auditor of the Entity issued by the Auditing
Practices Board for use in the UK. A review of interim financial information
consists of making enquiries, primarily of persons responsible for financial
and accounting matters, and applying analytical and other review procedures. A
review is substantially less in scope than an audit conducted in accordance
with International Standards on Auditing (UK and Ireland) and consequently
does not enable us to obtain assurance that we would become aware of all
significant matters that might be identified in an audit. Accordingly, we do
not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of financial statements in the half-yearly
financial report for the six months ended 30 June 2016 is not prepared, in all
material respects, in accordance with IAS 34 as adopted by the EU and the DTR
of the UK FCA.
Jonathan Mills
for and on behalf of KPMG LLP
Chartered Accountants
15 Canada Square
London
E14 5GL
8 August 2016
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