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RNS Number : 6977U IP Group PLC 03 August 2022
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF THE UK
VERSION OF THE MARKET ABUSE REGULATION (EU NO. 596/2014) WHICH FORMS PART OF
ENGLISH LAW BY VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT 2018.
FOR RELEASE ON 03 August 2022
("IP Group" or "the Group" or "the Company")
Half-yearly results
Significant progress in key portfolio companies, well financed, commitment to
continued shareholder returns
IP Group plc (LSE: IPO), which develops world-changing science and technology
businesses across life sciences, deeptech and cleantech, today announces its
financial results for the six months ended 30 June 2022.
Half-year highlights
· Significant progress in key companies including fusion result at
First Light Fusion, Istesso preparing to commence a Phase 2b trial for its
lead drug MBS2320 in rheumatoid arthritis, and multiple upgrades to revenue
projections at Oxford Nanopore
· Launch of dedicated cleantech platform Kiko Ventures to support
transformative climate technology
· Strong balance sheet and liquidity to support follow-on
investment in the portfolio with gross cash and deposits at 30 June 2022 of
£235.7m (HY21: £308.9m; FY21: £321.9m)
· NAV1F 1 (#_ftn1) of £1,414.0m or 136.7 pence per share (HY21:
£1,439.8m or 135.4 pence per share; FY21: £1,738.1m or 167.0pps)
· Loss of £309.8m (HY21: Profit of £116.5m; FY21: Profit of
£449.3m), driven by reversal of gains on Oxford Nanopore reflecting public
market declines for life science tools companies
· Profit of £35.6m excluding fair value movement on Oxford
Nanopore (HY21: Profit of £116.5m; FY21: Profit of £152.3m)
· Our private portfolio company valuations remained robust with
considerably more (92%) of our companies raising money in the current period
at or above previous funding round valuations
· Interim dividend of 0.50p per share (HY21: 0.48pps; final
dividend: 0.72pps); completion of £35m share buyback
Portfolio highlights
· Investment into portfolio: £52.0m into 22 companies across all
our key thematic areas (HY21 £69.5m; FY21: £103.7m) including significant
allocations into Istesso Ltd (£10m) and Bramble Energy Ltd (£9.5m)
· Total portfolio: £1,265.5m (HY21: £1,263.5m; FY21: £1,507.5m)
· Net portfolio loss of £291.1m (HY21: £140.4m gain; FY21:
£499.2m gain), with quoted portfolio losses of £395.4m and private portfolio
gains of £104.3m. Oxford Nanopore contributed a loss of £345.5m (HY21: nil,
FY21: £297.1m gain)
· Total funds raised by portfolio companies: approximately £330m
(HY21: c.£1.0bn; FY21: c.£2.4bn) including Nexeon (£60m), Microbiotica
(£40m), MoA Technology (£35m) and Bramble Energy Ltd (£32m)
· Realisations of £2.1m, reflecting market conditions (HY21:
£111.9m; FY21 £213.9m)
Post period-end update
· Agreement to issue long maturity private loan notes to UK
institutional investors, making an additional £105m available for future
drawdown for ESG investment to support portfolio companies and new investments
· The fair value of the Group's holdings in listed companies
experienced a net fair value increase of £30.2m in the period since 30(th)
June
· Hysata, our novel electrolyser business, completes AUD$43m round
including AUD$19m from IP Group, to fund pilot plant
Greg Smith, Chief Executive of IP Group, said: “I am pleased to report
strong progress in the first half of the year in our leading private portfolio
companies. First Light Fusion achieved a world-first fusion result which was
externally validated by the UK Atomic Energy Authority and we anticipate that
Istesso’s Phase 2b study in rheumatoid arthritis for its lead drug MBS2320
will start shortly. Our deepening thematic focus was demonstrated by the
launch of our dedicated cleantech platform, Kiko Ventures.
Having acted to ensure that the Group has a strong level of liquidity, IP
Group ended the period with gross Cash of £235.7m. This financial strength
enabled the Group to continue to invest into our leading companies over the
period as well as continuing to return a proportion of all exits to
shareholders via dividends and share buybacks. In addition, we have arranged a
private market debt issue to provide additional funding flexibility in what
may be difficult market conditions.
The Group, including Parkwalk, is one of the largest investors in university
and other research-based companies in the world and has both a maturing
portfolio and an exciting pipeline of opportunities. While the Group continues
to plan for reduced realisations this year, given the current market backdrop
which has resulted in a first half loss, we continue to believe that the
prospects for our portfolio are compelling. Given our strong cash and credit
facilities, maturing portfolio and deep sector expertise, IP Group is well
placed to navigate the current economic and geopolitical conditions and
generate significant returns to shareholders.”
Webinar: IP Group will host a webinar for analysts and investors today, 10:00
GMT. For more details or to register as a participant please visit
www.ipgroupplc.com/events (http://www.ipgroupplc.com/events) .
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 & Operating Officer
Liz Vaughan-Adams, Communications +44 (0) 20 7444 0062/+44 (0) 7979 853802
Charlotte Street Partners
David Gaffney +44 (0) 7854 609998
Andrew Wilson +44 (0) 7810 636995
Further information on IP Group is available on our website:
www.ipgroupplc.com
This half-yearly report may contain forward-looking statements. These
statements reflect the Board's current view, are subject to a number of
material risks and uncertainties and could change in the future. Factors that
could cause or contribute to such changes include, but are not limited to, the
general economic climate and market conditions, as well as specific factors
relating to the financial or commercial prospects or performance of individual
portfolio companies within the Group's portfolio of investments. Throughout
this Half-Yearly Report the Group's holdings in portfolio companies reflect
the undiluted beneficial equity interest excluding debt, unless otherwise
explicitly stated.
Interim Management Report
Summary
The Group’s purpose is one of evolving science and innovation into
world-changing businesses. Our vision is to contribute to a better future
through the impact of the science and technology-based businesses we have
identified, backed, and grown together as long-term partners. An underlying
theme in our strategy to achieve this is one of increasing focus; increasingly
directing our capital, resources, and expertise on clear thematic areas
contributing to a sustainable, healthier and tech-enriched future. IP
Group’s international footprint provides valuable insight and resource to
support our portfolio companies as they scale and grow. In five years’ time,
IP Group aspires to address global unmet needs, building significant portfolio
companies, presence, and influence in these areas. Our ambition is to grow and
support another five businesses to values in excess of $1bn and at least one
worth more than $10bn.
In the first half of the year, while public market conditions were difficult,
the Group’s portfolio made excellent progress with First Light Fusion
completing a £33m Series C round and confirming it had achieved fusion while
a number of other companies closed notable funding rounds. Since 30 June 2022,
one of our leading portfolio companies, Istesso, is preparing to commence a
Phase 2b trial for its rheumatoid arthritis drug MBS2320, which we expect to
begin soon. Having acted to ensure that the Group has a strong level of
liquidity, IP Group ended the period with gross Cash of £235.7m and added
further capacity through agreeing a private note placement shortly after the
half year. This financial strength will enable the Group to continue to direct
investment into leading companies over the coming periods without recourse to
shareholders. The Group, including Parkwalk, is one of the largest investors
in university and other research-based companies in the world and IP Group has
both a maturing portfolio as well as a compelling pipeline of opportunities.
As part of our strategy of deeper thematic focus, IP Group launched
its wholly-owned platform dedicated to supporting transformative climate
technology in the first half of the year called ‘Kiko Ventures’. Kiko
Ventures is fully owned and funded by the Group and will build on IP Group’s
strong track record and existing cleantech portfolio, which is valued at more
than £190m. In line with previous guidance, the Group plans to invest
approximately £200m over five years from its balance sheet capital into
existing and new companies within the cleantech space.
There continues to be a high level of macro uncertainty with rising inflation
and interest rates, fears of recession and ongoing geopolitical concerns,
greatly exacerbated by Russia’s invasion of Ukraine. Like others, the Group
is not immune to geopolitical events and the resultant volatile equity
markets. Our public portfolio has been impacted by the reaction of global
stock markets to rising interest rates and elevated uncertainty, particularly
evidenced by the rotation out of growth and technology stocks, with fewer
funding rounds and limited opportunities for cash realisations as compared to
the previous year.
As yet, we have seen little direct evidence of the public market correction
impacting valuations in our private portfolio. However, we are mindful of the
higher level of uncertainty around private valuations. We have responded by
obtaining independent external valuations for five of our largest private
companies and have reduced the valuation of a small number of our later stage
holdings where appropriate. See further details of our approach in the
financial review section.
IP Group remains well financed and is well placed to support its portfolio
companies. Increased interest in our main thematic areas makes us confident
that appetite for and valuation of growth companies in our areas of expertise
will get stronger. As a result, we believe that prospects for our portfolio
remain positive. However, in the short term we are planning lower capital
allocations to the portfolio than originally envisaged for 2022 on the basis
of likely lower levels of cash realisations given the current market backdrop.
Delivering returns for shareholders, alongside impact, is a core principle of
the Group and narrowing the discount to our NAV per share remains a key focus
of the Board. Our shareholder value proposition comprises primarily capital
growth over the medium and long term, alongside the return of a proportion of
cash realisations through dividends and other mechanisms such as share
buybacks.
Financial performance; strong cash balance
As at 30 June 2022, IP Group had gross cash and deposits of £235.7m (HY21:
£308.9m, FY21: 321.9m), having deployed £52.0m of capital in the period
including notable investments into portfolio companies Istesso Ltd (£10m) and
Bramble Ltd (£9.5m) as well as a number of smaller size investments into
current and new opportunities across all three of our thematic areas. Since 30
June 2022, the Group has invested £19m.
As at 30 June, the Group’s Net Asset Value was £1,414.0m, or 136.7 pence
per share, compared with £1,439.7m, or 135.4 pence per share a year before
and a reduction of 19% from £1,738.1m, or 167pence per share, at 31 December
2021. The decline over the last six months is largely attributable to the
reduction in value of the Group’s public portfolio which has been impacted
by the rotation out of growth and technology stocks as well as the broader
public market backdrop.
IP Group’s public portfolio recorded a fair value reduction of £395m in the
period to 30 June 2022 (HY21: gain £55.9m, FY21: £288.6m), of which £345m
related to the fall in the share price of Oxford Nanopore Technologies plc
(HY21: £nil, FY21: £297.1m). In the private portfolio, the Group has seen a
fair value gain of £104m, over half of which is attributable to an initial
uplift in the fair value of portfolio company First Light Fusion Ltd after it
confirmed it had achieved fusion in April. The Group therefore recorded a net
loss of £309.8m in the period (HY21: Profit of £116.5m; FY21: Profit of
£449.3m).
Overview of business performance including thematic focus & holdings
The performance of the Group's Business Units is summarised below with further
detail on the performance of each in the Portfolio Review.
All £m unless stated Invested Realisations Net Portfolio Gain/(loss) Fair Value Simple return on capital (%)
at 30 June 2022
Oxford Nanopore Technologies plc - - (345.5) 226.5 (60%)
Healthier future: Life Sciences 31.1 1.8 (39.8) 403.6 (10%)
Tech-enriched future: Deeptech 4.1 0.1 3.9 219.7 2%
Sustainable future: Cleantech (Kiko Ventures) 13.1 - 69.2 196.2 67%
North America 2.1 - 11.8 94.0 14%
Australia and New Zealand 0.8 - 10.7 36.8 43%
Platform investments 0.8 0.2 (3.2) 43.5 (8%)
Organic and De minimis - - 3.0 16.2 29%
Total Net Portfolio 52.0 2.1 (289.9) 1,236.5 (20%)
Attributable to third parties - - (1.2) 29.0 (7%)
Gross Portfolio 52.0 2.1 (291.1) 1,265.5 (19%)
It is pleasing to report solid progress in the highlighted companies in each
of our thematic areas as outlined in the following table:
Theme and company Key metrics(1) Milestones achieved to date Value creation milestones
Tech-enriched future: 19.5% ownership Completion of $45m Series C Customer acquisition and revenue growth
Featurespace Limited £65m IP Group value 2020 revenues: £21m
Leading predictive analytics for fraud and cybercrime prevention £342m company value 5-year compound annual growth rate in recurring revenue of 74% Faster growth rate than projected market growth of 30%
68 customers (Dec 2021)
Healthier future: 56.4% ownership Positive Phase 2a data in patients with Rheumatoid Arthritis MBS2320 Phase 2b data H1 2024
Istesso Limited £96m IP Group value Preparations for Phase 2b assessment are ongoing Second product into clinic
Reprogramming metabolism to treat autoimmune disease £150m company value
Start MBS2320 Phase 3 trial
Sustainable future: 27.5% ownership Commissioning of hyper-velocity gas gun reactor Series D fundraise
First Light Fusion £115m IP Group value Validated fusion reaction High impact scientific publication
Specify gain reactor (Machine 4)
Solving fusion power with the simplest machine possible £417m company value
(1) Ownership % and company value both on an undiluted basis
Shareholder returns, interim dividend
The Board continues to recognise that share price volatility and the discount
to NAV per share remains a major issue for shareholders and remains focussed
on shareholder value creation, having introduced a share buyback programme and
dividends last year. The Board has declared an interim dividend of
0.50 pence per share (HY21: 0.48 pence per share), with the Directors
offering shareholders the opportunity to elect to receive dividends in the
form of fully paid shares in IP Group plc in lieu of cash under the Scrip
Dividend Scheme. Total dividend payments during 2021 were 1.48 pence per
share, with a final 2021 dividend of 0.72 pence per share paid in the current
period.
The Board continues to consider that shareholder returns will be driven
primarily by long-term capital appreciation. The Board remains committed to
delivering a regular dividend income, which is intended to comprise a
relatively small component of total shareholder return. We will also continue
to consider share buyback programmes and other capital return tools as we
generate realisations from our portfolio.
Capital and third party funds
The Group manages or advises over £603m in third party capital across our
Parkwalk, UK and Australian business units. Parkwalk, the Group’s specialist
EIS fund management subsidiary, now has assets under management of £450m
(HY21: £403m; FY21: £388m) including alumni funds managed in conjunction
with the universities of Oxford, Cambridge, Bristol, and Imperial College
London. In Australia, the IP Group HostPlus Innovation Fund totals A$224m
(c.£127m) and has invested in several of IP Group’s portfolio companies
around the world. The Group intends to continue growing the level of funds
under management in the coming years, including the first close of our China
Everbright fund in the second half of 2022. Including Parkwalk, the Group
invested a combined total of £90m into research-based companies (HY21
£89.9m; FY21: £155.9m).
Capital structure and financing arrangements
The Board has been considering the Group’s capital structure and has
concluded that it would be appropriate to add additional capacity to support
portfolio investment given current volatility in capital markets’ appetite
for science-based investment companies. Following the regular repayment of
our European Investment Bank facilities over the past four years, debt has
fallen from over £100m at December 2017 to £44.1m at 30 June 2022, whilst
the portfolio grew from £1.1bn to £1.3bn over that period.
Accordingly, we have recently agreed terms to issue £120m of long maturity
private loan notes to London-based institutional investors. Half of these
notes will be drawn down in December 2022 and the balance in June 2023, with
three equal maturities in December in 2027, 2028 and 2029. The interest rate
is fixed, at an average of 5.25%. Concurrent with the private placement of
the loan notes, we have agreed to the early repayment of approximately £15m
of the shorter-dated of our EIB debt, leaving £22m of EIB debt to be
progressively repaid between now and January 2026, resulting in an additional
£105m net additional funding overall.
This modest level of gearing will give the Group additional flexibility to
make investments in accordance with our strategy, in ESG compliant
investments, give greater flexibility in managing the timing of realisations
and exits, and further enhance liquidity.
Outlook
IP Group remains well financed and is well placed to support its portfolio
companies. Maintaining a strong level of liquidity continues to be extremely
important in the current environment. The Group is committed to further
growing its NAV per share as well as to closing the current share price
discount to NAV and to creating further value for stakeholders. We
continue to see increased interest in our main thematic areas and
are confident that investor appetite for growth companies will return.
PORTFOLIO REVIEW
Overview
As at 30 June 2022, the value of the Group's portfolio, including LP fund
investments, was £1,265.5m (HY21: £1,263.5m, FY21: £1,507.5m) reflecting a
net portfolio loss of £291.1m (HY21: gain £140.4m, FY21: gain £499.2m) and
net cash invested of £49.9m (HY21: net realisation £40.8m, FY21: net
realisation £107.1m). The portfolio consists of interests in 52 'focus'
investments, representing 87% of the portfolio value, and 51 other investments
(HY21: 43, 86%, 60, FY21: 44, 90%, 56).
Performance summary
A summary of the Income Statement gains and losses that are directly
attributable to the portfolio is as follows:
Six months Six months ended Year ended
ended 30 June 2021 31 December
30 June 2022 £m 2021
£m £m
Unrealised gain on revaluation of investments 113.2 106.9 474.4
Unrealised loss on revaluation of investments (432.7) (19.1) (63.1)
Effects of movement in exchange rates 15.4 (2.1) 4.6
Change in fair value of equity and debt investments (304.1) 85.7 415.9
Gain on disposals of equity investments 4.2 57.4 81.5
Movement in value of interests in Limited Partnerships 8.8 (2.7) 1.8
Net portfolio (loss)/gain (291.1) 140.4 499.2
A summary of the largest unrealised and realised fair value gains and losses
by portfolio investment is as follows:
Gains £m Losses £m
First Light Fusion Limited 57.3 Oxford Nanopore Technologies plc (345.5)
Featurespace Limited 13.4 Diurnal Group plc (22.2)
Interest in Cayman Fund L.P. 11.0 Centessa Pharmaceuticals plc (10.9)
Hysata Pty Ltd 8.6 Athenex, Inc. (5.6)
Nexeon Limited 8.5 Ultraleap Holdings Limited (4.2)
Other quoted - Other quoted (7.0)
Other private 34.0 Other private (28.5)
Total 132.8 Total (423.9)
Investments and realisations
The Group deployed a total of £52.0m across 22 new and existing investments
during the period (HY21: £71.1m, 42, FY21: £106.8m, 67), versus realisations
in the period of £2.1m (HY21: £111.9m; FY21: £213.9m), resulting in net
investment of £49.9m (HY21: net realisations of £40.8m, FY21: net
realisations of £107.1m).
An analysis of amounts invested by company focus is as follows:
Cash investment analysis by company focus Six months ended Six months ended Year ended
30 June 2022 30 June 31 December 2021
2021
£m
£m
£m
Top 20 26.2 37.5 51.4
Focus 10.9 8.8 14.1
Other (including companies exited during the period) 12.0 6.6 11.8
Total United Kingdom 49.1 52.9 77.3
North America 2.1 14.3 19.1
Australia & New Zealand 0.8 3.9 10.4
Total purchase of investments 52.0 71.1 106.8
Less cash proceeds from sales of investments (2.1) (111.9) (213.9)
Net investment / (realisations) 49.9 (40.8) (107.1)
( )
Largest investments by portfolio company:
Investments £m
Istesso Limited 10.0
Bramble Energy Limited 9.5
Microbiotica Limited 4.0
Gripable Limited 3.5
MoA Technology Limited 2.8
Other 22.2
Total 52.0
Deferred consideration of £44.3m (on a discounted and risk-weighted basis)
was outstanding at 30 June (HY21: £36.9m, FY21: £42.3m), predominantly
relating to the Group's realisation of WaveOptics (£26.4m, exited in 2021),
Enterprise Therapeutics (£12.7m, exited in 2020) and Kuur Therapeutics
(£5.1m, company acquired by Athenex in 2021).
Number of Investments (including holdings in LP funds)
United Kingdom North America Australia & New Zealand Total
1 January 2022 88 1 14 103
Additions 6 - 1 7
Closed/liquidated (2) - - (2)
Reclassified to de minimis (4) - (1) (5)
30 June 2022 88 1 14 103
Co-investment analysis
Including the £51.6m of primary capital invested by the Group (the Group also
invested £0.3m via secondary purchases), the Group's portfolio raised
approximately £350m during the half year to 30 June 2022 (HY21: £1.0bn;
FY21: £2.4bn). Co-investment from parties or funds with a greater than 1%
shareholding in IP Group plc totalled £9.5m, all of which was invested in MoA
Technology Limited. An analysis of this co-investment by source is as follows:
Portfolio capital raised Six months ended Year ended
30 June 2022 30 June 2021
£m % £m %
IP Group (1) 51.6 14% 68.5 7%
Funds managed by Parkwalk Advisors 19.6 5% - 0%
IP Group plc shareholders (>1% holdings) 9.5 3% 53.2 5%
Institutional investors 90.3 25% 311.4 29%
Corporate, other EIS, individuals, universities and other 186.7 52% 615.4 59%
Capital into multi-sector platforms - 0% - 0%
Total 357.8 100% 1,048.5 100%
(1) Reflects primary investment only; in the six months to June 2022 the Group
invested £0.3m via secondary purchase of shares (HY21: £1.0m, FY21: £1.1m).
Portfolio analysis by focus
At 30 June 2022, the Group's portfolio fair value of £1,265.5m was
distributed across the portfolio as follows:
Fair value analysis As at 30 June 2022 As at 31 December 2021
by company focus
Fair value Number Fair value Nu
mb
er
£m % % £m % %
Top 20 by value 858.0 70% 20 19% 1,129.5 77% 20 19%
Focus 201.3 17% 32 31% 194.9 13% 25 24%
Other 161.0 13% 51 50% 143.6 10% 58 57%
Total 1,220.3 100% 103 100% 1,468.0 100% 103 100%
De minimis and organic holdings 16.2 10.4
Total Portfolio 1,236.5 1,478.4
Attributable to third parties(1) 29.0 29.1
Gross Portfolio 1,265.5 1,507.5
(1 ) In the above table, the amount attributable to third parties
consists of £14.9m attributable to minority interests represented by third
party limited partners in the consolidated fund, IP Venture Fund II, £12.6m
attributable to Imperial College London and £1.5m attributable to other third
parties (HY21: £18.8m, £10.8m, £2.7m, FY21: £16.0m, £11.7m and £1.4m).
Top 20 investments consist of the 20 most valuable holdings in the Group's
portfolio by the period-end value. Focus investments are those investments
that are not within the 20 most valuable, but on which the investment teams
focus a significant proportion of their resources and capital. Outside of
these companies, the portfolio contains a broad selection of opportunities
categorised as 'other'. Many of these opportunities are at an early stage, and
they typically receive a lower level of capital and management resource.
Companies that are at a very early stage or in which the Group's holding is of
minimal value, but remain as operating businesses, are classed as de minimis
holdings. Organic holdings are investments in which the Group has acquired a
shareholding upon creating the company because of its technology transfer
relationship with Imperial College London, but in which it has not actively
invested.
The total value of the Group's portfolio companies (excluding OSE and CIC,
organic investments and de minimis holdings) is approximately £15bn (HY21:
£9bn, FY21: £20bn).
Portfolio analysis by sector
The Group funds spin-out companies based on a wide variety of scientific
research emerging from leading research-intensive institutions, which broadly
fall across our three thematic areas. The Group splits its core opportunity
evaluation, investment and business-building team into specialist divisions,
Life Sciences, Deeptech and Cleantech, and geographically including North
America and Australia & New Zealand. A small number of investments are
categorised as 'Platform investments', which includes our holdings in
companies which invest into other companies, such as Oxford Sciences
Enterprises plc, and our holdings in Limited Partnerships, such as the UCL
Technology Fund.
Fair value analysis by sector As at 30 June 2022 As at 31 December 2021
Fair value Number Fair value Nu
mb
er
£m % % £m % %
Oxford Nanopore Technologies plc 226.5 19% 1 1% 572.0 40% 1 1%
Life Sciences 403.6 33% 35 34% 414.9 28% 36 35%
Deeptech 219.7 18% 32 31% 226.3 15% 34 33%
Cleantech 196.2 16% 16 16% 103.3 7% 12 12%
North America 94.0 7% 1 1% 80.1 5% 1 1%
Australia and New Zealand 36.8 3% 14 13% 25.2 2% 14 14%
Platform investments 43.5 4% 4 4% 46.2 3% 5 4%
Total 1,220.3 100% 103 100% 1,468.0 100% 103 100%
De minimis and organic holdings 16.2 10.4
Total Portfolio 1,236.5 1,478.4
Attributable to third parties(1) 29.0 29.1
Gross Portfolio 1,265.5 1,507.5
(1)( ) In the above table, the amount attributable to third
parties consists of £14.9m attributable to minority interests represented by
third party limited partners in the consolidated fund, IP Venture Fund II,
£12.6m attributable to Imperial College London and £1.5m attributable to
other third parties (HY21: £18.8m, £10.8m, £2.7m, FY21: £16.0m, £11.7m
and £1.4m).
Portfolio review: Oxford Nanopore
While the IPO in October 2021 and after-market performance for the remainder
of the year was a great success, providing fair value gains of £297m at 31
December 2021, shares in Oxford Nanopore have performed less well in the six
months to 30 June, trading down from 697p to the current 318p 2 (#_ftn2) , a
decline of 54%, and pricing the stock 25% below its IPO price of 425p. This
decline in price reflects the general malaise in global stock markets and, in
particular, the life science tools sector. However, the company's fundamentals
remain strong, reporting Life Sciences Research Tools (LSRT) revenue of £127m
in 2021, representing a 94% increase over 2020, and increasing LSRT revenue
guidance for 2022 to £145-160m from the previous £135-145m. At the upper end
of the range, this would represent 26% year-on-year growth. Oxford Nanopore
remains a core, strategic holding for the Group with significant potential
upside as the Company fulfils its growth and profitability ambitions over the
coming years.
Company name Description Group Stake at 30 June 2022(I) Net Unrealised + realised fair value movement Fair value
% investment/ (divestment) £m of Group
£m holding
at 30 June 2022
£m
Oxford Nanopore Technologies plc Enabling the analysis of any living thing, by any person, in any environment 10.0% - (345.5) 226.5
Portfolio review: Life sciences
IP Group's Life Sciences portfolio comprises holdings in 35 companies valued
at £404m at 30 June 2022.
During the first half of 2022, the other life sciences portfolio (excluding
Oxford Nanopore) lost £39.7m in fair value, or 10%. This was driven largely
by declines in the publicly listed part of the portfolio (Diurnal (£22.2m),
Centessa (£10.9m), Athenex (£5.6m), DeepMatter (£0.6m), Intelligent
Ultrasound (£0.6m), Tissue Regenix (£0.5m)), which was down an aggregate
£42.2m. While much of this decline reflected the broader turmoil in global
stock markets and, in particular, the sell-off in the
biotechnology/life-sciences sector, there were some company-specific issues
which contributed to the falls. Thus, in the case of Diurnal, reimbursement
and pricing constraints relating to its endocrine drug franchise led the
company to announce that it will require further financing to reach
profitability, while Centessa took the decision to discontinue development of
its Phase 3 drug lixivaptan.
Company name Description Group Stake at 30 June 2022(I) Net Unrealised + realised fair value movement Fair value
% investment/ (divestment) £m of Group
£m holding
at 30 June 2022
£m
Istesso Limited Reprogramming metabolism to treat autoimmune disease 56.4% 10.0 - 95.6
Hinge Health, Inc. The World's First Digital Clinic for Back and Joint Pain 1.8% - 0.8 64.3
Ieso Digital Health Limited Digital therapeutics for psychiatry 32.2% - - 21.8
Crescendo Biologics Limited Biologic therapeutics eliciting the immune system against solid tumours 15.1% - - 18.7
Artios Pharma Limited Novel oncology therapies 7.6% - 0.4 18.2
Mission Therapeutics Limited Targeting deubiquitylating enzymes for the treatment of CNS and mitochondrial 19.0% 2.7 - 18.1
disorders
Microbiotica Limited Gut-microbiome based therapeutics and diagnostics 18.4% 4.0 1.7 16.1
PsiOxus Therapeutics Limited Gene and viral therapies for cancer 25.0% - - 15.4
Oxular Limited Treatments and delivery technology for sight-threatening diseases 27.2% - - 14.6
Other companies (26 companies) 14.2 (42.6) 120.8
Total 30.9 (39.7) 403.6
i. Represents the Group's undiluted beneficial economic equity interest
(excluding debt), including only the Group's portion of IPVF II. Voting
interest is below 50%.
Hinge Health continues to significantly grow revenues and expand its customer
base. The company raised a $400m Series E round in October 2021 at a $6bn
company valuation, led by Coatue Management and Tiger Global. However,
considering public market performance in the first half of 2022 we engaged a
third-party valuation specialist to assess the company's current value. We
have valued our holding to the mid-point of their suggested valuation range, a
10% reduction to the Series E price, which equates to a £6m reduction in the
value of the Group's holding. This was more than offset by FX gains, resulting
in a net £0.8m increase in the carrying value of our investment.
There have been some significant developments at several of our key portfolio
names, including Microbiotica's £50m Series B financing and Crescendo
Biologics' $750m collaboration with BioNTech, which is designed to combine
Crescendo's Humabody technology with BioNtech's mRNA platform in the creation
of novel therapeutic agents.
Istesso, the Group's third largest holding, continues to progress towards the
start of its Phase 2b study for MBS2320, its lead drug, in rheumatoid
arthritis. To this end, the Group invested £10m in the company towards the
cost of the study by way of a convertible loan note in the first half.
We are pleased to have made several new investments during the half-year,
including £3.5m into a Series A financing for GripAble, an Imperial
College-originated company developing digitally-enabled rehabilitation
programmes and devices for people with neurological and musculoskeletal
conditions, and Kynos, an Edinburgh University spinout developing novel drugs
against kynurenine 3-monooxygenase (KMO), a pivotal enzyme in the mediation of
autoimmunity and cancer. In addition, the Group invested £2.4m into Abliva
AB, a Stockholm-listed biotech company developing novel agents for the
treatment of rare mitochondrial diseases. Abliva's lead drug, KL1333, has been
approved by the FDA to enter a potentially pivotal study in primary
mitochondrial disease (PMD) and the company's recent c.£16m financing round,
in which the Group participated, is designed to enable the company to reach a
key inflexion point in this study.
Portfolio review: Technology
IP Group's Technology portfolio consists of our Deeptech and Cleantech
portfolios and comprises holdings in 48 companies valued at £416m at 30 June
2022. The portfolio experienced market headwinds in the period but overall
delivered a satisfactory performance with the Deeptech portfolio recording a
fair value increase of £3.9m, largely driven by the uplift in value of
Featurespace, and the Cleantech portfolio recording a fair value increase of
£69.2m, driven by First Light Fusion and Nexeon.
In the first half of the year, the Group also launched 'Kiko Ventures', our
platform to deepen our support for transformative climate technology. Kiko is
fully owned and funded by the Group and will build on our strong track record
and existing cleantech portfolio. The Group plans to invest approximately
£200m over five years from its balance sheet capital into existing and new
companies with the Group's cleantech team, led by partners Robert Trezona,
Jamie Vollbracht and Arne Morteani, continuing to support and build
category-leading companies, under the Kiko Ventures brand.
Deeptech portfolio
Company name Description Group Stake at 30 June 2022(i) Net Unrealised + realised fair value movement Fair value
% investment/ (divestment) £m of Group
£m holding
at 30 June 2022
£m
Featurespace Limited Leading predictive analytics company 19.5 - 13.4 65.0
Ultraleap Holdings Limited Contactless haptic technology 17.4 - (3.4) 32.1
"feeling without touching"
Garrison Technology Limited Anti-malware solutions for enterprise cyber defences 23.4 - - 25.7
Salt Pay Co. Limited Mobile payments with integrated loyalty schemes Not disclosed - (4.0) 20.6
Other companies (28 companies) 4.1 (2.1) 76.3
Total 4.1 3.9 219.7
i. Represents the Group's undiluted beneficial economic equity interest
(excluding debt), including only the Group's portion of IPVF II. Voting
interest is below 50%.
The Deeptech portfolio comprises holdings in 32 companies valued at £220m at
30 June 2022.
Overall, the Deeptech portfolio fared well in the first half of 2022 given the
very significant cooling of the technology market witnessed over the period.
The most valuable asset in the portfolio, Artificial Intelligence fraud
prevention company Featurespace, continues to go from strength-to-strength in
terms of revenue growth and securing new blue-chip customers. The company,
which is well-funded and delivering in line with growth targets, is at a scale
now where it is having a substantial positive impact on society, protecting
millions of consumers from experiencing the catastrophic effects of fraud and
defending our global banking systems. The value of our 19.5% holding in
Featurespace increased by £13.4m, as a result of commercial progress over the
period, and we have very high hopes for further growth in this asset as it
expands its customer base.
Our second largest holding, world-leading hand tracking and haptics company
Ultraleap continues to make good progress following its £60m series D funding
round last year. The company, which is enabling intuitive, touchless gesture
control in AR/VR, interactive kiosks, digital out-of-home and automotive,
delivered healthy revenue growth over the period and continues to gain
traction with enterprise customers that have the potential to deliver
significant royalty revenue through integration of the Ultraleap technology
into consumer products. We did, however, reflect a £3.4m reduction in our
carrying value to reflect potential public-market impacts on the value of this
company (see financial review section below for further details).
Our third largest holding, Garrison Technology, which powers enterprise-wide
protection from phishing attacks and malware, had a strong first half with
healthy revenue growth powered in particular by strong traction with US and UK
governmental customers.
University College London spin-out company Re:infer, which uses machine
learning technology to understand massive amounts of conversational data in
real time, has been growing rapidly and attracting attention for its unique
technological capabilities, which are in high demand in the Robotic Process
Automation sector. In August, leading enterprise automation software company
UiPath announced that it had acquired Re:infer for an undisclosed amount.
We were also pleased to see many examples of positive progress in the
earlier-stage portfolio in the first half of the year. Accelercomm, which is
developing a patented and secure wireless communications architecture that
offers a 10x improvement on data rate, doubles network capacity and is
required to deliver the full spectrum of 5G (and beyond) services across the
wireless communications marketplace, won 'Best Digital Tech Breakthrough' at
the GLOMO (Global Mobile) Awards at Mobile World Congress in Barcelona, having
been selected by a worldwide panel of hundreds of industry leaders.
University of Oxford spin-out Oxford Quantum Motion made exciting technical
progress with its scalable silicon-based qubit technology that we believe puts
it at the front of the field of promising approaches to constructing the
building blocks of a quantum computer.
On the less positive side, some of our lower value holdings did feel the
effects of stock market headwinds and, in some cases, commercial setbacks.
Mirriad, which uses AI to place advertising naturally into video content, saw
its share price fall despite announcing an 800% increase in US campaign
revenues for the 2021 holiday season compared to 2020, with data from Nielsen
showing that Mirriad's audience reach was up to 39% higher than in the
equivalent TV spot breaks in the same content. The company also announced an
important partnership with Magnite, Inc., the world's largest independent
sell-side advertising platform, to bring scale and automation to the
in-content advertising format. Another of our listed assets, Actual
Experience, suffered some commercial setbacks and fell 98% in the period,
following a previous sale, IP Group has already recovered its cost on this
investment.
Cleantech portfolio: Kiko Ventures
Company name Description Group Stake at 30 June 2022(i) Net Unrealised + realised fair value movement Fair value
% investment/ (divestment) £m of Group
£m holding
at 30 June 2022 (i)
£m
First Light Fusion Limited Solving fusion with the simplest possible machine 27.5 - 57.3 114.6
Bramble Energy Limited The fuel cell company with Gigafactories 31.5 9.5 3.9 20.7
Nexeon Limited Silicon anodes for next generation lithium-ion batteries 7.8 - 8.4 19.8
Oxbotica Limited Software to enable every vehicle to become autonomous 14.3 - - 16.3
Other companies (12 companies) 3.6 (0.4) 24.8
Total 13.1 69.2 196.2
i. Represents the Group's undiluted beneficial economic equity interest
(excluding debt), including only the Group's portion of IPVF II. Voting
interest is below 50%.
The Kiko Ventures portfolio comprises holdings in 16 companies valued at
£196m at 30 June 2022.
The first half of 2022 has been positive for the cleantech portfolio, with an
overall fair value increase of £69.2m. First Light Fusion, the largest asset
in the cleantech portfolio, completed a $45m (£33m) Series C fundraise from
both existing and new investors to accelerate the development of its gain
experiment and to perform preliminary design and engineering work on a
first-of-a-kind fusion energy power plant based on its technology. In April,
First Light also announced it had achieved fusion with its approach, a result
which has been independently validated by the UK Atomic Energy Authority
(UKAEA) and the first time that fusion has been demonstrated using a
projectile-based approach. First Light achieved fusion having spent less than
£45m, and with a rate of performance improvement faster than any other fusion
scheme in history. We believe that achieving this world-first will result in
at least a doubling of the value of the company, based on recent comparatives
and third-party valuation work and, combined with the funding round, the Group
has recorded a net fair value gain of £57.3m. First Light is working with UBS
Investment Bank to explore strategic options for the next phase of its
scientific and commercial development.
Despite macro-economic headwinds, large deals are still happening in the
cleantech ecosystem, and there have been other significant funding rounds in
our portfolio. In February, Bramble Energy completed a £35m Series B with IP
Group committing approximately £10m, one of our largest investments in
cleantech to date. Bramble, a joint spin-out from Imperial College of London
and University College of London, has developed a unique, printed circuit
board (PCB) fuel cell that utilises existing and cost-effective production
methods and materials from the PCB industry, reducing cost and complexity in
manufacturing hydrogen fuel cells. Nexeon, an Imperial College spin-out
developing materials for lithium-ion battery anodes, also raised significant
funding in this period. Nexeon entered into a strategic partnership with SKC,
a battery and semiconductor materials company, headquartered in Korea. The
deal saw a consortium led by SKC invest $80m (£67m) in the company, which led
to an £8.4m increase in the fair value of our holding. We also made two
investments in new companies in the period: one in heat pump technology and
the other in circular economy plastics.
Portfolio review: North America
The North American market remains an important part of the Group's overall
strategy to develop world-changing science and technology businesses. This is
supported by its relative contribution to global scientific research and its
deep commercial and capital markets. More than eight years ago, we decided
to begin building a strategic presence in North America, backing a locally
based team, and establishing relationships with top-tier US Universities and
Federal Laboratories. The business we established in the US, IP Group, Inc.,
has grown its team, network, and portfolio significantly since that time while
also attracting co-investment from a growing roster of high-quality
co-investors. We believe the platform is poised for significant growth over
the next 3-5 years and will continue to provide crucial strategic reach and
support for the Group in this geography.
In the first half of 2022, the US portfolio continued to make excellent
progress, achieving significant developmental and financial
milestones. Carisma Therapeutics, a company focussed on developing novel
cancer immunotherapies, signed a collaboration agreement with Moderna, which
included an investment of $45 million in cash and a $35 million convertible
note. Aptatek BioSciences, a developer of in-home health monitoring
solutions for patients with chronic disease, completed a round of funding with
Canterbury Scientific Ltd., which includes an option to manufacture. Nano
sensor company Instrumems announced its formal entry into the $7.5 billion
flow sensor market with a breakthrough solution that offers multi-sense
capabilities. Additive manufacturing company Uniformity Labs has signed
several partnership agreements with major 3D printing companies to produce
products using their revolutionary ultra-high density metal powders. These
include industry leaders Desktop Metal and Michelin's AddUp Group.
Company name Description Fair value
of Group
holding
at 30 June 2022(i)
£m
MOBILion Systems, Inc. A platform technology for conducting ion mobility separations with lossless 23.6
ion transfer and manipulation
Uniformity Labs, Inc. Equipment, materials and software for additive manufacturing 16.4
Carisma Therapeutics, Inc. Cancer immunotherapy treatments 15.1
Exyn Technologies, Inc. Unmanned aerial systems 12.9
Other companies (25 companies) 26.0
Total 94.0
i. Represents the Group's undiluted beneficial economic equity interest
(excluding debt), including only the Group's interest in IPG Cayman LP, which
is no longer consolidated. Voting interest is below 50%.
Portfolio review: Australia and New Zealand
In Australia and New Zealand, the Group continued to make significant
progress. The portfolio now stands at 14 companies in total.
Through the period, a number of companies in the portfolio achieved milestones
and demonstrated significant operational progress.
Hysata continue to make strong progress with the development of its novel
capillary-fed electrolyser, announcing in March the publication of a paper in
leading journal Nature Communications demonstrating performance at 98% energy
efficiency. This performance exceeds the 2050 IRENA target, representing a
significant step change. Following the announcement, the company has received
significant inbound interest from potential customers. In July, Hysata also
completed an oversubscribed series A funding round of A$43m.
Alimetry announced in June that it has received FDA clearance for Gastric
Alimetry, a pioneering non-invasive medical device for aiding the diagnosis
of gastric disorders, and the launch of Alimetry Inc., a US-based subsidiary
based in Minneapolis, MN, that will market and distribute Gastric Alimetry in
the US.
In June we also announced the launch of ElectraLith, a spin-out from Monash
University that is commercialising breakthrough technology for efficient and
sustainable lithium production, investing alongside Rio Tinto and Monash
Investment Holdings. ElectraLith's technology has the potential to
significantly shift the economics of lithium production from brine, ore and
recycling sources, reducing costs substantially while dramatically lowering
its environmental footprint.
In the period (and as reported in the 2021 Annual Report), Hostplus committed
a further A$75m to the IP Group Hostplus Innovation Fund. The IP Group
HostPlus Innovation Fund has invested in a number of IP Group's portfolio
companies in Australia and around the world, providing additive growth capital
for companies as they scale.
Portfolio review: Platform Investments
IP Group's Platform Investments portfolio comprises holdings in two companies
and two interests in Limited Partnerships, valued at £44m at 30 June 2022.
The Platform Investments portfolio is a cross-country and cross-sector
portfolio, containing holdings in multi-sector platform companies that operate
in a similar way to IP Group, but focus on a specific university, such as OSE
and CIC, and the UCL Technology Fund ('UCL'). As at 30 June 2022, IP Group has
a 2.3% holding in OSE valued at £20.6m and a 1.0% holding in CIC valued at
£4.0m (HY21: 2.3%, £23.3m, 1.0%, £3.1m, FY21: 2.3%, £23.3m, 0.9%, £2.7m).
Company name Description Group Stake at 30 June 2022(i) Net Unrealised + realised fair value movement Fair value
% investment/ (divestment) £m of Group
£m holding
at 30 June 2022
£m
Oxford Science University of Oxford preferred IP partner under 15-year framework agreement 2.3 - (2.7) 20.6
Enterprises plc
Interest in UCL Technology Fund L.P. Commercialising world class research from UCL 46.7 0.8 (2.3) 16.2
Other companies (2 companies/LPs) - 1.7 6.7
Total 0.8 (3.3) 43.5
I Represents the Group's undiluted beneficial economic equity interest
(excluding debt), including only the Group's portion of IPVF II. Voting
interest is below 50%.
Third party fund management: Parkwalk Advisors
Parkwalk, the Group's specialist EIS fund management subsidiary, now has
assets under management of £450m (HY21: £403m; FY21: £388m) including funds
managed in conjunction with the universities of Oxford, Cambridge, Bristol and
Imperial College London. In March 2022 Parkwalk closed their second
HMRC-approved Knowledge Intensive EIS Fund, and the first Fund was fully
invested by May 2022.
Despite the macro-economic climate, Parkwalk invested £38.0m in the first six
months of 2022 (HY21: £20.4m; FY21: £52.2m) in the university spin-out
sector across 19 companies (HY21: 20 investments). Beauhurst named Parkwalk as
the most active investor in the sector.
Eight new companies joined the Parkwalk portfolio, and one exit was achieved
at a modest uplift in value. Nine portfolio companies closed funding rounds at
uplifts in valuation, one unchanged and two at lower valuations than
previously held value. These companies raised c.£195m in funding in H1 this
year. We expect some further uplifts and some write-downs in the second half
of the year.
In the first half of the year three new employees joined the team taking
Parkwalk to 21 full time employees.
Parkwalk liaised closely with BEIS, HMT and HMRC on the financial ecosystem
for knowledge-intensive spinout companies and the UK Government's 'science
superpower' agenda.
Within Parkwalk, and more broadly, the Group continues to explore further fund
management opportunities.
Financial Review
· Loss for the period of (£309.9m) (HY21: profit of £116.5m;
FY21: profit of £449.3 m);
· Net assets were £1,414.0m (HY21: £1,439.7m; FY21: £1,738.1m);
· Net assets per share were 136.7p (HY21: 135.4p; FY21: 167p)
Consolidated statement of comprehensive income
A summary analysis of the Group's performance is provided below:
Six months ended Six months ended Year ended
30 June 2022 30 June 31 December 2021
£m 2021 £m
£m
Net portfolio (loss)/gain (291.1) 140.4 499.2
Net overheads (11.1) (9.6) (19.5)
Administrative expenses - consolidated portfolio companies - (0.1) (0.1)
Loss on disposal of subsidiary - - (3.8)
Administrative expenses -share-based payments charge (1.4) (1.3) (2.6)
Carried interest plan provision charge (6.0) (12.2) (17.2)
Net finance expense (0.2) (0.7) (1.4)
Taxation - - (5.3)
(Loss)/profit for the period (309.8) 116.5 449.3
Other comprehensive income (0.1) 0.1 0.3
Total comprehensive (loss)/profit for the period (309.9) 116.6 449.6
Exclude:
Share-based payment charge 1.4 1.3 2.6
Return on NAV (308.5) 117.9 452.2
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.
Net overheads
Six months ended Six months ended Year ended
30 June 2022 30 June 31 December 2021
£m 2021 £m
£m
Other income 3.1 5.1 13.6
Administrative expenses - all other expenses (12.5) (12.1) (28.3)
Administrative expenses - annual incentive scheme (1.7) (2.6) (4.8)
Net overheads (11.1) (9.6) (19.5)
Other income comprises fund management fees, licensing and patent income,
corporate finance fees as well as consulting and similar fees typically
chargeable to portfolio companies for services including executive search and
selection, as well as legal and administrative support. Other income for the
period totalled £3.1m (HY21: £5.1m; FY21: £13.6m); the decrease from the
previous half year was largely as a result of a reduction in performance fees
payable in respect of our managed funds, which have been impacted by the
reduction in portfolio values.
Other central administrative expenses, excluding performance-based staff
incentives and share-based payments charges, have remained essentially
unchanged relative to HY21 at £12.5m (HY21: £12.1m; FY21: £28.3m).
The charge of £1.7m in respect of the Group's Annual Incentive Scheme,
reflects a provisional assessment of performance against 2022 AIS targets
which include Group, Team and Individual performance elements (HY21: £2.6m;
FY21: £4.8m).
Other income statement items
The share-based payments charge of £1.4m (HY21: £1.3m; FY21: £2.9m)
reflects the accounting charge for the Group's 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.
Included within the Group's administrative expenses are costs in respect of a
small number of consolidated portfolio companies. Typically, the Group owns a
non-controlling interest in its portfolio companies; however, in certain
circumstances the Group takes a controlling stake and hence consolidates the
results of a portfolio company into the Group's financial statements.
The carried interest plan charge of £6.0m (HY21: £12.2m charge; FY21:
£17.2m charge) relates to the recalculation of liabilities under the Group's
carry schemes, which include a scheme for the UK and Australian investment
teams, as well as historic IP Group and Touchstone schemes.
Consolidated statement of financial position
A summary analysis of the Group's assets and liabilities is provided below:
30 June 2022 30 June 31 December 2021
2021
£m
£m
£m
Portfolio 1,265.5 1,246.4 1,507.5
Other non-current assets 9.2 29.1 32.0
Cash and deposits 235.7 308.9 321. 9
EIB debt facility (44.1) (59.5) (51.8)
Other net current liabilities 24.8 19.1 (6.4)
Other non-current liabilities (77.1) (104.3) (65.1)
Total Equity or Net Assets ("NAV") 1,414.0 1,439.7 1,738.1
NAV per share 136.7 135.4p 167.0p
The composition of, and movements in, the Group's portfolio are described in
the Portfolio review above.
Portfolio Valuations
Given public market valuation reductions in the period and the resulting
higher level of uncertainty around private portfolio valuations, we have
carried out an enhanced valuation process in the period, including obtaining
external valuations for five of our largest private assets (First Light
Fusion, Featurespace, Hinge Health, SaltPay, and Ultraleap). In the case of
First Light Fusion and Featurespace, our valuation consultants concluded on an
increase in valuation in the period. In the case of Hinge Health, SaltPay and
Ultraleap, they recommended a modest reduction in our carrying values,
reflecting the impact of reduced public market valuations. In all cases, our
carrying values reflect the mid-point or lower of the valuation ranges we
received from our external valuation consultants.
More broadly, to date we have seen little evidence of the public market
correction impacting private valuations in our portfolio. While funding
activity in the period was weaker than the first half of 2021, our portfolio
continued to raise significant amounts of capital in funding rounds, the
majority of which happened at higher valuations than the previous funding
round:
Six months Six months
ended ended
30 June 2022 30 June 2021
No. % No. %
Up round 7 59% 8 53%
Flat round 4 33% 6 40%
Down round 1 8% 1 7%
12 100% 15 100%
The majority of our portfolio remains well funded, with many of our more
mature companies evidencing commercial progress or anticipating technical or
funding milestones in the next 12-18 months, therefore we remain confident
around the resilience of our portfolio.
The charts below summarise the valuation basis for the Group's portfolio.
Further details on the Group's valuation policy can be found in note 3 and in
the 2021 Annual Report and Accounts. The Group seeks to use observable market
data as the primary basis for determining asset fair values where appropriate.
Other valuation methods include: market-derived valuations adjusted to reflect
considerations including (inter alia) technical measures, financial measures
and market and sales measures; discounted cash flows and price-earnings
multiples.
Unaudited Six months Unaudited Six months Audited Year ended
ended ended 31 December
30 June 2022 30 June 2021
£m 2021 £m
£m
Quoted 269.2 162.9 662.7
Recent financing (<12 months) (2021 HY: <9 months) 273.2 674.1 383.4
Recent financing (>12 months) (2021 HY: >9 months) 106.3 131.8 65.6
Other: Future market/commercial events 35.8 12.1 37.8
Other: Adjusted recent financing price based on past performance 249.0 79.5 142.3
Other: DCF/Revenue Multiple 189.9 159.1 100.0
Debt 37.5 26.9 22.8
Total equity and debt investments (excludes LP interests) 1,160.9 1,246.4 1,414.6
Top 20 Portfolio Companies by holding value
The following table lists information on the 20 most valuable portfolio
company investments, which represent 70% of the total portfolio value (HY21:
71%, FY21: 75%). Detail on the performance of these companies is included in
the Life Sciences, Deeptech and Cleantech portfolio reviews.
The Group engages third party valuation specialists to provide valuation
support where required; during the period we commissioned third party
valuations on five out of the top 20 holdings (HY21: two; FY21: three).
Company name Significant named co-investors Primary valuation basis Fair value of Group holding at 30 Jun 2022
£m
Oxford Nanopore Technologies plc LSE quoted Quoted bid price 226.5
First Light Fusion Limited OSI, Hostplus, Tencent, Braavos *Adjusted financing 114.5
Istesso Limited Puhua Capital DCF 95.6
Featurespace Limited Highland Europe, Insight, Invoke, MissionOG, TTV Capital, Robert Sansom, *Revenue multiple 65.0
Chrysalis
Hinge Health, Inc. Atomico Advisors, Bessemer, Coatue, Insight, Lead Edge, Tiger Global *Adjusted financing 64.3
Ultraleap Holdings Limited Cornes, Dolby Ventures, Hostplus, Mayfair Partners *Adjusted financing 32.1
Garrison Technology Limited BGF, Dawn Capital, NM Capital Revenue multiple 25.7
Ieso Digital Health Limited Morningside, Molten Ventures Recent financing (< 12 months) 21.8
Bramble Energy Limited Hydrogen One Capital, BGF Investments, Parkwalk Advisors Recent financing (< 12 months) 20.7
Oxford Science Enterprises plc Blue Pool, Fosun Pharma, Invesco, Lansdowne, Redmine, Sequoia, Temasek, Future market/commercial events 20.6
Tencent
Salt Pay Co. Limited Scottish Mortgage, Tiger Global, Social Capital Hedosophia *Adjusted financing 20.5
Nexeon Limited Invesco, Nortrust, SKC, Wacker Chemie Recent financing (< 12 months) 19.8
Crescendo Biologics Limited Sofinnova Capital, BioDiscovery 5, Millennium Pharmaceuticals, Quan Venture Recent financing (< 12 months) 18.7
Funds
Artios Pharma Limited Arix Bioscience, BioDiscovery 5, SV Life Sciences, Pfizer, Merck Ventures Recent financing (< 12 months) 18.2
Mission Therapeutics Limited Pfizer, Roche, Sofinnova Partners, SR one Recent financing (> 12 months) 18.1
Oxbotica Limited Fundamental Insurance Investments, BT Technology Ventures, BGF, bp venture, Recent financing (> 12 months) 16.3
Ocado
Microbiotica Limited Tencent, Fleurie Invest AB, British Patient Capital, Cambridge Innovation Recent financing (< 12 months) 16.1
Capital
PsiOxus Therapeutics Limited SR One, Lundbeckfond Ventures, Invesco, Sedgwick Yard *Adjusted funding 15.5
Oxular Limited Forbion, NeoMed, V-Bio Ventures Recent financing (> 12 months) 14.7
Hysata Pty Ltd Clean Energy Finance Corporation Future market/commercial events 13.3
Total 858.0
* Third party valuation specialists used for 30 June 2022 valuation
Other portfolio
Our portfolio also including holdings in LP funds, namely IPG Cayman LP, UCL
Technology Fund LP, and Technikos LLP. These funds give us both economic
interest and direct investment opportunities in a portfolio of early-stage
companies, as well as relationships with high-quality institutional
co-investors.
EIB debt facility
The Group has debt facilities with the European Investment Bank (“EIB”),
total borrowings under which totalled £44.1m at the period end (HY21:
£59.5m, FY21: £51.8m). Of these facilities, £15.4m was due to be repaid
within twelve months of the period end (HY21: £15.4m, FY21: £15.4m) at 30
June 2021.
On 2 August 2022, the Group signed a Note Placing Agreement to issue a £120m
debt private placement to London-based institutional investors. Half of this
will be drawn down in December 2022 and the balance in June 2023, with three
equal maturities in December in 2027, 2028 and 2029. The interest rate is
fixed, at an average of 5.25%. Approximately £15m of the proceeds will be
used to repay early the shorter-dated portion of our EIB debt, leaving £22m
of EIB debt to be progressively repaid between now and January 2026.
Cash and deposits
The principal constituents of the movement in cash and deposits during the
period are as follows:
Six months ended Six months ended Year ended
30 June 2022 30 June 31 December 2021
2021
£m
£m
£m
Net cash (used)/generated in operating activities (12.4) 16.0 10.0
Realisations 2.1 111.4 213.4
Other investing (0.5) (1.1) 0.3
Cash disposed via disposal of subsidiary undertaking - - (7.1)
Investments (52.0) (69.5) (106.7)
Dividends paid (7.1) (10.1) (14.9)
Purchase of treasury shares (8.5) - (27.2)
Repayment of debt facility (7.7) (7.7) (15.4)
Other financing activities - (0.4) (0.8)
Effect of foreign exchange rate changes (0.1) - 0.1
Movement during period (86.2) 38.6 51.7
At 30 June 2022, the Group's cash and deposits totalled £235.7m, a decrease
of £86.2m from a total of £321.9m at 31 December 2021, predominantly due to
outflows of investing activities of £50.6m, a £13.6m cash outflow from
operations and a £7.7m cash outflow from the repayment of debt and a £7.1m
dividend payment.
Under the terms of its term loans with the EIB, the Group is required to
maintain a minimum cash balance of £13m. The Group is also required to hold
six months of debt service costs (interest and capital repayments) in a
separate bank account, which totalled £8.5m at 30 June 2022 (HY21: £8.5m;
FY21: £9.4m).
Dividend
The Board has declared an interim dividend in respect of the period from 1
January 2022 to 30 June 2022 of 0.50p per ordinary share (the "Interim
Dividend").
The Interim Dividend will be payable on or around 19 September 2022. The
ex-dividend date will be 11 August 2022 with a record date of 12 August
2022.
Eligible shareholders can elect to receive new ordinary shares in the Company
in lieu of a cash dividend (the "Scrip Dividend Alternative"). The Scrip
Dividend Alternative reference price is to be calculated using the average of
the closing middle market quotations for the Company's shares, as derived from
the Daily Official List of the London Stock Exchange, over the five dealing
days commencing on the ex-dividend date and will be announced by the Company
and detailed on the Company's website on 18 August 2022, in accordance with
the terms and conditions of the Scrip Dividend Scheme, which are available to
view and download on the Company's website at:
www.ipgroupplc.com/investor-relations/shareholder-information/scripdividend
(the "Terms and Conditions").
Any shareholders wishing to take up the Scrip Dividend Alternative will have
until 5pm on 26 August 2022, the election date, either to return their
completed Scrip Dividend Mandate Form to the Company registrars, Link Group,
at Corporate Actions, 10(th) Floor, Central Square, 29 Wellington Street,
Leeds, LS1 4DL or to elect to participate online at www.signalshares.com using
the Investor Code on their share certificate (in the case of shareholdings in
certificated form) or to take the necessary action via the CREST system (in
the case of shareholdings in uncertificated form).
Shareholders who have previously submitted a Scrip Dividend Mandate form to
effect a permanent scrip election will not need to take any action in respect
of the Interim Dividend and such election will continue to apply for all
future dividends for which a scrip dividend is offered, until such time as the
mandate is cancelled in accordance with the Terms and Conditions. A CREST
shareholder will need to submit a new Dividend Election Input Message for
every dividend that they wish to receive the Scrip Dividend Alternative,
including the Interim Dividend.
Further details including the terms and conditions of the Scrip Dividend
Scheme are available to view and download on the Company's website at:
www.ipgroupplc.com/investor-relations/shareholder-information/scripdividend
Any shareholder who wishes to receive the Interim Dividend in cash rather than
new shares and has not previously submitted an election to receive the Scrip
Dividend Alternative, does not need to take any action in order to accept the
Interim Dividend.
Taxation
The Group's business model seeks to deliver long-term value to its
stakeholders through the commercialisation of fundamental science and
innovation. To date, this has been largely achieved through the formation of,
and provision of services and development capital to, spin-out companies
formed around such science and innovation. 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 in excess of 10% in its portfolio companies and those
companies are themselves trading, the Directors continue to believe that the
majority of its holdings will qualify for the Substantial Shareholdings
Exemption ("SSE"). 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 non-qualifying holdings would ordinarily
give rise to taxable profits for the Group, to the extent that these exceed
the Group's operating losses from time to time.
Alternative Performance Measures ("APMs")
The Group discloses alternative performance measures, such as NAV and Return
on NAV, in this half-yearly 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 in
the Group including their definition and purpose is set out in note 11.
Principal risks and uncertainties
A detailed explanation of the principal risks and uncertainties faced by the
Group, and the steps taken to manage them, is set out in the Corporate
Governance section of the Group's 2021 Annual Report and Accounts. The
principal risks and uncertainties are summarised as follows:
• it may be difficult for the Group to maintain the required level
of capital to continue to operate at optimum levels of investment, activity
and overheads;
• it may be difficult for the Group's portfolio companies to attract
sufficient capital;
• the returns and cash proceeds from the Group's early-stage
companies can be very uncertain;
• universities or other research-intensive institutions may
terminate the collaborative relationships with the Group;
• the Group may lose key personnel or fail to attract and integrate
new personnel;
• macroeconomic conditions may negatively impact the Group's ability
to achieve its strategic objectives;
• there may be changes to, impacts from, or failure to comply with,
legislation, government policy and regulation;
• the Group may be subjected to Phishing and Ransomware attacks,
data leakage and hacking; and
• the Group may be negatively impacted operationally as a result of
its recent international expansion.
The Group reviewed its operational, strategic and principal risk registers in
the period including and has concluded that it is not aware of any significant
changes in the nature of the principal risks that would result in a change to
the Group's principal risks as set out above in the forthcoming six months.
consolidated statement of comprehensive income
For the six months ended 30 June 2022
Note Unaudited six months ended Unaudited six months ended Audited
30 June 2022 30 June year ended 31 December 2021
£m 2021 £m
£m
Portfolio return and revenue
Change in fair value of equity and debt investments 3 (304.1) 85.7 415.9
Gain on disposal of equity investments 5 4.2 57.4 81.5
Loss on disposal of subsidiary - - (3.8)
Change in fair value of limited and limited liability partnership interests 4 8.8 (2.7) 1.8
Revenue from services and other income 3.1 5.1 13.6
(288.0) 145.5 509.0
Administrative expenses
Carried interest plan charge 9 (6.0) (12.2) (17.2)
Share-based payment charge (1.4) (1.3) (2.6)
Other administrative expenses (14.2) (14.8) (33.2)
(21.6) (28.3) (53.0)
Operating (loss)/profit (309.6) 117.2 456.0
Finance income 0.6 0.2 0.4
Finance costs (0.8) (0.9) (1.8)
(Loss)/profit before taxation (309.8) 116.5 454.6
Taxation - - (5.3)
(Loss)/profit for the period (309.8) 116.5 449.3
Other comprehensive income
Exchange differences on translating foreign operations (0.1) 0.1 0.3
Total comprehensive (loss)/profit for the period (309.9) 116.6 449.6
Attributable to:
Equity holders of the parent (308.7) 111.4 448.5
Non-controlling interest (1.2) 5.2 1.1
(309.9) 116.6 449.6
Earnings per share
Basic (p) 2 (29.85) 10.49 42.33
Diluted (p) 2 (29.85) 10.40 41.68
consolidated statement of financial position
As at 30 June 2022
Note Unaudited six months ended Unaudited six months ended Audited
30 June 2022 30 June year ended 31 December 2021
£m 2021 £m
£m
ASSETS
Non-current assets
Intangible assets:
Goodwill 0.4 0.4 0.4
Property, plant, and equipment 0.5 0.7 0.3
Portfolio:
Equity investments 3 1,123.4 1,219.5 1,391.8
Debt investments 3 37.5 26.9 22.8
Limited and limited liability partnership interests 4 104.6 17.1 92.9
Receivable from sale of equity investments 6 8.3 11.3 31.3
Total non-current assets 1,274.7 1,275.9 1,539.5
Current assets
Trade and other receivables 5.7 4.3 6.9
Receivable from sale of equity investments 6 36.0 25.6 11.0
Deposits 141.3 101.2 216.2
Cash and cash equivalents 94.4 207.7 105.7
Total current assets 277.4 338.8 339.8
Total assets 1,552.1 1,614.7 1,879.3
EQUITY AND LIABILITIES
Equity attributable to owners of the parent
Called up share capital 8 21.3 21.3 21.3
Share premium account 102.4 102.1 102.4
Retained earnings 1,294.6 1,310.6 1,617.5
Total equity attributable to equity holders 1,418.3 1,434.0 1,741.2
Non-controlling interest (4.3) 5.7 (3.1)
Total equity 1,414.0 1,439.7 1,738.1
Current liabilities
Trade and other payables 16.9 11.2 18.7
EIB debt facility 15.4 15.4 15.4
Total current liabilities 32.3 26.6 34.1
Non-current liabilities
EIB debt facility 28.7 44.1 36.4
Carried interest plan liability 9 38.1 31.6 33.1
Deferred tax liability 5.8 - 5.8
Loans from limited partners of consolidated funds 19.1 59.1 18.7
Revenue share liability 14.1 13.6 13.1
Total non-current liabilities 105.8 148.4 107.1
Total liabilities 138.1 175.0 141.2
Total equity and liabilities 1,552.1 1,614.7 1,879.3
consolidated statement of cash flows
For the six months ended 30 June 2022
Note Unaudited Unaudited Audited
six months six months year
ended ended ended
30 June 30 June 31 December
2022 2021 2021
£m £m £m
Operating activities
Operating (loss)/profit for the period (309.6) 117.2 456.0
Adjusted for:
Change in fair value of equity and debt investments 3 304.1 (85.7) (415.9)
(Loss)/Gain on disposal of equity investments 5 (4.2) (57.4) (81.5)
Change in fair value of limited and limited liability partnership interests 4 (8.8) 2.7 (1.8)
Loss on deconsolidation of subsidiary - - 3.8
Depreciation of property, plant and equipment 0.3 0.5 1.6
Long term incentive carry scheme charge 9 6.0 12.2 17.2
Fees settled in the form of equity (0.4) (0.3) (0.5)
Share-based payment charge 1.4 1.3 2.6
Changes in working capital
Decrease/(increase) in trade and other receivables 2.3 (0.3) (3.0)
(Decrease)/increase in trade and other payables (2.5) 0.4 8.7
Loans from limited partners of consolidated funds 0.4 26.2 27.7
Carry scheme payments (1.0) - (3.4)
Other operating cash flows
Net interest paid (0.4) (0.8) (1.5)
Net cash (outflow)/ inflow from operating activities (12.4) 16.0 10.0
Investing activities
Purchase of equity and debt investments 3 (49.0) (69.5) (103.7)
Investment in limited and limited liability partnership funds 4 (3.0) (1.1) (3.0)
Purchase of property, plant and equipment (0.1) - (0.2)
Distributions from limited partnership funds - - 0.5
Cash flow to deposits (114.0) (57.1) (230.5)
Cash flow from deposits 188.9 98.6 156.9
Cash disposed via disposal of subsidiary - - (7.1)
Proceeds from sale of equity investments 7 2.1 111.4 213.4
Net cash inflow from investing activities 24.9 82.3 26.3
Financing activities
Dividends paid (7.1) (10.1) (15.0)
Share Repurchases (8.5) - (27.2)
Lease principal payment (0.4) (0.4) (0.7)
Repayment of EIB facility (7.7) (7.7) (15.4)
Net cash outflow from financing activities (23.7) (18.2) (58.3)
Net (decrease)/increase in cash and cash equivalents (11.2) 80.1 (22.0)
Cash and cash equivalents at the beginning of the year 105.7 127.6 127.6
Effect of foreign exchange rate changes (0.1) - 0.1
Cash and cash equivalents at the end of the year 94.4 207.7 105.7
consolidated statement of changes in equity
For the six months ended 30 June 2022
Attributable to equity holders of the parent
Share capital Share premium Retained earnings Total Non-controlling interest Total equity
£m £m £m £m £m £m
At 31 December 2020 (audited) 21.3 101.6 1,208.5 1,331.4 0.5 1,331.9
Comprehensive income - - 111.4 111.4 5.2 116.6
Issue of equity - 0.5 - 0.5 - 0.5
Equity-settled share-based payments - - 1.3 1.3 - 1.3
Currency translation - - (10.6) (10.6) - (10.6)
At 30 June 2021 21.3 102.1 1,310.6 1,434.0 5.7 1,439.7
(unaudited)
Comprehensive income - - 336.8 336.8 (4.1) 332.7
Deconsolidation of subsidiary - 0.3 0.9 0.9 (4.7) (3.8)
Issue of shares - - - 0.3 - 0.3
Purchase of treasury shares (27.2) (27.2) - (27.2)
Equity-settled share-based payments - - 1.3 1.3 - 1.3
Ordinary Dividends - - (5.2) (5.2) - (5.2)
Currency translation - - 0.3 0.3 - 0.3
At 31 December 2021 (audited) 21.3 102.4 1,617.5 1,741.2 (3.1) 1,738.1
Comprehensive income - - (308.6) (308.6) (1.2) (309.8)
Issue of equity - - - - - -
Purchase of treasury shares - - (8.2) (8.2) - (8.2)
Equity-settled share-based payments - - 1.4 1.4 - 1.4
Ordinary Dividends - - (7.4) (7.4) - (7.4)
Currency translation - - (0.1) (0.1) - (0.1)
At 30 June 2022 21.3 102.4 1,294.6 1,418.3 (4.3) 1,414.0
(unaudited)
Notes to the half-yearly condensed set of financial statements
1. Operating Segments
For each of the periods below, 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 two
operating segments:
i. the commercialisation of intellectual property via the formation of
long-term partner relationships with universities;
ii. the management of venture capital funds focusing on early-stage UK
technology companies and the provision of corporate finance advice;
Within the University Partnerships segment, the Life Sciences, Technology,
Australia & New Zealand investment business units represent discrete
operating segments. In line with the quantitative thresholds and aggregation
criteria set out in IFRS 8, we have presented the activities of these business
units as a single reporting segment. The economic indicators which have been
assessed in determining that the aggregated operating segments have similar
economic characteristics include the application of a common business model
across the operating segments within the University Partnerships segment and
the global nature of the commercial operations, shareholders and potential
acquirers of the Group's portfolio companies.
Six months ended 30 June 2022 (unaudited) University partnership business Venture capital fund management Consolidated
£m £m £m
STATEMENT OF COMPREHENSIVE INCOME
Portfolio return and revenue
Change in fair value of equity and debt investments (304.1) - (304.1)
Gain on disposal of equity investments 4.2 - 4.2
Change in fair value of limited and limited liability partnership interests 8.8 - 8.8
Revenue from services and other income (0.6) 3.7 3.1
(291.7) 3.7 (288.0)
Administrative expenses
Carried interest plan charge (6.0) - (6.0)
Share-based payment charge (1.4) - (1.4)
Other administrative expenses (11.6) (2.6) (14.2)
(19.0) (2.6) (21.6)
Operating (loss)/profit (310.7) 1.1 (309.6)
Finance income 0.6 - 0.6
Finance costs (0.8) - (0.8)
(loss)/Profit before taxation (310.9) 1.1 (309.8)
Taxation 0.3 (0.3) -
(loss)/Profit for the period (310.6) 0.8 (309.8)
STATEMENT OF FINANCIAL POSITION
Assets 1,535.3 16.8 1,552.1
Liabilities (134.4) (3.7) (138.1)
Net Assets 1,400.9 13.1 1,414.0
Other segment items
Capital expenditure 0.1 0.0 0.1
Depreciation (0.3) (0.0) (0.3)
Six months ended 30 June 2021 (unaudited) University partnership business Venture capital fund management Consolidated
£m £m £m
STATEMENT OF COMPREHENSIVE INCOME
Portfolio return and revenue
Change in fair value of equity and debt investments 85.7 - 85.7
Gain on disposal of equity investments 57.4 - 57.4
Change in fair value of limited and limited liability partnership interests (2.7) - (2.7)
Revenue from services and other income 0.6 4.5 5.1
141.0 4.5 145.5
Six months ended 30 June 2021 (unaudited) University partnership business Venture capital fund management Consolidated
£m £m £m
Administrative expenses
Carried interest plan charge (12.2) - (12.2)
Share-based payment charge (1.3) - (1.3)
Other administrative expenses (12.5) (2.3) (14.8)
(26.0) (2.3) (28.3)
Operating profit 115.0 2.2 117.2
Finance income 0.2 - 0.2
Finance costs - (0.9) (0.9)
Profit before taxation 115.2 1.3 116.5
Taxation - - -
Profit for the period 115.2 1.3 116.5
STATEMENT OF FINANCIAL POSITION
Assets 1,598.8 15.9 1,614.7
Liabilities (171.5) (3.5) (175.0)
Net Assets 1,427.3 12.4 1,439.7
Other segment items
Capital expenditure - - -
Depreciation (0.5) - (0.5)
Year ended 31 December 2021 (audited) University partnership business Venture capital fund management Consolidated
£m £m £m
STATEMENT OF COMPREHENSIVE INCOME
Portfolio return and revenue
Change in fair value of equity and debt investments 415.9 - 415.9
Gain on disposal of equity investments 81.5 - 81.5
Loss on deconsolidation of subsidiary (3.8) - (3.8)
Change in fair value of limited and limited liability partnership interests 1.8 - 1.8
Revenue from services and other income 5.7 7.9 13.6
501.1 7.9 509.0
Administrative expenses
Carried interest plan charge (17.2) - (17.2)
Share-based payment charge (2.5) (0.1) (2.6)
Other administrative expenses (28.7) (4.5) (33.2)
(48.4) (4.6) (53.0)
Operating profit 452.7 3.3 456.0
Finance income 0.4 - 0.4
Finance costs (1.8) ∙∙ (1.8)
Profit before taxation 451.3 3.3 454.6
Taxation (5.3) - (5.3)
Profit for the year 446.0 3.3 449.3
STATEMENT OF FINANCIAL POSITION
Assets 1,862.1 17.2 1,879.3
Liabilities (137.4) (3.8) (141.2)
Net assets 1,724.7 13.4 1,738.1
Other segment items
Capital expenditure 0.2 - 0.2
Depreciation (1.6) - (1.6)
2. Earnings per Share
Earnings Unaudited Unaudited Audited
year ended
six months ended six months ended
30 June
31 December 2021
2022 30 June
2021 £m
£m
£m
Earnings for the purposes of basic and dilutive earnings per share (308.7) 111.4 448.5
Number of shares Unaudited Unaudited Audited
year ended
six months six months
31 December
ended ended
2021
30 June 30 June
2022
2021 Number of shares
Number of shares Number of shares
Weighted average number of ordinary shares for the purposes of basic earnings 1,034,323,153 1,062,384,933 1,059,547,189
per share
Effect of dilutive potential ordinary shares:
Options or contingently issuable shares - 8,957,138 16,431,907
Weighted average number of ordinary shares for the purposes of diluted 1,034,323,153 1,071,342,071 1,075,979,096
earnings per share
No adjustment has been made to the basic loss per share in the period ended 30
June 2022, 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
Deferred Bonus Share Plan (for annual bonuses deferred under the terms of the
Group's annual incentive scheme).
Earnings per share Unaudited Unaudited Audited
year ended
six months ended six months ended
30 June
31 December 2021
2022 30 June
2021 £m
£m
£m
Basic (p) (29.85) 10.49 42.33
Diluted (p) (29.85) 10.40 41.68
3. Investment portfolio
Level 1 Level 3
Equity investments in quoted spin-out companies Equity investments in unquoted spin-out companies Unquoted debt investments in spin-out companies Total
£m £m £m £m
At 31 December 2020 (audited) 83.4 1,040.6 38.7 1,162.7
Investments during the period 4.3 61.1 4.1 69.5
Transaction-based reclassifications during the period - 19.3 (19.3) -
Transfers from investment in LPs - 3.5 - 3.5
Other transfers between hierarchy levels during the period 24.2 (24.2) - -
Disposals during the period (5.6) (68.4) (1.6) (75.6)
Change in revenue share during the period - 0.6 - 0.6
Change in fair value during the period 56.6 24.1 5.0 85.7
At 30 June 2021 (unaudited) 162.9 1,056.6 26.9 1,246.4
Investments during the period 0.5 28.6 5.1 34.2
Transaction-based reclassifications during the period - 4.5 (4.5) -
Deconsolidation of United States portfolio - (109.4) (3.3) (112.7)
Other transfers between hierarchy levels during the period 359.0 (359.0) - -
Disposals during the period (75.2) (8.3) - (83.5)
Fees settled via equity during the period - 0.5 - 0.5
Change in revenue share during the period - (0.5) - (0.5)
Change in fair value during the period 215.5 116.1 (1.4) 330.2
At 31 December 2021 (audited) 662.7 729.1 22.8 1,414.6
Investments during the period 2.7 30.5 15.8 49.0
Transaction-based reclassifications during the period - 5.9 (5.9) -
Fees settled via equity during the period - 0.4 - 0.4
Change in revenue share during the period - 1.0 - 1.0
Change in fair value during the period (i) (396.2) 87.3 4.8 (304.1)
At 30 June 2022 (unaudited) 269.2 854.2 37.5 1,160.9
i The change in fair value in the period includes
a gain of £15.4m (HY21: loss of £2.1m; FY21: gain of £4.6m) in exchange
differences on translating foreign currency investments. The total unrealised
change in fair value in respect of Level 3 investments was a gain of £92.1m
(HY21: gain of £29.1m; FY21: gain of £143.8m).
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.
In terms of the valuation techniques used in arriving at our fair value
estimate, the following table provides an analysis of the portfolio by primary
valuation basis, with an associated sensitivity analysis by valuation
category. Note that in light of the onset of the COVID-19 pandemic in early
2020, we amended our analysis of recent financing transactions in 2020 to show
transactions within 9 months. At 2021 year-end we reverted to using 12 months.
Unaudited Six months Unaudited Six months Audited Year ended
ended ended 31 December
30 June 2022 30 June 2021
£m 2021 £m
£m
Quoted 269.2 162.9 662.7
Recent funding < 12 months (2021 HY: < 9 months) 273.2 674.1 383.4
Recent funding > 12 months (2021 HY: > 9 months) 106.3 131.8 65.6
Other: Future market/commercial events 35.8 12.1 37.8
Other: Adjusted recent financing price based on past performance 249.0 79.5 142.3
Other: DCF/Revenue Multiple 189.9 159.1 100.0
Debt 37.5 26.9 22.8
Investment portfolio 1,160.9 1,246.4 1,414.6
In addition to recent financing transactions, significant unobservable inputs
used in the fair value measurement include:
For valuations based primarily Future market/commercial events
· Financing & sale transactions, other market input or
commercial events occurring after the valuation date but which are judged to
be wholly or partially indicative of facts and circumstances in existence at
the balance sheet date
· Scenario probabilities
For valuations based primarily on adjusted recent financing price based on
past performance
· Portfolio-company specific milestone analysis
For valuations based primarily on DCF or Revenue Multiples
· Estimated clinical trial success rates
· Estimated pharmaceutical collaboration milestone and royalty
payments
· Discount factors
· Range of appropriate revenue multiples
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 Group has considered the impact of ESG and climate change issues on its
portfolio, including performing a materiality assessment (see TCFD disclosures
on page 24 of the Group's 2021 Annual Report) 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. We believe our current
valuation approach, based largely on quoted valuations and recent financing
transactions reflect market participant assessment of the ESG and climate
risks and opportunities of our portfolio.
Valuation sensitivities
The largest individual asset within the 'DCF / Revenue multiple' category
above is Istesso Limited, whose equity is valued at £81m as at 30 June 2022
(HY21: £82m, FY21: £81m). The primary valuation basis for this company is a
DCF model, whose key inputs include: clinical trial & drug approval
success rates, the estimated value and structure of a potential pharmaceutical
partnership post successful Ph2b clinical trial data including quantum and
timing of milestone payments, an estimate of addressable Rheumatoid Arthritis
market for Istesso's drug and associated market share and royalty rates, and
relevant discount rates. Our estimated range for the value of the Group's
equity investment in Istesso based on this DCF model is £75m to £112m (FY21:
£66m to £102m).
Within the 'Adjusted valuation' category above is First Light Fusion Limited,
whose equity is valued at £115m as at 30 June 2022 (HY21: £21m), FY21:
£57m). The valuation of this company involves an assessment against
comparable companies and involves certain key assumptions around their
comparability and First Light's assumed maturity value. Our estimated range
for the value of the Group's equity investment in First Light Fusion based on
this model is £84m to £203m.
Other than as noted above for Istesso and First Light Fusion, for assets
valued on 'other' methods in the table above, due to the large number of
inputs used in the valuation of these assets, any range of reasonably possible
alternative assumptions does not significantly impact the fair value and hence
does not require disclosure.
The table below summarises the impact of a 10% increase/decrease in the price
of unquoted investments by primary valuation basis on the Group's post-tax
profit for the year and on equity.
Unaudited Six months Unaudited Six months Audited Year ended
ended ended 31 December
30 June 2022 30 June 2021
£m 2021 £m
£m
Recent funding < 12 months (2021 HY: < 9 months) 27.3 67.4 38.3
Recent funding > 12 months (2021 HY: > 9 months) 10.6 13.2 6.6
Other: Future market/commercial events 3.6 1.2 3.8
Other: Adjusted recent financing price based on past performance 24.9 7.9 14.2
Other: DCF/Revenue Multiple 19.0 15.9 10.0
Debt 3.8 2.7 2.3
Investment portfolio 89.2 108.3 75.2
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, there have been no
transfers of this nature (HY21: £24.2m, FY21: £380.2m). 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 period (HY21: no such instances, FY21:no such
instances).
Transfers between level 3 debt and level 3 equity occur upon conversion of
convertible debt into equity.
Change in fair value in the year Unaudited Six months Unaudited Six months Audited Year ended
ended ended 31 December
30 June 2022 30 June 2021
£m 2021 £m
£m
Fair value gain 118.2 106.9 479.0
Fair value loss (422.3) (21.2) (63.1)
(304.1) 85.7 415.9
The Company's interests in subsidiary undertakings are listed in note 10 to
the Company's financial statements.
4. Limited and Limited Liability Partnership Interests
Unaudited Six months
ended
30 June 2022
£m
At 1st January 2021 22.2
Investments during the year 1.6
Distribution from limited partnership funds (0.5)
Transfer to equity investments (3.5)
Change in fair value during the year (2.7)
At 30(th) June 2021 17.1
Investments during the year 1.5
Recognition of interest in IPG Cayman LP following deconsolidation 69.8
Change in fair value during the year 4.5
At 1 January 2022 92.9
Investments during the year 3.0
Distribution from limited partnership funds (0.1)
Change in fair value during the year 8.8
At 30(th) June 2022 104.6
5. Gain on disposal of equity
Unaudited Six months Unaudited Six months Audited Year ended
ended ended 31 December
30 June 2022 30 June 2021
2021
£m
£m
£m
Disposal proceeds 2.1 111.4 213.4
Movement in amounts receivable on sale of equity investments 2.1 21.6 27.2
Carrying value of investments disposed - (75.6) (159.1)
Profit on disposal 4.2 57.4 81.5
Profit 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.
6. RECEIVABLE ON SALE OF DEBT AND EQUITY INVESTMENTS
Unaudited Six months Unaudited Six months Audited Year ended
ended ended 31 December
30 June 2022 30 June 2021
2021
£m
£m
£m
Current 36.0 25.6 31.3
Non-current 8.3 11.3 11.0
44.3 36.9 42.3
Deferred & contingent consideration consists of £26.4m in relation to the
sale of the Group's holding in WaveOptics Limited, £12.7m in relation to the
sale of the Enterprise Investment, £5.1m in relation to the sale of Athenex
and £0.2m in relation to the sale of Perpetuum Limited.
7. dividends
Unaudited Six months Unaudited Six months Audited Year ended
ended ended 31 December
30 June 2022 30 June 2021 2021
Declared and paid during the year Pence per share £m Pence per share £m Pence per share £m
Ordinary shares
Interim dividend - - - - 0.48 5.2
Prior financial year final dividend 0.72 7.4 1.0 10.6 1.0 10.6
Dividends paid to equity owners in the financial year 0.72 7.4 1.0 10.6 1.48 15.8
Of the £7.4m dividend paid in 2022, £7.1m was settled in cash and £0.3m was
settled via the transfer of existing treasury shares from the share buyback to
satisfy valid scrip elections received under the Group's Scrip Dividend
Scheme.
The proposed 0.50p per share interim dividend for FY22 has not been included
as a liability as at 30 June 2022, in accordance with IAS 10 'Events after the
reporting period'. It will be paid on or around 19(th) September 2022.
8. Share Capital
Audited
Unaudited Unaudited Year ended
Six months ended Months ended 31 December 2021
30 June 2022 30 June 2021
Issued and fully paid: Number £m Number £m Number £m
At 1 January 2022 1,040,754,160 21.3 1,062,353,734 21.3 1,062,353,734 21.3
Issued in respect of scrip dividend - - 434,380 - 679,553 -
Share capital at 31 December 1,040,754,160 21.3 1,062,788,114 21.3 1,063,033,287 21.3
Existing Treasury shares at 1 January 2021 (22,279,127) - - - - -
Purchase of treasury shares (7,429,494) - - - (22,279,127) -
Settlement of employee share-based payments 770,148 - - - - -
Settlement of Scrip dividend 330,851 - - - - -
1,034,425,665 21.3 1,062,788,114 21.3 1,040,754,160 21.3
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.
9. Long-term incentive carry scheme - carried interest plan liability
Unaudited 30 June 2022 Unaudited 30 June 2021 Audited
£m £m 31 December 2021
£m
Opening liability 33.1 19.4 19.3
Charge for the year 6.0 12.2 17.2
Payments made in the year (1.0) - (3.4)
Closing liability 38.1 31.6 33.1
Unaudited 30 June 2022 Unaudited 30 June 2021 Audited
£m £m 31 December 2021
£m
IP Group historic scheme 22.8 13.5 16.6
IP Group current scheme 7.2 9.8 6.8
Touchstone scheme 8.1 8.3 9.7
Closing liability 38.1 31.6 33.1
The IP Group historic carry scheme was in place between the creation of the
scheme in 2011 and January 2018. Portfolio companies were allocated to carry
vintages based on the date of IP Group`s first investment into each company,
and follow-on investments into companies all fell within the same carry
vintage. Within this scheme there were vintages for year 2011-2013, 2014-2015
and 2016-2017.
The IP Group current carry scheme started from February 2018 and is the scheme
still in place at reporting date. Under the scheme, the individual investments
made by IP Group are allocated to carry vintages based on the date of each
investment, and so investments within one portfolio company can fall within
several different vintages. Within this scheme there are vintages 2018-2020
and 2021-2023.
The Touchstone carry scheme was operated by Touchstone Innovations plc prior
to its acquisition by IP Group plc in October 2017. Investments within this
scheme related to the former Touchstone companies, several of which fall
within the IP group current scheme as well.
10. 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) Key management transactions
Key management personnel held shares in the following spin-out companies as at
30 June 2022 as follows:
Director/ PDMR Company name Number of Number of shares acquired/ (disposed of) in the period Number of %
shares held at
shares held at
1 January 2022
30 June 2022
Greg Smith Alesi Surgical Limited 2 - 2 <0.1%
Crysalin Limited (I) 149 - 149 <0.1%
Diurnal Group plc 15,000 - 15,000 <0.1%
EmDot Limited (I) 4 - 4 0.23%
Istesso Limited 313,425 - 313,425 0.28%
Itaconix plc 4,500 - 4,500 <0.1%
Mirriad Advertising plc 16,667 - 16,667 <0.1%
Oxbotica Limited 8 - 8 <0.1%
Oxford Nanopore Technologies plc 27,008 - 27,008 <0.1%
Rio AI Limited (III) 144,246 - 144,246 <0.1%
Surrey Nanosystems Limited 88 - 88 <0.1%
Tissue Regenix Group plc 50,000 - 50,000 <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 (I) 46 - 46 <0.1%
Diurnal Group plc 73,000 - 73,000 <0.1%
Mirriad Advertising plc 16,667 - 16,667 <0.1%
Oxford Nanopore Technologies plc 2,784 - 2,784 <0.1%
David Baynes Ultraleap Holdings Limited 2,600 - 2,600 <0.1%
Zeetta Networks Limited 424 - 424 0.11%
Mark Reilly Actual Experience plc 28,000 - 28,000 <0.1%
Mark Reilly Bramble Energy Limited 16 - 16 <0.1%
Diffblue Limited (II) 8,038 - 8,038 <0.1%
Diurnal Group plc 7,500 - 7,500 <0.1%
Itaconix plc 377,358 - 377,358 <0.1%
Mirriad Advertising plc 66,666 - 66,666 <0.1%
Oxbotica Limited 8 - 8 <0.1%
Ultraleap Holdings Limited 1,700 - 1,700 <0.1%
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 (I) 23 - 23 <0.1%
Diurnal Group plc 113,819 - 113,819 <0.1%
Genomics plc 333 - 333 <0.1%
Ibex Innovations Limited 1,701 - 1,701 <0.1%
Istesso Limited Ordinary Shares 7,048,368 - 7,048,368 8.89%
Microbiotica Limited 7,000 - 7,000 <0.1%
Mirriad Advertising plc 3,333 - 3,333 <0.1%
Oxbotica Limited 3 - 3 <0.1%
Oxehealth Limited 33 - 33 <0.1%
Oxford Nanopore Technologies plc 18,540 - 18,540 <0.1%
Topivert Limited (I) 1,000 - 1,000 <0.1%
Ultraleap Holdings Limited 558 - 558 <0.1%
Joyce Xie Bramble Energy Limited 88 - 88 <0.1%
Creavo Medical Technologies Limited (I) 21 - 21 <0.1%
Istesso Limited 4,504 - 4,504 <0.1%
Mirriad Advertising plc 4,839 - 4,839 <0.1%
Ultraleap Holdings Limited 1,585 - 1,585 <0.1%
Lisa Patel Alesi Surgical Limited 1 - 1 <0.1%
Creavo Medical Technologies Limited (I) 23 - 23 <0.1%
Diurnal Group plc 37,500 - 37,500 <0.1%
Istesso Limited 3,477,833 - 3,477,833 4.39%
Microbiotica Limited 3,000 - 3,000 <0.1%
Mirriad Advertising plc 3,333 - 3,333 <0.1%
Oxford Nanopore Technologies plc 9,453 - 9,453 <0.1%
Topivert Limited (I) 1,000 - 1,000 <0.1%
Ultraleap Holdings Limited 1,317 - 1,317 <0.1%
Elizabeth Vaughan-Adams Amaethon Limited (I) 939 - 939 <0.1%
Bramble Energy Limited - A Ordinary Shares - 2 2 <0.1%
Creavo Medical Technologies Limited (I) 23 - 23 <0.1%
Crysalin Limited (I) 100 - 100 <0.1%
DeepMatter Group plc 82,393 1,655,440 1,737,833 <0.1%
Diurnal Group plc 4,844 - 4,844 <0.1%
Emdot Limited (I) 3 - 3 <0.1%
First Light Fusion Limited 77 - 77 <0.1%
Istesso Limited 218,448 - 218,448 0.19%
Mirriad Advertising plc 4,941 - 4,941 <0.1%
Oxford Nanopore Technologies plc 4,500 - 4,500 <0.1%
Rio AI Limited (III) 2,258,185 13,986,014 16,244,199 <0.1%
Surrey Nanosystems Limited 53 - 53 <0.1%
Tissue Regenix Group plc 75,599 - 75,599 <0.1%
Ultraleap Holdings Limited 400 - 400 <0.1%
Moray Wright Mirriad Advertising plc 73,664 - 73,664 <0.1%
OxSyBio Limited (I) 20 - 20 <0.1%
Chris Glasson 8Power Limited 400 - 400 <0.1%
Audioscenic Limited 967 - 967 <0.1%
Creavo Medical Technologies Limited (I) 105 - 105 <0.1%
Istesso Limited 9,009 - 9,009 <0.1%
Mirriad Advertising plc 8,064 - 8,064 <0.1%
Oxbotica Limited 34 - 34 <0.1%
Oxehealth Limited 328 - 328 <0.1%
Topivert Limited (I) 3,000 - 3,000 <0.1%
Ultraleap Holdings Limited 1,585 - 1,585 <0.1%
Angela Leach Amaethon Limited (I) 1,408 - 1,408 <0.1%
Alesi Surigcal Limited 2 - 2 <0.1%
Barocal Limited - 1,010 1,010 <0.1%
Boxarr Limited 102 - 102 <0.1%
Bramble Energy Limited - A Ordinary Shares 8 5 13 <0.1%
Creavo Medical Technologies Limited (I) 23 - 23 <0.1%
Crysalin Limited (I) 149 - 149 <0.1%
Angela Leach Deep Matter Group plc 68,101 - 68,101 <0.1%
Diffblue Limited 644 - 644 <0.1%
Diurnal Group plc 11,500 - 11,500 <0.1%
Emdot Limited (I) 4 - 4 0.23%
First Light Fusion Limited 27 - 27 <0.1%
Ieso Digital Health Limited - B2 Preferred Shares 29 - 29 <0.1%
Istesso Limited - A Shares 322,923 - 322,923 0.29%
Itaconix plc 4,500 - 4,500 <0.1%
Mixergy Limited 206 - 206 0.00%
Mirriad Advertising plc 16,667 - 16,667 <0.1%
Oxbotica Limited 3 - 3 <0.1%
Oxford Nanopore Technologies plc 37,880 29 37,909 <0.1%
OxONN Limited - 20,000 20,000 <0.1%
Rio AI Limited (III) 180,308 - 180,308 <0.1%
Surrey Nanosystems Limited 78 - 78 <0.1%
Tissue Regenix Group plc 146,791 - 146,791 <0.1%
Ultraleap Holdings Limited 500 - 500 <0.1%
Xeros Technology plc 16 - 16 <0.1%
Anthony York Has no holdings in IP Group portfolio companies
I Company being closed down
II. Restated opening position
III. Previously called Ditto AI Limited
B) Portfolio companies
i) Services
The Group earns fees from the provision of 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:
Statement of comprehensive income Unaudited six months ended Unaudited six months ended Audited
30 June 30 June year ended
2021
2022
31 December 2021
£m
£m £m
Revenue from services 0.1 0.3 0.3
Statement of financial position Unaudited six months ended Unaudited six months ended Audited
30 June 30 June year ended
2021
2022
31 December 2021
£m
£m £m
Trade receivables 0.1 0.2 0.2
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 Unaudited six months ended Unaudited six months ended Audited year ended
30 June 30 June 31 December 2021
2021
2022
£m
£m
£m
Net portfolio loss/(gains) 50.1 50.4 56.5
Statement of financial position Unaudited Unaudited Audited
30 June 30 June 31 December 2021
2021
2022
£m
£m
£m
Equity and debt investments 522.6 539.4 444.6
C) Subsidiary companies
Subsidiary companies that are not 100% owned either directly or indirectly by
the parent company have intercompany balances with other Group companies
totalling as follows:
Unaudited Unaudited 30 June 2021 Audited
30 June £m 31 December 2021
2022 £m
£m
Intercompany balances with other Group companies 2.5 2.0 2.4
These intercompany balances represent funding loans provided by Group
companies that are interest free, repayable on demand and unsecured.
11. 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 more 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 Unaudited six months ended Unaudited six months ended Audited year ended
30 June 30 June 31 December 2021
2021
2022
£m
£m
£m
NAV Primary statements NAV per share is defined as net assets divided by the number of outstanding NAV £1,414.0m £1,439.8m £1,738.1m
per share
shares in issue. The measure shows net assets managed on behalf of
shareholders by the Group per share in issue. It is a useful measure to
compare to the Group's share price.
Shares in issue 1,034,425,665 1,062,788,114 1,040,754,160
NAV 136.7p 135.4p 167.0p
per share
Return on NAV Primary statements Return on NAV is defined as the total comprehensive income or loss for the Total comprehensive income (309.9) 116.6 449.6
year excluding charges which do not impact on net assets, specifically
amortisation of intangible assets and 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 1.4 1.3 2.6
Return on NAV (308.5) 117.9 452.2
Net portfolio gain/(loss) Primary statements Net portfolio gains are defined as the movement in the value of holdings in Change in fair value of equity and debt investments (304.1) 85.7 415.9
the portfolio due to share price movements or impairments in value, gains or
losses on realisation of investments and gains or losses on disposals of
subsidiaries. The measure shows a summary of the income statement gains and
losses which are directly attributable to the portfolio, which is a headline
measure for the Group's performance. This is a key driver of the Return on NAV
which is a performance metric for directors' and employees' incentives.
The definition has been updated in 2022 to include 'Change in fair value of LP
investments', as following the deconsolidation of our US business, changes to
the value of the US portfolio will be included within this income statement
caption.
Gain on disposal of equity investments 4.2 57.4 81
.5
Change in fair value of LP investments
8.8 (2.7)
1.
8
Net portfolio gain/(loss) (291.1) 140.4 499.2
Net realisations Portfolio review Net realisations is defined as the net amount realised/invested from/into the Purchase of equity and debt investments (52.0) (69.5) (103.7)
portfolio. It is calculated by taking the net amount of the purchases of
/(investment) equity and debt investments, less the proceeds from the sale of equity and
debt investments.
The measure is used as a KPI for the relative generation or use of cash by the
portfolio.
Proceeds from sale of equity and debt investments 2.1 111.4 213.4
Net realisations (49.9) 41.9 109.7
/(investment)
Total portfolio Consolidated statement of financial position Total portfolio is defined as equity and debt investments that we control and Equity investments 1,123.4 1,219.5 1391.8
consolidate directly, our "Investment Portfolio", plus interests in LP funds,
most significantly our holding in IPG Cayman LP, our US platform, which is now
reflected within this category following its deconsolidation in November 2021.
Debt investments 37.5 26.9 22.8
Limited and Limited Liability Partnership interests
104.6 17.1 92.9
Total portfolio value 1,265.5 1,263.5 1,507.5
Net overheads Financial review Net overheads are defined as the Group's core overheads less operating income. Other income 3.1 5.1 13.6
The measure reflects the Group's controllable net operating "cash-equivalent"
central cost base and is used as a performance metric in the Group's Annual Other administrative expenses
Incentive Scheme. Core overheads exclude items such as share-based payments,
amortisation of intangibles and consolidated portfolio company costs. (14.2) (14.8) (33.2)
Excluding:
Administrative expenses -consolidated portfolio companies - 0.1 0.1
FRS 3 charge in respect of acquisition of subsidiary - - -
Net overheads (11.1) (9.6) (19.5)
Cash and deposits Primary statements Cash is defined as cash and cash equivalents plus deposits. Cash and cash equivalents 94.4 207.7 105.7
The measures give a view of the Group's liquid resources on a short-term
timeframe. The Group's Treasury Policy has a maximum maturity limit of 13
months for deposits
Deposits 141.3 101.2 216.2
Cash 235.7 308.9 321.9
12. Post balance sheet events
Between 30 June 2022 and 29 July 2022 the fair value of the Group’s holdings
in listed companies experienced a net fair value increase of £30.2m.
On 2 August 2022, the Group signed a Note Placing Agreement to issue a £120m
debt private placement to London-based institutional investors. Half of this
will be drawn down in December 2022 and the balance in June 2023, with three
equal maturities in December in 2027, 2028 and 2029. The interest rate is
fixed, at an average of 5.25%. Approximately £15m of the proceeds will be
used to repay early the shorter-dated portion of our EIB debt, leaving £22m
of EIB debt to be progressively repaid between now and January 2026.
In July 2022, Hysata, the Group’s novel electrolyser business, completed a
AUD$43m round including AUD$19m from IP Group.
STATEMENT OF DIRECTORS' RESPONSIBILITIES
General information
The comparative financial information presented herein for the year ended 31
December 2021 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 2021 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
This condensed set of financial statements has been prepared in accordance
with IAS 34 Interim Financial Reporting as adopted for use in the UK.
The annual financial statements of the group for the year ended 31 December
2022 will be prepared in accordance with UK-adopted international accounting
standards. As required by the Disclosure Guidance and Transparency Rules of
the Financial Conduct Authority, the condensed set of financial statements has
been prepared applying the accounting policies and presentation that were
applied in the preparation of the company's published consolidated financial
statements for the year ended 31 December 2021.
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 2021.
Going concern
The Directors are required to satisfy themselves that it is reasonable to
presume that the Group is a going concern. The Group had Net Cash of £235.7m
as at 30 June 2022. In light of the Group's forecast net overhead costs, debt
repayment obligations and other committed spend, the Directors are satisfied
that in taking account of reasonably possible downsides including the
potential impact of COVID-19 and other uncertainties, the Group has adequate
access to resources to enable it to meet its obligations and to continue in
operational existence for at least the next 12 months.
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 2021 and which will form the basis
of the 2022 Annual Report and Accounts.
Additional guidance describing the components of portfolio fair value
gains/losses which will be included in the Group's 2022 Annual Report and
Accounts is presented as follows:
• Change in fair value of equity and debt investments is the
movement in the fair value of investments in accordance with IFRS 13 between
the start and end of the accounting period, or from the date of investment
within the accounting period to the end of the accounting period.
• Gain on disposal of equity investments is the difference between
the fair value of the consideration received in accordance with IFRS 13 (less
any directly attributable costs) on the sale of equity and debt investments,
and the investment's carrying value at the start of the accounting period.
Statement of Directors' responsibilities
The Directors confirm to the best of their knowledge that: the half-yearly
results have been prepared in accordance with IAS 34 as adopted by the
European Union; and 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
Sir Douglas Flint Greg Smith
Chairman Chief Executive
Officer
02 August 2022
INDEPENDENT REVIEW REPORT
TO IP GROUP PLC
Conclusion
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 2022 which comprises the consolidated statement of Comprehensive Income,
consolidated statement of Financial Position, consolidated Statement of Cash
Flows, consolidated Statement of Changes in Equity and the related explanatory
notes.
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 2021 is not prepared, in all
material respects, in accordance with IAS 34 Interim Financial Reporting as
adopted for use in the UK and the Disclosure Guidance and Transparency Rules
("the DTR") of the UK's Financial Conduct Authority ("the UK FCA").
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.
We read the other information contained in the half-yearly financial report
and consider whether it contains any apparent misstatements or material
inconsistencies with the information in the condensed set of financial
statements.
A review is substantially less in scope than an audit conducted in accordance
with International Standards on Auditing (UK) 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.
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.
The latest annual financial statements of the group were prepared in
accordance with International Financial Reporting Standards adopted pursuant
to Regulation (EC) No 1606/2002 as it applies in the European Union and in
accordance with international accounting standards in conformity with the
requirements of the Companies Act 2006 and the next annual financial
statements will be prepared in accordance with UK-adopted international
accounting standards
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.
The purpose of our review work and to whom we owe our responsibilities
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 DTR of 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.
Jonathan Martin
for and on behalf of KPMG LLP
Chartered Accountants
15 Canada Square
London
E14 5GL
02 August 2021
1 (#_ftnref1) NAV is defined as Total Equity, excluding Other Intangibles
(see Note 11)
2 (#_ftnref2) As of 29 July 2022
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