REG - IP Group PLC - Half-yearly results
17/09/2024 07:15
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RNS Number : 4147E IP Group PLC 17 September 2024
FOR RELEASE ON 17 September 2024
("IP Group" or "the Group" or "the Company")
Half-yearly results
Good progress on exits with more in pipeline; encouraging developments in key
portfolio companies, maintaining balance sheet strength remains a priority
IP Group plc (LSE: IPO), which invests in breakthrough science and innovation
companies with the potential to create a better future for all, today
announces its financial results for the six months ended 30 June 2024.
Good progress on exits with the pipeline of future cash realisations strong
through to the end of 2025; the pipeline includes a number of transactions at
an advanced stage of negotiation
- Agreed sale of Garrison Technology Ltd ("Garrison") to Everfox
in the period; sale completed in August with £30m proceeds received.
- Cash proceeds((i)) of £3.4m in the period with a further
£41.2m already received (including Garrison) in the second half (HY23:
£32.2m; FY23: £38.6m).
- Further exits expected including several at an advanced stage of
negotiation and would be expected to take place at or above 2023 year end
carrying values.
Encouraging developments within our maturing portfolio
- £380m of total capital raised by portfolio in the period (HY23:
£299m; FY23: £667m).
- Healthier future (Life Sciences): Four companies reported
positive clinical trial data; awaiting trial data readout from Istesso Phase
2b for Leramistat in rheumatoid arthritis; Mission and Enterprise closed
significant investment rounds to fund the next stage of clinical development.
- Tech-enriched future (Deeptech): Agreed sale of Garrison to
US-based cybersecurity firm Everfox for proceeds of £30m; continued strong
revenue growth at Featurespace with FY23 revenues increasing 46.5% to £50.4m.
- Regenerative future (Cleantech): Hysata completed its
oversubscribed $111m Series B funding round, the largest Series B in
Australian cleantech history and which was reflected in our 2023 year end
valuation. Refocussed plan at First Light Fusion with management team
strengthened by addition of experienced Acting CEO. Record-breaking test of
the company's amplifier technology at leading US fusion lab Sandia.
Focus on maintaining financial strength
- Maintained strong balance sheet and good liquidity with gross
cash and deposits(i) of £161.3m (HY23: £250.0m; FY23: £226.9m).
- Net overheads(i) reduced by 16% (£1.6m) to £8.7m.
- Invested £49.1m into the portfolio across 23 companies within
our three high-growth sectors.
- NAV per share(i) declined to 104.7p (-9%), driven primarily by a
fair value decrease in the market value of listed holding Oxford Nanopore,
some of which has reversed in the second half.
- Third party managed funds stood at £637m (HY23: £689m FY23:
£650m), with more than £90m available for investment.
Delivering shareholder returns
- Completed £8.1m of the £20m share buyback launched in December
2023 in the period, with the remainder now complete as at the announcement
date.
- Announced the intention to increase the Group's current share
buyback programme by a further £10m. Future cash returns expected to be in
the form of share buybacks when the share price discount to NAV exceeds 20%.
Post period-end update
- Additional cash proceeds of £41.2m since 30 June; gross cash
and deposits of £183.7m as at end August 2024
- Fair value of the Group's holdings in listed companies
experienced a net fair value increase of £52m in the period since 30 June,
including ONT increasing by £43m
- More than £10m cash realised from the sale of other stakes in a
small number of portfolio companies in July.
- Additional proceeds expected from the announced Intelligent
Ultrasound Group plc's material disposal transaction
- Over £95m of total cash returned to shareholders through
dividends and share buybacks since 2021
- We are now seeing strong signs of improvement in the private
tech sector, reflected in a strong pipeline of exits and interest in our
portfolio.
- Focus on costs has accelerated since the half-year, with a
planned reduction in net overheads(i) of over 25% on an annualised basis by
the year end.
- Hostplus committed an additional A$125m to the IP Group Hostplus
Innovation fund, taking total funds committed to A$435m.
Summary financials
HY to 30 June 2024 (unaudited) HY to 30 June 2023 FY 2023
(unaudited) (audited)
Net Asset Value (NAV) £1,072.2m £1,313.6m £1,190.3m
NAV per share 104.7pps 126.7pps 114.8pps
% Return on NAV ((i)) -9% -4% -13%
Loss for the period/year (£109.9m) (£54.5m) (£174.4m)
Total portfolio ((i)) £1,111.0m £1,276.1m £1,164.9m
Gross cash and deposits ((i)) £161.3m £250.0m £226.9m
Cash proceeds((i)) £3.4m £32.2m £38.6m
Portfolio investment ((i)) £49.1m £59.8m £73.2m
(i) Note 12 details the Alternative
Performance Measures ("APM")
Greg Smith, Chief Executive of IP Group, said: "The Group has made progress on
delivering cash proceeds in the year to date, and has a strong pipeline of
future realisations, some at an advanced stage of negotiation. We are seeing
improvement in market sentiment toward private transactions in the areas in
which we operate, which has been reflected in our ability to realise
investments. Furthermore, we expect these exits to take place at or above
their carrying values at the end of last year, validating our prudent approach
to portfolio valuation. As a result, the Group remains in a strong financial
position with £183.7m of gross cash at the end of August which is
particularly important in the current environment.
The Board remains committed to delivering shareholder returns that include a
regular cash component from realisations. With a share price discount to NAV
of more than 20%, we have not only accelerated our buyback programme in the
period and have now bought back £20.0m of shares under our planned programme
but also plan to increase it by an additional £10m.
As the UK's most active investor in university spinouts, we are pleased with
the progress in our portfolio in our three thematic sectors, with our
portfolio continuing to mature and attract commercial and strategic interest,
and we continue to believe we remain well positioned to deliver good financial
returns for our shareholders."
Webinar
IP Group will host a webinar for analysts and investors today, 17 September,
at 09:00am. For more details or to register as a participant please visit
https://www.investormeetcompany.com/ip-group-plc/register-investor
(https://www.investormeetcompany.com/ip-group-plc/register-investor) .
For more information, please contact:
IP Group plc www.ipgroupplc.com
Greg Smith, Chief Executive Officer +44 (0) 20 7444 0050
David Baynes, Chief Financial and Operating Officer
Liz Vaughan-Adams, Communications +44 (0) 20 7444 0062/+44 (0) 7967 312125
Portland
Alex Donaldson +44 (0) 7516 729702
Further information on IP Group is available on our website:
www.ipgroupplc.com
This half-yearly report may contain forward-looking statements. These
statements reflect the Board's current view, are subject to a number of
material risks and uncertainties and could change in the future. Factors that
could cause or contribute to such changes include, but are not limited to, the
general economic climate and market conditions, as well as specific factors
relating to the financial or commercial prospects or performance of individual
portfolio companies within the Group's portfolio of investments. Throughout
this Half-Yearly Report, the Group's holdings in portfolio companies reflect
the undiluted beneficial equity interest excluding debt, unless otherwise
explicitly stated.
Interim Management Report
Summary
IP Group is one of the companies most closely aligned with the UK's 'science
superpower' ambition, having already formed more than 500 science-based
businesses. Combining university relationships with deep sector experience and
networks allows us to access highly differentiated dealflow in the pursuit of
our purpose of accelerating the power of science for a better future. The
Group is one of the largest and most experienced investors in University IP in
the world. By starting and growing businesses driving improved health
outcomes, the energy transition and the digital transformation, we continue to
believe that we can have a significant impact on some of society's biggest
needs and deliver compelling financial returns for our shareholders. Our
current portfolio contains a number of companies including Oxford Nanopore,
Istesso, Featurespace, Oxa, Hysata, First Light Fusion and Hinge Health, among
others, with the potential for billion-dollar exit valuations.
While the overall market environment for growth companies and early-stage
investing remained challenging in the first half of 2024, several factors such
as the increase in corporate M&A activity, including the sale of one of
our leading portfolio companies, gives us increasing confidence that
conditions are improving. We were also encouraged by the fundraisings that our
companies achieved, reflecting the quality of our portfolio. Our portfolio
successfully raised a total of £380m of funding of which IP Group contributed
£49.1m (HY23: £298m, £59.8m; FY23: £667m, £73.2m). Notable transactions
in the period included the oversubscribed US$111m fundraise by Hysata, the
largest Series B in Australian cleantech history (which was reflected in our
2023 year end valuation), the £35m raise by Genomics to accelerate the
adoption of polygenetic risk scores, the £26m raise by Enterprise
Therapeutics to fund its Ph2a clinical proof of concept trial in cystic
fibrosis and the £25m Series D raise by Mission Therapeutics to progress its
clinical candidates in the area of mitophagy.
In the ongoing uncertain private financing environment, maintaining our
financial strength continues to remain key and we have therefore placed a
greater focus on exits, revenue generation and on cost reduction to ensure the
Group remains appropriately sized and well positioned. The Group finished the
period with £161.3m gross cash and deposits. Additional cash proceeds of
£41.2m received since 30 June has increased gross cash and deposits to
£183.7m as at the end of August 2024.
They key exit in the period was the sale of Garrison to Everfox which was
agreed in June and completed in August, delivering £30m of cash post period
end. Additional post period end exits have included the sale of stakes in a
small number of portfolio companies for more than £10m of cash in aggregate.
In addition, Intelligent Ultrasound Group plc entered into a conditional sale
and purchase agreement for the sale of its Clinical AI business to GE
HealthCare for an enterprise value of £40.5m. IP Group has a 20.8% stake in
Intelligent Ultrasound, which has pledged an intention to make a "material
return of capital" to its shareholders. As a result, cash proceeds were £3.4m
in the period with a further £41.2m received in the second half (HY23:
£32.2m; FY23: £38.6m). It is pleasing to note that all of these transactions
have been at or above current carrying levels, validating the cautious
valuation approach which underpins our reported NAV.
We have also continued to focus capital and time on the most promising
opportunities within the three high-growth sectors where we have deep
expertise and experience. It is good to report that in life sciences, four
companies (Storm, Kynos, Abliva and Mission) reported positive clinical trial
data, albeit there was one trial failure (which had largely been reflected in
our 2023 year end valuation). The Group has yet to receive any information
from Istesso Ltd on the outcome of its Phase 2b trial for Leramistat
(MBS20320) in rheumatoid arthritis and will update the market as soon as is
practicable once it has received the information. In deeptech, we welcomed the
sale of Garrison to US-based cybersecurity firm Everfox (formerly Forcepoint
Federal) along with confirmation of continued strong growth at Featurespace
where the company confirmed that 2023 revenues had increased 46.5% to £50.4m.
In cleantech, Hysata completed its oversubscribed $111m Series B funding
round, the largest Series B in Australian cleantech history.
Financial results: Progress on exits, reduced net overheads; strong cash
balance
The Group has continued to proactively manage its level of investment during
the period and, as a result, remains in a strong financial position with gross
cash and deposits of £161.3m at 30 June 2024 (HY23: £250.0m; FY23:
£226.9m). The Group invested £49.1m (HY23: £59.8m; FY23: £73.2m) in the
period including notable investments into portfolio companies Hysata
(£11.7m), Istesso £10.0m, Pulmocide (£3.7m) and Mission Therapeutics
(£3.7m) as well as a number of smaller size investments into current and new
opportunities across all three of our thematic areas. Cash proceeds were in
line with expectations at £3.4m. The Group's portfolio continues to remain
well-funded, with over two thirds of the portfolio currently funded into 2026
or beyond.
By eliminating several operating costs and increasing focus on revenues, we
have nullified the effect of any inflationary cost increases and reduced the
net overheads during the period from £10.3m to £8.7m. We recognise that NAV
has fallen in recent periods which has increased the ratio between overheads
and the portfolios we manage. To this end, we have continued to focus on cost
reductions since the period end as we streamline our business by consolidating
our functions further. In this way we anticipate reducing our overheads by
over 25% on an annualised basis by the year end.
As at 30 June 2024, the Group's Net Asset Value was £1,072.2m, or 104.7 pence
per share (HY23: £1,313.6m, or 126.7pps; FY23: £1,190.3m, or 114.8pps), a
decline of 10.1pps resulting from the loss of £109.9m in the period (HY23:
Loss of £54.5m; FY23: Loss of £174.4m).
The Group's portfolio recorded net portfolio losses of £103.0m in the period,
driven by Oxford Nanopore which represented £94.9m of the decrease. Within
the private portfolio valuation decreases including at Ultraleap Holdings and
First Light Fusion were largely offset by gains elsewhere in the portfolio,
most notably Featurespace.
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 Cash proceeds Net portfolio gain/(loss) Fair value at 30 June 2024 Simple return on capital (%)
Healthier future: Life Sciences (ex ONT) 33.9 2.5 (4.2) 424.4 (1%)
Healthier future: ONT - - (94.9) 78.7 (55%)
Tech-enriched future: Deeptech 2.0 0.1 9.5 242.8 4%
Regenerative future: Cleantech (Kiko Ventures) 12.8 - (12.7) 275.4 (5%)
Platform investments 0.4 0.8 (0.7) 89.7 (1%)
Total Portfolio 49.1 3.4 (103.0) 1,111.0 (9%)
Third-party funds under management
The Group has a flexible approach to capital that combines balance sheet
monies with earlier-stage, tax-advantaged funds as well as later-stage private
capital and now manages or advises £637m (HY23: £689m, FY23: £650m).
Approximately three-quarters of the Group's private capital, £482m, is
managed by Parkwalk, the Group's specialist EIS fund management subsidiary
(FY23: £469m, HY23: £497m), including funds managed in conjunction with the
universities of Oxford, Cambridge, Bristol, and Imperial College London.
Parkwalk invested £17.5m in the first six months of 2024 (HY23: £24.0m;
FY23: £45.1m) in the university spin-out sector across 20 companies (HY23:
16 investments; FY23 27 investments). Again, a report from market data
provider Beauhurst shows that IP Group and Parkwalk are by far the UK's
leading investor in the sector. Fifteen new companies joined the Parkwalk
portfolio, and one escrow release from a previous exit was distributed to
underlying investors. Three portfolio companies closed funding rounds at
uplifts in valuation, one unchanged and four at lower valuations than the
previously held value. These companies raised c.£60m in funding in H1 this
year. We expect this trend to continue in the second half of the year.
Parkwalk liaised closely with BEIS, DSIT, HMT and HMRC on the financial
ecosystem for knowledge-intensive spin-out companies and across political
parties to ensure science and innovation is at the heart of the UK
Government's growth mission.
Most of our remaining funds are managed by our Australian team. The IP Group
Hostplus Innovation Fund, managed for top ten Australian Superannuation fund,
Hostplus, was valued at £146m at the period end, and has invested in several
of the Group's portfolio companies including Oxford Nanopore, Genomics, First
Light Fusion, Oxa and Hysata, providing additive growth capital for companies
as they scale. TelstraSuper is also investing alongside IP Group through a
co-investment mandate. Since the period end, Hostplus has increased the funds
allocated to this activity by A$125m, a further endorsement of the
relationship we have with them, and which brings the total committed to
A$435m.
The Group has a continued focus on increasing its funds under management,
which it expects to exceed the value of balance sheet funds in the short to
medium term.
Continued commitment to shareholder returns
Delivering returns for shareholders is the Group's financial purpose and
narrowing the discount to our NAV per share remains a focus. The Group aims to
deliver returns to shareholders primarily in the form of long-term capital
appreciation. Subject to the Group's capital allocation policy, the majority
of cash proceeds will be typically reinvested with a smaller proportion used
to deliver a cash return to shareholders. Since the introduction of this
approach in 2021, the Group has delivered more than £95m of cash returns to
our shareholders via dividends and share buybacks.
Given the continued discount between the Company's share price and its NAV per
share, which the Directors continue to believe significantly undervalues the
Group's portfolio, we launched a share buyback of up to £20m in December
2023. The Board remains committed to utilising a proportion of realisations to
make regular cash returns to shareholders, which is now anticipated to be
solely in the form of share buybacks while the share price discount to NAV
exceeds 20%. In the six months to 30 June 2024, the Group purchased 16,631,176
shares for £8.1m. A further 28,649,429 shares for £11.8m have been purchased
since the period end. Since the buyback was launched in December, a total of
45,500,907 shares have been purchased for £20.0m. The Directors have also
announced plans to increase the buyback programme by a further £10m once this
tranche is completed.
Board changes
Our non-executive colleague Dr. Elaine Sullivan stepped down from the
Company's board of directors effective from the close of the AGM. Having
(substantially) completed her third term of three years, Dr Sullivan did not
stand for re-election.
Outlook
While the current macro environment remains challenging, the Group is now
seeing strong signs that conditions are improving, having seen increased
corporate activity in and appetite for its portfolio. We also believe that our
mission of investing in breakthrough science and innovation, particularly from
leading universities, is highly aligned with the Government's growth agenda
and that we are well placed to benefit from initiatives in this area. The
Government has been clear on its support for UK based innovation and sciences,
and has committed to progress a number of fiscal and regulatory reforms which
support our operating environment. IP Group continues to be well financed, and
we are confident that our maturing portfolio will deliver value for
shareholders as investor appetite for growth companies returns and which we
anticipate delivering a number of further material exits over the next 18
months.
PORTFOLIO REVIEW BY SECTOR
Overview
The Group has a focused and maturing portfolio of companies that contribute to
a healthier future (life sciences), a tech-enriched future (deeptech) and a
regenerative future (cleantech, Kiko Ventures).
In addition, a small number of investments are categorised as platform
investments, which are funds or portfolio companies that invest in other
opportunities.
As at 30 June 2024 As at 31 December 2023
Sector £m % £m %
Healthier future: Life sciences (ex-ONT) 424.4 38% 393.8 33%
Healthier future: Life sciences (ONT) 78.7 7% 173.6 15%
Tech-enriched future: Deeptech 242.8 22% 231.4 20%
Regenerative future: Cleantech (Kiko Ventures) 275.4 25% 275.3 24%
Platform investments 89.7 8% 90.8 8%
Total portfolio 1,111.0 100% 1,164.9 100%
Portfolio Review: Healthier future: Life sciences
IP Group's Life Sciences portfolio comprises holdings in 33 companies valued
at £503.1m at 30 June 2024 (HY23: 32 companies valued at £589.6m, FY23: 33
companies valued at £567.4m).
Company name Description Group Stake at 30 June 2024(1) Net Unrealised + realised fair value movement Fair value
% investment/ (divestment) £m of Group
£m holding
at 30 June 2024
£m
Istesso Limited Reprogramming metabolism to treat autoimmune disease 56.5% 10.0 3.9 127.6
Oxford Nanopore Technologies plc Enabling the analysis of any living thing, by any person, in any environment 9.5% - (94.9) 78.7
Hinge Health, Inc. The World's First Digital Clinic for Back and Joint Pain 1.8% - 0.2 34.2
Pulmocide Limited Novel inhaled treatment for life-threatening fungal lung infections 11.8% 3.7 - 23.0
Mission Therapeutics Limited Targeting deubiquitylating enzymes for the treatment of CNS and mitochondrial 21.3% 3.7 3.0 22.5
disorders
Crescendo Biologics Limited Biologic therapeutics eliciting the immune system against solid tumours 14.3% - - 19.6
Artios Pharma Limited Novel oncology therapies 7.3% - - 17.4
Centessa Pharmaceuticals plc Discovery and development of medicines that are transformational for patients 2.1% (0.7) 2.2 17.2
Microbiotica Limited Gut-microbiome based therapeutics and diagnostics 17.7% 0.1 - 16.2
Storm Therapeutics Limited Clinical stage biotechnology company creating novel therapies that inhibit RNA 12.1% 2.1 - 11.5
modifying enzymes for use in oncology
Genomics plc Using large-scale genetic information to develop precision healthcare tools 8.2% 3.1 - 11.4
and to bring new understanding to drug discovery
Other companies (22 companies) 9.4 (13.5) 123.8
Total 31.4 (99.1) 503.1
(1) 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 first half of 2024 has seen good progress in the portfolio with four
companies reporting positive clinical trial data.
Pulmocide has released Phase 2 safety data for opelconazole, its anti-fungal
drug for the treatment of a life-threatening lung infection, invasive
pulmonary aspergillosis (IPA). The Phase 2 data from lung transplant patients
was notable because, alongside showing opelconazole was safe and well
tolerated, it was also found to be better tolerated than standard of care
antifungals when used in combination with immunosuppressive therapy. The trial
also provided evidence that the drug eradicated existing fungal infections in
the lung and could prevent new infections which, if confirmed in the ongoing
Phase 3, we hope will generate significant commercial interest.
Kynos Therapeutics has reported positive top line results from the
first-in-human Phase I study of KNS366, its novel drug for acute and chronic
inflammatory disorders. The study demonstrated that KNS366 was safe and well
tolerated and a potent inhibitor of its target enzyme, KMO.
Storm Therapeutics has also released interim Phase 1 clinical data on its
first-in-class oncology drug (STC-15) at the American Society of Clinical
Oncology (ASCO) Annual Meeting. STC-15 was studied in advanced cancer patients
and found to be well tolerated with promising signs of clinical activity.
In early July, Abliva reported results from the interim analysis of its Phase
2 trial of KL1333 for the treatment of primary mitochondrial disease. Efficacy
endpoints (fatigue and muscle weakness) passed futility and supported
recruiting additional patients to complete the Phase 2 study.
In terms of transactions, several companies have closed investment rounds to
fund the next stage of clinical development including Enterprise Therapeutics,
which raised £26m to support a Phase 2a clinical proof of concept trial in
cystic fibrosis, and Mission Therapeutics, which raised £25.2m to fund a
Phase 1a/1b study on a potential disease-modifying treatment for Parkinson's
Disease. Both companies have first-in-class drugs for diseases with a high
unmet medical need, so it is pleasing that they are now funded through to the
next clinical milestone and value inflection point.
Outside of the therapeutics portfolio, several companies continue to make good
commercial progress and have signed new collaboration/partnerships deals; for
example, Genomics plc has established a precision medicine collaboration with
GSK, and expanded its genetic testing partnership with Mass Mutual; MoA has
agreed a 10-year commercial partnership with Croda to develop next-generation
bioherbicides, and Oxehealth has announced its first US partnership with a
behavioural health services provider for its contactless patient monitoring
solution.
Despite the positives, the portfolio has faced challenges including Oxford
Nanopore whose share price has continued to underperform as concerns over the
challenging macroenvironment have lingered and US peers have delivered
underwhelming Q1 results. Whilst disappointing, we remain positive about
Oxford Nanopore's long-term prospects and believe that there is a significant
commercial opportunity for the company, especially in regulated applied
markets where the upcoming launch of its Q-Line sequencing portfolio will help
drive revenue from a new customer base. To this end we have seen improvements
in the share price of ONT since the period end and the completion of an £80m
equity issue which saw a £60m strategic investment from Novo Holdings.
We also have numerous portfolio companies nearing clinical milestones,
including Istesso which we expect to deliver Phase 2b data for Leramistat
(MBS2320) in the near term. The small increase in the value of our holding in
the period reflects unwinding of discounting and updates to exchange rates
within our internal DCF valuation model for this company.
Portfolio Review: Tech-enriched future: Deeptech
IP Group's Technology portfolio comprises holdings in 31 companies valued at
£242.8m at 30 June 2024 (HY23: 29 companies valued at £206.4m, FY23: 32
companies valued at £231.4m).
Company name Description Group Stake at 30 June 2024(1) Net Unrealised + realised fair value movement Fair value
% investment/ (divestment) £m of Group
£m holding
at 30 June 2024
£m
Featurespace Limited Leading predictive analytics company 20.1% - 39.8 112.7
Garrison Technology Limited Anti-malware solutions for enterprise cyber defences 23.6% - (0.9) 30.6
Accelercomm Limited Developing a high-performance decoding solution for 5G mobile communication 26.4% - - 12.5
Other companies (28 companies) 1.9 (29.4) 87.0
Total 1.9 9.5 242.8
(1)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%.
A future enriched and enhanced by technology is becoming all the more real as
we work our way through 2024, with further advances in AI, chip design and
networked communications all continuing at pace. Nvidia became one of a
handful of companies to have passed a $3tn valuation with continued strong
demand for advanced technologies.
The deeptech team at IP Group seeks to capitalise on this megatrend of digital
transformation through investment in four interlinked investment themes of
future compute, next generation communication networks, the human / machine
interface and applied AI. To frame this another way, we invest in information
in all its forms - its creation, transmission, representation, and
exploitation. This holistic approach to deeptech investing across the broad
gambit of digital transformation allows the team to identify and mine rich
investment seams.
The undoubted highlight in the first half of the year was the agreed sale, at
around our NAV holding value, of our stake in Garrison to US-based
cybersecurity firm Everfox (formerly Forecepoint Federal). Following
regulatory clearances, the sale completed in August with initial proceeds of
£30m being received. This exit represented an excellent outcome for both
Garrison and for IP Group, being a strong endorsement of Garrison's
anti-malware solutions for enterprise cyber defences. The price attracted at
exit reinforces the Group's valuation methodology and should provide further
confidence in the carrying values of our assets.
Elsewhere in our portfolio Featurespace, another of our large cybersecurity
assets, continues to see healthy growth with top-tier customers for its highly
differentiated anti-fraud solutions. In 2023, Featurespace grew turnover by
46.5% to £50.4m through successful deployment of software to direct and
indirect customers via transactional and licence deals. International
expansion underpinned its strong growth and recurring revenues comprised 79%
of revenue, up from 70% in 2022. Featurespace also noted that given the
trajectory of growth and cash generation, it expects to maintain a strong
financial position without the need for additional equity or debt capital.
Despite the continued challenging environment for raising fresh venture
capital in new funding rounds, appetite for our portfolio remains healthy with
several of our companies successfully completing fundraisings. We approved new
investments into some of our most promising early-stage assets including
Lumai, which aims to deliver a 1000x improvement on compute speed and energy
efficiency through its optical approach to AI hardware, and Quantum Dice,
which is deploying a quantum based random number generator for applications
both in encryption / cybersecurity and in the seeding of complex deterministic
simulations. Another early-stage asset of note is Helio Display Materials,
which we continue to support with additional capital as it seeks to exploit
its world-leading perovskite-based colour conversion technology in the
manufacture of micro-LED displays.
Audioscenic, our immersive 3D audio company attracted a lot of attention at
the trade shows CES and Computex, where it showcased additional monitor and
laptop products, several of which have moved into production. It continues to
be one of our most promising mid-stage assets.
However, alongside this progress, Ultraleap, our user interfaces company, made
the difficult decision to reshape some of its divisions and reduce the size of
its team to reflect changing dynamics in the VR/AR sector, which has been
slower to emerge than many of the leading players predicted. We believe this
rightsizing exercise, alongside a recent fundraise, leaves Ultraleap
well-positioned to exploit the opportunity for its world-leading hand tracking
and haptics technologies.
In the second half of 2024, we hope to see further technical and commercial
progress at Intrinsic Semiconductor Technologies as it continues to advance
the application of its game-changing non-volatile memory technology. In
offering smaller, more manufacturable and better performing memory blocks,
Intrinsic aims to provide alternatives to the classical computing platforms,
as well as providing a replacement for existing memory platforms such as
Flash.
Portfolio Review: Regenerative future: Kiko Ventures (Cleantech)
The Cleantech (Kiko Ventures) portfolio comprises holdings in 17 companies
valued at £275.4m at 30 June 2024 (HY23: 14 companies valued at £262.4m,
FY23: 16 companies valued at £275.3m).
Company name Description Group Stake at 30 June 2024(1) Net Unrealised + realised fair value movement Fair value
% investment/ (divestment) £m of Group
£m holding
at 30 June 2024
£m
Hysata Pty Limited Developing a new type of breakthrough hydrogen electrolyser and accelerating 37.0% 11.7 (0.6) 81.0
the global transition to net zero
Oxa Autonomy Limited Software to enable every vehicle to become autonomous 11.8% - - 65.7
First Light Fusion Limited Solving fusion with the simplest possible machine 27.5% - (15.9) 49.0
Bramble Energy Limited The fuel cell company with Gigafactories 31.4% - - 20.9
Nexeon Limited Silicon anodes for next generation 5.1% - 4.0 15.9
lithium-ion batteries
Other companies (12 companies) 1.1 (0.2) 42.9
Total 12.8 (12.7) 275.4
(1)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%.
A notable highlight of the first half of 2024 was the completion of the Series
B funding round for Hysata, which took total funds raised to US$111m, making
it the largest Series B in Australian cleantech history. We had participated
in the first close at the end of 2023, with Kiko and IP Group Australia
contributing a total of US$15m. The round was led by bp Ventures and
Templewater and was supported by a wide international syndicate including
POSCO, IMM, Shinhan Financial Group, Oman Investment Authority and
TelstraSuper. Hysata will use the funding to expand production capacity at its
iconic beachside manufacturing facility near Sydney and further develop its
technology as it focuses on reaching gigawatt scale manufacturing.
The first half has been a mixed period for First Light Fusion. The company
continues to make strong technical progress, achieving a major milestone in
February in becoming the first fusion company to successfully fire a shot on
Sandia National Laboratories' Z Machine, the world's largest pulse power
machine. The shot broke the pressure record for the Machine, a major
achievement which validates both the performance of First Light's amplifier
technology and the company's ability to work with third party facilities,
pointing the way to a more capital light strategy. First Light aims to
continue in partnership with Sandia and other providers of ICF (Inertial
Confinement Fusion) 'driver' technology. The management team of First Light
has been strengthened by the appointment of Graham O'Keeffe who has taken over
as Acting CEO from founder Nick Hawker. Graham is an experienced business
leader with significant expertise managing and raising funds for fast growing
deep technology companies. His experience includes the turnaround, and recent
exit, of DisplayLink, a developer of graphics semiconductors spun out from
Cambridge, with the company being acquired by Synaptics Inc. Nick Hawker has
moved into a new role of Chief Scientific Officer (CSO), responsible for the
company's scientific mission and focussing on how it transforms its unique
technology for inertial confinement fusion (ICF) into a commercially viable,
scalable proposition for energy production. However, while there is still
activity in the fusion funding market, we have not seen a return to the
multi-hundred-million funding rounds of 2021. As First Light has still not
completed its Series D fund raise, we have carried out a re-evaluation of our
holding which, using expert third party input, has led to a reduction in value
of £15.9m.
Elsewhere in the portfolio, there has been good progress for Vytal, which has
technology to eliminate single-use packaging by enabling cost-efficient re-use
of plastic containers. In June, Vytal raised €6.2m to accelerate the roll
out of its technology, which is already being used in 17 countries and with
over 7,000 partners. The round was led by Emerald Technology Ventures, one of
the most successful and established cleantech ventures funds, having been
founded in 2000 and currently managing assets of over €1bn over four funds.
Attracting high quality co-investment is a core performance target for the
Kiko team, and Emerald's financial strength and experience, having
participated in hundreds of cleantech venture transactions, is an example of
this in practice. Existing relationships between the Kiko team and Emerald
were key to securing this funding. Three new investments in exciting climate
technologies were approved in the period.
Portfolio review: Platform Investments
IP Group's Platform Investments portfolio comprises holdings in two companies
and three interests in Partnerships, valued at £89.7m at 30 June 2024. The
Platform Investments portfolio contains holdings in funds and companies that
operate in a similar way to IP Group, most significantly our interest in our
US platform, managed by Longview Innovation, the UCL Technology Fund, Oxford
Science Enterprises Limited and Cambridge Innovation Capital Limited, all of
which IP Group was a founding investor in. The performance of these
investments is summarised as follows:
Company name Description Group Stake at 30 June 2024(1) Net Unrealised and realised fair value movement Fair value
% investment/ (divestment) £m of Group
£m holding
at 30 June 2024
£m
US platform (managed by Longview Innovation) Commercialising world class research in the US 58.1% - (0.5) 45.5
UCL Technology Fund L.P. Commercialising world class research from UCL 46.4% (0.4) (0.9) 19.3
Oxford Science University of Oxford preferred IP partner under 15-year framework agreement 1.8% - 1.0 19.3
Enterprises plc
Other companies (2 companies/LLPs) - - (0.3) 5.6
Total (0.4) (0.7) 89.7
(1) 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%.
Portfolio review: Additional Analysis
Number of investments by sector
As at 30 June 2024 As at 31 December 2023
Sector Number % Number %
Healthier future: Life sciences (ex-ONT) 32 37% 32 37%
Healthier future: Life sciences (ONT) 1 1% 1 1%
Tech-enriched future: Deeptech 31 36% 32 37%
Regenerative future: Cleantech (Kiko Ventures) 17 20% 16 19%
Platform investments 5 6% 5 6%
Total number of portfolio investments(1) 86 100% 86 100%
(1) Excludes de minimis holdings, which have a small value to the Group and
are not actively managed to the same extent as core holdings, and are
accordingly not included in the stated number of companies.
Number of Investments
United Kingdom North America Australia & New Zealand Total
1 January 2024 75 1 10 86
Additions 1 - - 1
Exited & acquired in period - - - -
Being closed/liquidated - - - -
Reclassified to de minimis(1) (1) - - (1)
30 June 2024 75 1 10 86
(1) De minimis holdings have a small value to the Group and are not actively
managed to the same extent as core holdings, and are accordingly not included
in the stated number of companies.
Co-investment analysis
Including the £49.0m (HY23: £59.8m, FY23: £73.2m) of primary capital
invested by the Group (in addition, the Group invested £0.1m via secondary
purchases (HY23: £nil, FY23: £nil)), the Group's portfolio raised
approximately £380m during the period (HY23: £298m, FY23: £667m).
Co-investment from parties or funds with a greater than 1% shareholding in IP
Group plc totalled £3.4m (HY23: £nil, FY23: £1.0m). An analysis of this
co-investment by source is as follows:
Six months ended 30 June 2024 Six months ended 30 June 2023(3)
Portfolio capital raised £m % £m %
IP Group(1) 49.0 13% 59.8 20%
IP Group managed funds(2) 21.9 6% 9.9 3%
IP Group plc shareholders (>1% holdings) 3.4 1% - 0%
Institutional investors 13.3 4% 26.0 9%
Corporate, other EIS, individuals, universities and other 291.9 76% 202.6 68%
Capital into Platform investments - 0% - 0%
Total 379.5 100% 298.3 100%
(1 ) Reflects primary investment only; during the six months to 30 June
2024 the Group invested £0.1m via secondary purchase of shares (HY23: £nil,
FY23: £nil).
(2 ) Includes Parkwalk Advisors and other funds managed by IP Group.
(3 ) Prior year comparatives have been represented to reflect revised
investors classification which has been updated in the current period
Portfolio funding position
The following table lists information on the expected cash-out dates (the date
by which portfolio companies are projected to need to have raised further
funding) of portfolio companies in which IP Group's investment holding value
is greater than £4m. The values in the below table show the IP Group
portfolio value which falls within each of the cash-out periods.
30 June 2024 30 June 2023 31 December 2023
Company name £m % £m % £m %
Funded to breakeven 324.4 34% 354.2 33% 345.8 35%
2023 - - 59.5 6% - -
2024 H1 - - 109.4 10% 69.8 7%
2024 H2 22.5 2% 292.3 27% 57.7 6%
2025 H1 261.9 27% 229.5 21% 377.8 38%
2025 H2 19.0 2% 10.7 1% 33.0 3%
2026 315.7 33% 18.1 2% 104.2 10%
2027 20.8 2% - 0% 10.7 1%
Total 964.3 100% 1,073.7 100% 999.0 100%
Companies < £4m value 79.0 83.7 75.1
Interest in Limited Partnerships and Platforms 67.7 118.7 90.8
Total portfolio 1,111.0 1,276.1 1,164.9
FINANCIAL REVIEW
· Loss for the period of £109.9m (HY23: Loss of (£54.5m), FY23:
Loss of (£174.4m))
· Net assets were £1,072.2m (HY23: £1,313.6m, FY23: £1,190.3m)
· Net assets per share were 104.7p (HY23: 126.7p, FY23: 114.8p)
· Net overheads were £(8.7)m, a reduction of £1.6m from the
previous period (HY23: £(10.3)m, FY23: £(22.5)m)
Consolidated statement of comprehensive income
A summary analysis of the Group's performance is provided below:
Six months Six months ended Year ended
ended 30 June 2023 31 December 2023
30 June 2024 £m £m
£m
Net portfolio loss(1) (103.0) (44.4) (160.5)
Net overheads(2) (8.7) (10.3) (22.5)
Non-portfolio foreign exchange gains and losses 0.1 1.2 0.4
Administrative expenses - share-based payments charge (0.8) (1.0) (2.6)
Carried interest plan provision credit/(charge) (0.1) (0.5) 4.7
Net finance income 1.4 1.6 4.2
Taxation 1.2 (1.1) 1.9
Loss after tax for the period (109.9) (54.5) (174.4)
Other comprehensive income (0.9) (0.8) (0.4)
Total comprehensive loss for the period (110.8) (55.3) (174.8)
Exclude:
Share-based payment charge 0.8 1.0 2.6
Return on NAV(1) (110.0) (54.3) (172.2)
(1) Defined in note 12 Alternative Performance Measures.
(2) See net overheads table below and definition in note 12 Alternative
Performance Measures.
Net portfolio gains/(losses) consist primarily of realised and unrealised fair
value gains and losses from the Group's equity and debt holdings in spin-out
businesses, which are analysed in detail in the portfolio analysis above.
Fair value movements
A summary of the unrealised and realised fair value gains and losses is as
follows:
Six months Six months ended Year ended
ended 30 June 2023 31 December 2023
30 June 2024 £m £m
£m
Quoted equity & debt investments (95.2) (29.4) (31.8)
Private equity & debt investments (6.2) 4.5 (83.8)
Investments in Limited Partnerships (1.9) (8.3) (36.5)
Foreign exchange movements 0.3 (11.2) (8.4)
Net portfolio losses (103.0) (44.4) (160.5)
A summary of the largest unrealised and realised fair value gains and losses
by portfolio investment is as follows:
Gains £m Losses £m
Featurespace Limited 39.8 Oxford Nanopore Technologies plc (94.9)
Nexeon Limited 4.0 Ultraleap Holdings Limited (26.5)
Istesso Limited 3.9 First Light Fusion Limited (15.9)
Mission Therapeutics Limited 3.0 Ieso Digital Health Limited (10.7)
Kynos Therapeutics Limited 2.6 Akamis Bio Limited (3.7)
Other quoted 3.3 Other quoted (3.5)
Other private 8.4 Other private (12.9)
Foreign exchange 0.9 Foreign exchange (0.8)
Total 65.9 Total (168.9)
Net overheads
Six months Six months ended Year ended
ended 30 June 2023 31 December 2023
30 June 2024 £m £m
£m
Other income 3.8 3.1 5.9
Administrative expenses - all other expenses (11.7) (12.3) (25.8)
Administrative expenses - annual incentive scheme (0.8) (1.1) (2.6)
Net overheads (8.7) (10.3) (22.5)
Other income
Other income comprises fund management fees and licensing and patent income.
In the current period other income totalled £3.8m (HY23: £3.1m, FY23:
£5.9m), and increased by 23% from first half of the previous year driven by
increased fund management revenues from our Parkwalk business unit.
Other central administrative expenses
Other central administrative expenses, excluding performance-based staff
incentives, share-based payments charges and the impact of foreign exchange
movements, have reduced from the prior period at £11.7m (HY23: £12.3m, FY23:
£25.8m) reflecting an additional focus on cost control in the first half of
2024.The charge of £0.8m in respect of the Group's Annual Incentive Scheme
reflects a provisional assessment of performance against 2024 AIS targets
which include Group, Team, and Individual performance elements (HY23: £1.1m,
FY23: £2.6m).
Other income statement items
The share-based payments charge of £0.8m (HY23: £1.0m, FY23: £2.6m)
reflects the accounting charge for the Group's Restricted Share Plan,
Long-Term Incentive Plan and Deferred Bonus Share Plan. This non-cash charge
reflects the fair value of services received from employees, measured by
reference to the fair value of the share-based payments at the date of award,
but has no net impact on the Group's total equity or net assets.
Carried interest plan charge
The carried interest plan charge of £0.1m (HY23: £0.5m charge, FY23: £4.7m
credit) relates to the recalculation of liabilities under the Group's carry
schemes. As at 30 June 2024, 77% of the Group's equity & debt investments
were included within carry scheme arrangements (HY23: 70%, FY23: 70%). The
liabilities are calculated based upon any excess of current fair value above
cost and hurdle rate of return within each scheme or vintage. Any payments
will only be made following the full achievement of cost and hurdle via cash
proceeds and are only paid on the event of a cash realisation.
Consolidated statement of financial position
A summary analysis of the Group's assets and liabilities is provided below:
Six months Six months ended Year ended
ended 30 June 2023 31 December 2023
30 June 2024 £m £m
£m
Total Portfolio 1,111.0 1,276.1 1,164.9
Other non-current assets 6.4 5.3 10.2
Other net current assets/(liabilities) (8.0) 4.0 (7.5)
Cash and deposits 161.3 250.0 226.9
Borrowings (132.1) (138.3) (135.2)
Other non-current liabilities (66.4) (83.5) (69.0)
Total Equity or Net Assets ("NAV") 1,072.2 1,313.6 1,190.3
NAV per share 104.7p 126.7p 114.8p
The composition of, and movements in, the Group's portfolio are described in
the portfolio review above.
Portfolio valuations
Given continued volatility in public markets and uncertainty over the extent
of the impact on private valuations, we have continued to seek third party
valuation advice across some of the larger companies in our portfolio which
were assessed as having a higher degree of valuation uncertainty. These were
First Light Fusion, Hinge Health and Ultraleap.
The first half of 2024 saw an increase in the level of capital raised by the
portfolio compared to the same period in 2023, with £380m raised (HY23:
£298m, FY23: £667m). The period saw fewer newly priced raises of equity,
with a lot of the capital being follow-on tranches of rounds agreed in
previous years, or funding via convertible debt. A larger proportion of the
rounds took place at or below the previous funding round prices, indicating
that we are seeing some evidence of reductions in private valuations from
financing transactions in our portfolio. For all three down rounds,
impairments had been recognised already in the Group's 2023 full year results
in anticipation of the funding round outcomes.
Six months ended Six months ended Year ended
30 June 2024 30 June 2023 31 December 2023
£m £m £m
No. % No. % No. %
Up round 4 50% 10 72% 13 62%
Flat round 1 12% 2 14% 3 14%
Down round 3 38% 2 14% 5 24%
Total 8 100% 14 100% 21 100%
Most 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 12-24 months, therefore we remain confident around the
resilience of our portfolio.
The table below summarises the valuation basis for the Group's portfolio.
Further details on the Group's valuation policy and approach can be found in
notes 3 and 4.
Six months Six months ended Year ended
ended 30 June 2023 31 December 2023
30 June 2024 £m £m
£m
Quoted 108.7 206.5 203.8
Funding transaction (<12 months) 177.8 268.0 187.9
Funding transaction (>12 months) 222.3 191.0 162.7
Other: Future market/commercial events 69.5 15.8 25.0
Other: Adjusted financing price based on past performance - upwards 36.0 178.3 99.9
Other: Adjusted financing price based on past performance - downwards 163.4 129.2 203.9
Other: Discounted Cash Flow (DCF) 140.5 115.8 126.6
Other: Revenue Multiple 125.1 76.8 85.4
Statements from LP 67.7 94.7 69.7
Total Portfolio 1,111.0 1,276.1 1,164.9
Other assets and liabilities
The majority of other long-term assets relate to amounts receivable on sale of
equity and debt investments, representing deferred and contingent
consideration amounts to be received in more than one year.
Other long-term liabilities relate to carried interest and revenue share
payables, and loans from LPs of consolidated funds. The Group consolidates the
assets of a fund in which it has a significant economic interest, IP Venture
Fund II LP. Loans from third parties of consolidated funds represent
third-party loans into this partnership. These loans are repayable only upon
these funds generating sufficient realisations to repay the Limited Partners.
Borrowings
On 2 August 2022, the Group signed a Note Placing Agreement ("NPA") to issue a
£120m debt private placement to London-based institutional investors
(primarily Phoenix Group). £60m of this was drawn in December 2022 and the
balance was drawn 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 was 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 (£6.3m of the EIB debt will be repaid within
twelve months of the period end).
Under the terms of the NPA, the Group is required to maintain a minimum cash
balance of £25m at any time, equity must be at least £500m and gross debt
less restricted cash must not exceed 25% of total equity as at the Group's 30
June and 31 December reporting dates. The NPA also includes 'Cash Trap'
provisions which stipulate that the Group is required to maintain cash and
cash equivalents of no less than £50m at any time, equity must be at least
£750m, and gross debt less restricted cash must not exceed 20% of total
equity as at the Group's 30 June and 31 December reporting dates. In the event
of the Cash Trap being triggered, the Group is not permitted to pay or declare
a dividend or purchase any of its shares. In addition, investments are
restricted to £2.5m per calendar quarter other than those legally committed
to. The Group is also required to place the net proceeds of all cash proceeds
(over a threshold of £1m) into a blocked bank account. Entering a Cash Trap
does not constitute a default under the NPA.
All covenants have been met throughout the period. For further details of the
Group's loans including covenant details see note 19 to the 2023 Annual
Report.
Cash and deposits
At 30 June 2024, the Group's cash and deposits totalled £161.3m, a decrease
of £65.6m from a total of £226.9m at 31 December 2023, predominantly due to
outflows of investing activities of £49.1m, a £9.3m net cash outflow from
operations, £8.1m spent on the share buy-back scheme and a £3.1m cash
outflow from the repayment of debt net of an inflow of cash proceeds of
£3.4m.
Investments and realisations
The Group invested a total of £49.1m across 23 portfolio companies during the
period (HY23: £59.8m, 23, FY23: £73.2m; 33) and realised cash proceeds of
£3.4m (HY23: £32.2m, FY23: £38.6m).
Largest investments and realisations by portfolio company for the period:
Investments £m Cash Realisations £m
Hysata Pty Ltd 11.7 Zihipp Limited 1.4
Istesso Limited 10.0 UCL Technology Fund LP 0.8
Pulmocide Limited 3.7 Centessa Pharmaceuticals plc 0.7
Mission Therapeutics Limited 3.7 Karus Therapeutics Limited 0.2
Genomics plc 3.1 Ankere Therapeutics Pty Ltd 0.2
Other 16.9 Other 0.1
Total 49.1 Total 3.4
Deferred consideration estimated at £5.8m was outstanding at 30 June 2024
(HY23: £12.5m, FY23: £9.2m), relating to the Group's realisation of
Enterprise Therapeutics (£3.8m, exited in 2020) and Zihipp Limited (£1.9m,
exited in 2023).
Dividend and share buyback
In its 2023 results, the Group reiterated the Board's commitment to making
regular cash returns to shareholders from realisations but announced that, in
light of the prevailing discount between the Company's share price and its NAV
per share, these regular cash returns will normally be made in the form of
share buybacks when the share price discount to NAV exceeds 20%. As a result,
no dividends were paid in the period (HY23: 7.7m, FY23: £13.0m), with the
Group instead announcing that it had initiated a share buyback of up
to £20m in December 2023.
During 2024, the Company purchased 16,631,176 ordinary shares (2023: 220,302
shares) with an aggregate value of £8.1m (HY23: £nil, FY23: £0.2m), and
they are held in treasury. Retained profits have been reduced by £8.1m (2023:
£0.2m), being the net consideration paid for these shares, including the
expenses directly relating to the treasury share purchase. At 30 June 2024 the
company had 38,643,207 treasury shares (HY23: 26,273,218 FY23: 26,493,520).
Taxation
The Group's business model seeks to deliver long-term value to its
stakeholders through the commercialisation of fundamental research carried out
at its partner universities. To date, this has been largely achieved through
the formation of, and provision of services and development capital to,
spin-out companies formed around the output of such research. The Group
primarily seeks to generate capital gains from its holdings in spin-out
companies over the longer term but has historically made annual net operating
losses from its operations from a UK tax perspective. Capital gains achieved
by the Group would ordinarily be taxed upon realisation of such holdings;
however, since the Group typically holds more than 10% in its portfolio
companies and those companies are themselves trading, the majority of the
portfolio will qualify for the Substantial Shareholdings Exemption ("SSE") on
disposal.
This exemption provides that gains arising on the disposal of qualifying
holdings are not chargeable to UK corporation tax and, as such, the Group has
continued not to recognise a provision for deferred taxation in respect of
uplifts in value on those equity holdings that meet the qualifying criteria.
Gains arising on sales of holdings which do not qualify for SSE will
ordinarily give rise to taxable profits for the Group, to the extent that
these exceed the Group's ability to offset gains against current and brought
forward tax losses (subject to the relevant restrictions on the use of
brought-forward losses). In such cases, a deferred tax liability is recognised
in respect of estimated tax amount payable.
The Group complies with relevant global initiatives including the US Foreign
Account Tax Compliance Act ("FATCA") and the OECD Common Reporting Standard.
Alternative Performance Measures ("APMs")
The Group discloses alternative performance measures, such as NAV per share
and Return on NAV, in this 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 by the Group is set out in note 12.
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 Strategic Report
section of the Group's 2023 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
may be insufficient,
· 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 and its portfolio companies may be subjected to phishing
and ransomware attacks, data leakage and hacking,
· The Group may be negatively impacted by operational issues both from
a UK central and international operations perspective
The Group reviewed its operational, strategic and principal risk registers in
the period 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 2024
Note Unaudited Unaudited Audited
six months
six months ended
year ended
ended 30 June 2023 31 December 2023
30 June 2024 £m £m
£m
Portfolio return and revenue
Change in fair value of equity and debt investments 3 (99.9) (27.5) (110.9)
(Loss) on disposal of equity and debt investments 5 (1.5) (5.7) (10.8)
Change in fair value of limited and limited liability partnership interests 4 (1.6) (11.2) (38.8)
Revenue from services and other income 3.8 3.1 5.9
(99.2) (41.3) (154.6)
Administrative expenses
Carried interest plan credit/(charge) 9 (0.1) (0.5) 4.7
Share-based payment charge (0.8) (1.0) (2.6)
Other administrative expenses (12.4) (12.2) (28.0)
(13.3) (13.7) (25.9)
Operating loss (112.5) (55.0) (180.5)
Finance income 4.8 3.8 9.8
Finance costs (3.4) (2.2) (5.6)
Loss before taxation (111.1) (53.4) (176.3)
Taxation 1.2 (1.1) 1.9
Loss after taxation for the period (109.9) (54.5) (174.4)
Other comprehensive income
Exchange differences on translating foreign operations (0.9) (0.8) (0.4)
Total comprehensive loss for the period (110.8) (55.3) (174.8)
Attributable to:
Equity holders of the parent (105.6) (53.9) (171.3)
Non-controlling interest (5.2) (1.4) (3.5)
(110.8) (55.3) (174.8)
Loss per share
Basic (p) 2 (10.24) (5.20) (16.53)
Diluted (p) 2 (10.24) (5.20) (16.53)
The accompanying notes form an integral part of the financial statements.
Consolidated statement of financial position
As at 30 June 2024
Note Unaudited Unaudited Audited
six months
six months ended
year ended
ended 30 June 2023 31 December 2023
30 June 2024 £m £m
£m
ASSETS
Non-current assets
Goodwill 0.4 0.4 0.4
Property, plant and equipment 1.1 0.3 1.4
Joint venture investment 0.6 0.6 0.6
Equity investments 3 947.2 1,123.8 1,011.5
Debt investments 3 57.8 57.6 83.7
Limited and limited liability partnership interests 4 67.7 94.7 69.7
Receivable on sale of debt and equity investments 6 4.3 4.0 7.8
Total non-current assets 1,079.1 1,281.4 1,175.1
Current assets
Assets held for Sale 3 38.3 - -
Trade and other receivables 6.7 7.3 8.2
Receivable on sale of debt and equity investments 6 1.5 8.5 1.4
Deposits 70.0 166.8 126.0
Cash and cash equivalents 91.3 83.2 100.9
Total current assets 207.8 265.8 236.5
Total assets 1,286.9 1,547.2 1,411.6
EQUITY AND LIABILITIES
Equity attributable to owners of the parent
Called up share capital 8 21.3 21.3 21.3
Share premium account 102.5 102.5 102.5
Retained earnings 962.7 1,196.8 1,075.6
Total equity attributable to equity holders 1,086.5 1,320.6 1,199.4
Non-controlling interest (14.3) (7.0) (9.1)
Total equity 1,072.2 1,313.6 1,190.3
Current liabilities
Trade and other payables 16.2 11.7 17.1
Borrowings 7 6.2 6.3 6.3
Total current liabilities 22.4 18.0 23.4
Non-current liabilities
Borrowings 7 125.9 132.0 128.9
Carried interest plan liability 9 36.6 44.4 38.0
Deferred tax liability 3.5 7.9 4.8
Loans from limited partners of consolidated funds 19.9 19.8 19.8
Revenue share liability 6.4 11.5 6.4
Total non-current liabilities 192.3 215.6 197.9
Total liabilities 214.7 233.6 221.3
Total equity and liabilities 1,286.9 1,547.2 1,411.6
Registered number: 4204490
The accompanying notes form an integral part of the financial statements. The
financial statements were approved by the Board of Directors and authorised
for issue on 17 September 2024 and were signed on its behalf by:
Greg Smith
Chief Executive Officer
David Baynes
Chief Financial & Operating Officer
Consolidated statement of cash flows
For the six months ended 30 June 2024
Note Unaudited Unaudited Audited
six months
six months ended
year ended
ended 30 June 2023 31 December 2023
30 June 2024 £m £m
£m
Operating activities
Loss before taxation for the period (111.1) (53.4) (176.3)
Adjusted for:
Change in fair value of equity and debt investments 3 99.9 27.5 110.9
Change in fair value of limited and limited liability partnership interests 4 1.6 11.2 38.8
Loss on disposal of equity investments 5 1.5 5.7 10.8
Long term incentive carry scheme (credit)/charge 9 0.1 0.5 (4.7)
Carried interest scheme payments 9 (1.5) (0.1) (1.3)
Share-based payment charge 0.8 1.0 2.6
Finance income (4.8) (3.8) (9.8)
Finance costs 3.4 2.2 5.6
Depreciation of right of use asset, property, plant and equipment 0.3 0.3 0.6
Corporate finance fees settled in the form of portfolio company equity - (0.1) (0.1)
Changes in working capital
Decrease/(increase) in trade and other receivables (0.8) 2.9 1.3
Decrease in trade and other payables (1.1) (8.0) (0.3)
Drawdowns from limited partners of consolidated funds 0.1 0.3 0.3
Other operating cash flows
Interest received(1) 2.3 - 3.7
Net interest received - 1.6 -
Net cash outflow from operating activities (9.3) (12.2) (17.9)
Investing activities
Purchase of equity and debt investments 3 (48.7) (52.8) (63.4)
Investment in limited and limited liability partnership funds 4 (0.4) (7.0) (9.8)
Investment in joint venture - (0.6) (0.6)
Proceeds from sale of equity and debt investments 5 2.6 31.5 37.7
Distribution from limited partnership funds 4 0.8 0.7 0.9
Cash flow to deposits (60.0) (146.7) (191.7)
Cash flow from deposits 116.0 132.7 218.4
Interest received on deposits(1) 4.3 - 4.1
Net cash (outflow)/inflow from investing activities 14.6 (42.2) (4.4)
Financing activities
Dividends paid 11 - (7.7) (13.0)
Repurchase of own shares - treasury shares 8 (8.1) - (0.1)
Lease principal payment (0.3) (0.3) (0.5)
Interest paid(1) (3.3) - (5.5)
Repayment of EIB loan facility (3.1) (3.1) (6.2)
Drawdown of loan facility (net of costs) - 60.0 60.0
Net cash inflow/(outflow) from financing activities (14.8) 48.9 34.7
Net decrease in cash and cash equivalents (9.5) (5.5) 12.4
Cash and cash equivalents at the beginning of the period 100.9 88.7 88.7
Effect of foreign exchange rate changes (0.1) - (0.2)
Cash and cash equivalents at the end of period 91.3 83.2 100.9
( )
(1) In the current year interest paid and interest received on deposits have
been shown separately. The directors have chosen not to represent the prior
half year comparatives as the amounts are immaterial.
The accompanying notes form an integral part of the financial statements.
Consolidated statement of changes in equity
For the six months ended 30 June 2024
Attributable to equity holders of the parent
Share Share Retained Total Non-controlling Total
capital premium earnings £m interest equity
£m £m £m £m
At 1 January 2023 (audited) 21.3 102.5 1,257.9 1,381.7 (5.6) 1,376.1
Loss for the period - - (53.9) (53.9) (1.4) (55.3)
Currency translation - - (0.5) (0.5) - (0.5)
Total comprehensive income for the period - - (54.4) (54.4) (1.4) (55.8)
Issue of shares - - - - - -
Equity-settled share-based payments - - 1.0 1.0 - 1.0
Ordinary dividends - - (7.7) (7.7) - (7.7)
Total contributions by and distributions to owners - - (6.7) (6.7) - (6.7)
At 30 June 2023 (unaudited) 21.3 102.5 1,196.8 1,320.6 (7.0) 1,313.6
Loss for the period - - (117.0) (117.0) (2.1) (119.1)
Currency translation - - (0.4) (0.4) - (0.4)
Total comprehensive income for the period - - (117.4) (117.4) (2.1) (119.5)
Issue of shares - - - - - -
Purchase of treasury shares - - (0.1) (0.1) - (0.1)
Equity-settled share-based payments - - 1.6 1.6 - 1.6
Ordinary dividends - - (5.3) (5.3) - (5.3)
Total contributions by and distributions to owners - - (3.8) (3.8) - (3.8)
At 1 January 2024 (audited) 21.3 102.5 1,075.6 1,199.4 (9.1) 1,190.3
Loss for the period - - (104.7) (104.7) (5.2) (109.9)
Currency translation - - (0.9) (0.9) - (0.9)
Total comprehensive income for the period - - (105.6) (105.6) (5.2) (110.8)
Issue of shares - - - - - -
Purchase of treasury shares (8.1) (8.1) - (8.1)
Equity-settled share-based payments - - 0.8 0.8 - 0.8
Ordinary dividends - - - - - -
Total contributions by and distributions to owners - - (7.3) (7.3) - (7.3)
At 30 June 2024 (unaudited) 21.3 102.5 962.7 1,086.5 (14.3) 1,072.2
The accompanying notes form an integral part of the financial statements
1. Operating segments
For the year ended 31 December 2023 and the periods ended 30 June 2024 and 30
June 2023, the Group's revenue and loss before taxation were derived largely
from its principal activities within the UK. For management reporting
purposes, the Group is currently organised into five operating segments:
i) Venture Capital investing within our 'Healthier future' thematic area
ii) Venture Capital investing within our 'Tech-enriched future' thematic
area
iii) Venture Capital investing within our 'Regenerative future' thematic area
iv) Venture Capital investing: Other, representing investments not included
within our three thematic areas above, including platform investments
v) the management of third-party funds and the provision of corporate
finance advice
Reporting line items within Venture Capital investing which are not allocated
by thematic sector are presented in the 'Venture Capital investing: other
segment. The element of our 'Healthier future' thematic area relating to
Oxford Nanopore Technologies Limited is disclosed separately given its size.
.
Six months ended 30 June 2024 (unaudited)
STATEMENT OF COMPREHENSIVE INCOME Venture capital investing: Healthier future Of which Oxford Nanopore Venture capital investing: Tech enriched future Venture capital investing: Regenerative future Venture capital investing: Other Venture capital investing: Total Third party fund management Consolidated
£m £m £m £m £m £m £m £m
Portfolio return and revenue
Change in fair value of equity and debt investments (97.5) (94.9) 9.4 (12.7) 0.9 (99.9) - (99.9)
(Loss)/gain on disposal of equity and debt investments (1.6) - 0.1 - - (1.5) - (1.5)
Change in fair value of limited and limited liability partnership interests (1.6) (1.6) - (1.6)
Revenue from services and other income 2.1 2.1 1.7 3.8
(99.1) (94.9) 9.5 (12.7) 1.4 (100.9) 1.7 (99.2)
Administrative expenses
Carried interest plan release/(charge) (0.1) (0.1) - (0.1)
Share-based payment charge (0.7) (0.7) (0.1) (0.8)
Other administrative expenses (9.4) (9.4) (3.0) (12.4)
(10.2) (10.2) (3.1) (13.3)
Operating loss (99.1) (94.9) 9.5 (12.7) (8.8) (111.1) (1.4) (112.5)
Finance income 4.4 4.4 0.4 4.8
Finance costs (3.4) (3.4) - (3.4)
Loss before taxation (99.1) (94.9) 9.5 (12.7) (7.8) (110.1) (1.0) (111.1)
Taxation 1.2 1.2 - 1.2
Loss for the period (99.1) (94.9) 9.5 (12.7) (6.6) (108.9) (1.0) (109.9)
STATEMENT OF FINANCIAL POSITION
Assets 508.8 78.7 242.8 275.4 242.5 1,269.5 17.4 1,286.9
Liabilities (208.3) (208.3) (6.4) (214.7)
Net Assets 508.8 78.7 242.8 275.4 34.2 1,061.2 11.0 1,072.2
Other segment items:
Portfolio Investment (33.9) - (2.0) (12.8) (0.4) (49.1) - (49.1)
Proceeds from sale of equity and debt investments 2.5 - 0.1 - 0.8 3.4 - 3.4
Six months ended 30 June 2023 (unaudited)
STATEMENT OF COMPREHENSIVE INCOME Venture capital investing: Healthier future Of which Oxford Nanopore Venture capital investing: Tech enriched future Venture capital investing: Regenerative future Venture capital investing: Other Venture capital investing: Total Third party fund management Consolidated
£m £m £m £m £m £m £m £m
Portfolio return and revenue
Change in fair value of equity and debt investments (32.7) (27.8) (7.0) 12.3 (0.1) (27.5) - (27.5)
(Loss)/gain on disposal of equity and debt investments (7.6) - 1.9 - - (5.7) - (5.7)
Change in fair value of limited and limited liability partnership interests (11.2) (11.2) - (11.2)
Revenue from services and other income 0.7 0.7 2.4 3.1
(40.3) (27.8) (5.1) 12.3 (10.6) (43.7) 2.4 (41.3)
Administrative expenses
Carried interest plan charge (0.5) (0.5) - (0.5)
Share-based payment charge (0.9) (0.9) (0.1) (1.0)
Other administrative expenses (9.6) (9.6) (2.6) (12.2)
(11.0) (11.0) (2.7) (13.7)
Operating loss (40.3) (27.8) (5.1) 12.3 (21.6) (54.7) (0.3) (55.0)
Finance income 3.7 3.7 0.1 3.8
Finance costs (2.2) (2.2) - (2.2)
Loss before taxation (40.3) (27.8) (5.1) 12.3 (20.1) (53.2) (0.2) (53.4)
Taxation (1.1) (1.1) - (1.1)
Loss for the period (40.3) (27.8) (5.1) 12.3 (21.2) (54.3) (0.2) (54.5)
STATEMENT OF FINANCIAL POSITION
Assets 642.2 177.7 231.6 296.1 359.4 1,529.3 17.9 1,547.2
Liabilities (227.7) (227.7) (5.9) (233.6)
Net Assets 642.2 177.7 231.6 296.1 131.7 1,301.6 12.0 1,313.6
Other segment items:
Portfolio Investment (24.9) - (10.8) (17.2) (6.9) (59.8) - (59.8)
Proceeds from sale of equity and debt investments 0.1 - 31.4 - 0.7 32.2 - 32.2
Portfolio return and revenue
Year ended 31 December 2023 (audited)
STATEMENT OF COMPREHENSIVE INCOME Venture capital investing: Healthier future Of which Oxford Nanopore Venture capital investing: Tech enriched future Venture capital investing: Regenerative future Venture capital investing: Other Venture capital investing: Total Third party fund management Consolidated
£m £m £m £m £m £m £m £m
Portfolio return and revenue
Change in fair value of equity and debt investments (92.9) (31.9) (7.0) (8.7) (2.3) (110.9) - (110.9)
(Loss)/gain on disposal of equity and debt investments (12.9) - 2.1 - - (10.8) - (10.8)
Change in fair value of limited and limited liability partnership interests (38.8) (38.8) - (38.8)
Loss on disposal of subsidiary - - - -
Revenue from services and other income 1.3 1.3 4.6 5.9
(105.8) (31.9) (4.9) (8.7) (39.8) (159.2) 4.6 (154.6)
Administrative expenses
Carried interest plan charge 4.7 4.7 - 4.7
Share-based payment charge (2.3) (2.3) (0.3) (2.6)
Other administrative expenses (22.6) (22.6) (5.4) (28.0)
(20.2) (20.2) (5.7) (25.9)
Operating loss (105.8) (31.9) (4.9) (8.7) (60.0) (179.4) (1.1) (180.5)
Finance income 9.4 9.4 0.4 9.8
Finance costs (5.6) (5.6) - (5.6)
Loss before taxation (105.8) (31.9) (4.9) (8.7) (56.2) (175.6) (0.7) (176.3)
Taxation - - - - 1.9 1.9 - 1.9
Loss for the period (105.8) (31.9) (4.9) (8.7) (54.3) (173.7) (0.7) (174.4)
STATEMENT OF FINANCIAL POSITION
Assets 576.5 173.6 231.4 275.3 310.2 1,393.4 18.2 1,411.6
Liabilities (214.7) (214.7) (6.6) (221.3)
Net Assets 576.5 173.6 231.4 275.3 95.5 1,178.7 11.6 1,190.3
Other segment items:
Portfolio Investment (33.9) - (11.9) (17.6) (9.8) (73.2) - (73.2)
Proceeds from sale of equity and debt investments 3.7 - 33.2 0.1 1.6 38.6 - 38.6
2. Earnings per share
Earnings Unaudited Unaudited Audited
six months
six months ended
year ended
ended 30 June 2023 31 December 2023
30 June 2024 £m £m
£m
Earnings for the purposes of basic and dilutive earnings per share (105.6) (53.9) (171.3)
Number of shares Unaudited Unaudited Audited
six months ended
six months
year ended
ended
30 June 2024
31 December 2023
30 June 2023
Number of shares
Number of
Number of
shares
shares
Weighted average number of ordinary shares for the purposes of basic 1,031,449,8069 1,035,891,3111 1,036,400,4068
earnings per share
Effect of dilutive potential ordinary shares:
Options or contingently issuable shares -- -- --
Weighted average number of ordinary shares for the purposes of diluted 1,031,449,8069 1,035,891,3111 1,036,400,4068
earnings per share
Unaudited Unaudited Audited
six months
six months ended
year ended
ended 30 June 2023 31 December 2023
30 June 2024 £m £m
£m
Basic (10.24) (5.20) (16.53)
Diluted (10.24) (5.20) (16.53)
No adjustment has been made to the basic loss per share in the period ended 30
June 2024, as the exercise of share options would have the effect of reducing
the loss per ordinary share, and therefore is not dilutive.
Potentially dilutive ordinary shares include contingently issuable shares
arising under the Group's LTIP arrangements, and options issued as part of the
Group's Sharesave schemes and Deferred Bonus Share Plan (for annual bonuses
deferred under the terms of the Group's Annual Incentive Scheme).
3. Portfolio: Equity and debt investments and Assets Held for Sale
Assets held for sale
During the reporting period, Garrison Technology Ltd and part of the Group's
holding in Centessa Pharmaceuticals plc met the classification criteria as
Assets held for sale and were hence reclassified from Equity Investments to
Assets held for sale.
Equity and Debt investments within the Top 20 by holding value
The following table lists information on the 20 most valuable equity and debt
portfolio company investments, which represent 69% of the total portfolio
value (HY23: 70%, FY23: 70%). 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 two out of the top 20 holdings (HY23: four, FY23: nine).
Company name Primary valuation basis Fair value of Group holding at 30 June 2024
£m
Istesso Limited Discounted cash flow 127.6
Featurespace Limited Revenue multiple 112.7
Hysata Pty Ltd Funding transaction < 12 months, PWERM 81.0
Oxford Nanopore Technologies plc Quoted bid price 78.7
Oxa Autonomy Limited Funding transaction > 12 months, PWERM 65.7
First Light Fusion Limited *Adjusted funding - downwards 49.0
Hinge Health, Inc. *Adjusted funding - downwards 34.2
Pulmocide Limited Adjusted funding - upwards 23.0
Mission Therapeutics Limited Funding transaction < 12 months, PWERM 22.5
Bramble Energy Limited Funding transaction > 12 months, PWERM 20.9
Crescendo Biologics Limited Funding transaction > 12 months, PWERM 19.6
Oxford Science Enterprises plc Future event 19.3
Artios Pharma Limited Adjusted funding - downwards 17.4
Microbiotica Limited Funding transaction > 12 months, PWERM 16.2
Nexeon Limited Funding transaction > 12 months 15.9
Accelercomm Limited Funding transaction > 12 months 12.5
Storm Therapeutics Limited Funding transaction > 12 months 11.5
Genomics plc Funding transaction < 12 months, PWERM 11.4
Centessa Pharmaceuticals plc Quoted bid price 11.3
Autifony Therapeutics Limited Discounted cash flow 10.7
Total 761.1
(* Third-party valuation specialists used for 30 June 2024 valuation. In these
instances, the valuation basis is management's assessment of the primary
valuation input used by the third-party valuation specialist.)( )
Level 1 Level 3
Equity investments in quoted spin-out companies Unquoted equity investments in spin-out companies Debt investments in unquoted spin-out companies Total
£m
£m £m £m
At 1 January 2023 (audited) 228.7 892.1 38.1 1,158.9
Investments - 30.1 22.7 52.8
Transaction-based reclassifications - 7.6 (7.6) -
Other transfers between hierarchy levels 2.2 (2.2) - -
Disposals (1.1) (0.1) (0.3) (1.5)
Fees settled via equity - 0.2 - 0.2
Change in revenue share - (1.5) - (1.5)
Change in fair value(1) (22.8) (2.3) 5.8 (19.3)
Change in FX (0.5) (6.6) (1.1) (8.2)
At 30 June 2023 (unaudited) 206.5 917.3 57.6 1,181.4
Investments - 2.7 7.9 10.6
Transaction-based reclassifications - 0.2 (0.2) -
Other transfers between hierarchy levels (0.4) 0.4 - -
Disposals (0.5) (7.5) - (8.0)
Fees settled via equity - (0.1) - (0.1)
Change in revenue share - (5.3) - (5.3)
Change in fair value(1) (1.7) (101.4) 17.7 (85.4)
Change in FX (0.1) 1.4 0.7 2.0
At 1 January 2024 (audited) 203.8 807.7 83.7 1,095.2
Investments 0.6 31.1 17.0 48.7
Transaction-based reclassifications - 44.5 (44.5) -
Other transfers between hierarchy levels - - - -
Disposals (0.7) - - (0.7)
Reclassification to Assets Held for Sale (8.2) (30.1) - (38.3)
Fees settled via equity - - - -
Change in revenue share - - - -
Change in fair value(1) (95.2) (6.7) 2.2 (99.7)
Change in FX 0.2 0.2 (0.6) (0.2)
At 30 June 2024 (unaudited) 100.5 846.7 57.8 1,005.0
(1)The total unrealised change in fair value and FX in respect of Level 3
investments for HY24 was a loss of £4.9m (HY23: loss of £4.2m, FY23: loss of
£85.8m).
Unquoted equity and debt investment are measured in accordance with IPEV
guidelines with reference to the most appropriate information available at the
time of measurement. Where relevant, several valuation approaches are used in
arriving at an estimate of fair value for an individual asset.
For assets and liabilities that are recognised at fair value on a recurring
basis, the Group determines whether transfers have occurred between levels in
the hierarchy by re-assessing categorisation (based on the lowest level input
that is significant to the fair value measurement as a whole) at the end of
each reporting period. Transfers between levels are then made as if the
transfer took place on the first day of the period in question, except in the
cases of transfers between tiers based on an initial public offering ("IPO")
of an investment wherein the changes in value prior to the IPO are calculated
and reported in level 3, and those changes post are attributed to level 1.
Transfers between level 3 and level 1 occur when a previously unquoted
investment undertakes an initial public offering, resulting in its equity
becoming quoted on an active market. In the current period, transfers of this
nature amounted to £nil (HY23: £2.2m, FY23: £1.8m). Transfers between level
1 and level 3 would occur when a quoted investment's market becomes inactive,
or the portfolio company elects to delist. There have been no instances in the
current period (HY23: one instance, £0.0m, FY23: one instance, £0.0m).
Transfers between level 3 debt and level 3 equity occur upon conversion of
convertible debt into equity. In the period to 30 June 2024, transfers of this
nature amounted to £44.5m (HY23: £7.6m, FY23: £7.8m).
The Group has considered the impact of ESG and climate change issues on its
portfolio, including performing a materiality assessment which suggested the
Group's portfolio has a relatively low level of climate change risk, and clear
areas of opportunity via the Group's Cleantech investments. For an overview of
the portfolio split by sector, please refer to the portfolio analysis by
sector above. We believe our current valuation approach, based largely on
funding transactions and quoted valuations, reflects market participant
assessment of the ESG and climate risks and opportunities of our portfolio.
At the period end date, the Group was in the process of disposing of
investments including Garrison Technology Limited, which were accordingly
reclassified within current assets as Assets Held for Sale.
Valuation inputs and sensitivities
Unobservable inputs are typically portfolio company-specific and, based on a
materiality assessment, are not considered significant either at an individual
company level or in aggregate where relevant for common factors such as
discount rates.
The sensitivity analysis table below has been prepared in recognition of the
fact that some of the valuation methodologies applied by the Group in valuing
the portfolio investments involve subjectivity in their significant
unobservable inputs. The table illustrates the sensitivity of the valuations
to these inputs. The inputs of investments valued using techniques which
involve significant subjectivity have been flexed, as below.
Valuation Technique Fair value of investments Variable inputs Variable input sensitivity Positive impact Negative impact Fair value of investments Fair value of investments
HY24 HY23 FY23
£m £m £m % of NAV £m % of NAV £m £m
Quoted 100.5 n/a n/a n/a n/a n/a n/a 206.5 203.8
Funding transaction 177.8 n/a +/-5% 8.9 0.8% (8.9) (0.8%) 268.0 187.9
<12 months
Funding transaction 222.3 n/a +/-5% 11.1 1.0% (11.1) (1.0%) 191.0 162.7
>12 months
Other: Future market/commercial events 39.4 • Estimated impact of future event +/-10% 3.9 0.4% (3.9) (0.4%) 15.8 25.0
• Execution risk discount applied to future event (where positive)
• Scenario probabilities
• Discount rates
• Extent to which future event is indicative of facts and circumstances in
existence at the balance sheet date
Other: Adjusted financing price based on past performance - Upwards* 36.0 • Company-specific milestone analysis resulting in a positive calibration +/-10% 3.6 0.3% (3.6) (0.3%) 178.3 99.9
adjustment versus the previous funding transaction price
Other: Adjusted financing price based on past performance - Downwards* 163.4 • Company-specific milestone analysis resulting in a positive calibration +/-10% 16.3 1.5% (16.3) (1.5%) 129.2 203.9
adjustment versus the previous funding transaction price
Other: Revenue multiple* 125.1 • Estimate of future recurring revenues +/-10% 12.5 1.2% (12.5) (1.2%) 76.8 85.4
• Selection of comparable companies
• Discount/premium to multiple
Other: DCF* 140.5 • Discount rate +/-20% 28.1 2.6% (28.1) (2.6%) 115.8 126.6
• Clinical trial and drug approval success rates
• Estimate of likelihood, value and structure of a potential
pharmaceutical partnership
• Estimate of addressable market
• Market share and royalty rates
• Probability estimation of liquidity event
• Estimate of forward exchange rates
Total 1,005.0 84.4 (84.4) 1,181.4 1,095.2
*Due to the large number of inputs used in the valuation of these assets,
unobservable inputs are below a size threshold that would warrant disclosure
under IFRS 13, paragraph 93(d). Due to the large number of inputs, any range
of reasonably possible alternative assumptions does not significantly impact
the fair value and hence no valuation sensitivity is required under IFRS 13
paragraph 93(h)(ii).
Within the 'Other: DCF' category above is Istesso Limited, in which we value
the equity of IP Group's holding at £90.6m as at 30 June 2024 (HY23: £86.7m,
FY23: £86.7m), and the debt at £37.0m as at 30 June 2024 (HY23: £27.0m,
FY23: £27.0m). The valuation of the equity in this company is based on a DCF
model in which the key inputs include the discount rate, probability of
clinical trial success, market share and royalty rates and the selection of
relevant comparable deal sizes. The DCF model assesses the value of the future
cash flows which would arise from the successful development of the company's
lead asset Leramistat, which is in a PhIIb trial, within Rheumatoid Arthritis.
Our estimated range for the value of the Group's equity investment as at 30
June 2024 is based on this DCF model, which was provided by external valuation
advisors as at 31 December 2023 and updated internally as at 30 June 2024, is
£90.6m to £144.1m (HY23: £66.0m to £103.0m, FY23: £80.0m to £120.0m). A
valuation range was not calculated in respect of the Group's debt investment
in Istesso Limited, which has a total value of £37.0m (HY23: £27.0m, FY23
£27.0m). The outcome of Istesso Limited's Phase 2b clinical trial in
Rheumatoid Arthritis, which is expected in the second half of 2024, may result
in a material change in the valuation range.
Within the 'Other: Adjusted financing price based on past performance -
Downwards' category above is First Light Fusion Limited, in which we value the
equity of IP Group's holding at £49.0m as at 30 June 2024 (HY23: £114.5m,
FY23: £64.9m). The valuation of the equity in this company is based on the
last financing round price, calibrated downwards to reflect the difficult
funding environment, despite its achievement of fusion subsequent to the
fundraise, and an assessment of recent comparable company financing
transactions. Our estimated range for the value of the Group's equity
investment in First Light Fusion based on this model as at 30 June 2024 is
£31.1m to £49.4m (HY23: £62.1m to £123.5m, FY23: £48.0m to £99.0m).
Change in fair value and FX in the period Unaudited Unaudited Audited
six months
six months ended
year ended
ended 30 June 2023 31 December 2023
30 June 2024 £m £m
£m
Fair value gains 65.9 25.3 97.4
Fair value losses (168.9) (52.8) (208.3)
Total (103.0) (27.5) (110.9)
4. Portfolio: Limited and limited liability partnership interests
Fund interests are valued on a net asset basis, estimated based on the
managers' NAVs. Manager's NAVs apply valuation techniques consistent with IFRS
and are subject to audit. Where audited accounts are received in arrears of
the publication of the Group's results hence these are marked as unaudited in
the table below, however a retrospective review of audited accounts versus
earlier unaudited results is carried out. Managers' NAVs are usually published
quarterly, two to four months after the quarter end. The below table analyses
the fund valuations with reference to manager NAV dates used at the period
end.
Limited & Limited Liability Partnerships Functional currency Status Unaudited Unaudited Audited
six months
six months ended
year ended
ended 30 June 2023 31 December 2023
30 June 2024 £m £m
£m
IPG Cayman Fund L.P. (Longview Innovation) USD Unaudited & adjusted downwards 45.6 74.6 46.0
UCL Technology Fund L.P. GBP Unaudited 19.3 17.2 20.7
Technikos LLP GBP Unaudited & adjusted downwards 2.8 2.9 3.0
Total 67.7 94.7 69.7
We reviewed the underlying valuation methodologies adopted by our Fund
managers for all Fund investments of material value. Following our review of
valuation methodologies, we were satisfied that the techniques utilised were
appropriate, other than in respect of IPG Cayman Fund L.P. and Technikos LLP
where downwards adjustments were made to the fund manager's NAV estimate.
Limited & Limited Liability Partnerships movements in the period £m
At 1 January 2023 (audited) 99.6
Investments 7.0
Distribution from Limited Partnership funds (0.7)
Change in fair value (8.3)
Currency revaluation (2.9)
At 30 June 2023 (unaudited) 94.7
Investments 2.8
Distribution from Limited Partnership funds (0.2)
Change in fair value (28.2)
Currency revaluation 0.6
At 1 January 2024 (audited) 69.7
Investments 0.4
Distribution from Limited Partnership funds (0.8)
Change in fair value (1.6)
Currency revaluation -
At 30 June 2024 (unaudited) 67.7
The Group considers interests in limited and limited liability partnerships to
be level 3 in the fair value hierarchy throughout the current and previous
financial years.
The valuation of the Group's interests in limited and limited liability
partnerships is a significant accounting estimate, as management has applied
judgment in adjusting the NAV estimates provided by the fund manager. Such
adjustments were based on an assessment of the valuations of specific equity
and debt investments in portfolio companies held within the fund in question.
In making these assessments, the Group has applied a valuation methodology
consistent with that set out in Note 3. Unobservable inputs are portfolio
company-specific and, based on a materiality assessment, are not considered
individually significant either at an individual company level or in aggregate
where relevant for common factors such as discount rates. If no adjustment had
been made to the NAV estimates provided by the fund manager, the carrying
value of Limited Liability investments would be higher by £13.1m (FY23:
£9.8m).
5. (Loss)/Gain on disposal of equity investments
Unaudited Unaudited Audited
six months
six months ended
year ended
ended 30 June 2023 31 December 2023
30 June 2024 £m £m
£m
Proceeds from sale of debt and equity investments 2.6 31.5 37.7
Movement in amounts receivable on sale of debt and equity investments (3.4) (35.7) (39.0)
Carrying value of investments (0.7) (1.5) (9.5)
(Loss) on disposal (1.5) (5.7) (10.8)
(Loss) on disposal of investments is calculated as disposal proceeds plus
deferred and contingent consideration receivable in respect of the sale, less
the carrying value of the investment at the point of disposal.
The subsequent receipt of deferred and contingent consideration amounts is
reflected in the above table as a positive amount of disposal proceeds and a
negative movement in amounts receivable on sale of debt and equity
investments, resulting in no overall movement in profit on disposal if the
full amount accrued is received.
6. Receivable on sale of debt and equity investments
Unaudited Unaudited Audited
six months
six months ended
year ended
ended 30 June 2023 31 December 2023
30 June 2024 £m £m
£m
Deferred and contingent consideration (non-current) 4.3 4.0 7.8
Deferred and contingent consideration (current) 1.5 8.5 1.4
Total deferred and contingent consideration 5.8 12.5 9.2
The following table summarises the primary valuation basis used to value the
deferred consideration:
Investment Primary Valuation Basis Unaudited Unaudited Audited
six months
six months ended
year ended
ended 30 June 2023 31 December 2023
30 June 2024 £m £m
£m
Enterprise Therapeutics Holdings Limited Probability-weighted DFC model reflecting potential milestone payments 3.9 11.4 7.7
Reinfer Limited Discounted sale amount - 1.1 -
Zihipp Limited Probability-weighted DFC model reflecting potential milestone payments 1.9 - 1.5
Total 5.8 12.5 9.2
During the period £1.4m (HY23: £30.9m, FY23: £32.4m) of cash was received
in respect of amounts recognised as deferred consideration.
7. Borrowings and Loans from Limited Partners of consolidated funds
Current liabilities Unaudited Unaudited Audited
six months
six months ended
year ended
ended 30 June 2023 31 December 2023
30 June 2024 £m £m
£m
Borrowings 6.2 6.3 6.3
Total 6.2 6.3 6.3
Non-current liabilities Unaudited Unaudited Audited
six months
six months ended
year ended
ended 30 June 2023 31 December 2023
30 June 2024 £m £m
£m
Loans drawn down from the Limited Partners of consolidated funds 19.9 19.8 19.8
Borrowings 125.9 132.0 128.9
Total 145.8 151.8 148.7
8. Share capital
Unaudited Unaudited Audited
six months ended
six months ended
year ended
30 June 2024 30 June 2023 31 December 2023
Issued and fully paid: Number £m Number £m Number £m
Ordinary shares of 2p each
At 1 January 1,063,188,005 21.3 1,063,188,005 21.3 1,063,188,005 21.3
Issued in respect of scrip dividend - - - - - -
Share capital at period end 1,063,188,005 21.3 1,063,188,005 21.3 1,063,188,005 21.3
Existing treasury shares at 1 January (26,493,520) (0.5) (28,110,373) (0.6) (28,110,373) (0.6)
Purchase of treasury shares (16,631,176) (0.3) - - (220,302) -
Shares transferred out of treasury for SAYE - - 285,335 - 285,335 -
Settlement of employee share-based payments 4,481,489 0.1 1,551,820 - 1,551,820 -
Outstanding at period end 1,024,544,798 20.6 1,036,914,787 20.7 1,036,694,485 20.7
The Company has one class of ordinary shares with a par value of 2p ("Ordinary
Shares") which carry equal voting rights, equal rights to income and
distributions of assets on liquidation, or otherwise, and no right to fixed
income.
During 2024, the Company purchased 16,631,176 ordinary shares (2023: 220,302
shares) with an aggregate nominal value of £0.3m (2023 - £0.2k), and they
are held in treasury. Retained profits have been reduced by £8.1m (2023:
£0.1m), being the net consideration paid for these shares, including the
expenses directly relating to the treasury share purchase. At 30 June 2024 the
company had 38,643,207 treasury shares (HY23: 26,273,218 FY23: 26,493,520).
9. Long-term incentive carry scheme - Carried interest plan liability
The Group operates a number of Long Term Incentive Carry Schemes ("LTICS") for
eligible employees which may result in payments to scheme participants
relating to returns from investments. Under the Group's LTICS arrangements, a
profit-sharing mechanism exists whereby if a specific vintage delivers returns
in excess of the base cost of investments together with an agreed hurdle rate,
scheme participants receive a share of excess returns. Of the Group's total
equity and debt investments, 76.7% are included in LTICS arrangements (HY23:
70.0%, FY23: 69.0%).
The calculation of the liability in respect of the Group's LTICS is derived
from the fair value estimates for the relevant portfolio investments and does
not involve significant additional judgement (although the fair value of the
portfolio is a significant accounting estimate). The actual amounts of carried
interest paid will depend on the cash realisations of individual vintages, and
valuations may change significantly in the next financial year. Movements in
the liability are recognised in the consolidated statement of comprehensive
income.
Unaudited Unaudited Audited
six months
six months ended
year ended
ended 30 June 2023 31 December 2023
30 June 2024 £m £m
£m
At 1 January 38.0 44.1 44.1
Charge/(credit) for the period/year 0.1 0.5 (4.7)
Payments made in the period/year (1.5) (0.1) (1.3)
Foreign exchange movements - (0.1) (0.1)
At period/year end 36.6 44.4 38.0
10. Related party transactions
All related party transactions that took place in the six months ending
30 June 2024 are consistent in nature with the disclosures in Note 24 on
pages 195 to 198 of the Annual report and accounts 2023. There were no related
party transactions which took place in the period that materially affected
performance or the financial position of the Group.
11. Dividends
Unaudited Unaudited Audited
six months ended
six months ended
year ended
30 June 2024 30 June 2023 31 December 2023
Declared and paid during the year per share £m per share £m
per share £m
Ordinary shares:
Interim dividend - - - - 0.51 5.3
Prior financial year final dividend paid - - 0.76 7.7 0.76 7.7
Dividends paid to equity owners in the period - - 1.27 13.0
0.76 7.7
Proposed interim dividend at half - - 0.51 5.3 0.51 5.3
year
Proposed final dividend at financial - - -- - - -
year end
In its 2023 results, the Group reiterated the Board's commitment to making
regular cash returns to shareholders from realisations but announced that, in
light of the prevailing discount between the Company's share price and its NAV
per share, these regular cash returns will normally be made in the form of
share buybacks when the share price discount to NAV exceeds 20%. As a result,
no dividends were paid in the period (HY23: 7.7m, FY23: £13.0m).
12. 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 Definition and purpose Unaudited Unaudited Audited
reconciliation
six months
six months ended
year ended
ended 30 June 2023 31 December 2023
30 June 2024 £m £m
£m
NAV per share Primary statements NAV per share is defined as Net Assets divided by the number of outstanding NAV £1,072.2m £1,313.6m £1,190.3m
shares.
The measure shows net assets managed on behalf of shareholders by the Group
per outstanding share.
NAV per share is a standard measure used within our peer group and can be
directly compared with the Group's share price.
Shares in issue 1,024,544,798 1,036,914,787 1,036,694,485
NAV per share 104.7p 126.7p 114.8p
Return on NAV Primary statements Return on NAV is defined as the total comprehensive income or loss for the Total comprehensive income (110.8) (55.3) (174.8)
period excluding charges which do not impact on net assets, specifically
share-based payment charges.
The measure shows a summary of the income statement gains and losses which
directly impact NAV.
Excluding:
Share-based 0.8 1.0 2.6
payment charge
Return on NAV (110.0) (54.3) (172.2)
Net portfolio gains/(losses) note 3,4,8 Net portfolio gains are defined as the movement in the value of holdings in Change in fair value (99.9) (27.5) (110.9)
the portfolio due as a result of realised and unrealised gains and losses.
of equity and debt investments
The measure shows a summary of the income statement gains and losses which are
directly attributable to the Total Portfolio (see definition below), which is
a headline measure for the Group's portfolio performance.
This is a key driver of the Return on NAV which is a performance metric for
directors' and employees' incentives.
(loss)/Gain on disposal of equity investments (1.5) (5.7) (10.8)
Change in fair value (1.6) (11.2) (38.8)
of LP interests(2)
Net portfolio (loss) (103.0) (44.4) (160.5)
Total portfolio(1) Consolidated statement of financial position Total portfolio is defined as the total of equity investments, debt Equity investments 947.2 1,123.8 1,011.5
investments and investments in LPs.
This measure represents the aggregate balance sheet amounts which the Group
considers to be its investment portfolio, and which is described in further
detail within the portfolio review section of the strategic report.
Debt investments 57.8 57.6 83.7
LP interests 67.7 94.7 69.7
Assets held for sale 38.3 - -
Total Portfolio 1,111.0 1,276.1 1,164.9
Portfolio investment Primary statements Portfolio investment is defined as the purchase of equity and debt investments Purchase of equity and debt investments (48.7) (52.8) (63.4)
plus investments into limited partnership interests.
This gives a combined measure of investment into the Group's portfolio
Investment in limited and limited liability partnerships (0.4) (7.0) (9.8)
Portfolio investment (49.1) (59.8) (73.2)
Cash proceeds Primary statements Cash proceeds is defined as the proceeds from the disposal of equity and debt Proceeds from the sale of equity investments 2.6 31.5 37.7
investments plus distributions received from limited partnership interests.
This gives a combined measure of cash received from the Group's portfolio.
Distributions from limited partnership funds 0.8 0.7 0.9
Cash proceeds 3.4 32.2 38.6
Net overheads Financial review Net overheads are defined as the Group's core overheads less operating income. Other income 3.8 3.1 5.9
The measure reflects the Group's controllable net operating "cash-equivalent"
central cost base.
Other administrative expenses (12.4) (12.2) (28.0)
Excluding:
Net overheads exclude items such as share-based payments and consolidated Non-portfolio foreign exchange movements (0.1) (1.2) (0.4)
portfolio company costs.
Administrative expenses: consolidated portfolio companies - - -
Net overheads (8.7) (10.3) (22.5)
Gross Cash and deposits Primary statements Cash and deposits is defined as cash and cash equivalents plus deposits. Cash and cash equivalents 91.3 83.2 100.9
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.
Deposit 70.0 166.8 126.0
Cash 161.3 250.0 226.9
(Loss)/profit excluding ONT Primary statements Loss/profit excluding ONT is defined as the Group's (loss)/profit for the (Loss) for the period (109.9) (54.5) (174.4)
period (after tax) excluding the (loss)/profit on the investment held in
Oxford Nanopore publicly quoted shares both realised and unrealised.
Excluding:
Change in fair value of equity investment in Oxford Nanopore 94.9 27.8 31.9
(Loss)/profit excluding ONT (15.0) (26.7) (142.5)
Simple return on capital (%) Note 12 (Net Portfolio gain/loss, Total portfolio) Defined as net portfolio gains/losses divided by the opening total portfolio Net portfolio (losses) (103.0) (44.4) (160.5)
value.
This measure gives a view of the size of portfolio gains or losses relative to Opening total portfolio value 1,164.9 1,258.5 1,258.5
the opening portfolio value, giving useful additional context for the value of
gains or losses.
Simple return on capital (%)
-9% -4% -13%
% Return on NAV Note 12 (return on NAV) Defined as return on NAV divided by the opening Net Asset Value. Return on NAV (110.0) (54.3) (172.2)
Primary statements (Net Asset Value) This measure gives a view of the size of Return on NAV relative to the opening Opening Net Asset Value 1,190.3 1,376.1 1,376.1
Net Asset Value, giving useful additional context for the value of returns.
Return on NAV (%) -9% -4% -13%
(1 ) At the period end date, the Group was in the process
of disposing of a number of assets, which were accordingly reclassified within
current assets as Assets Held for Sale. These assets are considered to be part
of the Group's investment portfolio and have been managed as such throughout
the period. Accordingly the APM has been amended to included Assets Held for
Sale within the Group's Total portfolio APM
13. Post balance sheet events
As at 13 September 2024, unrealised fair value gains subsequent to the
reporting date in respect of the Group's quoted portfolio totalled £53m,
largely in respect of Oxford Nanopore Technologies plc, which has seen a fair
value gain of £42.0m since 30 June 2024.
Post period end, the Group has generated proceeds of £41.2m through the
disposal of portfolio investments including Garrison (£30m) and a number of
other holdings. In the case of Garrison and half our holding in Centessa,
these investments were classified as Assets Held for Sale within the 30 June
2024 balance sheet.
Statement of Directors' responsibilities
General information
The comparative financial information presented herein for the year ended 31
December 2023 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 2023 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 are 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 2023.
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 relating to the valuation of unquoted equity and debt
investments and limited partnership interests were the same as those applied
to the audited consolidated financial statements for the year ended 31
December 2023.
The significant accounting judgments made in preparing these half-yearly
results relating to the application of IFRS 10 in respect of Istesso Limited
and IPG Cayman LP were updated to reflect events during the period as follows:
· For Istesso Limited, the investment of £10m in the period,
primarily via convertible loan notes ('CLN'). Given the investment represented
the drawdown of an amount that was legally committed in 2023 and which
conferred on additional substantive rights, the Directors concluded that IP
Group continues not to control Istesso Limited under IFRS 10.
· For IPG Cayman LP, there we no significant changes in the facts
and circumstances pertaining to control and as a result the Directors
concluded that IP Group continues not to control IPG Cayman LP under IFRS 10.
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 Cash and Deposits of
£161.3m as at 30 June 2024. 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, 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.
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).
By order of the Board
Sir Douglas Flint
Greg Smith
Chairman
Chief Executive Officer
16 September 2024
INDEPENDENT REVIEW REPORT TO IP GROUP PLC
1. Conclusion
We have been engaged by IP Group plc ("the Company") to review the condensed
set of financial statements in the half-yearly financial results for the six
months ended 30 June 2024 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 results for the six months ended 30 June 2024 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").
2. Basis for conclusion
We conducted our review in accordance with International Standard on Review
Engagements (UK) 2410 Review of Interim Financial Information Performed by the
Independent Auditor of the Entity ("ISRE (UK) 2410") issued 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.
Conclusions relating to going concern
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Basis for conclusion section of this report,
nothing has come to our attention that causes us to believe that the directors
have inappropriately adopted the going concern basis of accounting, or that
the directors have identified material uncertainties relating to going concern
that have not been appropriately disclosed.
This conclusion is based on the review procedures performed in accordance with
ISRE (UK) 2410. However, future events or conditions may cause the Group to
cease to continue as a going concern, and the above conclusions are not a
guarantee that the Group will continue in operation.
3. 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 annual financial statements of the Group are prepared in accordance with
UK-adopted international accounting standards.
The directors are responsible for preparing the condensed set of financial
statements included in the half-yearly financial report in accordance with IAS
34 as adopted for use in the UK.
In preparing the condensed set of financial statements, the directors are
responsible for assessing the Group's ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to
liquidate the Group or to cease operations, or have no realistic alternative
but to do so.
4. 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. Our conclusion, including our conclusions relating to going concern,
are based on procedures that are less extensive than audit procedures, as
described in the Basis for conclusion section of this report.
5. 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.
Jatin Patel
for and on behalf of KPMG LLP
Chartered Accountants
15 Canada Square
London
E14 5GL
16 September 2024
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