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
(unaudited)
|
FY 2023
(audited)
|
Net Asset Value (NAV)
|
£1,072.2m
|
£1,313.6m
|
£1,190.3m
|
NAV per share
|
104.7pps
|
126.7pps
|
114.8pps
|
% Return on NAV (i)
|
-9%
|
-4%
|
-13%
|
Loss for the period/year
|
(£109.9m)
|
(£54.5m)
|
(£174.4m)
|
Total portfolio (i)
|
£1,111.0m
|
£1,276.1m
|
£1,164.9m
|
Gross cash and deposits
(i)
|
£161.3m
|
£250.0m
|
£226.9m
|
Cash proceeds(i)
|
£3.4m
|
£32.2m
|
£38.6m
|
Portfolio investment (i)
|
£49.1m
|
£59.8m
|
£73.2m
|
(i)
Note 12 details the Alternative Performance
Measures ("APM")
Greg Smith, Chief Executive of IP Group, said:
"The Group has made progress on delivering cash
proceeds in the year to date, and has a strong pipeline
of future realisations, some at an advanced stage of negotiation.
We are seeing improvement in market sentiment toward private
transactions in the areas in which we operate, which has been
reflected in our ability to
realise
investments. Furthermore, we expect these exits to take place at or
above their carrying values at the end of last year, validating our
prudent approach to portfolio valuation. As a result, the Group
remains in a strong financial position with £183.7m of gross cash
at the end of August which is particularly important in the current
environment.
The Board remains committed to delivering shareholder returns
that include a regular cash component from realisations. With a
share price discount to NAV of more than 20%, we have not only
accelerated our buyback programme in the period and have now bought
back £20.0m of shares under our planned programme but also plan to
increase it by an additional £10m.
As the UK's most active investor in university spinouts, we
are pleased with the progress in our portfolio in our three
thematic sectors, with our portfolio continuing to mature and
attract commercial and strategic interest, and we continue to
believe we remain well positioned to deliver good financial returns
for our shareholders."
Webinar
IP Group will host a webinar for analysts and
investors today, 17 September, at 09:00am. For more details or to
register as a participant please visit
https://www.investormeetcompany.com/ip-group-plc/register-investor.
For more information, please
contact:
IP Group
plc
|
www.ipgroupplc.com
|
Greg Smith, Chief Executive Officer
David Baynes, Chief Financial and Operating
Officer
Liz Vaughan-Adams, Communications
|
+44 (0) 20 7444 0050
+44 (0) 20 7444 0062/+44 (0) 7967
312125
|
Portland
|
Alex Donaldson
|
+44 (0) 7516 729702
|
Further information on IP Group is
available on our website: www.ipgroupplc.com
This half-yearly report may
contain forward-looking statements. These statements reflect the
Board's current view, are subject to a number of material risks and
uncertainties and could change in the future. Factors that could
cause or contribute to such changes include, but are not limited
to, the general economic climate and market conditions, as well as
specific factors relating to the financial or commercial prospects
or performance of individual portfolio companies within the Group's
portfolio of investments. Throughout this Half-Yearly Report, the
Group's holdings in portfolio companies reflect the undiluted
beneficial equity interest excluding debt, unless otherwise
explicitly stated.
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
20241
%
|
Net
investment/ (divestment)
£m
|
Unrealised + realised fair value
movement
£m
|
Fair value
of Group
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 disorders
|
21.3%
|
3.7
|
3.0
|
22.5
|
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 modifying enzymes for use in
oncology
|
12.1%
|
2.1
|
-
|
11.5
|
Genomics plc
|
Using large-scale genetic information to
develop precision healthcare tools and to bring new understanding
to drug discovery
|
8.2%
|
3.1
|
-
|
11.4
|
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
20241
%
|
Net
investment/ (divestment)
£m
|
Unrealised + realised fair value movement
£m
|
Fair value
of Group
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
|
1Represents 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
20241
%
|
Net
investment/ (divestment)
£m
|
Unrealised + realised fair value movement
£m
|
Fair value
of Group
holding
at 30 June 2024
£m
|
Hysata Pty Limited
|
Developing a new type of
breakthrough hydrogen electrolyser and accelerating the global
transition to net zero
|
37.0%
|
11.7
|
(0.6)
|
81.0
|
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
lithium-ion batteries
|
5.1%
|
-
|
4.0
|
15.9
|
Other companies (12 companies)
|
|
|
1.1
|
(0.2)
|
42.9
|
Total
|
|
|
12.8
|
(12.7)
|
275.4
|
1Represents 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
20241
%
|
Net
investment/ (divestment)
£m
|
Unrealised and realised fair value
movement
£m
|
Fair value
of Group
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
Enterprises plc
|
University of Oxford preferred IP partner under
15-year framework agreement
|
1.8%
|
-
|
1.0
|
19.3
|
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
investments1
|
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 minimis1
|
(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
20233
|
Portfolio capital raised
|
£m
|
%
|
£m
|
%
|
IP Group1
|
49.0
|
13%
|
59.8
|
20%
|
IP Group managed funds2
|
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
ended
30 June 2024
£m
|
Six months ended
30 June 2023
£m
|
Year ended
31 December 2023
£m
|
Net portfolio loss1
|
(103.0)
|
(44.4)
|
(160.5)
|
Net overheads2
|
(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 NAV1
|
(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
ended
30 June 2024
£m
|
Six
months ended
30 June 2023
£m
|
Year ended
31 December 2023
£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
ended
30 June 2024
£m
|
Six
months ended
30 June 2023
£m
|
Year ended
31 December 2023
£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
ended
30 June 2024
£m
|
Six
months ended
30 June 2023
£m
|
Year ended
31 December 2023
£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
30 June
2024
£m
|
Six
months ended
30 June
2023
£m
|
Year
ended
31
December 2023
£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
ended
30 June 2024
£m
|
Six months ended
30 June 2023
£m
|
Year ended
31 December 2023
£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
six months
ended
30 June 2024
£m
|
Unaudited
six months ended
30 June 2023
£m
|
Audited
year ended
31 December 2023
£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
six months
ended
30 June 2024
£m
|
Unaudited
six months ended
30 June 2023
£m
|
Audited
year ended
31 December 2023
£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
six months
ended
30 June 2024
£m
|
Unaudited
six months ended
30 June 2023
£m
|
Audited
year ended
31 December 2023
£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
received1
|
|
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
deposits1
|
|
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
paid1
|
|
(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
capital
|
Share
premium
£m
|
Retained
earnings
£m
|
Total
£m
|
Non-controlling
interest
£m
|
Total
equity
£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
six months
ended
30 June 2024
£m
|
Unaudited
six months ended
30 June 2023
£m
|
Audited
year ended
31 December 2023
£m
|
Earnings for the purposes of basic and dilutive
earnings per share
|
(105.6)
|
(53.9)
|
(171.3)
|
Number of
shares
|
Unaudited
six months ended
30 June 2024
Number of shares
|
Unaudited
six months
ended
30 June 2023
Number of
shares
|
Audited
year ended
31 December 2023
Number of
shares
|
Weighted average number of ordinary shares for
the purposes of basic
earnings per share
|
1,031,449,8069
|
1,035,891,3111
|
1,036,400,4068
|
Effect of dilutive potential ordinary
shares:
|
|
|
|
Options or contingently issuable
shares
|
--
|
--
|
--
|
Weighted average number of ordinary shares for
the purposes of diluted
earnings per share
|
1,031,449,8069
|
1,035,891,3111
|
1,036,400,4068
|
|
Unaudited
six months
ended
30 June 2024
£m
|
Unaudited
six months ended
30 June 2023
£m
|
Audited
year ended
31 December 2023
£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
£m
|
Unquoted equity investments in spin-out
companies
£m
|
Debt investments in unquoted spin-out
companies
£m
|
Total
£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 value1
|
(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 value1
|
(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 value1
|
(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
|
1The 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
<12 months
|
177.8
|
n/a
|
+/-5%
|
8.9
|
0.8%
|
(8.9)
|
(0.8%)
|
268.0
|
187.9
|
Funding transaction
>12 months
|
222.3
|
n/a
|
+/-5%
|
11.1
|
1.0%
|
(11.1)
|
(1.0%)
|
191.0
|
162.7
|
Other: Future market/commercial
events
|
39.4
|
• Estimated
impact of future event
• 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
|
+/-10%
|
3.9
|
0.4%
|
(3.9)
|
(0.4%)
|
15.8
|
25.0
|
Other: Adjusted financing price based on past
performance - Upwards*
|
36.0
|
•
Company-specific milestone analysis resulting in a positive
calibration adjustment versus the previous funding transaction
price
|
+/-10%
|
3.6
|
0.3%
|
(3.6)
|
(0.3%)
|
178.3
|
99.9
|
Other: Adjusted financing price based on past
performance - Downwards*
|
163.4
|
•
Company-specific milestone analysis resulting in a positive
calibration adjustment versus the previous funding transaction
price
|
+/-10%
|
16.3
|
1.5%
|
(16.3)
|
(1.5%)
|
129.2
|
203.9
|
Other: Revenue multiple*
|
125.1
|
• Estimate of
future recurring revenues
• Selection of
comparable companies
•
Discount/premium to multiple
|
+/-10%
|
12.5
|
1.2%
|
(12.5)
|
(1.2%)
|
76.8
|
85.4
|
Other: DCF*
|
140.5
|
• Discount
rate
• 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
|
+/-20%
|
28.1
|
2.6%
|
(28.1)
|
(2.6%)
|
115.8
|
126.6
|
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
six months
ended
30 June 2024
£m
|
Unaudited
six months ended
30 June 2023
£m
|
Audited
year ended
31 December 2023
£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
six months
ended
30 June 2024
£m
|
Unaudited
six months ended
30 June 2023
£m
|
Audited
year ended
31 December 2023
£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
six months
ended
30 June 2024
£m
|
Unaudited
six months ended
30 June 2023
£m
|
Audited
year ended
31 December 2023
£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
six months
ended
30 June 2024
£m
|
Unaudited
six months ended
30 June 2023
£m
|
Audited
year ended
31 December 2023
£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
six months
ended
30 June 2024
£m
|
Unaudited
six months ended
30 June 2023
£m
|
Audited
year ended
31 December 2023
£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
six months
ended
30 June 2024
£m
|
Unaudited
six months ended
30 June 2023
£m
|
Audited
year ended
31 December 2023
£m
|
Borrowings
|
6.2
|
6.3
|
6.3
|
Total
|
6.2
|
6.3
|
6.3
|
|
|
|
|
|
|
Non-current liabilities
|
Unaudited
six months
ended
30 June 2024
£m
|
Unaudited
six months ended
30 June 2023
£m
|
Audited
year ended
31 December 2023
£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
six months ended
30 June
2024
|
Unaudited
six months ended
30 June
2023
|
Audited
year ended
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
six months
ended
30 June 2024
£m
|
Unaudited
six months ended
30 June 2023
£m
|
Audited
year ended
31 December 2023
£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
six months ended
30 June
2024
|
Unaudited
six months ended
30 June
2023
|
Audited
year ended
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
|
-
|
-
|
0.76
|
7.7
|
1.27
|
13.0
|
Proposed interim dividend at half
year
|
-
|
-
|
0.51
|
5.3
|
0.51
|
5.3
|
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
reconciliation
|
Definition and purpose
|
|
Unaudited
six months
ended
30 June 2024
£m
|
Unaudited
six months ended
30 June 2023
£m
|
Audited
year ended
31 December 2023
£m
|
NAV per share
|
Primary statements
|
NAV per share is defined as Net
Assets divided by the number of outstanding 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.
|
NAV
|
£1,072.2m
|
£1,313.6m
|
£1,190.3m
|
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 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.
|
Total comprehensive
income
|
(110.8)
|
(55.3)
|
(174.8)
|
Excluding:
|
|
|
|
Share-based
payment charge
|
0.8
|
1.0
|
2.6
|
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 the portfolio due as a
result of realised and unrealised gains and losses.
The measure shows a summary of the
income statement gains and losses which are directly attributable
to the Total Portfolio (see definition 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.
|
Change in fair value
of equity and debt investments
|
(99.9)
|
(27.5)
|
(110.9)
|
(loss)/Gain on disposal of equity
investments
|
(1.5)
|
(5.7)
|
(10.8)
|
Change in fair value
of LP interests2
|
(1.6)
|
(11.2)
|
(38.8)
|
Net portfolio (loss)
|
(103.0)
|
(44.4)
|
(160.5)
|
Total
portfolio1
|
Consolidated statement of financial
position
|
Total portfolio is defined as the
total of equity investments, debt 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.
|
Equity investments
|
947.2
|
1,123.8
|
1,011.5
|
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 plus investments into
limited partnership interests.
This gives a combined measure of
investment into the Group's portfolio
|
Purchase of equity and debt
investments
|
(48.7)
|
(52.8)
|
(63.4)
|
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 investments plus
distributions received from limited partnership
interests.
This gives a combined measure of
cash received from the Group's portfolio.
|
Proceeds from the sale of equity
investments
|
2.6
|
31.5
|
37.7
|
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. The measure reflects
the Group's controllable net operating "cash-equivalent" central
cost base.
|
Other income
|
3.8
|
3.1
|
5.9
|
Other administrative
expenses
|
(12.4)
|
(12.2)
|
(28.0)
|
Excluding:
|
|
|
|
|
|
Net overheads exclude items such as
share-based payments and consolidated portfolio company
costs.
|
Non-portfolio foreign exchange
movements
|
(0.1)
|
(1.2)
|
(0.4)
|
|
|
|
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.
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.
|
Cash and cash
equivalents
|
91.3
|
83.2
|
100.9
|
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 period (after tax)
excluding the (loss)/profit on the investment held in Oxford
Nanopore publicly quoted shares both realised and
unrealised.
|
(Loss) for the period
|
(109.9)
|
(54.5)
|
(174.4)
|
|
|
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
value.
|
Net portfolio (losses)
|
(103.0)
|
(44.4)
|
(160.5)
|
|
|
This measure gives a view of the
size of portfolio gains or losses relative to the opening portfolio
value, giving useful additional context for the value of gains or
losses.
|
Opening total portfolio
value
|
1,164.9
|
1,258.5
|
1,258.5
|
|
|
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 Net Asset Value,
giving useful additional context for the value of
returns.
|
Opening Net Asset Value
|
1,190.3
|
1,376.1
|
1,376.1
|
|
|
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