9th Mar 2005 07:01
IP2IPO Group PLC09 March 2005 For immediate release 9 March 2005 IP2IPO Group plc Preliminary results for the year ended 31 December 2004 IP2IPO Group plc (AIM: IPO), the intellectual property commercialisationcompany, today announces its audited preliminary results for the year ended 31December 2004. Highlights • Successful flotation of three portfolio companies during 2004 (2003: nil) • Realisation from the sale of shares in a spin out company of £924,000 (2003: nil) • Market value of shares in quoted companies at year end of £24 million (2003: nil) • Revenues increased to £1,183,000 (2003: £222,000) • First full year profit after tax of £322,000 (2003: loss of £583,000) • Cash balance of £34.8 million (2003: £38.2 million) • Acquisition of Top Technology Ventures Limited in June 2004 • Six new spin out companies formed in 2004 - IP2IPO received stakes in each company • Acquisition of 19.9% of share capital of Techtran Group Limited in July 2004 Post year end highlights • Acquired remaining share capital of Techtran Group Limited in January 2005 Commenting on the Group's preliminary results, David Norwood, Chief ExecutiveOfficer of IP2IPO, said: "I am delighted to be able to report such positive results for the year. Theflotation of three spin out companies from the IP2IPO portfolio during 2004 isanother, highly significant milestone in IP2IPO's development. The flotation ofthese three companies means that IP2IPO has succeeded in turning an aggregateinvestment of £739,000 into proceeds of £1 million and quoted shares worth over£24 million at the year end. "Since the year end, IP2IPO has expanded its operations via the acquisition ofTechtran Group Limited, a company with a technology commercialisationpartnership with the University of Leeds (one of the UK's leading researchuniversities). This is an extremely constructive start to 2005 which will buildon the strong foundations that the Company established in 2004." For more information contact: IP2IPO (www.ip2ipo.com) 020 7242 9900David Norwood, Chief Executive Officer Buchanan Communications 020 7466 5000Tim Anderson, Mark Court, Mary-Jane Johnson IP2IPO Group plc Chairman's statement I am delighted to be able to report that IP2IPO's first full year as a quotedcompany has been an extremely positive one. Your Company's business is focused on the commercialisation of intellectualproperty from UK universities. Its business model is based on entering intolong-term partnerships with universities and through these, IP2IPO assists itsuniversity partners to realise value from their intellectual property assets. Inreturn, IP2IPO has secured the right to significant interests in university spinout companies and technology licences. At the end of 2004, IP2IPO had long-term partnerships with four universities:Oxford, Southampton, York and King's College London. In January 2005, IP2IPOannounced a fifth partnership - with the University of Leeds - through itsacquisition of Techtran Group Limited. Collectively, IP2IPO's partners havetotal research income greater than £250 million. 2004 was a highly significant year for IP2IPO. In March, the first universityspin out company from the IP2IPO portfolio, Offshore Hydrocarbon Mapping plc,listed on the alternative investment market ("AIM") of the London StockExchange. In October, two further companies from the IP2IPO portfolio, Synairgenplc and VASTox plc, followed Offshore Hydrocarbon Mapping plc to AIM. IP2IPOinvested a total of £739,000 in these three companies during 2002 and 2003. Asat 31 December 2004, the combined market capitalisation of these three companieswas just over £150 million and the aggregate value of IP2IPO's holdings was £24million. First and foremost, the flotation of three companies from the IP2IPO portfolioduring 2004 is a demonstration of IP2IPO's business model and its ability tocreate value from university intellectual property. However, these flotationshave also blazed a trail within the university sector. As at 31 December 2004,the combined value of IP2IPO's university partners' interests in the threecompanies was greater than £20 million. Your Company's Board believes that thesuccesses which IP2IPO has recorded in 2004 will add momentum to the trendswhich are already prevalent within the university sector and which are drivingthe commercialisation of intellectual property to the forefront of thestrategies of the UK's research-led universities. For the year ended 31 December 2004, IP2IPO generated turnover of £1,183,000, asurplus on the disposal of fixed asset investments of £924,000 and profits forthe year of £322,000. I am pleased to report that costs were controlled in linewith expectations. During 2005, your Company's primary focus will be on continuing to build astrong portfolio of university spin out companies and to create value from thisportfolio. In addition, IP2IPO will remain alert to opportunities to expand itsbusiness during the year. Given the growing impetus behind the commercialisationof university intellectual property, the Board of your Company notes theemergence of new entrants into the market. IP2IPO's successes during 2004 haveconsolidated its position as the market leader, and this gives your Company theopportunity to approach new expansion opportunities selectively. During 2004 there were a number of changes to the Board of your Company. AlexSnow, Harry Fitzgibbons and Andrew Beeson resigned their non-executivedirectorships and Dr Steven Lee, IP2IPO's former director of life sciences, leftIP2IPO to become chief executive of VASTox plc. I would like to express theBoard's thanks for the contribution that all the departing directors made to thesuccess of your Company. In August, I took over the chairmanship of your Companyfrom Dr Bruce Smith, who remains a non-executive director and I would like torecord the appreciation of the Board for Bruce's services as chairman and forhis continuing commitment to IP2IPO. In October, IP2IPO was fortunate to securethe services of Dr Bruce Campbell, who adds a huge wealth of experience toIP2IPO's executive team as chief scientific officer. Graham RichardsChairman9 March 2005 IP2IPO Group plc Chief Executive Officer's review 2004 has been a year in which IP2IPO focused on proving its business model. YourCompany has striven to identify strong commercialisation opportunities from itsuniversity partnerships, to build promising university spin out companies and towork with its portfolio of spin out companies to create value. Quoted portfolio performance I am delighted to report that three companies from the IP2IPO stable listed onAIM during 2004: Offshore Hydrocarbon Mapping plc, Synairgen plc and VASTox plc.The table below provides a summary of the position at the year end in respectof each of these three companies. It is IP2IPO's accounting policy to carrythese investments at cost (less any provision for impairment). However, on thebasis of the closing mid-price of each of these investments on 31 December 2004,their aggregate value was some £24 million. From an operational perspective, itis pleasing to note that the £1 million of proceeds received by IP2IPO onaccount of its part-disposal of Offshore Hydrocarbon Mapping plc shares isgreater than the aggregate costs of all three investments. Date of Cost of Cost of Proceeds of Value of % holding Uplift in value formation investment shares disposal holdings as as at between original sold at 31.12.04 31.12.04 cost of investment and value at 31.12.04 Company £'000 £'000 £'000 £'000 Offshore Hydrocarbon 2002 150 41 1,000 7,131 10 65xMapping plcSynairgen plc 2003 564 - - 10,159 31 18xVASTox plc 2003 25 - - 6,747 13 270xTotal 739 41 1,000 24,037 I am also pleased to report that the flotation of each of the above companieswas well received by the stock market and at the year end, all three companieswere trading substantially in excess of their listing price. Looking forward,IP2IPO will endeavour to encourage spin out companies in its portfolio toconsider a stock market listing, where it believes they have robust businessmodels and exciting growth prospects. Unquoted portfolio performance The unquoted portfolio of fixed asset investments in spin out companies formedunder IP2IPO's university partnerships has grown and matured during 2004. At 31December 2004, your Company had 16 such investments, six of which were formedduring the year. These 16 investments are recorded on the balance sheet at cost(less any provision for impairment) and total £5.4m. Six companies in theportfolio raised a total of £6.7 million in private equity finance from thirdparties during year. Taking into account changes in the share price in any ofthe unquoted companies by reference to subsequent third party investment, thefair value of the portfolio of unquoted companies at 31 December 2004 is £7.6million, an increase of 40% over historic cost. Provisions IP2IPO made provisions against fixed asset investments during the year totalling£178,000. These provisions were made against fixed asset investments transferredto IP2IPO from Beeson Gregory (its former parent company) in 2001. Included inthe figure above, is a provision of £50,000 against Novarc Limited, which hasthe result of fully providing against the investment as a consequence of thatcompany's voluntary liquidation in January 2005. Acquisitions during the year In 2004, IP2IPO took the strategic decision to expand its operations into fundmanagement. Accordingly, in June 2004, IP2IPO acquired all of the share capitalof Top Technology Ventures Limited, a manager of UK venture capital fundsfocused on early stage technology investments, for a consideration of £2.4million. This acquisition generated £2.9 million of goodwill on the Groupbalance sheet. In the six months following its acquisition, Top TechnologyVentures Limited has streamlined its cost base and has announced its intentionto expand the funds under its management. Acquisitions after the year end In July 2004, IP2IPO invested £2 million in return for a 19.9% interest inTechtran Group Limited ("Techtran"), a company engaged in the commercialisationof intellectual property from the University of Leeds. This investment enabledIP2IPO to work alongside the Techtran management team and to further assess thestrengths of the company. In January 2005, IP2IPO completed an acquisition ofall of the share capital of Techtran which it did not already own at that time,for a total consideration of £16.1 million. The University of Leeds is one ofthe leading research universities in the UK with research income of over £100million. The partnership between Techtran and the University of Leeds is highlyinnovative because it is the first instance of a UK university completelyoutsourcing its technology commercialisation function to the private sector. Thepartnership commenced in 2002 and has a demonstrable record of success. Techtranalready has interests in a portfolio of 13 spin out companies from theUniversity of Leeds. Review of operations During 2004, IP2IPO continued to control costs carefully, incurring consolidatedadministrative expenses for the year of £3,260,000. In addition, IP2IPO hascontinued to generate short term revenues through the provision of advisory andfund-raising services. In the second half of 2004, Top Technology VenturesLimited added to both IP2IPO's revenues and profitability. Your Company's cash position is healthy. Cash at the end of the year stood at£34,801,000. Your Company has outstanding commitments to invest significantsums in university spin out companies under the terms of its universitypartnerships. As at 31 December 2004, these commitments totalled £13,262,000.In addition a further commitment of £800,000 is payable in deferredconsideration, due as a result of the acquisition of Top Technology VenturesLimited. The acquisition of Techtran in January 2005 resulted in net cashoutflows of approximately £1,561,000. Outlook for 2005 I am confident in both the strength of the pipeline of new intellectual propertyopportunities available to IP2IPO and the overall rigour of IP2IPO's businessmodel. I am also delighted with the progress that IP2IPO has made in the earlypart of 2005 and I believe that the acquisition of Techtran will cement IP2IPO'sposition as the UK's leader in the field. As the business grows and its head count expands, I expect our cost base torise. However, your Company's management will monitor this carefully and willseek to match costs against sources of short term income wherever possible. The successful flotation of Offshore Hydrocarbon Mapping plc, Synairgen plc andVASTox plc demonstrates not only that universities are important engines ofbreakthrough inventions, but with the right support, university spin outcompanies can mature rapidly and can develop into robust, stand-alone businessesin a relatively short period of time. During 2005, market conditions permitting,IP2IPO will seek to build on its 2004 record. David NorwoodChief Executive Officer9 March 2005 IP2IPO Group plcCONSOLIDATED PROFIT AND LOSS ACCOUNTFor the year ended 31 December 2004 2004 2003 Note £'000 £'000 Turnover Continuing operations 519 222 Acquisition 664 - 1,183 222Administrative expensesProvision against fixed asset investments (178) (109)Other (3,260) (1,170)Total (3,438) (1,279) Surplus on disposal of fixed asset investments ......Continuing operations 924 - Operating profit (loss) Continuing operations (1,435) (1,057) Acquisition 104 - (1,331) (1,057) Interest receivable and similar income 1,616 474 Profit (loss) on ordinary activities before taxation 285 (583) Tax on profit (loss) on ordinary activities 37 - Profit (loss) on ordinary activities after taxation 4 322 (583) Basic profit (loss) per ordinary share 3 0.79p (1.9p)Diluted profit (loss) per ordinary share 3 0.77p (1.9p) There is no difference between the profit (loss) on ordinary activities beforetaxation and the profit (loss) for the years stated above, and their historicalcost equivalents. There are no recognised gains and losses other than the profit (loss) above andtherefore no separate statement of total recognised gains and losses has beenpresented. IP2IPO Group plcCONSOLIDATED BALANCE SHEETAs at 31 December 2004 2004 2003 Note £'000 £'000 Fixed assetsIntangible fixed assets Goodwill 2,850 - Other 15 12 Tangible fixed assets 55 27Investments Equity rights 16,861 17,556 Equity investments 9,988 5,804 Investments in Limited Partnerships 87 - 26,936 23,360 29,856 23,399Current assets Debtors 1,238 170Cash at bank and in hand 34,801 38,245 36,039 38,415 Creditors: Amounts falling due within one year (3,345) (774) Net current assets 32,694 37,641 Total assets less current liabilities 62,550 61,040 Creditors: Amounts falling due after more than one year - (383) Provision for liabilities and charges (90) - Net assets 62,460 60,657 Capital and reservesCalled up share capital 4,129 4,064Share premium account 59,605 58,972Merger reserve 783 -Profit and loss account (deficit) 4 (2,057) (2,379) Total equity shareholders' funds 62,460 60,657 IP2IPO Group plcConsolidated Cash Flow StatementFor the year ended 31 December 2004 2004 2003 £'000 £'000 Net cash outflow from operating activities (2,021) (708) Returns on investments and servicing of financeInterest received 1,374 474Net cash inflow from returns on investment and servicing of finance 1,374 474 Taxation - - Capital expenditure and financial investmentPurchase of intangible fixed assets (4) (12)Purchase of tangible fixed assets (30) (5)Purchase of fixed asset investments (3,728) (1,818)Sale of fixed asset investments 965 -Net cash outflow from capital expenditure and financial investment (2,797) (1,835) Net cash outflow before financing and acquisitions 3,444) (2,069) AcquisitionsPurchase of subsidiary undertaking (911) -Net cash acquired with subsidiary 230 - (681) - Net cash outflow before financing (4,125) (2,069) FinancingIssue of ordinary shares 681 37,738Share issue costs - (1,812)Net cash inflow from financing 681 35,926 (Decrease) Increase in cash (3,444) 33,857 IP2IPO Group plcNotes 1. The financial information set out in this preliminary announcement does notconstitute the company's statutory accounts, but has been extracted from thecompany's statutory accounts for the years ended 31 December 2003 and 2004. Theauditors' reports on the statutory accounts for the years ended 31 December 2003and 2004 were unqualified and did not contain a statement under section 237(2)or (3) of the Companies Act 1985. The statutory accounts for the year ended 31December 2003 have been delivered to the registrar, while the statutory accountsfor the year ended 31 December 2004 will be delivered to the registrar followingthe company's Annual General meeting. This financial information has beenprepared on the basis of the accounting policies set out in the annual financialstatements for the year ended 31 December 2003. 2. Availability of statutory accounts Copies of this announcement and the full statutory accounts will be availablefrom the registered office at 1st Floor, 20-21 Tooks Court, Cursitor Street,London, EC4A 1LB, and from the offices of the Group's nominated advisor, KBCPeel Hunt, 111 Old Broad Street, London, EC2N 1PH. 3. Basic and diluted profit (loss) per ordinary share The basic and diluted profit (loss) per ordinary share is based on profitsattributable to ordinary shareholders for the year of £322,000 (2003: loss of£583,000). The basic profit (loss) per share is based on the weighted averagenumber of ordinary shares of 40,777,613 in issue during the year (2003:30,031,187). The diluted profit (loss) per ordinary share in 2004 is based onthe weighted average number of ordinary shares plus the potentially dilutiveoptions over ordinary shares of 41,883,290. Since the Group reported a net lossin 2003, the diluted loss per share for that year is equal to the basic loss pershare. 4. Reconciliation of shareholders' funds 2004 2003 £'000 £'000GroupProfit (loss) for the financial year 322 (583)Net proceeds of shares issued 1,481 35,926 Net increase in shareholders' funds 1,803 35,343Opening shareholders' funds 60,657 25,314 Equity shareholders' funds at 31 December 62,460 60,657 5. Notice of AGM The Annual General Meeting will be held at 11am on 27 April 2005 at BuchananCommunications, 107 Cheapside, London EC2V 6DN. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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