26th Feb 2008 07:01
IP Group PLC26 February 2008 ("IP Group" or "the Group" or "the Company") IP Group Preliminary Results Substantial growth in value and scale of portfolio 26 FEBRUARY 2008: IP Group plc (LSE: IPO), the UK's leading universityintellectual property commercialisation company, today announces its preliminaryresults for the year ended 31 December 2007. Financial highlights • Strong rise in net assets: £213.8m (2006: £179.2m) • Substantial increase in fair value of equity investments in portfolio: £126.1m (2006: £87.4m) • Profit after taxation: £30.5m (2006: £40.1m) • Cash invested in portfolio companies: £6.8m (2006: £8.5m) • Cash proceeds from sales of equity investments: £8.0m (2006: £3.1m) • Cash balance at 31 December 2007: £46.0m (2006: £51.3m) Portfolio and Operational highlights • Portfolio of companies in which the Group has a fair value holding of £3m or above at year end expanded to 12 (2006: 8 companies) • Over £70m of capital raised by portfolio companies during the year, of which over £30m was raised in private financing rounds • Successful AIM flotation of two portfolio companies, as well as successful reversals on to AIM and PLUS Markets of two portfolio companies • IP Venture Fund completes second closing with total commitments of £31m and makes 11 investments into Group portfolio companies • Significant operational and developmental advances made by portfolio companies during 2007 Commenting on the Group's preliminary results, Alan Aubrey, Chief Executive ofIP Group, said: "IP Group's unparalleled access to commercialisable university intellectualproperty and proven business building methodology has resulted in a substantialimprovement in the value, quality and scale of our portfolio of companies during2007. "The portfolio of companies in which the Group has a holding worth above £3m hasgrown and this is backed by a large and diverse pool of other opportunities.Together with its strong cash position, the Group is well positioned to realisesignificant shareholder value over the long term." For more information, please contact: IP Group plcAlan Aubrey, Chief Executive Officer 020 7444 0050Mike Townend, Director of Capital Markets 020 7444 0050Greg Smith, Group Financial Controller 020 7444 0050Liz Vaughan-Adams, Communications 020 7444 0062 / 07979 853 802 Further information on IP Group is available on our website: www.ipgroupplc.com Financial Dynamics 020 7831 3113Ben Atwell, Rob Bailhache, Sanjeev Pandya CHAIRMAN'S STATEMENT This is my first statement as Chairman since IP Group moved to the Official Listfrom AIM and I am pleased to report that there has been good overall progressacross the business during 2007, reflected by the strong growth in theportfolio. The Group has performed in line with the Board's expectations,maintaining its market leadership position in university intellectual propertycommercialisation in the UK. Through its ten university partners in the UK, the Group has unrivalled accessto a strong pipeline of investment opportunities as well as research capabilityand is uniquely placed at the forefront of commercialising UK innovation. IPGroup continues to work with its university partners to source, develop andinvest in world-leading technologies and then grow these businessespost-investment through to significant value creation. During 2007, we focused on integrating our most recent university partnerships,five of which were established during 2006, continuing to develop our longerestablished partnerships and on rolling out our proprietary commercialisationmethodology and best practices across the Group. The Group's portfolio isincreasingly diverse with exposure to a number of key sectors: Energy &Renewables, Healthcare & Life Sciences (Therapeutics and Non-therapeutics), IT &Communications and Chemicals & Materials. These technologies are developedthrough many years of research at the Group's partner universities. We also strengthened our fund management operations during the year, completinga second closing of the IP Venture Fund at £31 million, which provides anadditional potential source of financing for our portfolio companies. The fundhas now made a total of 13 investments in IP Group portfolio companies. The Group also further developed its own internal third-party fund-raisingcapability during the year, with the establishment of a dedicated CapitalMarkets team. As global financial markets have deteriorated, we have alreadyseen the benefits of this strategy. Indeed, it is particularly encouraging tonote that the Group's portfolio companies raised over £30 million in privatefinancings during the year. This demonstrates not only the strength of thebusiness model but also the Group's resilience in testing times. There have been a number of changes to the Board this year. I am delighted tohave resumed the role of Non-Executive Chairman. I have been a director of theGroup for five years and was Chairman when the Group floated on AIM. DavidNorwood, the Group's founder and previous Executive Chairman, has moved to theposition of Special Projects Director. David remains an Executive Director andis actively involved with shareholder relations, strategic issues andfund-raisings. He also acts as chairman or non executive director of a number ofour portfolio companies. In addition, Mike Townend joined us from LehmanBrothers as Director of Capital Markets. Outlook Looking ahead, and against the current backdrop of global economic uncertainty,your Directors believe that the Group remains well positioned and are confidentof further progress during 2008. IP Group has a strong balance sheet and willcontinue its policy of prudent cash management while ensuring risk remainsdiversified within the portfolio. The portfolio is maturing and the Directors expect the Group's portfoliocompanies to make further significant progress in 2008 with a number preparingproduct launches or due to reach other critical milestones. The Group's most recent corporate transactions, which include two substantialprivate fund-raisings, demonstrate the continuing success of our strategy towiden our distribution platform. The Board remains committed to maintaining thisbalance particularly in the light of the recent illiquidity in global equitymarkets. IP Group is well placed in a number of key sectors through its ten exclusivelong term relationships with UK universities and its growing and diverse spreadof portfolio companies. Although the current volatility in the equity marketsis likely to lead to a reduction in financings through the public markets in2008, the Group will increasingly utilise alternative fund raising options forits portfolio companies. With a strong cash position, a broad portfolio andunrivalled sources of future technology, IP Group is well positioned to createlong-term shareholder value. I would like to thank all of our staff for their hard work and commitment aswell as our shareholders, university partners and all of our associates fortheir ongoing support. DR BRUCE SMITHChairman26 February 2008 CHIEF EXECUTIVE'S STATEMENT The Group has again delivered a strong performance in 2007, substantiallyincreasing the underlying value of the portfolio and increasing net assets to£213.8m during the year (2006: £179.2m). The Group generated a profit before taxof £30.5m, in line with the Board's expectations, and largely driven by gains inthe value of the Group's portfolio. It is noteworthy that revenues fromservices, in the form of fund management and consultancy fees, rose to £2.0m(2006: £1.8m) and cash proceeds generated from the sale of equity investmentsduring the period rose significantly to £8.0m (2006: £3.1m). The Group's cashposition remained strong with £46.0m cash at year end (2006: £51.3m) whilst theGroup continued to invest in the portfolio and the Modern franchise, and investin the infrastructure required to support the new partnerships established in2006 and the growing portfolio. Companies in the Group's portfolio continue to make good technical andcommercial progress, with a number announcing significant developments in theyear. During 2007 the Group's portfolio increased in value by 44% to £126.1mfrom £87.4m. The Group ended the year with 12 portfolio companies in which ithas a holding valued at £3m or above, as well as stakes in 53 other businesses,and these are analysed in greater detail in the Portfolio Review below. Operational Review University partnership business During 2007, the Group has been focused on developing the five new relationshipswith UK universities established in the prior year as well as continuing todevelop our longer established partnerships. Our ten university partnerships nowrepresent a significant proportion of the scientific research base in the UK. Iam pleased to report that these more recent relationships are already bearingfruit in the form of a total of seven spin out companies formed from theUniversity of Surrey, Queen Mary, University of London, the University of Bath,the University of York and the University of Glasgow. The breadth of our university partnerships provides us with an excellentpipeline of technology-based development opportunities which remains unmatchedby any other intellectual property commercialisation company in the UK. IPGroup's success depends on its ability to work with its university partners toidentify opportunities from the concepts and ideas generated from this researchbase and to progress those opportunities through to value creation in variousforms. To that end we have continued to successfully develop our investment andbusiness building methodology during the year. The companies in the Group's portfolio have continued to make significantprogress towards their commercial and technological goals during the year.Below, I highlight a few notable examples: In September 2007, Revolymer Limited, a spin-out from the University of Bristolin the Chemicals & Materials sector that develops new polymers with enhancedphysical properties, announced that it had completed development of its newnon-stick chewing gum. Revolymer announced that the 'Clean Gum' had both goodtaste and in field tests could be easily removed from shoes, clothes, pavementsand hair. Retroscreen Virology Limited in the Healthcare & Life Sciences(Non-therapeutics) sector is one of Europe's leading contract Virology researchcompanies and has grown revenues to £3.1m for the year to 31 July 2007 from just£1.1m in 2005. IP Group has a 22.9% stake in the business. Green Chemicals plc, which develops speciality chemicals with more benignenvironmental footprints than existing products, announced in April 2007 thatinitial results from industrial trials of its Perachem FR flame retardanttreatment were progressing ahead of expectations. In December 2007, the Companyannounced the signing a letter of intent with Good Hair Days to develop anexclusive range of environmentally friendly hair lightening and colouringproducts. In July 2007 Photopharmica (Holdings) Limited ("Photopharmica"), a University ofLeeds spin-out company in the Healthcare & Life Sciences (Therapeutics) sector,announced the successful completion of the first ever Phase IIplacebo-controlled clinical trial using topical photodynamic therapy for thetreatment of microbial disease in wounds. Finally, in November 2007, the Group announced that Tracsis plc ("Tracsis"), anIT & Communications company providing resource optimisation software to majortransport companies in the passenger rail and bus industries, had been admittedto the Alternative Investment Market ("AIM") raising £2m by way of the placing.Tracsis was the eleventh Group business to float on AIM or PLUS markets, and isa good example of the profitable, cash-generative businesses created through theGroup's university partnership model, which enabled it to complete an IPOsuccessfully in a difficult market. Fund management business The Group's fund management business contributed total income of £1.2m during2007 (2006: £1.5m). In August 2007, the Group announced that it had completed a second closing of IPVenture Fund ("the IPVF"), the venture capital fund established in July 2006 inpartnership with the European Investment Fund, one of the leading venturecapital investors in Europe. The second close was over-subscribed and attracteda further £15.5m with participation by a number of new respected institutionalinvestors taking total commitments to £31m. The IPVF has the ability to investup to 25% in post seed financings in the Group's portfolio of spin-out companiesand during the year invested a total of £6.9m (2006: £0.7m) into eleven (2006:two) IP Group portfolio companies. With the second close now complete, the fundprovides an excellent prospective source of follow on funding for present andfuture spin-outs in the IP Group portfolio. 'Modern' Businesses The Group's strategy of creating businesses to address specific global issues,led by world-class management teams seeking to access and exploit a portfolio ofintellectual property based investments within a particular sector, has seencontinued success in 2007. As previously announced, the Group launched its latest subsidiary in this field,Modern Waste Limited ("Modern Waste") in May 2007. IP Group committed £2m toModern Waste, which will develop and exploit innovative waste and recyclingtechnologies. Modern Waste is headed by Executive Chairman John Shepherd and inJanuary 2008 Victor Cocker CBE, the founder Chairman of WRAP and former CEO ofSevern Trent plc, and Michael Averill, the former CEO of Shanks Group plc joinedthe board as Non-Executive Directors. Modern Waste has established a strongpipeline of initial opportunities. The Group's drug development subsidiary, Modern Biosciences plc ("ModernBiosciences"), has also made good progress in the year. In April 2007, Dr SamWilliams became CEO. Sam is an award-winning biotechnology analyst with over tenyears' experience in the sector and joined Modern Biosciences from LehmanBrothers. In June 2007, Dr Clive Dix became Chairman. Clive was previously CEOof PowderMed Ltd, overseeing its sale to Pfizer in 2006, and was a Board memberof PowderJect Pharmaceuticals plc which was acquired by Chiron for £550m in2003. He has more than 22 years' experience in the pharmaceutical andbiotechnology industries. During the year, Modern Biosciences concluded twodevelopment agreements, Rimcazole, a new treatment for cancer from theUniversity of Dundee, and an exclusive worldwide licence with the University ofAberdeen to develop new, oral, disease-modifying molecule treatments forrheumatoid arthritis. Finally, as announced earlier in the year, Modern Water plc ("Modern Water")became the first of the Group's Modern businesses to be successfully floated onAIM, raising £30m (before expenses) of new capital and valuing the company atapproximately £70m on admission. Modern Water was established in 2006 to source,develop and deploy technology-based solutions to meet the growing demand for theeconomic availability of fresh water and treatment of waste water. Financial Review Income statement A summary analysis of the Group's performance for the year is as follows: 2007 2006 £'m £'m _____ _____Portfolio gains 35.0 40.2Other income 2.0 1.8Administrative expenses - Modern Businesses & Photopharmica (2.6) (0.3)Administrative expenses - All Other Businesses (6.6) (3.9)Finance income 2.7 2.3 _____ _____ Profit for the period 30.5 40.1 _____ _____ As described in more detail in the Portfolio Review below, the portfolio gainsare largely attributable to gains on Oxford Advanced Surfaces plc (£11.5m),Modern Water (£10.9m), Green Chemicals plc (£7.1m) and Photopharmica (£6.5m).These gains were offset to some degree by a reduction in the value of ourholdings in certain companies in the quoted portfolio, most significantly AvactaGroup plc (£4.3m). The existing quoted portfolio generated net fair value losses of £7.6m during2007 (2006: £0.9m), which the Board believes is reflective of a generaldeterioration in market conditions during the year, and the stage of developmentand lack of news-flow surrounding these companies, rather than a lack ofunderlying technical or commercial progress. The Board remains confident thatthe breadth and quality of the quoted portfolio is such that it will generateshareholder returns over the medium term. The Group generated £2.0m (2006: £1.8m) of other income during 2007 and thisconsisted primarily of fund management income, as described above, and fees fromconsultancy services. As anticipated at the end of 2006, the Group incurred increased administrativeexpenses for 2007 of £9.2m (2006: £4.2m). The increase was largely a result oftwo factors. Firstly additional staff costs brought about by the doubling of thenumber of University partnerships and also the strengthening of the centralmanagement team to support this expansion and the growth of the portfolio.Secondly, the consolidation of costs incurred in portfolio companies that,because IP Group's shareholding is more than 50%, are accounted for assubsidiary undertakings. These companies comprised Modern Biosciences, ModernWater (until its IPO in June 2007), Modern Waste and Photopharmica (until itsprivate placing in December 2007). The net expenses incurred by these businessesthat have been consolidated into the income statement of the Group amounted to£2.6m (2006: £0.3m). Portfolio performance In 2007, the Group recorded £34.5m of net fair value gains and gains on deemeddisposals of investments (2006: £38.2m). An analysis of these gains is asfollows: 2007 2006 £'m £'m _____ _____ Gains on the revaluation of investments 38.1 47.8Losses on the revaluation of investments (11.7) (9.6) _____ _____ Net fair value gains 26.4 38.2Gains on deemed disposal of subsidiaries 8.1 - _____ _____ Total 34.5 38.2 _____ _____ A detailed analysis of these gains and losses is given in the Portfolio Reportbelow. In 2007, the Group ceased to control Modern Water as a result of its issuingadditional share capital during its placing on AIM, and Photopharmica as aresult of an additional funding round completed in December. As a result ofthese transactions, Modern Water and Photopharmica ceased to be subsidiaries andaccordingly are no longer consolidated. The Group recognised a gain on disposalof £8.1m (2006: £nil). Proceeds on disposal of equity investments Reflecting the increasing maturity of the Group's investment portfolio, theGroup generated a significant increase in cash proceeds on the sale of equityinvestments of £8.0m, compared to the £3.1m during 2006. Of this, the Group generated £5.4m as the result of sales of 2,671,765 ordinaryshares in Offshore Hydrocarbon Mapping plc ("OHM") and a further £2.6m as aresult of the sale of 2,136,664 ordinary shares in Oxford Catalysts Group plc ("OCG"). As at 31 December 2007, the Group has realised total cash proceeds of£6.3m from its total investment of £0.2m in OHM and the value of its remaining0.8% holding in the company is £0.6m. Aggregate cash proceeds of £4.6m have beengenerated by the Group from its total investment in OCG of £0.4m and itsremaining 16.7% holding in the company is worth £9.7m at 31 December 2007. Cash At 31 December 2007 the Group had total cash of £46.0m (2006: £51.3m). Theprincipal constituents of the movement in cash in the year can be summarised asfollows: 2007 2006 £'m £'m _____ _____ Net cash used in operating activities (2.6) (1.4)Net cash used in investing activities (2.9) (6.2)Issued share capital 0.2 19.0 _____ _____ Movement during period (5.3) 11.4 _____ _____ The Group invested £6.8m (2006: £8.5m) in the portfolio as well as £0.7m (2006:£0.2m) investment in the IP Venture Fund. As described above, the Groupgenerated cash proceeds of £8.0m (2006: £3.1m) on disposals of equity stakes.However, there was a net cash outflow from investing activities of £2.9m (2006:£6.2m) mainly as a result of the acquisition and subsequent deemed disposal ofPhotopharmica in the year, as well as the deemed disposal of Modern Water. During 2007 the Group issued new share capital for cash proceeds of £0.2m (2006:£19.0m) as a result of the exercise of employee unapproved share options. At 31 December 2007, the Group had £36.7m ring-fenced for seed round financingof new spin-out companies from its university partners (2006: £40.5m). As aresult of the second closing of the IP Venture Fund in August 2007, the Grouphas £2.2m of undrawn commitments for investments in the fund at 31 December 2007(2006: £1.2m). It is the Group's current policy to place any cash surplus to near term workingcapital requirements on short-term and overnight deposits. The Group has noforeign currency deposits. Share based payments During May 2007, the Group introduced a new Long Term Incentive Plan ("LTIP") inwhich shares were granted to certain executive directors and key employees whichvest after a three year period depending on the achievement of certain keyperformance measures. The accounting for share allotments to employees of thisnature is accounted for under IFRS 2, "Share Based Payments" and accordingly acharge of £0.3m for the period (2006: nil) has been recognised in the incomestatement. Taxation The Group's directors continue to believe that the Group qualifies for theSubstantial Shareholdings Exemption ('SSE') on chargeable gains arising ondisposal of qualifying holdings. During 2007 the Group obtained apost-transaction clearance from HM Revenue & Customs under Code of Practice 10(CoP10) that SSE applied to the Group's disposal of shares in OHM. The Group hastherefore not recognised any deferred tax provision on net gains arising on itsportfolio of equity investments. Portfolio Review During 2007 the Group's portfolio made strong progress on all levels, increasingin value by 44% from £87.4m across 53 companies to £126.1m across 65 companies.Following the admission to AIM of Tracsis in November 2007 and the reversal onto AIM and concurrent placing of Oxford Advanced Surfaces plc ("OAS") duringDecember 2007, twelve of the Group's university spin out companies have beenadmitted to either AIM or PLUS Markets (2006: eight). Outside of the publicmarkets arena, ten portfolio companies completed successful funding rounds,raising a total of £31.3m. Portfolio analysis by investment stage The portfolio businesses in the Group's portfolio are at varying stages ofdevelopment, which we analyse into three categories: 'Pre-seed & Incubation', 'Portfolio Businesses £3m'. The former categoryconsists of any portfolio companies which have yet to receive seed investmentand which are being incubated, while the latter two categories consist of moremature businesses. These are further analysed based on the current value of theGroup's holding at a given date. An analysis of the Group's portfolio byinvestment stage is as follows: As at 31 Dec 2007 Fair Value NumberCompany stage £m % % _____ _____ _____ _____ Pre-seed & Incubation 0.6 0% 14 22%Portfolio businesses £3m 96.9 77% 12 18% _____ _____ _____ _____ All portfolio businesses 126.1 100% 65 100% _____ _____ _____ _____ (continued from table above) As at 31 Dec 2006 Fair Value NumberCompany stage £m % % _____ _____ _____ _____Pre-seed & Incubation 0.5 1% 10 19%Portfolio businesses £3m 60.2 68% 8 15% _____ _____ _____ _____ All portfolio businesses 87.4 100% 53 100% _____ _____ _____ _____ Largest portfolio businesses ('Portfolio businesses >£3m') It has been a good year for our largest portfolio businesses during 2007, with anumber of companies completing successful financing rounds on both public andprivate markets. Further details of these portfolio businesses are shown in thetable below. In December, OAS, a spin-out company from the University of Oxford specialisingin coatings and materials, reversed into an AIM listed company and completed aplacing raising £3m. At 31 December 2007, the Group's 15.7% stake realised afair value gain of £11.5m on a mark-to-market basis. Photopharmica, the University of Leeds spin-out company, which is developingpharmaceutical products using photodynamic therapy (PDT), announced thecompletion of a £6m private financing round in December. At 31 December 2007,the Group had a 49.9% stake and recognised a fair value gain in the year of£6.5m. In addition, during the year the Group recognised a fair value gain of £7.1m onits 24.5% holding in Green Chemicals plc, following its reversal on to PLUSMarkets in January and recognised fair value gains of £2.4m and £1.2m on iQurLimited and Ilika Technologies Limited respectively, with both companiescompleting successful private funding rounds in the second half of 2007.Movements in the market prices of quoted companies Summit Corporation plc,Synairgen plc and Avacta Group plc resulted in a reduction in value of £7.1m forthe year, partially offset by a £1.2m fair value gain on Proximagen Neuroscienceplc. Other portfolio businesses Of the 39 portfolio businesses in which the Group has a fair value stake of lessthan £3m at 31 December 2007, seven were seeded by the Group during the yearwith a total investment of £2.0m (2006: eleven companies, £3.8m). In addition,seven companies in this category completed successful private follow-onfundings, raising a total of £14.9m. The admission to AIM in November of Tracsis, as noted above, valued the companyat £7.0m. The Group recognised a fair value gain of £0.1m on its 20.9% stake ona mark-to-market basis. In the Pre-seed & Incubation category, fourteen new businesses were createdduring 2007 (2006: sixteen). Portfolio analysis by sector At 31 December 2007, the Group has built a portfolio that is well diversified bysector. The Group analyses its portfolio businesses by sector based on theirprincipal activity. As at 31 Dec 2007All portfolio businesses Fair Value NumberSector £m % % _____ _____ _____ _____ Energy & Renewables 25.4 20% 8 12%Healthcare & Life Sciences: Non Therapeutics 28.5 23% 17 26%Healthcare & Life Sciences: Therapeutics 35.0 28% 12 19%IT & Communications 5.2 4% 11 17%Chemicals & Materials 32.0 25% 17 26% _____ _____ _____ _____ 126.1 100% 65 100% _____ _____ _____ _____ (Continued from table above) As at 31 Dec 2006All portfolio businesses Fair Value NumberSector £m % % _____ _____ _____ _____ Energy & Renewables 22.4 26% 9 17%Healthcare & Life Sciences: Non Therapeutics 27.8 32% 12 23%Healthcare & Life Sciences: Therapeutics 21.5 24% 12 23%IT & Communications 4.5 5% 7 13%Chemicals & Materials 11.2 13% 13 24% _____ _____ _____ _____ 87.4 100% 53 100% _____ _____ _____ _____ Largest portfolio businesses ('Portfolio businesses >£3m') Company name Description Quoted/ Unquoted Avacta Group plc Advanced molecular detection and analysis technologies for the Quoted biopharmaceutical, homeland security, defence and medical diagnostics industriesGreen Chemicals plc Environmentally friendly textiles and bleaching chemicals QuotedIlika Technologies Limited Development and application of high throughput, combinatorial R&D Unquoted techniques for the discovery of new materialsiQur Limited Diagnosis and treatment of liver disorders UnquotedModern Water plc Water technologies to address problems of the availability of Quoted freshwater and the treatment and disposal of wastewaterOxford Advanced Surfaces plc Development & commercialisation of technology which enables the Quoted modification of the surface properties of a broad range of materialsOxford Catalysts Group plc Speciality catalysts for the generation of clean fuels, from both Quoted conventional fossil fuels and renewable sources such as biomassOxford NanoLabs Limited Diagnostic company developing highly innovative products for Unquoted application in genomics, pharmacogenomics and high throughput drug discoveryPhotopharmica (Holdings) Develops novel photosensitisers as products for medical use & has UnquotedLimited opened up new applications of topical photodynamic therapyProximagen Neuroscience plc Developing drugs for the treatment of neurodegenerative diseases QuotedSummit Corporation plc Using whole organism phenotypic screens for drug discovery and Quoted developmentSynairgen plc Developing drugs for respiratory diseases with a focus on asthma and Quoted chronic obstructive pulmonary disease (continued from table above) Company value Group Stake Fair Value of Group holding at: 31 Dec 07 31 Dec 07 31 Dec 07 31 Dec 06Company name £m % £m £m _____ _____ _____ _____Avacta Group plc 28.8 23.9% 6.9 10.5Green Chemicals plc 30.7 24.5% 7.5 0.4Ilika Technologies Limited 29.5 23.6% 7.0 5.7iQur Limited 23.3 17.7% 4.1 1.2Modern Water plc 53.0 23.0% 12.2 -Oxford Advanced Surfaces plc 76.5 15.7% 12.0 0.7Oxford Catalysts Group plc 58.0 16.7% 9.7 12.9Oxford NanoLabs Limited 27.8 41.6% 11.6 11.6Photopharmica (Holdings) Limited 26.0 49.9% 13.0 0.2Proximagen Neuroscience plc 23.1 23.5% 5.4 4.2Summit Corporation plc 49.6 8.1% 4.0 5.4Synairgen plc 11.9 29.6% 3.5 5.0 ALAN AUBREYChief Executive Officer 26 February 2008 CONSOLIDATED INCOME STATEMENTFor the year ended 31 December 2007 Note 2007 2006 £'m £'m _____ _____Revenue Change in fair value of equity investments 26.4 38.2 Gains on deemed disposal of subsidiaries 8.1 - Gains on disposal of equity investments 0.5 1.9 Dividends received - 0.1 Revenue from services 2.0 1.8 _____ _____ 37.0 42.0 _____ _____Administrative expenses Employee bonus costs (1.3) (0.3) Research and development costs (0.7) - Share based payment charge (0.3) - Other administrative expenses (6.9) (3.9) _____ _____ (9.2) (4.2) _____ _____ Operating profit 27.8 37.8Finance income - interest receivable 2.7 2.3 _____ _____Profit before taxation 30.5 40.1Taxation - - _____ _____Profit for the year 30.5 40.1 _____ _____Profit attributable to: Equity holders of the parent 30.5 40.1 Minority interest - - _____ _____ 30.5 40.1 _____ _____ Basic earnings per ordinary share (p) 2 12.25 16.84 _____ _____Diluted earnings per ordinary share (p) 2 12.25 16.81 _____ _____ CONSOLIDATED BALANCE SHEET As at 31 December 2007 2007 2006 Note £'m £'m _____ _____ASSETSNon-current assetsIntangible assets: Goodwill 18.7 18.7 Acquired intangible assets 0.3 0.5Property, plant and equipment 0.5 0.1Equity rights and related acquisition costs 20.2 20.3Equity investments 4 126.1 87.4Financial asset 1.1 1.1Investment in limited partnerships 1.0 0.3 _____ _____Total non-current assets 167.9 128.4 _____ _____Current assetsTrade and other receivables 2.1 2.2Cash and cash equivalents 46.0 51.3 _____ _____Total current assets 48.1 53.5 _____ _____Total assets 216.0 181.9 _____ _____EQUITY AND LIABILITIESEquity attributable to equity holders of the parentShare capital 5.0 4.9Share premium account 96.7 92.0Merger reserve 12.8 12.8Retained earnings 99.0 69.2 _____ _____Total shareholders' equity 213.5 178.9 _____ _____Minority interest in equity 0.3 0.3 _____ _____Total equity 213.8 179.2 _____ _____Non-current liabilitiesProvisions - 0.1 _____ _____Total equity and non-current liabilities 213.8 179.3 _____ _____Current liabilitiesTrade and other payables 2.2 2.6 _____ _____Total equity and liabilities 216.0 181.9 _____ _____ CONSOLIDATED CASH FLOW STATEMENT For the year ended 31 December 2007 2007 2006 £'m £'m _____ _____Operating activitiesProfit before taxation 30.5 40.1Adjusted for:Finance income - interest receivable (2.7) (2.3)Fair value movements in equity investments (26.4) (38.2)Depreciation of tangible non-current assets 0.1 -Amortisation of intangible non-current assets 0.2 0.2Profit on disposal of equity investments (0.5) (1.9)Gains on deemed disposal of subsidiaries (8.1) -Equity allocated to staff 1.3 2.1Share-based payment charge 0.3 -Changes in working capitalIncrease in trade and other receivables (0.3) (0.7)Decrease in trade and other payables and provisions (0.1) (2.6)Operating cash flowsDividends classified as investing activities cash flows - (0.1)Interest received 3.1 2.0 _____ _____Net cash outflow from operating activities (2.6) (1.4) _____ _____Investing activitiesPurchase of property, plant and equipment (0.1) -Purchase of equity investments (6.8) (8.5)Investment in Limited Partnership Funds (0.7) (0.2)Financial asset - 0.1Acquisition of subsidiaries net of cash acquired (1.7) (0.8)Proceeds from sale of equity investments 8.0 3.1Deemed disposal of subsidiaries net of cash disposed (1.6) -Dividend received - 0.1 _____ _____Net cash outflow from investing activities (2.9) (6.2) _____ _____Financing activitiesProceeds from issue of share capital 0.2 19.0 _____ _____Net increase in cash and cash equivalents (5.3) 11.4Cash and cash equivalents at the beginning of the year 51.3 39.9 _____ _____Cash and cash equivalents at the end of the year 46.0 51.3 _____ _____ NOTES BASIS OF PREPARATION The preliminary results for the year ended 31 December 2007 have been extractedfrom audited accounts which have not yet been delivered to the Registrar ofCompanies. The financial information set out in this announcement does notconstitute statutory accounts for the year ended 31 December 2007 or 31 December2006. The financial information for the year ended 31 December 2006 is derivedfrom the statutory accounts for that year. The reports of the auditors on thestatutory accounts for the years ended 31 December 2007 and 31 December 2006were (i) unqualified, (ii) did not include references to any matters to whichthe auditors drew attention by way of emphasis without qualifying their reports,and (iii) did not contain statements under section 237 (2) or (3) of theCompanies Act 1985. The statutory accounts for the year ended 31 December 2006have been delivered to the registrar, while the statutory accounts for the yearended 31 December 2007 will be delivered to the registrar following theCompany's Annual General Meeting. EARNINGS PER SHARE The basic and diluted profit per ordinary share is based on profits attributableto ordinary shareholders for the year of £30.5m (2006: £40.1m). The basicprofit per share is based on the weighted average number of ordinary shares of248,952,170 in issue during the year (2006: 238,155,846). The diluted profitper ordinary share in 2007 is based on the weighted average number of ordinaryshares plus the potentially dilutive options over ordinary shares, totalling248,952,170 (2006: 241,190,446). CONSOLIDATED STATEMENT OF CHANGES IN EQUITY Attributable to equity holders of the Company Share Share Merger Retained Other Total capital premium reserve earnings reserve £'m £'m £'m £'m £'m £'m _____ _____ _____ _____ _____ _____At 1 January 2006 4.6 73.3 12.8 29.1 - 119.8Consolidated profit for the year - - - 40.1 - 40.1Issue of share capital in the 0.3 18.7 - - - 19.0yearMinority interest acquired with - - - - - -subsidiary _____ _____ _____ _____ _____ _____At 1 January 2007 4.9 92.0 12.8 69.2 - 178.9Consolidated profit for the year - - - 30.5 - 30.5Pre acquisition reserves - - - (0.4) - (0.4)attributable to the GroupLiabilities acquired in excess - - - - (2.3) (2.3)of net interest in subsidiaryPartial disposal of subsidiary - - - (0.6) - (0.6)investments to minorityinterestsDisposal of subsidiary - - - - 2.3 2.3undertakingsIssue of share capital in the 0.1 4.7 - - - 4.8yearShare based payment charge - - - 0.3 - 0.3Minority interest acquired with - - - - - -subsidiary _____ _____ _____ _____ _____ _____At 31 December 2007 5.0 96.7 12.8 99.0 - 213.5 _____ _____ _____ _____ _____ _____ (Continued from table above) Minority interest Total Equity £'m £'m _____ _____At 1 January 2006 - 119.8Consolidated profit for the year - 40.1Issue of share capital in the year - 19.0Minority interest acquired with subsidiary 0.3 0.3 _____ _____At 1 January 2007 0.3 179.2Consolidated profit for the year - 30.5Pre acquisition reserves attributable to the - (0.4)GroupLiabilities acquired in excess of net - (2.3)interest in subsidiaryPartial disposal of subsidiary investments 0.6 -to minority interestsDisposal of subsidiary undertakings (0.9) 1.4Issue of share capital in the year - 4.8Share based payment charge - 0.3Minority interest acquired with subsidiary 0.3 0.3 _____ _____At 31 December 2007 0.3 213.8 _____ _____ EQUITY INVESTMENTS - DESIGNATED AS 'AT FAIR VALUE THROUGH PROFIT OR LOSS' Group Quoted spin Unquoted spin Other out companies out companies investments Total £'m £'m £'m £'m _____ _____ _____ _____ At 1 January 2006 24.6 18.3 1.4 44.3Investments during the year 0.7 7.8 - 8.5Reclassifications during the year 1.5 (1.5) - -Disposal during the year (0.6) (0.5) - (1.1)Change in fair value in the year 22.5 15.4 0.3 38.2Equity allocated to staff - (2.1) - (2.1)Adjustment arising on consolidation of Poseidon (0.4) (0.4)Water Ltd _____ _____ _____ _____At 1 January 2007 48.7 37.0 1.7 87.4Investments during the year 0.5 6.3 - 6.8Reclassifications during the year 2.3 (2.3) - -Reclassification of subsidiaries as equity 9.2 5.4 - 14.6investments during the yearChange in fair value in the year 13.8 12.5 0.1 26.4Equity allocated to staff - (1.4) (0.2) (1.6)Disposal during the year (7.5) - - (7.5) _____ _____ _____ _____At 31 December 2007 67.0 57.5 1.6 126.1 _____ _____ _____ _____ AVAILABILITY OF STATUTORY ACCOUNTS Copies of the full statutory accounts will be available from the registeredoffice at 24 Cornhill, London, EC3V 3ND from 31 March 2008 and will also beavailable on the Group's website at www.ipgroupplc.com. ANNUAL GENERAL MEETING The Annual General Meeting will be held at 3pm on 29 April 2008 at IP Group plc,24 Cornhill, London, EC3V 3ND. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Ip Group