14th Mar 2006 07:04
IP2IPO Group PLC14 March 2006 For immediate release 14 March 2006 IP2IPO Group plc Preliminary results for the year ended 31 December 2005 IP2IPO Group plc (AIM: IPO), the intellectual property commercialisationcompany, today announces its audited preliminary results for the year ended 31December 2005. Highlights • Value of shares in spin-outs at 31 December 2005: £44 million (2004: £36 million) • Six university partners at year end (2004: four) • 37 Spin-out companies at 31 December 2005 (2004: 20) • Successful flotation of two portfolio companies during 2005 (2004: three) • Realisation from the sale of shares in a spin out company of £0.8m (2004: £0.8m) • Profit after tax of £5.6m (2004: £21.0m) • Cash balance at 31 December 2005 of £40 million (2004: £35 million) • Acquisition of Techtran Group Limited in January 2005 • Successful launch of Modern Biosciences • 25 Year partnership signed with The University of Bristol Post year end highlights • 25 Year partnership signed with The University of Surrey • Modern Biosciences entered into a Memorandum of Understanding with the University of Manchester • Partnership with the University of York extended to span the entire university Commenting on the Group's preliminary results, Alan Aubrey, Chief ExecutiveOfficer of IP2IPO, said: "2005 has been a year of expansion for IP2IPO. At 31 December 2005 the Group hadsix university partnerships and 37 spin-out businesses, of which five are quotedon AIM. The total value of the Group's equity stakes now exceeds £44m. During2005 the Group has expanded beyond its existing university partnership businesswith the formation of Modern Biosciences which has established a promisingpipeline of opportunities and an experienced management team. "The first quarter of 2006 has seen IP2IPO enter into a 25 yearcommercialisation partnership with the University of Surrey and an extension ofIP2IPO's University of York partnership to cover the entire University. Inaddition, Modern Biosciences has entered into a Memorandum of Understanding withthe University of Manchester allowing Modern Biosciences to invest inlife-science based IP generated by the university." For more information contact: IP2IPO (www.ip2ipo.com) 020 7489 5210Alan Aubrey, Chief Executive Officer Buchanan CommunicationsTim Anderson, Mark Court, Mary-Jane Johnson 020 7466 5000 IP2IPO Group plcChairman's statement I am pleased to report that your company has made considerable progress in theyear ended 31 December 2005. University partnerships IP2IPO began 2005 with four university partners. By the end of 2005, the Grouphad six partnerships, and since the year end your company has entered into itsseventh long term partnership agreement. In January 2005, the Group completed the acquisition of Techtran Group Limited.The acquisition brought a number of benefits to the Group, including anadditional long term partnership with the University of Leeds, an excitingportfolio of ten spin out companies and an exceptional management team. Theintegration of Techtran with IP2IPO has been extremely successful, with DrAlison Fielding appointed as Director of Technology Transfer and Alan Aubreybecoming Chief Executive Officer of IP2IPO with effect from 1 January 2006. In December 2005 the Group entered into a long term partnership with theUniversity of Bristol. Subsequent to year end the Group announced its first spinout investment and is working on a promising pipeline of further spin outopportunities. Since 31st December 2005, IP2IPO has entered into a partnership with theUniversity of Surrey. This is IP2IPO's seventh university partnership and thethird IP2IPO university partner from the SETSquared group of universities.Surrey enjoys a strong reputation for innovation and enterprise. Since 31December 2005 the Group has announced an extension of its partnership with theUniversity of York to the cover the whole university. IP2IPO will continue to assess further opportunities and to enter into long termpartnerships with leading research universities on a selective basis where itidentifies institutions with sufficient breadth and depth of research and theright innovative culture to build a diversified portfolio of high growth spinout companies over the lifetime of a partnership. Modern Biosciences In May 2005 the Group raised £13.7m through a placing. This enabled the Group tolaunch Modern Biosciences, a company formed to in-licence life scienceintellectual property on a selective basis not only from IP2IPO's seven existinguniversity partnerships but any other university or research group. ModernBiosciences will develop further the intellectual property and then eitherout-licence the IP to industry or form a spin out company. This enables IP2IPOto generate value from intellectual property which either addresses too narrow amarket and/or is at too early a stage at the time that we identify it to supportthe formation of a company. The progress of Modern Biosciences to date has been encouraging with thedevelopment of a promising pipeline of opportunities, and I am delighted toreport that Dr Ian Wilding has been appointed to the Board as the ChiefScientific Officer. Dr Wilding is recognised globally as an innovator in earlydrug development with extensive experience of scientific and commercialsolutions to problem issues in early drug development. Subsequent to year end Modern Biosciences has signed a Memorandum ofUnderstanding with the University of Manchester. Under the terms of theagreement, Modern Biosciences will work with the University of Manchester toidentify and assess drug related investment opportunities IP2IPO Group plcChairman's statement (Continued) arising from research carried out across the University. Modern Biosciences willprovide investment for suitable opportunities and also take on responsibilityfor the development and commercialisation of the IP. Board changes In January 2006 I assumed the role of Executive Chairman. Professor GrahamRichards remains on the Board of IP2IPO as Senior Non-Executive Director. AlanAubrey has been appointed as Chief Executive Officer of the Group, and I wouldlike to welcome Alan to his new role and thank him for his contribution to theGroup to date. I am also delighted to welcome Stephen Brooke to the Board asDirector of Business Development. Stephen has played an important role in thestrategy and direction of the Group to date, and I wish him well in his newposition. Outlook for 2006 I am confident that 2006 will prove to be another good year in the developmentof IP2IPO. The pipeline of spin-outs looks very promising. Potentialopportunities include technologies as diverse as diagnostic tests fordebilitating and currently incurable diseases, to novel fuel technologies forefficient and clean energy production. UK universities continue to be a source of world-leading scientific innovationand achievement, but in the past have sometimes floundered in the exploitationof those ideas. I believe that the IP2IPO business model can create first classbusinesses from UK science, for the benefit of our university partners, thewider community and our shareholders. I would like to conclude by thanking our shareholders, our University partners,the mangers of our portfolio companies and our staff for their support in whathas been an important year in the growth and development of IP2IPO. DAVID NORWOODExecutive Chairman14 March 2006 IP2IPO Group plcChief Executive's Statement The year ended 31 December 2005 has proven to be a year of expansion for IP2IPO.With healthy cash reserves, a promising portfolio of 37 spin-out companies andan encouraging pipeline of new spin-out opportunities, your company is extremelywell positioned. Results for the year ended 31 December 2005 During the year ended 31 December 2005 the Group made a profit after taxation of£5,605,000 (2004: £21,046,000). This profit, in the most part, can beattributed to net fair value gains of £5,737,000 (2004: £24,014,000). Gross fairvalue gains and losses are shown in the following table: 2005 2004 £'000 £'000Fair value gains 14,107 24,249Fair value losses (8,370) (235) 5,737 24,014 There were a number of encouraging fair value gains during the year. The IPO ofProximagen Neurosciences plc resulted in a gain of £5,990,000. In October 2005the University of Leeds spin-out GETECH Group plc floated on AIM valuing theGroup's stake at £1,983,000 on an initial investment of £480,000. In 2005 weannounced a multi-million dollar collaboration between ReOx Limited and a majorbio-pharmaceutical company. In addition, IP2IPO received a dividend of £209,000from ReOx in the year. These factors led to a fair value gain of £2,300,000.Your company also realised £762,000 from the acquisition of Toumaz TechnologyLimited by Nanoscience Inc and its subsequent sale of Nanoscience considerationshares. The fall in the share price of Offshore Hydrocarbon Mapping plc ('OHM plc') ledto a full year loss on IP2IPO's holding of OHM plc stock of £4,700,000. Since 31December 2005 the OHM plc share price has recovered. It is in the nature ofIP2IPO's business that its portfolio companies, as well as having breakthroughsand successes, will also have setbacks from time to time and that when thesecompanies are quoted and IP2IPO still has a material shareholding the impact onthe Group will be greater. Over time as the number of quoted companiesincreases, individual gains and losses will have a reduced proportional effecton total portfolio performance. Portfolio At the beginning of the year the Group had a portfolio of 20 companies. Duringthe year ended 31 December 2005 the Group added 17 spin-out businesses to itsportfolio taking the total number of spin-outs to 37. The movement in the numberof spin-outs is set out below: Unquoted spin-outs Quoted spin-outs (number) (number)At 1 January 2005 17 3New spin-out businesses 17 -Companies floated during the year (2) 2At 31 December 2005 32 5 At 31 December 2005, your Company had 32 unquoted investments. These 32investments are recorded on the balance sheet at fair value and total£18,252,000 (2004: £8,415,000). The Group invested a total of £4,209,000 (2004:£3,728,000) in spin-out companies during the year. IP2IPO Group plcChief Executive's Statement (Continued) The Group expects to establish approximately 10 to 15 new spin out companies peryear from its existing university partnerships. Three companies in the portfolio raised a total of £6.6 million in privateequity finance from third parties during the year and subsequent to year endPerpetuum Limited announced the completion of a £2.2 million financing. Cash Your Company's cash position remains strong. Cash at the end of the year stoodat £39,947,000 (2004: £34,801,000). Your Company has outstanding commitments toinvest significant sums in university spin out companies under the terms of itsuniversity partnerships. As at 31 December 2005, these commitments totalled£19,570,000. Since the year end the Company has entered into a partnership withthe University of Surrey and extended the terms of its partnership with theUniversity of York to cover the entire university. These two new arrangementshave resulted in a combined cash commitment of up to £10,000,000. In addition afurther commitment of £1,155,000 is payable in deferred consideration, due as aresult of the acquisitions during 2005. The acquisition of Techtran in January2005 resulted in net cash outflows of approximately £5,400,000. IP2IPO continues to control costs carefully. In the year ended 31 December 2005administrative expenses amounted to £4,529,000 (2004: £6,594,000). IP2IPO hascontinued to generate income from the management of venture capital fundsthrough its subsidiary, Top Technology Ventures Ltd, and revenues through theprovision of advisory and private placement services to portfolio companies. TheGroup generated operating revenues during the year of £1,682,000 (2004:£1,183,000) and received interest income during the period of £1,744,000 (2004:£1,616,000). Outlook for 2006 The Group has recorded significant unrealised gains to date, and we will seek tounlock this value through disposals of equity stakes when prudent to do so. TheGroup will continue to seek to control costs where possible, and cover operatingcosts with revenues from advisory services and interest on cash balances. Your company has made progress to date in 2006. I am confident in both thestrength of the current portfolio and pipeline of new intellectual propertyopportunities available to IP2IPO and the ability of the IP2IPO business modeland management team to turn these opportunities into value for the Group. ALAN AUBREYChief Executive Officer 14 March 2006 IP2IPO Group plcCONSOLIDATED INCOME STATEMENTFor the year ended 31 December 2005 Note 2005 2004 £'000 £'000 Turnover 1,682 1,183 Equity investments Fair value gains 14,107 24,249 Fair value losses (8,370) (235) Surplus on disposal of equity investments 762 790 Dividends 209 - 6,708 24,804 Administrative expenses Accrual for employee bonuses (1,174) (4,202) Other administrative expenses (3,355) (2,392) (4,529) (6,594) Operating profit 3,861 19,393 Finance income - interest receivable 1,744 1,616 Profit before taxation 5,605 21,009 Taxation - 37 Profit attributable to equity holders of the parent 3 5,605 21,046 4 12.58 51.61 Basic earnings per ordinary shareDiluted earnings per ordinary share 4 12.27 49.90 CONSOLIDATED BALANCE SHEETAs at 31 December 2005 2005 2004 Note £'000 £'000ASSETSNon-current assetsProperty, plant and equipment 91 55Intangible assets: Goodwill 18,403 2,091 Acquired intangible assets 605 757 Investment in patents 14 15Equity rights and related contract costs 20,202 20,170Equity investments 44,255 35,536Financial asset 1,337 -Investment in limited partnerships 84 87Total non-current assets 84,991 58,711 Current assetsTrade and other receivables 1,957 2,271Cash and cash equivalents 39,947 34,801Total current assets 41,904 37,072 Total assets 126,895 95,783 EQUITY AND LIABILITIESEquity attributable to equity holdersCalled up share capital 4,575 4,129Share premium account 73,294 59,605Merger reserve 12,797 783Retained earnings 29,113 23,264Total equity 119,779 87,781Non-current liabilitiesTrade and other payables 3,564 3,534Provisions 539 1,123Total equity and non-current liabilities 123,882 92,438 Current liabilitiesTrade and other payables 3,013 3,345Total equity and liabilities 126,895 95,783 CONSOLIDATED CASHFLOW STATEMENTFor the year ended 31 December 2005 2005 2004 £'000 £'000Operating activitiesOperating profit 3,861 19,393Depreciation of property, plant and equipment 37 35Fair value movements in equity investments (5,737) (24,014)Amortisation and impairment of intangible non-current assets 216 96Decrease / (Increase) in trade and other receivables 262 (736)(Decrease) / Increase in trade and other payables and provisions (1,689) 3,689Profit on disposal of equity investments (762) (790)Dividends (209) -Profit on disposal of property, plant and equipment - 6Share-based payment charge 282 300Net cash from operating activities (3,739) (2,021) Investing activitiesPurchase of property, plant and equipment (65) (34)Purchase of equity investments (4,209) (3,728)Financial asset (1,400) -Purchase of subsidiary undertaking (3,545) (911)Net cash acquired with subsidiary 1,838 230Proceeds from sale of equity investments 762 965Dividends 209 -Interest received 1,346 1,374Net cash used in investing activities (5,064) (2,104) Financing activitiesProceeds from issue of share capital 13,949 681Net increase / (decrease) in cash and cash equivalents 5,146 (3,444)Cash and cash equivalents at the beginning of the period 34,801 38,245Cash and cash equivalents at the end of the period 39,947 34,801 IP2IPO Group plcNotes 1. The preliminary results for the year ended 31 December 2005 have beenextracted from audited accounts which have not yet been delivered to theRegistrar of Companies. The financial information set out in this announcementdoes not constitute statutory accounts for the year ended 31 December 2005 or 31December 2004. The financial information for the year ended 31 December 2005 isderived from the statutory accounts for that year, except that comparativeinformation has been restated as a result of the adoption of InternationalFinancial Reporting Standards (IFRS). The report of the auditors on thestatutory accounts for the year ended 31 December 2005 was unqualified and didnot contain a statement under Section 237 of the Companies Act 1985. Thestatutory accounts for the year ended 31 December 2004 have been delivered tothe registrar, while the statutory accounts for the year ended 31 December 2005will be delivered to the registrar following the company's Annual GeneralMeeting. This financial information has been prepared on the basis of theaccounting policies set out in the interim financial statements dated 30 June2005. 2. Availability of statutory accounts Copies of this announcement and the full statutory accounts will be available inthe week commencing 27 March 2006 from the registered office at Warwick Court, 5Paternoster Square, London EC4M 7BP, and from the offices of the Group'snominated advisor, KBC Peel Hunt, 111 Old Broad Street, London, EC2N 1PH. 3. Basic and diluted profit per ordinary share The basic and diluted profit (loss) per ordinary share is based on profitsattributable to ordinary shareholders for the year of £5,605,000 (2004:£21,046,000). The basic profit (loss) per share is based on the weightedaverage number of ordinary shares of 44,562,701 in issue during the year (200440,777,614). The diluted profit (loss) per ordinary share in 2005 is based onthe weighted average number of ordinary shares plus the potentially dilutiveoptions over ordinary shares of 45,676,327 (2004: 42,171,821). Consolidated statement of changes in shareholders' equity Total Share Retained Merger Share Equity capital earnings reserve premium £'000 £'000 £'000 £'000 £'000At 1 January 2004 (restated) 64,954 4,064 1,918 - 58,972 Consolidated profit for the year to 31 December 21,046 - 21,046 - -2004 Employee share option charge in the year to 31 300 - 300 - -Dec 2004 Issue of share capital in the year to 31 December 1,481 65 - 783 6332004 At 31 December 2004 (restated) 87,781 4,129 23,264 783 59,605 Consolidated profit for the year to 31 December 5,605 - 5,605 - -2005 Employee share option charge in the year to 31 282 - 282 - -Dec 2005 Pre-acquisition reserves attributable to the (38) - (38) - -Group Issue of share capital in the year to 31 December 26,149 446 - 12,014 13,6892005 At 31 December 2005 119,779 4,575 29,113 12,797 73,294 5. Notice of AGM The Annual General Meeting will be held at 3pm on 25 April 2006 at BuchananCommunications, 45 Moorfields, London EC2Y 9AE. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Ip Group