Interim Results
IP2IPO Group PLC
08 September 2004
For Immediate Release 8 September 2004
IP2IPO Group plc
Interim results for the half year ended 30 June 2004
IP2IPO Group plc (AIM: IPO), the intellectual property company that
commercialises university technology, is pleased to announce its interim results
for the half year ended 30 June 2004.
Highlights
• Maiden pre-tax profits of £1.2 million (for the six month period to 30
June 2003: pre-tax loss of £292,000)
• Substantial increase in turnover at £379,000 (for the six month period to
30 June 2003: £39,000)
• Offshore Hydrocarbon Mapping, in March 2004, became the first company from
the IP2IPO portfolio to float, endorsing the Group's business model
• Investments in four, new spin out companies were made during the half
year, bringing to 17 the number of private companies in the IP2IPO portfolio
• Acquisition of Top Technology Ventures Limited, an investment manager of
early stage venture capital funds, on 30 June 2004 for a maximum
consideration of £2.4 million
• £2 million investment to acquire 20% of Techtran Group Limited, the
technology transfer company at the University of Leeds
• Net cash at 30 June 2004 of £37.3 million
Commenting on the results, Graham Richards, IP2IPO's Chairman, said: 'The first
half of 2004 has been successful for IP2IPO. For the remainder of the year we
will seek to build on this success by continuing to focus on driving value from
within our portfolio of spin out companies without relinquishing our commitment
to disciplined cost control.'
For more information please contact:
IP2IPO
David Norwood, Chief Executive Officer 020 7071 4348
Buchanan Communications
Mark Court, Mary-Jane Johnson 020 7466 5000
Chairman's half yearly statement
During the 6 months ended 30 June 2004, IP2IPO developed significantly.
In March 2004 Offshore Hydrocarbon Mapping plc ('OHM') became the first company
from the IP2IPO portfolio to float when it listed its shares on the Alternative
Investment Market of the London Stock Exchange plc. At that time, IP2IPO
disposed of 588,235 OHM shares to realise gross proceeds of £1 million. IP2IPO
continues to hold approximately 3 million OHM shares, representing 10.4% of
OHM's share capital. As at 30 June 2004, this holding was worth £7.1m. IP2IPO
was instrumental in the creation of OHM in June 2002, at which time IP2IPO
invested £150,000 in OHM and received a 26.3% stake in the company. The
successful flotation of OHM, some 21 months after its formation, is a major
milestone for IP2IPO.
As a result of making its first realisation from the disposal of shares in a
spin out company, and as a result also of growth in IP2IPO's income from the
provision of advisory services, operating profit for the 6 months ended 30 June
2004 was £440,000. Profit after taxation in the period was £1,202,000.
Your Company has continued to acquire interests in spin out companies with four
new investments added to the IP2IPO portfolio in the six month period to 30 June
2004. These additions include investments in the first two spin out companies
formed under IP2IPO's partnership with King's College London. As at 30 June
2004, IP2IPO had interests in 17 private companies formed as a result of its
long-term university partnerships. Five of these companies secured second round
finance during the period.
On 30 June 2004, IP2IPO acquired Top Technology Ventures Limited ('Top
Technology'), an investment management company of early stage venture capital
funds. The maximum consideration payable of £2.4 million is made up of a
combination of cash, shares and deferred cash payment. The acquisition is an
important strategic step for IP2IPO and will combine your Company's proven
ability to create new ventures based on world leading university intellectual
property and Top Technology's expertise in early stage investments.
Subsequent to the period end, IP2IPO invested £2 million to acquire 20% of the
share capital of Techtran Group Limited ('Techtran'). This is another
significant development for your Company. Techtran is a technology transfer
company that has a long-term technology commercialisation contract with the
University of Leeds, one of the UK's largest and best regarded research-led
universities. Under the terms of this contract, Techtran provides technology
commercialisation services to the University of Leeds and in return, Techtran
receives a significant (30%) interest in spin out companies and licences based
on intellectual property created at the University. At 30 June 2004, Techtran
had interests in 15 spin out companies.
The first half of 2004 has been successful for IP2IPO. For the remainder of the
year, your Company will seek to build on this success by continuing to focus on
driving value from within its portfolio of spin out companies without
relinquishing its commitment to disciplined cost control.
Graham Richards
Chairman
Consolidated Profit and Loss Account
Unaudited Unaudited Audited
six months six months 12 months
to 30 to 30 to 31
June June December
2004 2003 2003
Note £'000 £'000 £'000
Turnover 379 39 222
Administrative expenses
- Provision against fixed asset investments - - (109)
- Other (863) (418) (1,170)
- Total (863) (418) (1,279)
Surplus on disposal of fixed asset investments 924 - -
Operating profit (loss) 440 (379) (1,057)
Interest receivable and similar income 762 87 474
Profit (loss) on ordinary activities before taxation 1,202 (292) (583)
Tax on profit (loss) on ordinary activities - - -
Profit (loss) on ordinary activities after taxation 1,202 (292) (583)
Basic profit (loss) per ordinary share 2 2.96p (1.1p) (1.9p)
Diluted profit (loss) per ordinary share 2 2.86p (1.1p) (1.9p)
Consolidated Balance Sheet
Unaudited Unaudited Audited
at 30 at 30 at 31
June June December
2004 2003 2003
Note £'000 £'000 £'000
Fixed assets
Intangible fixed assets
- Goodwill 3 2,919 - -
- Other 14 - 12
Tangible fixed assets 59 33 27
Investments
- Equity rights 3 17,371 17,532 17,556
- Equity investments 3 7,379 3,771 5,804
24,750 21,303 23,360
27,742 21,336 23,399
Current assets
Debtors 501 75 170
Cash at bank and in hand 37,344 9,703 38,245
37,845 9,778 38,415
Creditors: Amounts falling due within one year (2,417) (67) (774)
Net current assets 35,428 9,711 37,641
Total assets less current liabilities 63,170 31,047 61,040
Creditors: Amounts falling due after more than one (383) - (383)
year
Provisions for liabilities and charges (128) - -
Net assets 62,659 31,047 60,657
Capital and reserves
Called up share capital 4,081 2,919 4,064
Share premium account 59,755 30,216 58,972
Profit and loss account (deficit) (1,177) (2,088) (2,379)
Total equity shareholders' funds 62,659 31,047 60,657
Consolidated Cash Flow Statement
Unaudited Unaudited Audited
six months six months 12 months
to 30 to 30 to 31
June June December
2004 2003 2003
Note £'000 £'000 £'000
Net cash outflow from operating activities 5 (620) (395) (708)
Returns on investments and servicing of finance
Interest received 762 87 474
Net cash inflow from returns on investment and
servicing of finance 762 87 474
Taxation - - -
Capital expenditure and financial investment
Purchase of intangible fixed assets (2) - (12)
Purchase of tangible fixed assets (3) - (5)
Purchase of fixed asset investments (1,353) (402) (1,818)
Sale of fixed asset investments 965 - -
Net cash outflow from capital expenditure and
financial investments (393) (402) (1,835)
Acquisitions
Purchase of subsidiary undertaking (880) - -
Net cash acquiried with subsidiary 230 - -
(650) - -
Net cash outflow before financing (901) (710) (2,069)
Financing
Issue of ordinary shares - 6,250 37,738
Share issue costs - (225) (1,812)
Net cash inflow from financing - 6,025 35,926
(Decrease) Increase in cash 5 (901) 5,315 33,857
1. Basis of preparation
The results for the half-year are unaudited. They have been prepared on the same
basis as the accounts for the year ended 31 December 2003. The financial
information in this interim announcement does not constitute statutory accounts
within the meaning of Section 240(5) of the Companies Act 1985.
The statutory accounts of IP2IPO Group plc for the year ended 31 December 2003
have been reported on by the company's auditors and have been delivered to the
Registrar of Companies. The report of the auditors was unqualified and did not
contain a statement under Section 237(2) or 272(3) of the Companies Act 1985.
2. Earnings per share calculation
The basic profit per share has been calculated by dividing the profit for the
period of £1,202,000 (for the period ended 30 June 2003: loss of £292,000; for
the year ended 31 December 2003: loss of £583,000) by the weighted average
number of shares of 40,638,910 in issue during the six month period to 30 June
2004 (for the six month period ended 30 June 2003: 26,038,012; for the year
ended 31 December 2003: 30,031,187).
The diluted profit per share has been calculated by dividing the profit for the
period of £1,202,000 by 41,991,935, the sum of the weighted average number of
shares in issue adjusted for the conversion of the dilutive potential shares,
weighted for the period they were outstanding. The diluted earnings per share
for the year ended 31 December 2003 and period ended 30 June 2003 are equal to
the basic earnings per share for these periods as IP2IPO Group plc recorded a
loss for these periods.
3. Intangibles
Goodwill of £2,919,000 had been recognised in respect of the acquisition of Top
Technology Ventures Limited on 30 June 2004, representing consideration of £2.4
million plus the net liabilities of that company at completion.
4. Fixed asset investments
Equity rights
University of
Oxford
chemistry Acqui-
department sition
equity rights costs Total
£'000 £'000 £'000
Cost
At 31 December 2003 17,256 354 17,610
Transfer to equity investments (175) - (175)
Additions - - -
At 30 June 2004 17,081 354 17,435
4. Fixed asset investments continued
University of
Oxford
chemistry Acqui-
department sition
equity rights costs Total
£'000 £'000 £'000
Aggregate amortisation of acquisition costs
At 31 December 2003 - (54) (54)
Charge for the period - (10) (10)
At 30 June 2004 - (64) (64)
Net book value
At 30 June 2004 17,081 290 17,371
At 31 December 2003 17,256 300 17,556
Equity investments
University University King's
of of South- College
Oxford ampton London Amaethon
spin outs spin outs spin outs Limited Other Total
£'000 £'000 £'000 £'000 £'000 £'000
Cost
At 31 December 2004 2,672 1,802 - 1,150 1,826 7,450
Investment in spin out 475 392 661 - - 1,528
companies
Assets acquired with Top - - - - 88 88
Technology
Disposals in spin out - (41) - - - (41)
companies
At 30 June 2004 3,147 2,153 661 1,150 1,914 9,025
Provision for impairment
At 31 December 2003 - - - - 1,646 1,646
Charge for the period - - - - - -
At 30 June 2004 - - - - 1,646 1,646
Net book value
At 30 June 2004 3,147 2,153 661 1,150 268 7,379
At 31 December 2003 2,672 1,802 - 1,150 180 5,804
4. Fixed asset investments continued
Disposals in spin out companies relates to the disposal of 588,235 shares in
Offshore Hydrocarbon Mapping plc, a spin out company from the University of
Southampton, on its admission to the Alternative Investment Market on 11 March
2004.
5. Notes to the cash flow statement
i. Net cash flow from operating activities
Unaudited Unaudited Audited
six months six months 12 months
to 30 to 30 to 31
June June December
2004 2003 2003
£'000 £'000 £'000
Operating profit (loss) 440 (379) (1,057)
Depreciation of tangible fixed assets 10 14 25
Amortisation of acquisition costs 10 9 20
Profit on disposal of fixed asset investments (924) - -
Increase in debtors and accrued income (240) (28) (123)
Increase (decrease) in creditors 84 (6) 318
Other non-cash movement - (5) -
Provision against fixed asset investments - - 109
Net cash flow from operating activities (620) (395) (708)
ii. Reconciliation of net cash flow to movement in net funds
Unaudited Unaudited Audited
six months six months 12 months
to 30 to 30 to 31
June June December
2004 2003 2003
£'000 £'000 £'000
Movement in cash in the year (901) 5,315 33,857
Changes in net funds resulting from cash flows (901) 5,315 33,857
Movement in net funds in the year (901) 5,315 33,857
Opening net funds 38,245 4,388 4,388
Closing net funds 37,344 9,703 38,245
Independent Review Report to IP2IPO Group plc
Introduction
We have been instructed by the company to review the financial information for
the six months ended 30 June 2004. We have read the other information contained
in the interim report and considered whether it contains any apparent
misstatements or material inconsistencies with the financial information.
Our report has been prepared in accordance with the terms of our engagement to
assist the company in meeting the requirements of the London Stock Exchange for
companies trading securities on the Alternative Investment Market and for no
other purpose. No person is entitled to rely on this report unless such a person
is a person entitled to rely upon this report by virtue of and for the purpose
of our terms of engagement or has been expressly authorised to do so by our
prior written consent. Save as above, we do not accept responsibility for this
report to any other person or for any other purpose and we hereby expressly
disclaim any and all such liability.
Directors' responsibilities
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by the directors. Where a company
is fully listed, the directors are responsible for preparing the interim report
in accordance with the Listing Rules of the Financial Services Authority which
require that the accounting policies and presentation applied to the interim
figures should be consistent with those applied in preparing the preceding
annual accounts except where any changes, and the reasons for them, are
disclosed. The directors of IP2IPO Group plc have voluntarily complied with this
requirement in preparing the interim report.
Review work performed
We conducted our review in accordance with guidance contained in Bulletin 1999/4
issued by the Auditing Practices Board for use in the United Kingdom by auditors
of fully listed companies. A review consists principally of making enquiries of
group management and applying analytical procedures to the financial information
and underlying financial data and based thereon, assessing whether the
accounting policies and presentation have been consistently applied unless
otherwise disclosed. A review excludes audit procedures such as tests of
controls and verification of assets, liabilities and transactions. It is
substantially less in scope than an audit performed in accordance with United
Kingdom Auditing Standards and therefore provides a lower level of assurance
than an audit. Accordingly we do not express an audit opinion on the financial
information.
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 30 June 2004.
BDO STOY HAYWARD LLP
Chartered Accountants
Southampton
31August 2004
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