IP Group limps through year with small fair value increase

Intellectual property-based business developer IP Group announced its annual financial results for the year to 31 December on Tuesday, with an overall net increase in the fair value of its portfolio, excluding net investment, of £6.5m - weakening from the £86.2m improvement in 2015.

The FTSE 250 company said it saw a strong second half portfolio fair value increase of £31.4m, which followed the £24.9m reduction in the first half.

Its portfolio held a fair value of £614.0m at year-end, compared to £552.2m at the start of the period.

Capital provided to portfolio companies and projects during the year was £69.7m, down from £115.9m, and portfolio cash realisations were £14.7m during the period, substantially stronger than the £0.6m reported in the prior year.

The group's portfolio companies managed to raise £230m of new capital during the year, with Oxford Nanopore a highlight as it completed a £100m private financing.

Diurnal was another highlight for the board, reporting positive headline data from the European Infacort Phase III pivotal study.

Looking at the books, IP Group’s net assets reduced to £768.7m from £781.9m during the year, and its hard net asset value softened to £706.5m from £714.3m.

Its return on hard NAV was a negative £7.6m, swinging from a positive £84.0m, and the group made a loss for the year of £14.8m, compared to 2015’s profit of £75.1m.

Gross cash and deposits fell to £112.3m by year-end, from £178.8m.

“2016 was another productive year for the group that saw our portfolio companies record impressive commercial progress and raise a total of approximately £230m,” said chief executive Alan Aubrey.

“The first half of the year saw major commercial developments in our key assets across all four of the sectors in which we operate; Healthcare, Technology, Cleantech, Biotech and we recorded successful exits from three companies.

“That strong operational performance continued in the second half of the year which also saw significant fundraisings from three of our largest portfolio companies as well as the acquisition of Parkwalk Advisors.”

Aubrey said the board believed the fundamentals of the business remained strong, with the group well-capitalised with a robust balance sheet, and a portfolio well diversified with a broad range of early to mature businesses across its four sectors.

“Geographically, we also have a developing operation in the US, a healthy pipeline of new opportunities and our most valuable portfolio company holdings are making excellent commercial progress.

“All of these factors combine to ensure that the group remains well positioned for the future and give us continued confidence for this year and beyond.”