IP Group — Priority companies making progress in 2022

IP Group (LSE: IPO)

Last close As at 22/02/2024

GBP0.50

−0.40 (−0.79%)

Market capitalisation

GBP519m

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Research: TMT

IP Group — Priority companies making progress in 2022

IP Group’s NAV per share came in at 132.9p at end-2022, only 2% below the end-June 2022 level. The NAV decline during 2022 was primarily due to the £428.5m loss from listed holdings (before foreign exchange (FX), mostly Oxford Nanopore Technologies, ONT), while private holdings posted gains before FX of c £101.4m (or 5.8% of opening NAV). Excluding ONT, IP Group posted a £25.2m profit in 2022. Most notably, its four major cleantech holdings posted a valuation uplift of c £120m in FY22. IP Group now trades at a 58% discount to end-2022 NAV which, together with a strengthened balance sheet, largely up-to-date portfolio marks and several potential portfolio catalysts, provides a certain degree of downside protection.

Milosz Papst

Written by

Milosz Papst

Director, Financials

TMT

IP Group

Priority companies making progress in 2022

FY22 results

Listed venture capital

5 April 2023

Price

55.8p

Market cap

£578m

Net cash (£m) at end-2022

160.1

Shares in issue

1.04bn

Code

IPO

Primary exchange

LSE

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

(13.3)

(8.8)

(7.8)

Rel (local)

(9.5)

(8.8)

(37.0)

52-week high/low

93.5p

52.9p

Business description

IP Group helps to create, build and support IP-based companies internationally. The group focuses on companies that meaningfully contribute to regenerative (renewable), healthier (life sciences) and tech-enriched (deep tech) futures. The group has an international footprint, with investment platforms in Australia, New Zealand, the United States and China, as well as the UK.

Next events

IP Group flagship event

May 2023

AGM and investor update

June 2023

Analysts

Milosz Papst

+44 (0)20 3077 5700

Dan Ridsdale

+44 (0)20 3077 5700

IP Group is a research client of Edison Investment Research Limited

IP Group’s NAV per share came in at 132.9p at end-2022, only 2% below the end-June 2022 level. The NAV decline during 2022 was primarily due to the £428.5m loss from listed holdings (before foreign exchange (FX), mostly Oxford Nanopore Technologies, ONT), while private holdings posted gains before FX of c £101.4m (or 5.8% of opening NAV). Excluding ONT, IP Group posted a £25.2m profit in 2022. Most notably, its four major cleantech holdings posted a valuation uplift of c £120m in FY22. IP Group now trades at a 58% discount to end-2022 NAV which, together with a strengthened balance sheet, largely up-to-date portfolio marks and several potential portfolio catalysts, provides a certain degree of downside protection.

Period
end

Net cash*
(£m)

Portfolio fair
value** (£m)

NAV
(£m)

NAV/share
(p)

(Discount)/premium
to NAV (%)***

06/21

249.4

1,246

1,440

135.4

(14)

12/21

270.1

1,508

1,738

167.0

(26)

06/22

191.6

1,266

1,414

136.7

(49)

12/22

160.1

1,259

1,376

132.9

(58)

Note: *Includes restricted cash but not funds held on behalf of Enterprise Investment Scheme/Venture Capital Trust investors. **Includes US platform and other limited partnership interests. ***Based on share price at respective period end.

Why consider investing in IP Group now?

IP Group is a leading investor in impactful, early-stage private companies with a differentiated deal origination network (which includes, among others, close ties to leading universities in the UK and abroad) and strong sector expertise. Its diverse portfolio of 95 innovative companies (top 20 accounting for 76% of NAV), spread across life sciences, deep tech and cleantech themes, matured during the last 15 years and is now available at a wide discount to NAV. Major potential near- to mid-term catalysts across IP Group’s portfolio include: (1) progress in clinical trials of 14 portfolio companies (eight of which have already started trials); (2) strong revenue growth, mostly across its deep tech holdings but also some life sciences companies; and (3) major technological and funding progress of its major cleantech holdings (eg First Light Fusion and Hysata).

Market values private portfolio at a c 70%+ discount

IP Group’s discount is wider than the 26% at end-2021, and likely reflects pressure on venture capital (VC) deal volumes and valuations from macroeconomic headwinds. That said, we estimate that (after accounting for the 15% ytd fall in ONT’s share price), IP Group’s market capitalisation implies a 70%+ discount to its end-2022 gross private portfolio value (excluding cash and deposits). This may be partly due to investor anxiety over the ability of listed VC investment companies to provide continued funding to their early-stage portfolios amid muted VC exit volumes. However, we note that IP Group’s gross cash and deposits stood at £241.5m (or 19% of total portfolio value) at end-2022. This is further assisted by the £60m undrawn credit and its quoted portfolio, valued at £228.7m at end-2022. IP Group’s portfolio holdings raised a total £1.0bn in 2022 (of which 9% was from IP Group), less than the £2.4bn in 2021 but similar to 2020 and above earlier years. Therefore, IP Group’s management considers most of the portfolio as being well funded.

Performance: NAV slightly down in H222

IP Group reported an NAV per share of 132.9p at end-2022, down 20% year-on-year in total return (TR) terms but only 2% below the end-June 2022 level. This decline reversed some of the 2021 NAV TR of 35%, bringing its end-2020 to end-2022 return to c 8%; see Exhibit 1.

Exhibit 1: IP Group’s NAV per share (p)

Source: IP Group data

The NAV fall in 2022 was primarily driven by IP Group’s listed holdings (with a £428.5m loss before FX impact), most of which came from ONT (£369.7m, see Exhibit 2), which is IP Group’s largest holding (16% of end-2022 total portfolio value). ONT successfully completed its initial public offering (IPO) in September 2021, allowing IP Group to realise £84m on its investment by selling around one-fifth of its stake. This brought IP Group’s total partial realisation from ONT to £106m, already more than its total investment of £77m. IP Group held a c 10% stake in the company, valued at £205.5m at end-2022, which (despite the 65% share price drop in 2022 to 246.5p vs the IPO price of 425p) implies a healthy gross multiple on invested capital of c 4.0x (of which 1.4x is realised).

ONT reported on 21 March 2023 that its Life Science Research Tools (LSRT) revenue in FY22 stood at £146.8m, which is within its FY22 guidance of £145–160m issued in March 2022 (even if at the lower end of the range). This implies 30% year-on-year underlying growth (excluding the FX impact and revenues from the Emirati Genome Program and COVID-19 sequencing). IP Group’s management highlighted that most of ONT’s peers reduced their sales growth guidance for FY22 to below 10% or withdrew it altogether throughout last year. ONT also reported an LSRT gross margin of 56.3% (vs 53.8% in FY21) and an adjusted EBITDA loss of £78.6m (vs £57.7m in FY21). Its cash, cash equivalents and other liquid investments amounted to £558.0m at end-2022 compared to £618.2m at end-2021. ONT’s management now guides to LSRT revenue growth of 16–30% on a constant currency basis in FY23, or more than 30% on an underlying basis both in FY23 and in the medium term. LSRT gross margin guidance now stands at more than 60% in FY23 and more than 65% in the medium term. The company continues to target adjusted EBITDA break-even by FY26.

Major cleantech holdings with c £120m revaluation gains

Meanwhile, several of IP Group’s top private holdings from the cleantech sector saw valuation uplifts during FY22:

First Light Fusion (9% of end-2022 portfolio value) posted a £57.3m (or 100%) uplift to end-2021 valuation (based on recent comparatives and third-party valuation) driven by the achievement of nuclear fusion using the ‘projectile fusion’ method, which was externally validated by the UK Atomic Energy Authority. We note that First Light Fusion used the same underlying physics as the National Ignition Facility (which recently achieved a fusion gain for the first time), though taking a more cost-efficient approach (see our recent EdisonTV interview for details).

Oxbotica (5%), a developer of software to enable every vehicle to become autonomous, recorded a £45.4m (or c 280%) uplift following its US$140m series C round in December 2022. The company will use the proceeds for its global expansion and to accelerate deployment in sectors such as agriculture, airports, energy, goods delivery, mining and shared passenger transportation. Oxbotica’s management expects its revenue to grow exponentially in the coming years, driven in particular by off-public highway industrial applications, while in the area of on-public highway mobility it focuses on long-term strategic programmes with customers ahead of the implementation of major shuttle and goods delivery programmes by governments. It already generates revenue from products for data-centric customers.

Hysata (c 1%), a developer of a novel capillary-fed electrolyser (device that uses electricity to split water into hydrogen and oxygen) from IP Group’s Australia and New Zealand platform, was revalued by £8.4m on the back of an oversubscribed c £24.3m series A round in August 2022 (with £5.4m committed by IP Group’s Kiko Ventures). Hysata will use the proceeds to develop a pilot manufacturing facility to deliver a low-cost green hydrogen (lowest across the global industry, according to the company).

Nexeon (c 1%), a developer of materials for lithium-ion battery anodes, was also revalued by £8.4m (or c 74%) following the second close of its funding round in August 2022.

IP Group’s cleantech vertical is now branded as Kiko Ventures, its fully owned platform launched in 2022. Its team exhibits a solid track record with a gross internal rate of return (IRR) of over 30% and gross realisation proceeds of £150m since the establishment of IP Group’s cleantech theme. Kiko Ventures seeks to position itself as the UK’s leading cleantech VC player and has recently become the founding member of the ‘Cleantech for UK’ initiative, backed, among others, by Breakthrough Energy founded by Bill Gates.

Exhibit 2: Major contributors to IP Group’s portfolio revaluation in FY22 (£m)

Source: IP Group data. Note: Share in end-2022 total portfolio value shown in brackets in the X-axis labels where available.

Istesso commencing Phase IIb trial for rheumatoid arthritis

IP Group’s life sciences exposure (excluding ONT) reported a net portfolio loss of £41.8m in FY22 (c 10% of end-2021 fair value), driven primarily by:

Centessa Pharmaceuticals – one of the quoted holdings; its share price declined by c 72% in 2022, translating into a £14.8m valuation loss for IP Group.

Diurnal – delisted and sold to Neurocrine for 27.5p per share (50% below end-2021 valuation) amid pricing and reimbursement setbacks for its largest potential product, resulting in a £13.7m loss for IP Group in 2022.

Hinge Health (4% of end-2022 portfolio value) – one of IP Group’s three unicorns and a provider of digital solutions for chronic musculoskeletal pain, which was marked down by 27% compared to its US$6bn valuation in a funding round in October 2021, translating into a £9.9m valuation loss for IP Group. This was despite continued significant growth in revenues and an expanding customer base, according to IP Group’s management. The downward revision (based on an external valuation) was made alongside several of IP Group’s other late-stage investments to reflect the less favourable valuation environment (see below).

While the fair value of Istesso (IP Group’s second-largest life sciences holding after ONT, making up 8% of end-2022 portfolio value) remained stable in 2022, we note that it has commenced a Phase IIb trial of MBS2320 for rheumatoid arthritis. Moreover, it received fast-track and orphan drug designations for the treatment of idiopathic pulmonary fibrosis. IP Group announced on 30 January 2023 that it was aware of exploratory discussions around a potential business combination involving Istesso, which have been terminated.

Similarly, while the fair value of Crescendo Biologics remained stable year-on-year, we note that the company signed a US$750m collaboration with BioNTech to combine its Humabody technology with BioNTech’s mRNA platform in the creation of novel therapeutic agents. As part of the agreement, Crescendo received an upfront payment of US$40m (in the form of cash, equity and research funding) and will be eligible to receive development, regulatory and commercial milestone payments up to a total of more than US$750m, plus tiered royalties on global net sales.

Deep tech portfolio adjusted to reflect softer market valuations

IP Group’s deep tech portfolio was marked down by £18.0m (or 8% of end-2021 fair value) including an £8.1m (or 33%) downward revaluation of SaltPay (a provider of mobile payments with integrated loyalty schemes). These fair value adjustments mostly reflect the softer valuations of late-stage VC businesses across the market. On top of this, Import.io (an operator of a web data integration platform) was marked down due to a shift in market conditions that severely affected its commercial position, while the share price of Mirriad (a company that uses artificial intelligence, AI, to place advertising into video content) fell by c 83% in 2022. Still, IP Group’s management highlighted that several holdings have displayed solid operating performance (with double-digit revenue growth in FY22), including Featurespace (AI-based predictive analytics for fraud, money laundering and cybercrime prevention), Garrison Technology (anti-malware and anti-phishing solutions for enterprise cyber defences) and Ultraleap (a company building touchless hand tracking and haptic technologies for virtual and augmented reality experiences).

Focus on driving value from high-conviction plays

IP Group remains positioned as a leading investor in impactful, early-stage projects with a differentiated deal origination network and strong sector expertise. It aims to focus over the next three years on driving returns from its more developed holdings and devote resources to its ‘priority companies’, which it believes will underpin its self-sustaining model. In this context, we note that while the company’s portfolio consisted of 95 companies at end-2022, its top 20 holdings represented 76% of NAV.

IP Group’s key portfolio milestones/catalysts this year include:

Clinical trial progress – 14 portfolio companies are currently conducting or are making financial preparations to commence trials, several of which should release key data in 2023, including Akamis Bio and Mission Therapeutics. Management highlighted last year that nine companies in the life sciences portfolio should have major data releases over the next two years, which on top of those mentioned above include Istesso, Artios Pharma, Microbiotica, Oxular, Pulmocide and Enterprise Therapeutics.

Revenue growth – especially in the deep tech portfolio where several companies are already generating material revenue: Featurespace and SaltPay at above £20m pa, Garrison Technology above £10m pa, with a further five holdings at an early revenue (£1–10m) stage. Top-line momentum is also a potential key catalyst for some life sciences companies (eg ONT and Hinge Health).

IP Group’s cleantech portfolio may benefit from further technological progress, significant funding rounds and new investments. Two holdings are particularly worth noting here: First Light Fusion (which will pursue another funding round) and Hysata (seeking to de-risk its new hydrogen electrolysis technology).

Current share price implies a c 70+% discount to private portfolio fair value

IP Group now trades at a c 58% discount to end-2022 NAV versus 26% and 21% at end-2021 and end-2020, respectively. This likely reflects the recent pressure on VC deal volumes and valuations from macroeconomic headwinds. That said, we estimate that (after accounting for the c 15% year to date decline in ONT’s share price and applying a 10% discount, which IP Group may have to accept when selling a larger ONT stake) IP Group’s current market capitalisation implies a c 73% discount to its gross private portfolio value (excluding cash and deposits) at end-2022 (and only captures c 41% of the end-2022 carrying value of its top 20 holdings excluding ONT).

We believe that, while a further decline in NAV cannot be ruled out, there are several factors that provide a certain degree of downside protection in terms of IP Group’s net asset value:

IP Group’s listed holdings, which made up c 18% of its total portfolio value (including 16% in ONT, see Exhibit 3), have already experienced a significant de-rating alongside broader public markets (growth stocks in particular) since end-2021.

Another 23% of portfolio value is attributable to companies that closed their last funding round during 2022, some even in the tougher conditions in H222 (eg Oxbotica, Nexeon, Hysata). Importantly, only 10% of these were down rounds, while 62% were carried out at higher valuations and 28% at stable valuations versus the previous funding round. IP Group’s management highlighted during the investor call that this pattern has been consistent across both H122 and H222.

A further 36% of IP Group’s portfolio comes from nine of its top 20 holdings, which were valued externally at end-2022, with IP Group applying fair values at or below the mid-point of the valuation range provided by external valuers.

Holdings that are valued based on future market/commercial events are held at a significant discount to reflect execution risk.

Exhibit 3: IP Group’s total investment portfolio breakdown at end-2022

Exhibit 4: IP Group’s total investment portfolio breakdown at end-2021

Source: IP Group data. Note: *Adjusted recent financing price based on past performance

Source: IP Group data. Note: *Adjusted recent financing price based on past performance

Exhibit 3: IP Group’s total investment portfolio breakdown at end-2022

Source: IP Group data. Note: *Adjusted recent financing price based on past performance

Exhibit 4: IP Group’s total investment portfolio breakdown at end-2021

Source: IP Group data. Note: *Adjusted recent financing price based on past performance

IP Group noted that the fair value of several later-stage holdings was marked down at end-2022, for example in the case of Hinge Health (see above) and some of IP Group’s deep tech holdings (as median public revenue multiples fell from 18.6x to 5.4x, according to IP Group’s management). Meanwhile, we think that early-stage VC valuations seem to have been generally more resilient across the market because: (1) they were less inflated in 2020–21 than late-stage VC valuations (especially pre-IPO candidates); (2) they are less often valued based on revenue multiples versus public peers than late-stage VC; and 3) they are further away from a VC exit, thus having more time to realise their valuation potential. PitchBook even suggested recently that non-traditional VC investors (corporates, financial institutions including investment banks, private equity (PE) firms, sovereign wealth and pension funds, hedge funds, etc) may turn to earlier-stage VC companies (several years from an exit) to shield themselves from near-term volatility.

Furthermore, IP Group’s management highlighted that UK VC valuations have not been inflated to the same extent as US VC and remain 70% below US levels in seed and series A rounds, based on PitchBook data. Overall, IP Group’s management highlighted that the auditor reiterated its opinion that the company’s valuation approach is ‘mildly cautious’. Management hosted a valuation deep-dive event on 23 March 2023.

New debt providing an additional liquidity buffer

Another factor that may be contributing to IP Group’s wide discount to NAV is investor anxiety over the ability of listed VC investment companies to provide continued funding to their portfolio companies (and the risk of potential dilution if they do not participate in the next funding rounds). Here, we note that IP Group has built a sizeable liquidity buffer by closing a £120m private debt issue to London-based investors (primarily Phoenix Group) in August 2022, as well as reducing capital allocations to its portfolio.

The recently raised debt bears an average fixed interest rate of 5.25% pa and will mature in three equal tranches in 2027, 2028 and 2029. Its main covenants include a minimum cash balance of £25m at any time, equity of at least £500m and maximum gross debt less restricted cash at 25% of total equity (as at the end-June and end-December). The first £60m tranche was drawn in December 2022 and the second will be drawn in June 2023. Around £15m from the first tranche was used for early repayment of the short-dated portion of IP Group’s debt from the European Investment Bank (EIB), with the remaining £22m of the EIB debt to be repaid progressively to January 2026. As a result, its gross cash and deposits reached £241.5m (or 19% of total portfolio value) at end-2022 (see Exhibit 5), assisted further by potential liquidity from its listed holdings (valued at £228.7m at end-2022, with no lock-up on the ONT shares) and the £60m of undrawn debt. Moreover, the company had £48.2m of deferred consideration at end-2022, mostly from WaveOptics (£28.8m second tranche of exit proceeds due in H123), as well as Enterprise Therapeutics (£12.5m) and Kuur Therapeutics (£5.6m).

Exhibit 5: IP Group’s cash flow bridge 2022

Source: IP Group data

IP Group’s confidence in its liquidity position is illustrated by its final dividend declaration of 0.76p per share, bringing the total FY22 payout to 1.26p, up from 1.20p in 2021. The distribution represents c 50% of its realisation proceeds, which compares to c 20% in 2021. While management highlighted that it has not set a fixed proportion of exit proceeds to be distributed to shareholders, it flagged that the 2021 ratio is a quite good reference point going forward (assuming a more normalised exit environment).

We believe that a solid safety margin in terms of liquidity is important given the current tougher exit environment, with Q422 European VC deal volumes down by 54% y-o-y to €12.8bn, according to PitchBook. This is also reflected in IP Group’s realisations of just £28.1m in 2022 (vs £213.4m and £191.0m in 2021 and 2020, respectively), mostly coming from Diurnal (£13.7m, see above) and Re:Infer (£8.6m, on which IP Group realised an IRR of 29.0%). Having said that, we note that the Q422 European VC deal volumes represented only an 8% decline from Q420 and that ‘landmark’ deals are still being completed, as illustrated for instance by Oxbotica’s latest funding round (see above).

In terms of capital allocations, IP Group invested £93.5m in FY22 (vs £106.8m in FY21, see Exhibit 6) across 46 new and existing investments. IP Group’s management highlighted that the company made several new investments, three of which were explicitly mentioned in the results release:

GripAble (series A round in H122)an Imperial College-originated company developing digitally enabled rehabilitation programmes and devices for people with neurological and musculoskeletal conditions.

Kynos Therapeutics (seed round in H122) an Edinburgh University spinout developing novel drugs against kynurenine 3-monooxygenase, a pivotal enzyme in the mediation of autoimmunity and cancer.

Abliva (£2.4m in H122) a Stockholm-listed biotech company developing novel agents for the treatment of rare mitochondrial diseases. Abliva’s lead drug, KL1333, has been approved by the US Food and Drug Administration to enter a potentially pivotal study in primary mitochondrial disease.

Exhibit 6: IP Group’s investments and realisations (£m)

Source: IP Group data

Major follow-on investments in 2022 include Istesso (£10.0m), Featurespace (£10.0m), Bramble Energy (£9.5m) and Hysata (£5.1m). Overall, its portfolio companies raised £1.0bn in funding in 2022 (of which 9% was from IP Group), less than the £2.4bn in 2021 but similar to 2020 and above earlier years. Therefore, IP Group’s management considers most of the portfolio as being well funded, although it did not provide detailed information on the cash runway across its portfolio, which we think could further reassure investors that IP Group’s portfolio companies have a large cash cushion. That said, management highlighted during the recent valuation deep-dive presentation that most of the top 20 holdings that need to raise funding still have a cash runway towards the back-end of 2024. Management highlighted during the investor call that the investment pace over the next one to two years should be similar to 2021–22. It has earmarked £200m over the next five years for Kiko Ventures alone.

In the context of IP Group’s prospective liquidity at holding level, we also note that its administrative expenses (excluding the carried interest plan charge and share-based payments) stood at £27.4m (down from £33.2m in 2021) and were partially covered by IP Group’s other income of £7.1m, which includes fund management fees, as well as licensing and patent income. IP Group’s assets under management grew from £575m at end-2021 to c £697m at end-2022, though IP Group’s other income declined from the high base in FY21 of £13.6m.

Exhibit 7: Financial summary

Year end 31 December

£m

FY17

FY18

FY19

FY20

FY21

FY22

INCOME STATEMENT

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

Portfolio returns

97.4

(46.1)

(44.6)

228.0

495.3

(309.1)

Fee income

6.1

9.9

8.6

6.2

13.6

7.1

Revenue

 

 

103.5

(36.2)

(36.0)

234.2

508.9

(302.0)

Cost of sales

-

-

-

-

-

-

Gross Profit

103.5

(36.2)

(36.0)

234.2

508.9

(302.0)

Carried interest charge

(1.3)

1.1

1.3

(14.3)

(17.2)

(12.0)

Operating costs

(37.6)

(51.7)

(39.4)

(29.4)

(33.1)

(27.4)

Investment and acquisition costs

(9.1)

-

-

-

-

-

Normalised operating profit

 

 

55.5

(86.8)

(74.1)

190.5

458.6

(341.4)

Exceptionals

-

(203.2)

-

-

-

-

Share-based payments

(2.4)

(1.9)

(2.3)

(2.9)

(2.6)

(2.9)

Reported operating profit

53.1

(291.9)

(76.4)

187.6

456.0

(344.3)

Net Interest

0.3

(1.8)

(2.4)

(1.5)

(1.4)

0.8

One-off items (incl FX)

-

-

-

-

-

-

Profit Before Tax (norm)

 

 

55.8

(88.6)

(76.5)

189.0

457.2

(340.6)

Profit Before Tax (reported)

 

 

53.4

(293.7)

(78.8)

186.1

454.6

(343.5)

Reported tax

-

(0.1)

(0.1)

(0.7)

(5.3)

(1.0)

Profit After Tax (norm)

55.8

(88.6)

(76.6)

188.3

451.9

(339.6)

Profit After Tax (reported)

53.4

(293.8)

(78.9)

185.4

449.3

(344.5)

Minority interests

(3.7)

0.1

3.4

-

(1.1)

-

Net income (normalised)

52.1

(88.5)

(73.2)

188.3

450.8

(339.6)

Net income (reported)

49.7

(293.7)

(75.5)

185.4

448.2

(344.5)

Basic average number of shares outstanding (m)

704

1,059

1,059

1,062

1,060

1,034

EPS - basic normalised (p)

 

 

7.4

(8.4)

(6.9)

17.7

42.5

(32.8)

EPS - diluted normalised (p)

 

 

7.4

(8.4)

(6.9)

17.6

41.9

(32.8)

EPS - basic reported (p)

 

 

7.1

(27.7)

(7.1)

17.5

42.3

(33.3)

Dividend (p)

-

-

-

-

1.48

1.22

Revenue growth (%)

(135.0)

(0.6)

(750.6)

117.3

0.0

Gross Margin (%)

100.0

100.0

100.0

100.0

100.0

100.0

Normalised Operating Margin (%)

53.6

239.8

205.8

81.3

90.1

113.0

Net overheads (operating costs less fee income)/NAV (%)

(2.1)

(3.4)

(2.7)

(1.7)

(1.1)

(1.5)

BALANCE SHEET

Fixed Assets

 

 

1,325.1

1,147.7

1,068.5

1,186.1

1,539.5

1,266.2

Intangible Assets

212.7

0.7

0.4

0.4

0.4

0.4

Tangible Assets

1.6

1.5

1.1

0.8

0.3

0.4

Investments

1,099.8

1,128.2

1,045.6

1,162.7

1,445.9

1,165.8

Investments in Associates

11.0

17.3

21.4

22.2

92.9

99.6

Current Assets

 

 

334.6

225.6

227.2

289.2

339.8

291.6

Stocks

8.3

6.6

32.3

18.9

17.9

50.1

Cash & equivalents

231.3

129.0

121.9

127.6

105.7

88.7

Deposits

95.0

90.0

73.0

142.7

216.2

152.8

Current Liabilities

 

 

(26.0)

(31.9)

(41.4)

(26.4)

(34.1)

(23.2)

Creditors

(19.7)

(16.5)

(26.0)

(11.0)

(18.7)

(16.9)

Lease liabilities

-

-

-

-

-

-

Short term borrowings

(6.3)

(15.4)

(15.4)

(15.4)

(15.4)

(6.3)

Long Term Liabilities

 

 

(125.2)

(123.2)

(112.4)

(117.0)

(107.1)

(158.5)

EIB loans

(97.7)

(82.4)

(67.1)

(51.9)

(36.4)

(75.1)

Other borrowings

(13.1)

(23.0)

(26.0)

(32.9)

(18.7)

(19.5)

Lease liabilities

-

-

-

-

-

-

Other long term liabilities

(14.4)

(17.8)

(19.3)

(32.2)

(52.0)

(63.9)

Net Assets

 

 

1,508.5

1,218.2

1,141.9

1,331.9

1,738.1

1,376.1

Minority interests

4.0

3.9

0.5

0.5

(3.1)

(5.6)

Shareholders' equity

 

 

1,504.5

1,214.3

1,141.4

1,331.4

1,735.0

1,370.5

Hard NAV per share

 

 

122.5

115.0

107.8

125.3

167.0

132.9

CASH FLOW

Op Cash Flow before WC and tax

60.3

(75.7)

(72.6)

191.9

460.2

(340.8)

Revaluation of investments held at fair value through P&L

(94.0)

46.1

44.6

(228.0)

(495.4)

309.1

Working capital

10.2

7.8

14.1

(5.9)

30.0

(3.5)

Exceptional & other

1.1

(3.1)

(3.4)

14.5

15.2

9.7

Tax

-

-

-

-

-

-

Net operating cash flow

 

 

(22.4)

(24.9)

(17.3)

(27.5)

10.0

(25.5)

Capex

(1.6)

(0.6)

(0.7)

-

(0.2)

(0.3)

Acquisitions/disposals

106.4

(4.8)

(9.3)

(4.5)

(10.1)

(4.6)

Equity financing

109.8

(100.9)

(63.0)

(68.6)

(131.6)

(97.4)

Dividends

-

-

-

-

(15.0)

(12.3)

Other

9.3

29.0

83.2

106.3

124.9

121.1

Net Cash Flow

201.5

(102.2)

(7.1)

5.7

(22.0)

(19.0)

Opening net debt/(cash)

 

 

(97.4)

(222.3)

(121.2)

(112.4)

(203.0)

(270.1)

FX

0.2

(0.1)

0.0

0.0

0.1

0.0

Other non-cash movements

(76.8)

1.2

(1.7)

84.9

89.0

(91.0)

Closing net debt/(cash)

 

 

(222.3)

(121.2)

(112.4)

(203.0)

(270.1)

(160.1)

Source: Company accounts

General disclaimer and copyright

This report has been commissioned by IP Group and prepared and issued by Edison, in consideration of a fee payable by IP Group. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2023 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

General disclaimer and copyright

This report has been commissioned by IP Group and prepared and issued by Edison, in consideration of a fee payable by IP Group. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2023 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

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