IP Group Plc Annual Report 2023

FY2023 Annual Report · IP Group Plc

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FULL YEAR RESULTS – 13TH MARCH 2024

For a future
made possible
by science.

Disclaimer.

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relation thereto nor does it constitute a recommendation
regarding the securities of the Company. No person must
construe the information contained in this presentation
as legal, business, tax or investment advice. Investors and
prospective investors in the securities of the Company
are required to make their own independent investigation
and appraisal of the business and financial condition of
the Company and the nature of the securities, and
consult his/her own independent counsel, business
advisor, tax advisor, investment advisor or any other
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investment or any other matters pertaining to the
Company and the securities of the Company.

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as at the date of this presentation. The distribution of this
presentation shall under no circumstances imply that
there shall not be a change in the Company’s affairs
since the date of this presentation or that the information
contained in this presentation is correct as of any date
subsequent to the date of this presentation.

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or affiliate of the Company as to the accuracy or
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to its accuracy or completeness or as a promise or
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that may be based on any information contained in this
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contained in this presentation must not be relied upon as
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to be a profit forecast. This presentation may contain
certain forward-looking statements, beliefs or opinions
with respect of the financial condition and business
operations of the Company as well as certain plans and
objectives of the Company. By their nature, forward-
looking statements involve risk and uncertainty, because
they depend on circumstances and events that may or
may not occur in the future. Past performance of the
Company cannot be relied on as a guide to future
performance, and any actual results and developments
may differ materially from those expressed in or implied
by such forward-looking statements. The Company can
give no assurance that such expectations will prove to
have been correct and the Company therefore cautions
any person not to place undue reliance on these
forward-looking statements which speak only as at
the date of this presentation.

Contents.

Overview

Maturing
portfolio with
multiple
inflection points

Financial
results

Summary
and Q&A

Speakers.

Dr Sam Williams

Greg Smith.
CEO

David Baynes.
CFOO

Dr Sam Williams.
Managing Partner,
Life Sciences

Paul Barrett.
Founder, CEO & Director
at Hysata

01
Overview

Full Year Overview.

Maturing portfolio with multiple
near-term inflection points.

Financial strength maintained
during challenging markets.

Continued commitment
to shareholder returns.

Portfolio entering a milestone
rich window

Sector specialists with investment
focused on highest growth
opportunities

Geographic focus on UK and Aus,
decisive action on US & China

Group & portfolio well-funded

Committed to regular cash returns
from exits

Gross cash £227m

NAV per share of 114.8p

IR activity more than doubled

Further £20m buyback underway

£0.7bn.

Total portfolio
capital raised

(13%).

FY23 return on
NAV per share

£75m.

Cash returned to
shareholders
since 2021

IP Group: industry pioneers.

Pioneered the model and
catalysed an industry.

UK’s most active investor
in science and innovation
companies.

Focused portfolio set
to deliver.

Investment themes and value drivers.

Healthier
future.

Multiple clinical trial
outcomes

Tech-enriched
future.

Strong revenue growth

Enabling widespread
adoption of AI

Regenerative
future.

Significant fundraisings

New pipeline

High opportunity markets.

Healthier
future.

Big Pharma looking for investment opportunities
• $20bn+ p.a. pharma revenues at risk due to ‘patent cliff’1
• $1.4tn Biopharma M&A Firepower2

Market drivers..

Tech-enriched
future.

The digital transformation is the most pervasive trend shaping our world
• $40bn fraud detection and prevention market by 20253
• Semiconductor memory market $103bn in 2022, projected to grow to $160bn+ by 20304

Regenerative
future.

Accelerating transition towards clean energy
• Green hydrogen: $1.7tn investment in electrolysers needed by 20505
• Autonomous vehicle software market to double by 2030 to $80bn6

1.
2.

Evaluate Pharma Outlook to 2028
EY Biopharma Firepower Report

3.
4.

Markets and Markets
Sky Quest.com

“Carbonomics – The clean hydrogen revolution”, Goldman Sachs

5.
6. McKinsey

02
Maturing portfolio
with multiple
inflection points

Healthier
Future.

Entering a milestone-rich window.

THERAPEUTICS
PORTFOLIO

IP GROUP
VALUE £m

COMPANY

ONCOLOGY

INFLAMMATION

OTHER

17.4

19.6

9.4

5.3

7.6

16.1

113.8

15.8

4.0

19.2

5.0

15.7

1.6

*Timing reflects current best estimate of clinical readouts and is subject to change
1. Based on a disclosed trial start date in 2024 we estimate trial completion in 2H 2025
2. Based on a disclosure in the media we estimate first batch of data to come in mid-2025
3. Phase 2b interim data for SerpinPC and Phase 1 interim data for ORX750 is estimated in Q4 2024
4. Phase 2/3 interim data for KL1333 is estimated in 2H 2024

2024

Phase 1/2

Phase 2b

Phase 1

Phase 2b

Phase 2/3

2025

Phase 2

Phase 1/2

Phase 1b

Phase 2a

Phase 3

Phase 2a

From disease modification to
disease resolution.

Phase 2b data for leramistat (MBS2320) in rheumatoid arthritis, a $25bn1 market,
on target; in 1H24

FDA fast-track and orphan drug designation for the treatment of idiopathic
pulmonary fibrosis (IPF), a $4bn2 market and condition of high unmet need

IPF phase 2; results expected 2025

IP Group provided £15m, committing £25m in total, fully funding both trials

Note: As of 31 December 2023
% holding on an undiluted basis.

1.
2.

Based on Berenberg DrugBank analysis and GlobalData
Based on Citeline data

£113.8m.
IPG Value

56.5%.
IPG %

Tech-enriched
Future.

AI and Machine Learning Opportunity.

Digital
transformation.

Leading predictive analytics for fraud
and cybercrime prevention.

Applied AI solution identifies abnormal transactions to automatically evaluate
financial crime risk

50bn events processed each year, protecting 500m consumers from risk

£34.4m revenues in 2022, growing significantly above market rate

Customers include blue-chip financial institutions such as HSBC, Worldpay
and NatWest

Recurring revenues representing c.80%

£73.0m.
IPG Value

20.1%.
IPG %

Our job is to make the
world a safer place to
transact.
Martina King
CEO

Note: As of 31 December 2023
% holding on an undiluted basis.

Regenerative
Future.

Redefining the economics of
green hydrogen.

Green hydrogen is expected to supply 10%-15% of all energy in a net-zero
global economy by 2050.

Highly efficient electrolysers enable economically viable green hydrogen

Hysata has developed a unique, patented electrolyser with proven 95% system
efficiency versus the best incumbents at 75%

Strong market pull and company on track to deliver commercial scale systems with key
customers in near future

Deep experience in the team across electrolysers and high-volume manufacturing

Disruptive product proposition underpinned by low capex, minimal EPC and design
for mass manufacturability for hyperscaling

03
Financial results
Strong balance sheet
with well-funded portfolio

Summary financials.

Gross Cash.

Net Asset Value (NAV).
£1,190m (FY22 £1,376m)

Return on NAV.

£227m

(FY22 £241.5m)

114.8pps

(FY22 132.9pps)

(13%)

(FY22 (20%))

Share Buyback
Announced.

£20m

(FY22 nil)

We continue to navigate carefully through
difficult markets. With £227m gross cash and
only 13% of our portfolio needing to raise money
in 2024, we are well-positioned for an
improvement in investor appetite.

David Baynes
CFOO

Drivers of private portfolio fair value changes.

£55m

(£27m)

(£22m)

(£11m)

(£8m)

(£116m)
Delayed funding

Down rounds

Market-based
adjustments

Company-specific
impacts (net)

Up rounds

Results: Balance sheet - net assets.

Portfolio

Net Cash

Other net liabilities

NAV
£1.4b

£1,259m

£160m

(£43m)
2
FY 2022

NAV
£1.2b

£1,165m

£92m
(£66m)
1
FY 2023

Other net liabilities

Net Cash

(6.4)p

8.9p

Remaining portfolio

26.9p

37.6p

Other top 20

114.8p
NAV per
share

16.7p

11.0p

7.0p

6.8p

6.3p

Total portfolio composition and concentration.

Portfolio by sector:

Portfolio concentration:

Other

10%

Life Sciences

33%

Top 40 by value

14%

Deeptech

20%

Platform
investments

£1.2bn.
Total

24%

Cleantech

15%

76%

Top 20 by value

The Group remains well funded.

£241.5m

£38.6m

(£13.0m)

(£22.5m)

(£0.6m)

£226.9m

(£73.2m)

£56.1m

Gross

Debt

Net

Opening

Closing

241.5

(81.4)

160.1

226.9

(135.2)

91.7

Opening gross

Investment

Debt & interest

Realisations

Dividends paid

Overheads

WC/other

Closing gross

And our portfolio remains well funded.

Portfolio
funding
profile.

Companies >£4m
value representing
>90% of equity and
debt investments

41%

2025

2027

2026

10%

Trade to profitability

Our portfolio.
For the larger companies in the portfolio:

35%

35%
funded to expected profitability

Only 13%
need to raise before the end of
2024

2024 H2

2024 H1

Over 50%
2025 or later

Portfolio valuation approach.

Primary
Approach

Description

Proportion of NAV

t
u
p
n

t
e
k
r
a
m

f
o
e
e
r
g
e
d
n
o
d
e
s
a
b

Quoted market prices

Bid price at valuation date

Funding transaction

Last funding round price, without adjustment

17%

30%

Adjusted financing

Valuation based primarily on recent financing price, adjusted upwards
(5 companies) or downwards (14 companies) based on positive or
negative performance since last priced financing

26%

Future market/
commercial events

Near-term event, typically a funding round or exit which has
documented terms but has not completed at the valuation date

Revenue multiples

Estimate of company Enterprise Value based on actual or forecast
revenue and a revenue multiple

Discounted Cashflow
(DCF) Models

Estimate based on cashflow projections, probability and risk-weighted
to the valuation date

11%

e
c
n
e
r
e
f
e
r
p

f
o
r
e
d
r
o

a
c
p
y
T

Debt.

FY22 private debt
placing totalling

£120m
at 5.25%
fixed interest

Drawn down in
two tranches:

1. £60m 2022
2. £60m 2023

1.
2.
3.

Continued commitment to shareholder returns.

Committed to regular
cash returns from
exits

Cash returns in the
form of share
buybacks when the
share price discount
exceeds 20%

Further £20m
buyback underway

£75m.

Cash returned to
shareholders since
2021

04
Summary
For a future made
possible by science

s
t
s
y
a
t
a
c
4
2
0
2

Phase 2b
readout in Q2

Potential
Phase 1/2 data
by year-end

Ongoing
commercial
rollout

Phase 3
progress and
safety readouts

Revenue
growth

Funding
round

Healthier
future.

Tech-enriched
future.

Regenerative
future.

Focused, with significant inflection points ahead.

Maturing portfolio with multiple
near-term inflection points.

Financial strength maintained
during challenging markets.

Continued commitment to
shareholder returns.

Q&A

05
Appendices

1 | Summary of strategy.

Accelerating the impact of
science for a better future.

A future enhanced by the impact of transformative businesses
we have identified, backed and grown as long-term partners.

Have an impact
on the world that
counts.

Develop our unique
insight, expertise
and access.

Accelerate value
creation.

Build a truly
distinctive
reputation.

Be a home for
exceptional
talent.

Deliver class-leading internal processes, services and controls.

2 | Impact is in our DNA.

IMPACT AT OUR CORE

GROUP LEVEL IMPACT

PORTFOLIO LEVEL IMPACT

Impact on our
communities.

We actively work with
local community
groups to increase
access to skills and
opportunities for all

Impact is a
strategic driver
for IP Group.

Impact is one of our
five strategic pillars
and is a fundamental
component of our
business model and
corporate strategy

Tech-enriched
future.

Regenerative
future.

Healthier
future.

We back deeptech
companies and
future computing
solutions, that enable
the digital economy,
and generate
prosperity for all

We invest in science,
addressing the
global climate
challenge, and back
innovators and
pioneers, creating
revolutionary climate
technology solutions

We invest in
breakthrough
therapeutics, which
focus on cure and
prevention rather
than only treating
symptoms

We are investing
today in science,
addressing the
world’s greatest
unmet challenges

By the numbers.
£1.8bn1

Backing science-based
businesses

500+

companies backed across
cleantech, life sciences and
deeptech

10k+

jobs created by the companies
we have backed

Note: The use by IP Group plc of any MSCI ESG research llc or its affiliates (“MSCI”) data, and the use of MSCI logos, trademarks, service marks or index names herein, do not constitute a sponsorship, endorsement, recommendation,
or promotion of IP Group plc by MSCI. MSCI services and data are the property of MSCI or its information providers, and are provided ‘as-is’ and without warranty. MSCI names and logos are trademarks or service marks of MSCI.
1.

£1.2bn NAV + £650m 3rd party AUM as of 31 December 2023.

3 | Board.

Sir Douglas Flint
Non-executive Chairman
Previously Group Chairman of HSBC,
spent 15 years as HSBC’s Group Finance
Director, joining from KPMG where he was a
partner.

Dr Elaine Sullivan
Non-executive Director
27 years’ international pharmaceutical
industry experience including Eli Lilly and
AstraZeneca.

Aedhmar Hynes
Non-executive Director
Background in communications advising
brands through digital transformation and
technology disruption. Ranked among the
‘PR Week’ 50 most powerful
communications professionals in the
world.

Greg Smith
Chief Executive Officer
Decade as Group CFO driving strategy,
scale and geographic expansion. Deep
experience in investment appraisal, capital
and resource allocation.
Previously KPMG and $3bn fund of hedge
funds.

Heejae Chae
Non-executive Director
Experienced public company director.
Former CEO of AIM-listed Scapa Group plc,
a global supplier of products for
healthcare and industrial markets.

Anita Kidgell
Non-executive Director
25 years of pharmaceutical experience.
Head of Corporate Strategy at GSK leading
strategic initiatives in China, ESG,
geopolitics, integrations and demergers.

David Baynes
Chief Financial and Operating Officer
Finance and venture background, long
track record of working successfully with
the Boards of investee companies
Co-founder Fusion IP plc.; bought by IP
Group.

Dr Caroline Brown
Non-executive Director
Background in corporate finance, advising
global corporations and governments.
Experience in managing early stage
companies in energy and tech sectors.

Angela Leach
Company Secretary and
Group Legal Counsel
Background in corporate, commercial and
IP law.
Previously CMS Cameron McKenna and
Memery Crystal.

4 | Executive Committee.

Greg Smith
Chief Executive Officer
See bio on previous page.

David Baynes
Chief Financial and Operating Officer
See bio on previous page.

Dr Sam Williams
Managing Partner, Life Sciences
20 years experience in biotech, both as
equity analyst and entrepreneur.
Co-founder: Istesso
Board member: Pulmocide Ltd, Diurnal Group
plc, Psioxus Ltd and Microbiotica Limited.

Moray Wright
CEO Parkwalk Advisors
20 years experience with corporate and
financial institutions and sits on the board of
several Parkwalk companies.
Previously: Hoare Govett, JP Morgan, Lazard
and Mirabaud.

Dr Mark Reilly
Managing Partner, Technology
Background in software, web, optics, and
electronics. Previously Remarkable
Innovation, a technical due diligence
company with a Fortune 500 and national
government clients.

Liz Vaughan-Adams
Director of Communications
Background in crisis management, M&A,
IPOs, fund raisings, media relations, CSR and
digital strategies.

Anthony York
Group People Director
Proven capability of developing and leading
high-performing teams. Specialising in
development of both HR and Reward
strategies that directly support commercial
growth objectives.

Angela Leach
Company Secretary and
Group Legal Counsel
See bio on previous page.

Chris Glasson
Group Finance Director
Chartered accountant with 15 years+
experience in finance.
Previously: Deloitte, Tesco, The Carphone
Warehouse.

Joyce Xie
Managing Director, Global Capital
International career in investment
management and investment banking.
Previously: HSBC investment banking,
portfolio management.

5 | Shareholder Register (Above 2% Holders).

Shareholder

Railways Pension Scheme

Lombard Odier

BlackRock

Vanguard

Baillie Gifford

Schroder Investment Management

Imperial College

abrdn

Lansdowne Partners

Border to Coast

Legal & General Investment Management

Telstra Super

*Source: RD:IR database as at 29 February 2024 and TR1 filings

% holding

15.7%

7.4%

4.7%

4.5%

4.2%

3.9%

2.9%

2.7%

2.6%

2.4%

2.3%

6 | Subsector focus and example holdings.

Understanding
disease

Reprogramming
cells

Reconditioning
tissue

Redirecting behaviour
to reduce risk

Applied AI

Next generation
networks

Human-machine
interface

Future compute

Mobility and transport

Clean power
generation

Heating and cooling

Carbon free fuel

Healthier
future.

Tech-enriched
future.

Regenerative
future.

7 | Top 10 holdings and fair value movement 2023.

£173.6m

£113.8m

Healthier Future

Regenerative Future

Tech-Enriched Future

FV mvmt

£73.0m

£70.0m

£65.7m

£64.9m

£46.5m

£3.1m

£8.8m

(£31.9m)

£34.0m

£31.6m

£31.0m

£20.9m

£0.0m

(£0.2m)

(£19.6m)

(£6.9m)

Oxford Nanopore
Technologies plc

Istesso Limited

Featurespace
Limited

Hysata Pty Ltd Oxa Autonomy

Limited

(£49.6m)

First Light
Fusion Limited

Hinge Health, Inc.

Garrison
Technology
Limited

Ultraleap
Holdings Limited

Bramble
Energy Limited

Fair value movements include both realised and unrealised movements and FX

Visionary ventures
for a future made
possible by science.

2nd Floor, 3 Pancras Square,
King’s Cross,
London, N1C 4AG

Tel: +44 (0) 20 7444 0050

Web: www.ipgroupplc.com