IP GROUP PLC
ANNUAL REPORT & ACCOUNTS FOR
THE YEAR ENDED 31 DECEMBER 2024
REGISTRATION NUMBER: 04204490
STOCK CODE: IPO
CONTENTS
.
BUSINESS OVERVIEW
Highlights
01
At a glance
03
STRATEGIC REPORT
Chair’s statement
05
Business model
07
Market overview
08
CEO review
10
Strategic progress
14
Managing Partner’s
17
portfolio review
CFOO review
21
Key performance indicators
26
Meaningful impact
28
Task Force on Climate-related
32
Financial Disclosures
Risk management
38
Working with the Group’s
50
stakeholders
GOVERNANCE
Governance at a glance
59
Board of Directors
61
Corporate governance framework 64
Corporate governance statement
65
Nomination Committee report
72
Directors’ Remuneration report
78
Audit and Risk Committee report
101
Directors’ report
106
Statement of Directors’
108
responsibilities
OUR FINANCIALS
Independent auditor’s report
109
Consolidated statement of
117
comprehensive income
Consolidated statement of
118
financial position
Notes to the consolidated
121
financial statements
Company balance sheet
160
Notes to the Company
162
financial statements
Company information
IBC
At IP Group, we understand science.
We understand its impact today and its potential to
shape the future.
With more than 20 years’ experience evolving great
ideas into world-changing businesses, we also
understand that progress takes patience. That is
why we choose partners with purpose, who, like us,
are committed to impacting the world’s greatest
unmet needs.
Together, we accelerate the impact of science to
transform ideas into impact, at scale. We see a
future transformed by human ingenuity. And we
look to make it happen by spotting the opportunities
others miss.
We are one of the most active investors in university
and other research-based companies in the world,
with a proven track record in backing and nurturing
science and technology-based businesses to deliver
impact and returns. Since the Group was founded,
IP Group and Parkwalk Advisors have backed over
500 companies whose compelling ideas, products
and services will meaningfully contribute to a
healthier, tech-enriched and regenerative future.
We aim to accelerate the impact of science for a
better future.
BUSINESS
MODEL
.
Read more
on page 07
MARKET
ENVIRONMENT
.
Read more
on page 08
PORTFOLIO
REVIEW
.
Read more
on page 17
GOVERNANCE
.
Read more
on page 59
IDEAS
POWERED
.
OUR FINANCIALS
STRATEGIC REPORT
OUR GOVERNANCE
BUSINESS OVERVIEW
Net Asset Value (“NAV”)
£952.5m
2023: £1,190.3m
NAV pence per share
1
97.7pps
2023: 114.8pps
% change in NAV
per share
(15%)
2023: (14%)
Loss for the year
(£207.0m)
2023: (£174.4m)
Total portfolio
1
£837.4m
2023: £1,164.9m
Gross cash and
deposits
1
£285.6m
2023: £226.9m
Cash proceeds
1
£183.4m
2023: £38.6m
Portfolio investment
1
£63.0m
2023: £73.2m
1
Note 27 details the Alternative Performance Measures (“APM”)
Outperformed on exits
despite reduction in NAV per share
Accelerated share
buyback programme
since January 2024, up to £80m
buybacks announced
Significant portfolio
and pipeline
opportunity
Total cash proceeds
from exits of £183.4m,
+375%
Largest ever exit: sale of
Featurespace Ltd to Visa
£784m of capital raised
across portfolio
Four companies
reported positive clinical
trial data
OUR FINANCIALS
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BUSINESS OVERVIEW
IP GROUP PLC ANNUAL REPORT 2024
01
HIGHLIGHTS
.
OUR FINANCIALS
STRATEGIC REPORT
OUR GOVERNANCE
BUSINESS OVERVIEW
Outperformed on exits, despite
reduction in NAV per share:
•
Total cash proceeds from exits of £183.4m (+ 375%)
including:
•
£134m:
Sale of Featurespace Ltd to Visa (£119m
cash received in the year) – largest ever exit
•
£30m:
Sale of Garrison Technology Ltd to Everfox
•
£9.2m:
Sale of Kynos Therapeutics Ltd to Dr Falk
Pharma GmbH
•
up to £15m:
Secondary sale of minority
holdings in six portfolio companies at small
premium to NAV
•
Strong balance sheet and liquidity with gross cash of
£285.6m, up 26% from £226.9m in 2023
•
NAV/share down 15% to 97.7p with closing NAV of
£952.5m, driven by decrease in market value of
Oxford Nanopore (ONT) and valuation reductions for
First Light Fusion and Istesso in challenging market
conditions
•
Raised further £95m of third-party funds
(Hostplus and Parkwalk) – third-party AUM now
£678m, up from £650m in 2023
•
Total net overheads run rate reduced by 23% by year
end, a 12% reduction for the year
Accelerated buybacks:
•
Since January 2024, announced buybacks of
up to £80m representing 19% of current market
capitalisation
•
Completed £30m of share buyback programme
during year, with £50m balance ongoing
•
10% of share capital retired to date, increased
shareholder authority now sought in order to
complete ongoing programme
Significant portfolio
and pipeline opportunity:
•
£784m of capital raised (up 17%) with £63m invested
across 38 companies, reflecting maintained
discipline
•
Istesso: Phase 2b study of leramistat in rheumatoid
arthritis demonstrated novel mechanism of action
and effectiveness in bone repair in secondary
endpoints despite not meeting primary endpoint
•
Enterprise Therapeutics and Genomics:
Significant investment rounds closed, to fund next
development stage
•
Four companies (Storm, Mission, Kynos and Abliva):
reported positive clinical trial data
•
Hysata: Completed oversubscribed $111m Series
B funding round, the largest Series B in Australian
cleantech history
•
First Light Fusion: Sets pressure record at Sandia
National Laboratories and refocuses business model
on revenues
•
Strong interest in companies developing faster, more
efficient computing hardware for AI including Instrisic
and Lumai
The Group prioritised profitable exits
during 2024, outperforming a relative
lack of liquidity across the venture capital
market, despite our negative NAV per
share performance. These exits included
our largest ever cash realisation with the
sale of Featurespace to Visa, alongside
a number of other holdings, at or above
carrying values. The £183m of cash
proceeds strengthened our liquidity position
and enabled us to significantly increase
our share buyback programme while
continuing to invest for growth.
We have already completed a number of
exits in the current year with a promising
pipeline of further realisations, giving us
confidence in delivering more than £250m of
exits from private company holdings by the
end of 2027. We also noted Hinge Health’s
recent announcement that it intends to list
on the New York Stock Exchange. Given our
share price continues to reflect a significant
discount to NAV per share, during 2025 we
intend to increase the proportion of exits
allocated to buybacks to 50%.
As the UK’s most active investor in university
spin-outs, IP Group has an exciting and
compelling portfolio of companies which is
attracting strong interest from third parties.
While the current macro environment
remains challenging, the Board has ensured
the Group is appropriately sized and
well financed and continues to focus on
delivering returns for shareholders.”
Greg Smith
CEO
02
IP GROUP PLC ANNUAL REPORT 2024
2024 HIGHLIGHTS
.
PERFORMANCE HIGHLIGHTS
OUR FINANCIALS
STRATEGIC REPORT
OUR GOVERNANCE
BUSINESS OVERVIEW
PROPORTION OF CAPITAL
INVESTEE COMPANY STAGE
Pre-Seed/Seed & Series A
Series B & C+
Dedicated
Enterprise
Investment Scheme (EIS)
funds
with world-class
universities
Science & tech
scale-up
capital
Permanent balance
sheet
capital
Private funds
managed by IP Group
IP Group's EIS business
INTEGRITY
.
PURPOSE
.
GROWTH
.
Committed to doing
the right thing, in
the right way.
Bold and focused
in the pursuit of
our mission.
Driven by finding
a better way to
do things.
Do the right thing, at the
right time and the right
way, even when no one
is looking.
Dedicated to
accelerating the power
of science for a better
future, and to delivering
market-leading returns.
Always looking for new
and innovative ways to
do things better.
Set high standards for
yourself and others.
Trust your colleagues to
make the right decisions
and to deliver. Genuine
care for all of the
stakeholders impacted
by your work.
Perseverance,
collaboration and
commitment. Success
will not often come
quickly, and cannot be
achieved alone.
Relentlessly curious,
open-minded and keen
to learn. We’re always
looking for a better way
to do things or a new
solution to a difficult
problem.
Our key differentiators
Purposeful thematic focus
Our purpose focuses us on impact. We are
focused on backing and supporting businesses in
our three investment themes where we can add
value through our expertise and experience.
Access to unique opportunities
We are a global group with a strong network
and relationships with world-leading
academic research institutions, giving us
differentiated access to an exciting portfolio of
high-growth companies.
Expert teams
We aim to be a home for exceptional and highly
motivated talent. Our investment teams are
experts in their fields with a deep understanding
of science and technology, as well as decades
of experience in identifying, nurturing and exiting
unique high-growth businesses.
Imagination and flair
We are entrepreneurs at heart, bringing
imagination and flair to supporting our
portfolio companies through all stages of
their development.
International profile
Our international footprint gives us access to a
range of opportunities and provides valuable
insight and resource to support our portfolio
companies as they scale and grow in the UK, US,
Australia and New Zealand.
Permanent capital structure
Investing from our balance sheet is a significant
advantage, enabling us to be flexible and patient.
This allows us to co-found and build companies,
and realise value at the most appropriate time.
Track record
We have a track record built over more
than 20 years of turning great ideas into
world-changing businesses and creating value.
HEALTHIER FUTURE
Life Sciences
Read about
Life Sciences
on pages 09 and 17
TECH-ENRICHED FUTURE
Deeptech
Read about
Deeptech
on pages 09 and 17
REGENERATIVE FUTURE
Cleantech
Read about
Cleantech
on pages 09 and 17
Culture and values
Three thematic focus areas
UK’s most active and largest investor in UK university spin-outs
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IP GROUP PLC ANNUAL REPORT 2024
03
AT A GLANCE
.
OUR FINANCIALS
STRATEGIC REPORT
OUR GOVERNANCE
BUSINESS OVERVIEW
Top ten investments by Fair Value
Oxford Nanopore
Technologies plc
£106.6m
Istesso Limited
£91.9m
Hysata Pty Ltd
£76.8m
Oxa
Autonomy
Limited
£42.7m
First Light
Fusion Limited
£25.0m
Nexeon
Limited
£19.4m
Hinge Health, Inc.
£36.6m
Pulmocide
Limited
£23.1m
Artios
Pharma
Limited
£17.4m
Mission
Therapeutics
£22.5m
KEY
Life Sciences
Cleantech
Priority companies
We place meaningful focus on a dynamic list of companies which we believe
can be material in the context of overall Group performance and underpin our
self-sustaining model. These include:
Oxford Nanopore Technologies
: The world’s first nanopore DNA sequencing
platform, which is uniquely scalable from pocket-sized formats through to
ultra-high throughput devices, enabling the genetic analysis of any living
thing, by any person, in any environment. The technology offers real-time data
analysis for rapid, dynamic insights and played a key role in the COVID-19
pandemic.
Istesso
: Immunometabolism drug discovery and development aimed at
reprogramming metabolism to treat autoimmune disease.
Hysata
: Hysata’s unique capillary fed electrolyser technology promises an
efficiency gain in the production of green hydrogen.
Oxa
: Global leader in autonomous vehicle software based on artificial
intelligence engineering, machine learning and modular software design.
Hinge Health
: The world’s first digital clinic for back and joint pain with an
expanding customer base.
First Light Fusion
: Inertial confinement approach to fusion, aiming to create the
extreme temperatures and pressures required for fusion by compressing fuel
using a hypervelocity projectile. Fusion power is safe, clean and limitless with the
potential to transform the world’s energy system. Achieved validated world-first
fusion event in 2022 and set pressure record at Sandia National Laboratory
in 2024.
Pulmocide
: Treatment of respiratory diseases through a novel approach to
inhaled medicines. Phase 3 study of its novel anti-fungal for invasive pulmonary
aspergillus underway.
04
IP GROUP PLC ANNUAL REPORT 2024
AT A GLANCE
.
OUR FINANCIALS
OUR GOVERNANCE
BUSINESS OVERVIEW
STRATEGIC REPORT
As we entered 2024, we recognised that appetite for higher
risk and early-stage assets was likely to remain cautious,
given the number and significance of the elections that were
to take place during the year as well as the disruptions to
historic trade and investment flows that were evident from
the major geopolitical tensions and military conflicts that had
escalated. We adjusted our investment plans accordingly,
concentrating capital allocation in our highest potential
portfolio companies, in particular those with good prospects
to deliver a cash return in the near to medium term.
Recognising the stubbornness of the gap between
our reported Net Asset Value (‘NAV’) per share
and our share price, the Board set management
a number of priorities in 2024 to address this
disparity. These included prioritising realisations to
demonstrate value creation from our investment
activity; pursuing third party co-investment
transactions to validate our valuation discipline;
attracting third party funds to add capacity to our
investing activity; seeking fresh investors to the plc
and improving operational gearing through better
cost performance.
This low appetite for (public market) investments in
early-stage assets was reflected in delayed funding
rounds, and where funding rounds did take place, we
witnessed a decline in valuation. As a consequence,
we reported a loss for the year of £207m driven
by a £52m decline in the value of our stakes in
listed companies (primarily Oxford Nanopore) and
valuation adjustments and write-offs in the private
portfolio of £228m. It is worth noting that in the latter
case, the 3 largest write-downs reflected a £94m
reversal of previous uplifts. In terms of cash flow, we
increased our cash and deposits by £59m in 2024
after investing £63m in the portfolio and applying
£30m to the repurchase of our own shares.
In order to achieve this outcome, we had some
significant successes. We delivered the highest value
cash realisation in our history from the sale of our
stake in Featurespace, generating disposal proceeds
of £134m of which £119m was received in cash before
the end of the year. Total proceeds of £183.4m were
five times that achieved in 2023. Gross cash at
31st December stood at £285.6m against our market
capitalisation at that date of £525.7m.
We structured and executed a partial secondary
sale of shareholdings in six of our portfolio
companies realising up to £15m in cash, at an
aggregate value modestly ahead of our book
carrying value thereby evidencing the integrity
of our valuation processes. We also secured a
further A$125m co-investment commitment from
Hostplus, our principal partner through our Australian
business. And we completed a restructuring and
reorganisation of our business that will reduce
ongoing costs within the business by £5m, or some
23%. Greg discusses these events in more detail in
his report.
Sir Douglas Flint
Chair
The Board is confident that there is
substantial unrecognised value within
the portfolio. Our principal objective in
the coming year is to harness what we
believe is a strong desire amongst UK
institutions to support this segment of
the UK growth story and configure our
business in whatever way is needed to
be successful.”
OUR FINANCIALS
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STRATEGIC REPORT
IP GROUP PLC ANNUAL REPORT 2024
05
CHAIRMAN’S STATEMENT
.
OUR FINANCIALS
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BUSINESS OVERVIEW
STRATEGIC REPORT
There were inevitably a number of disappointments. Our
largest portfolio investment, Oxford Nanopore fluctuated
in value significantly during the year losing over half its
value in the first half and although recovering a decent
portion of this in the second half, was still down by 38%
over the year. Management, with the Board’s strong
endorsement, and given our position as one of its largest
shareholders, has spent considerable time supporting
Oxford Nanopore on ways to address this volatility and
drive a recovery in its value for all their shareholders.
Although widely anticipated, we were frustrated that
Istesso (our second largest portfolio holding), was
not in a position to release any data from its phase2b
Rheumatoid Arthritis (RA) study with its drug leramistat
during 2024. However, on 11th February this year Istesso
did provide an update which was both disappointing,
yet at the same time, encouraging. The trial results
reinforced leramistat’s novel mechanism of action
and its effectiveness in bone protection in people
living with RA. Significant improvements were seen in
the key secondary endpoint of bone erosions as well
as improvements in disability and fatigue in patients
treated with leramistat, despite it not meeting the
primary endpoint of improvement in ACR20 versus
placebo. We are nevertheless pleased to report that
Istesso is sufficiently funded to conduct the additional
studies which the Phase2b results justified. This study will
undertake further evaluation of leramistat’s potential
to promote tissue repair in RA, as well as other chronic
conditions. Greg discusses this in more detail in
his review.
We spent considerable time in 2024 seeking to attract
private capital for a scale up fund to build on the
commitments that many pension funds and others
have made pursuant to the Mansion House compact
and other government sponsored initiatives to support
growing innovative UK businesses; while this was not
finalised in 2024 we are optimistic that the work done
and discussions in train will lead to the creation of such
a fund in 2025.
Public capital markets in 2024 were not helpful to
IP Group, nor indeed to most of our peer group, as
investor appetite for small cap companies was muted
– indeed many funds dedicated to this sector wound
down during the year. We applaud the efforts of the
London Stock Exchange to attempt to revitalise this
sector as we believe it is vital to the growth economy the
government seeks to establish. It is incredibly dispiriting
that in spite of the ambition of the Mansion House
reforms launched in the previous parliament and the
priority commitment given to the growth agenda by the
current government, that there is little evidence of such
change in UK investment markets for our sector.
We enter 2025 with key funding rounds underway
for a number of our significant portfolio companies.
Encouragingly, after prolonged gestation periods, there
is evidence that investors are prepared to commit,
albeit at discounts to previous rounds in many cases,
a factor which has been reflected in our year-end
valuations. Again, it is worth noting that much of this
renewed interest originates from outside the UK. These
funding rounds and any potential IPOs are encouraging
early indications that confidence may be returning to
our sector.
Notwithstanding the significant success in realisations
in 2024, our share price ended the year substantially
where it started the year (53.9p versus 58.1p) with the
discount to NAV remaining elevated at 45%. Adjusting for
net cash and listed stakes, the discount to the remaining
portfolio value was some 81%. We understand and share
shareholder frustration and disappointment with this
position, which we recognise has deteriorated further
since the year end following the release of Istesso’s
trial results. While reducing this gap will largely come
from success in our investment activities, thereby
demonstrating the value within the portfolio, we can
and have taken steps to address the discount by buying
back shares. During 2024 we completed a buyback
programme of £30m and we currently intend to
supplement this by adding a further £50m.
Outlook
As we enter 2025, the need remains for scientific
innovation to address many of society’s urgent
challenges, from ageing populations to climate change,
to harnessing the power, while controlling the misuse of
AI and understanding what the unprecedented power
of quantum computing will offer. The government in
the UK embraces the ambition to place UK science
and technological excellence at the heart of its growth
agenda, yet public markets remain slow to support this
ambition in terms of providing the long-term venture
and scale-up capital needed.
The Board is confident that there is substantial
unrecognised value within the portfolio. Our principal
objective in the coming year is to harness what we
believe is a strong desire amongst UK institutions
to support this segment of the UK growth story and
configure our business in whatever way is needed
to be successful. If we are mistaken in our belief that
there is support in UK public markets for contributing
to the financing of great ideas founded in UK scientific
discovery through to world changing businesses, we
shall look again, with our advisers, at the other options
already considered by the Board, to optimise value for
shareholders over the medium term. I look forward to
updating you on progress as the year develops.
Sir Douglas Flint
Chair
24 March 2025
06
IP GROUP PLC ANNUAL REPORT 2024
CHAIRMAN’S STATEMENT
.
OUR FINANCIALS
OUR GOVERNANCE
STRATEGIC REPORT
BUSINESS OVERVIEW
1
INPUTS
2
INVESTMENT LIFECYCLE –
BACKING COMPANIES FROM START-UP TO SCALE-UP
3
EXIT, REINVESTMENT &
RETURN TO SHAREHOLDERS
4
OUTCOMES WITH IMPACT
INTELLECTUAL.
We work with some
of the world’s best
scientists, universities
and entrepreneurs in
our chosen territories
and thematic
focus areas.
FINANCIAL.
We combine our
balance sheet
capital with third-
party capital
to accelerate
the progress
of promising
companies.
HUMAN.
We aim to attract
the best talent to the
Group and to our
portfolio businesses.
Investing from our balance
sheet enables us to be
patient and hold investments
until they mature before
realising value at the most
appropriate time.
We reinvest realised funds
into new opportunities and
into the growth of our priority
companies.
We also make appropriate
returns to shareholders.
Read about
our business
model in action
on page 13
Addressing the world’s
greatest unmet
challenges:
•
Genetic sequencing in
any environment
•
Treatment of
autoimmune, respiratory
and other serious
diseases
•
Preventing fraud and
financial crime
•
Cyber security
•
Autonomous vehicle
software
•
Clean energy
Economic growth
and innovation
•
500+ companies
created
•
27 new portfolio
investments in 2024
•
Deep pipeline of future
potential winners
Financial returns
•
£655m cash realised
from the portfolio over
five years
•
£105m returned to
shareholders via
dividends and share
buybacks over five years
START-UP.
Identification of promising research
and creation of investable
businesses. Capital deployed to
progress ideas to early commercial
and technical validation.
SCALE-UP.
Proactive sourcing of co-investment
and continued nurture and
development of businesses to grow
value over time.
PRIORITY COMPANIES.
Heaviest resources and capital focused on a dynamic list of the best risk/
reward opportunities and companies with potential to scale at >£1bn within
three to five years.
PROPORTION OF CAPITAL
INVESTEE COMPANY STAGE
Pre-Seed/Seed & Series A funding
Series B & C+ funding
Permanent balance
sheet
capital
Dedicated
Enterprise
Investment Scheme (EIS)
funds
with world-class
universities
Science & tech
scale-up
capital
Private funds
managed by IP Group
IP Group's EIS business
OUR FINANCIALS
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BUSINESS OVERVIEW
STRATEGIC REPORT
IP GROUP PLC ANNUAL REPORT 2024
07
BUSINESS MODEL
.
OUR FINANCIALS
OUR GOVERNANCE
BUSINESS OVERVIEW
STRATEGIC REPORT
Macroeconomic environment
The global economic landscape in 2024 has been
shaped by a complex interplay of factors, including
inflation dynamics, interest rate adjustments, and
geopolitical developments including elections in
many of the world’s largest democracies. The Bank of
England’s monetary policy, which saw the base rate
peak at 5.25% in 2023, has been pivotal in influencing
market conditions. As inflationary pressures began to
ease, the focus shifted towards the anticipated timing
and scale of interest rate cuts through the second half
of 2024 and into 2025.
Public market performance
In 2024, UK public market performance was mixed, with
the FTSE250 index gaining 5% in the year, but the FTSE
All-share index down 6%. Market commentary in the
UK continues to highlight a sustained period of capital
outflows from UK equities, particularly at the small cap
end of the market, and a reduction in the number of
UK listed companies as a result of acquisitions and
companies switching their primary listing venue out of
the UK.
Against this weak backdrop in the UK, global equity
markets experienced robust performance, driven by
solid economic growth, falling inflation, and Federal
Reserve interest-rate cuts. The NASDAQ composite
index gained 29%, with technology and communication
services stocks leading the gains, fuelled by the ongoing
artificial intelligence boom. Despite some volatility, the
overall market sentiment remained positive, marking
another positive year for risk assets within the US, albeit
early 2025 has seen NASDAQ fall back into correction
territory.
In terms of Initial Public Offering activity, 2024 saw an
overall rebound in IPO proceeds raised, with US proceeds
up 47% year-on-year. Life sciences IPO activity however
remained essentially flat against 2022 and 2023 activity
levels. Market commentary points to 2025 being the year
that IPO activity could see a broader-based recovery in
activity, albeit uncertainty around the impact of tariffs
and defence may have a dampening impact.
Private venture capital (VC)
market trends
The private VC market saw another year of relatively
muted activity following on from 2023, with overall global
activity flat at $369bn, and global deal volumes down
by 17%
1
, and with AI deals making up over one third of
all market volumes in the period. The same trend was
in evidence in the UK, with private fundraising down 19%
year-on-year by value, with the final quarter of the year
seeing the lowest number of deals since 2014
2
.
Our portfolio companies demonstrated resilience in
terms of fundraising performance, with a 17% increase in
total capital raised, driven by strong fundraising activity
within our Life Sciences portfolio and outperforming the
broader market.
Late-stage VC valuations in Europe saw a modest
10%
year-on-year increase, reflecting a cautious
improvement in sentiment during the year
3
.
1
Pitchbook data
2
Beahurst data
3
Pitchbook European VC valuations report
Exit and fundraise activity
Exit activity in the VC market continued to be subdued,
with US VC exit values of $149bn broadly unchanged
from 2022 and 2023, and around half the level seen in
2019
4
. Global fundraising figures by VC venture funds hit
a six-year low, with total funds raised of $104.7bn down
18% on 2023 figures
5
.
Strategic positioning and
future outlook
We remain optimistic about the long-term prospects of
VC investment in the US and UK. Thematic megatrends
continue to support the growth of disruptive, science-
based companies. IP Group is strategically aligned
with the UK Government’s growth initiatives and is well
positioned to benefit from reforms in the UK pensions
market, which aim to increase the allocation of pension
capital to high-growth private companies.
4
Pitchbook US venture survey
5
Venture Capital Journal
We remain optimistic about the long-term prospects of
VC investment in the US and UK. Thematic megatrends
continue to support the growth of disruptive,
science-based companies.”
Greg Smith
CEO
08
IP GROUP PLC ANNUAL REPORT 2024
MARKET OVERVIEW
.
OUR FINANCIALS
OUR GOVERNANCE
BUSINESS OVERVIEW
STRATEGIC REPORT
Megatrends in our thematic business sectors
Healthier
future
Curing and preventing
diseases to enable
healthier lives
Tech-enriched
future
Transformational
change in the
digital world
Regenerative
future
Civilisation-risk trajectory
of climate heating, driving
rapid decarbonisation
•
Understanding risk from patient to
population level
•
Reprogramming cells to change their
behaviour from diseased to healthy modes
•
Reconditioning tissues to improve response
to existing therapies
•
Redirecting patient behaviour to reduce risk
Megatrends
•
Drug “patent cliff”: more than $200bn annual
revenue at risk from expiry of patents on
existing drugs, increasing emphasis on new
drug discovery
•
Government intervention into drug pricing
favours newly-approved therapies
•
Emergence of digital healthcare and
personalised medicine
•
Explosion of DNA sequencing as costs fall
dramatically
Addressable markets
•
DNA sequencing market $100bn by 2034
•
RA market $37bn by 2030
•
Digital healthcare market value $836bn
by 2031
•
Billions of connected devices requiring real-
time and remote processing
•
Data growth outstripping economic growth
by multiple factors
•
Growth of the metaverse
•
Energy-hungry data centres
•
New technologies and powerful computing
multiplying cyberthreats
Megatrends
•
Applied AI to solve problems in underserved
application areas including cyber security
•
Next generation ultra-reliable networks to
deliver mission-critical new applications
•
Hardware and software that evolve and
enhance human interaction with machines
•
Future computing systems for complex
problem-solving, including analogue,
neuromathic and quantum computing
Addressable markets
•
Generative AI market $1tn market by 2034
•
Global chip market $1.07tn by 2030
•
Global autonomous vehicle market size of
over $100bn in 2030
•
Civilisation-risk trajectory of climate heating
driving rapid decarbonisation and climate-
resistant economies
•
2024 warmest year on record; over 1.5°C
above pre-industrial levels
•
4x increase in investment in clean energy
technology and infrastructure from today’s
levels by 2035
•
Continued UK Government commitment to
climate transition including new infrastructure
Megatrends
•
Energy transformation: electrification and
low/no carbon fuels
•
Energy reduction
•
Water reduction
Addressable markets
•
Green hydrogen $135bn market by 2032, $1.4tn
by 2050
•
Liquid fuels $1.5trn market with low
penetration of low-carbon fuels
•
Global battery market size over $0.5tn by 2032
OUR FINANCIALS
OUR GOVERNANCE
BUSINESS OVERVIEW
STRATEGIC REPORT
IP GROUP PLC ANNUAL REPORT 2024
09
MARKET OVERVIEW
.
OUR FINANCIALS
OUR GOVERNANCE
BUSINESS OVERVIEW
STRATEGIC REPORT
Overview
While the operating environment continued to remain
challenging in 2024, the Group prioritised generating
profitable cash realisations and made excellent
progress in this regard. This performance meant the
Group finished the year with a strong liquidity position,
having recorded total cash proceeds of £183.4m, nearly
five times the level achieved in 2023, with gross cash
and deposits of £286m at year-end up from £227m.
This enabled the Group to increase its buyback, as
well as reinvesting for future growth. Having delivered
a further £25m in realisations to date during 2025, the
Group is today increasing its buyback programme by a
further £10m, to a total of up to £80m.
The continued weaker market environment for
early-stage investing did, however, weigh on private
company valuations and quoted portfolio company
share prices, which impacted our NAV per share, down
15% to 97.7pps at the end of the year (2023: 114.8pps).
Accordingly, the Group took decisive action to adjust
our delivery strategy, which enabled us to reduce
our operating costs and ensure the Group remains
appropriately sized and well positioned. Further
information is set out in the financial review.
IP Group, including through its market-leading Parkwalk
brand, is the UK’s leading science and technology
investor, having formed more than 500 science-based
businesses. By starting and growing businesses driving
improved health outcomes, the energy transition and
the digital transformation, the Group aims to have
a significant impact on some of society’s biggest
needs and deliver compelling financial returns for
our shareholders.
Combining university relationships with deep sector
experience and networks provides highly differentiated
dealflow and the Directors believe the Group has a
compelling portfolio, evidenced by strong commercial
progress in many of our companies. In addition, the
Directors are encouraged by the signs of improvement
in the private technology sector following increased
interest and M&A activity in the portfolio.
The Directors believe the Group, one of the largest and
most experienced investors in university IP in the world,
is well placed to benefit from a recovery in the market
environment, given its strong liquidity position, reduced
cost base and promising portfolio, with many of our
portfolio companies having the potential for billion-
dollar exit valuations.
Delivery against strategic priorities
As noted in the Chairman’s Summary, against a
challenging backdrop, the Group made good progress
on achieving many of our main strategic priorities in
2024 which comprised delivering cash exits, accessing
further capital for the portfolio and our managed funds
and accelerating our share buyback programme.
The challenging environment impacted valuations
and share prices in the period, resulting in a negative
return on NAV of 17% or £207.0m (2023: negative return
of 13%, £172.2m). This was driven by substantial write-
downs in a number of our portfolio companies, the
largest of which was a £66m fall in the value of our
holding in Oxford Nanopore Technologies plc, followed
by a £40m reduction in the value of our holding in First
Light Fusion and a £33.8m reduction in the value of
our holding in Istesso Ltd to reflect the outcome of its
Phase 2b study of leramistat in rheumatoid arthritis
(RA). Although the study did not meet the primary
endpoint of improvements in ACR20 versus placebo,
leramistat did demonstrate statistically significant
reductions in the key secondary endpoint of bone
erosions, as well as improvements in disability and
fatigue. The performance of the Group’s business
units is summarised below with further detail in the
portfolio review.
All £m unless stated
Invested
Cash
proceeds
Net
portfolio
gain/(loss)
Fair value at
31 December
2024
Simple
return on
capital (%)
Healthier future: Life Sciences (ex ONT)
35.3
28.8
(52.2)
348.5
(14%)
Healthier future: ONT
1.0
1.6
(66.3)
106.6
(38%)
Tech-enriched future: Deeptech
8.5
148.9
10.5
89.4
4%
Regenerative future: Cleantech (Kiko Ventures)
15.7
0.0
(75.1)
215.9
(27%)
Platform investments
2.5
4.1
(11.9)
77.0
(13%)
Total portfolio
63.0
183.4
(195.0)
837.4
(17%)
Greg Smith
CEO
The Directors continue to believe the
Group has a compelling portfolio,
evidenced by strong commercial
progress in many portfolio companies.
While the current macro environment
remains challenging, the Group is
appropriately sized, well financed,
and continues to believe it is well
positioned for an improved appetite
for high growth investments while
remaining focused on delivering returns
for shareholders.”
10
IP GROUP PLC ANNUAL REPORT 2024
CEO REVIEW
.
OUR FINANCIALS
OUR GOVERNANCE
BUSINESS OVERVIEW
STRATEGIC REPORT
Our strategy of ‘increased focus’ meant that over 55% of our portfolio value is
concentrated in 10 companies, and 83% in 40 companies, across the three main
thematic areas where the Group has deep expertise and experience. The Group
invested in 38 opportunities in 2024 comprising 18 in Life Sciences, 9 in Deeptech and 8
in Cleantech. 95% of our capital was invested into the existing portfolio, with 5% being
invested into new opportunities.
Our portfolio also continues to be well-funded with over 82% by value of the portfolio
currently funded into 2026 or beyond. In 2024, our portfolio companies successfully
raised a total of £784m of which IP Group contributed £63.0m (2023: £667m, £73.2m).
Notable transactions announced in 2024 included the oversubscribed US$111m
fundraise by Hysata, the largest Series B in Australian cleantech history (which was
reflected in our 2023 year end valuation), the £35m raise by Genomics to accelerate
the adoption of polygenetic risk scores, the £26m raise by Enterprise Therapeutics to
fund its P2a clinical proof of concept trial in cystic fibrosis and the £25m Series D raise
by Mission Therapeutics to progress its clinical candidates in the area of mitophagy.
Cash exits
IP Group performed strongly on cash realisations, generating £183.4m (2023: £38.6m),
the majority of which came from the sale of portfolio company Featurespace Ltd to
Visa, generating £134m of cash for the Group, a return of 5.9x on the £22.9m invested.
The Group received an initial £119m cash in December 2024 with the balance of £15m
expected in 2025 and 2026. This transaction, which was executed at a 70% premium
to our holding value at the start of the year, represents IP Group’s largest ever exit.
Having been the first institutional investor in Featurespace, IP Group invested a total of
£22.9m over seven financing rounds, supporting the company’s growth into a leader in
enterprise technology for fraud and financial crime prevention.
Another key exit in the period also came from our Deeptech sector with the sale of
Garrison Technology Ltd, a pioneer in hardware-based cybersecurity solutions, to
Everfox, a global leader in high-assurance cybersecurity, which completed in August,
delivering £30m of cash. Garrison develops innovative “hardsec” technology that protects
users from cyber threats such as ransomware and phishing by creating an electronic
barrier between the internet and devices. IP Group supported Garrison’s growth from
startup to trusted provider for ultra-secure government clients, including the UK and US
governments, and commercial organisations like Lloyds Banking Group and Vodafone.
Both of these transactions further validate IP Group’s model and our expertise in
identifying and supporting science and technology businesses to successful exits.
In Life Sciences, the Group sold Kynos Therapeutics Ltd to Dr. Falk Pharma GmbH,
generating £9.2m of cash at a 2.4x multiple, while two quoted companies received
cash offers. Intelligent Ultrasound Group plc, in which the Group has a 20.8% holding,
received a cash offer from Surgical Science Sweden AB which valued the business
at approximately £45.2m. As a result, IP Group received £8.8m of cash for its holding
in 2025, which represented an uplift of £4.4m (100%) from the last-reported NAV at
30 June 2024.
Abliva AB, which discovers and develops medicines for the treatment of mitochondrial
disease and in which the Group has a 9.5% stake, received a cash offer from Pharming
Technologies BV which valued that business at approximately SEK725.3m. Following
the completion of the sale in February 2025, IP Group received £5.1m total cash,
representing a multiple of 1.6 times cost and an uplift in carrying value of £3.8m (292%)
since the last-reported NAV at 30 June 2024.
The Group also announced in December that it had agreed the sale of minority
holdings in nine portfolio companies across its balance sheet and managed funds to
a new fund managed by Lexham Partners for up to approximately £15m of cash from
the 6 balance sheet holdings included in the transaction. These sales are expected to
be at a small overall premium to the 2023 balance sheet value.
All of these transactions have been at or above current carrying levels, validating the
balanced valuation approach which underpins our reported NAV.
Accessing further capital under management
IP Group continued to focus on increasing its funds under management and we are
pleased to report that the Group raised £95m of third party managed funds in 2024
and now manages or advises £678m (2023: £650m). Approximately three-quarters
of that figure, or £481m, is managed by Parkwalk, the Group’s specialist EIS fund
management subsidiary (2023: £469m), including funds managed in conjunction with
the universities of Oxford, Cambridge, Bristol, and Imperial College London.
Parkwalk invested £47.2m in 2024 (2023: £45.1m) in the university spin-out sector
across 38 companies (2023: 27 companies). Again, a report from market data provider
Beauhurst shows that IP Group and Parkwalk are by far the UK’s leading investor in
the sector. Twenty-two new companies joined the Parkwalk portfolio, one positive exit
closed and a further one was announced, and two escrow releases from previous exits
were distributed to underlying investors. Fourteen portfolio companies closed funding
rounds at uplifts in valuation, five unchanged and ten at lower valuations than the
previously held value. These companies raised c.£140m in funding this year.
Through Parkwalk, we liaised closely with UK Government including HMRC on the financial
ecosystem for knowledge-intensive spin-out companies and across political parties to
ensure science and innovation is at the heart of the UK Government’s growth mission.
Most of our remaining funds are managed by our Australian team and we are also
pleased to report that Hostplus, a top ten Australian Superannuation fund, allocated
a further A$125m to the IP Group Hostplus Innovation Fund in the period, bringing the
total committed to A$435m. This fund has invested in several of the Group’s portfolio
companies including Oxford Nanopore, Genomics, First Light Fusion, Oxa and Hysata,
providing additive growth capital for companies as they scale. TelstraSuper is also
investing alongside IP Group through a co-investment mandate.
The Group continues to focus on increasing funds under management and believes
there is scope to further increase private capital under management this year.
OUR FINANCIALS
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IP GROUP PLC ANNUAL REPORT 2024
11
STRATEGIC REPORT
BUSINESS OVERVIEW
CEO REVIEW
.
OUR FINANCIALS
OUR GOVERNANCE
STRATEGIC REPORT
BUSINESS OVERVIEW
Accelerated buybacks
Delivering returns for shareholders remains paramount including focusing on
narrowing the discount to our NAV per share, which the Directors continue to believe
significantly undervalues the potential within the Group’s portfolio. We are therefore
announcing today that we intend to allocate 50% of the Group’s 2025 exits to our
ongoing buyback programme and a further extension of this programme by £10m.
The Group aims to deliver returns to shareholders primarily in the form of long-term
capital appreciation. Pursuant to the Group’s capital allocation policy, a proportion
of cash proceeds is reinvested and a proportion is used to deliver a cash return to
shareholders. The Directors regularly consider the mechanism to be used for such
cash returns and have determined that this will typically be in the form of share
buybacks while the share price discount to NAV exceeds 20%. Since the introduction of
this approach in 2021, the Group has delivered more than £110m of cash returns to our
shareholders via dividends and share buybacks.
Since launching the £20m share buyback programme in December 2023, IP Group
has extended the programme by up to an additional £60m including using 100% of
the proceeds from the secondary sale noted above, and the £10m announced today,
increasing the total to up to £80m.
During 2024, the Group purchased 66,110,008 shares for £29.4m and a further 19,325,177
shares for £9.2m have been purchased so far in 2025. The level of shares purchased is
now approaching the level of authority approved by shareholders at the Group’s 2024
AGM. As a result, the Directors are seeking a further shareholder buyback authority to
ensure the Group retains sufficient flexibility to execute its current buyback programme
between now and the AGM in June 2025. This authority will be sought at a General
Meeting, convened for 24 April 2025, with the Notice of General Meeting being posted
to shareholders today.
Optimising strategy for growth
The Group has many strengths that differentiate it from traditional venture capital
firms, enabling it to deliver long-term value to investors and the companies it supports.
By focusing on breakthrough innovations that are serving demand driven by global
megatrends, the Group is well positioned to address some of the world’s most pressing
challenges. With a proven track record of nurturing transformative technologies and
a mission to foster meaningful impact, our approach combines strategic investment
with operational support to help early-stage businesses succeed.
As referenced in the Chairman’s Statement, the Group completed a restructuring
in 2024, reducing ongoing costs by £5m, or some 23%, to ensure the business is
appropriately sized and well positioned. As part of this process, the Group consolidated
its balance sheet investment activities under a single investment committee, led by
Dr Mark Reilly, Managing Partner. The portfolios Dr Reilly has managed for the past six
years have delivered strong growth and cash realisations and, in his expanded role, he
will oversee the Group’s balance sheet portfolio with a focus on further improving our
track record.
A key differentiator for the Group is our deep partnerships with leading research
institutions, predominantly through our subsidiary, Parkwalk, providing access to a
pipeline of pioneering scientific research and high-potential intellectual property from
institutions including the University of Oxford, the University of Cambridge, and Imperial
College London. The EIS funds that are managed by Parkwalk provide a complimentary
source of funding for the earliest stage opportunities and a pipeline of future
investment opportunities for the Group’s balance sheet. This, coupled with IP Group’s
access to private scale-up capital, particularly that managed for Hostplus and other
Australian superannuation funds, provides a flexible approach to funding across all
stages of company maturity, ensuring we can support our portfolio companies from
inception through growth and scaling.
Outlook
The Directors continue to believe the Group has a compelling portfolio, evidenced by
strong commercial progress in many portfolio companies. In addition, the Directors are
encouraged by some signs of improvement in the private technology sector following
increased interest and M&A activity in the portfolio during 2024 and signs that appetite
for IPOs is starting to return. So far in 2025 we have delivered £25m of realisations and
believe we have the potential to deliver over £250m of exits by the end of 2027.
IP Group also remains well positioned to benefit from government support for a
number of fiscal and regulatory reforms which support our operating environment,
and we believe there is scope to further increase our funds under management
this year.
While the current macro environment remains challenging, the Group is appropriately
sized, well financed and continues to believe it is well positioned for an improved
appetite for high growth investments while remaining focused on delivering returns
for shareholders.
Greg Smith
CEO
24 March 2025
12
IP GROUP PLC ANNUAL REPORT 2024
CEO REVIEW
.
OUR FINANCIALS
OUR GOVERNANCE
STRATEGIC REPORT
BUSINESS OVERVIEW
Featurespace is a Cambridge-based developer of Adaptive Behavioural
Analytics technology which uses machine learning to fight enterprise
fraud and financial crime
.
With a mission to “make the world a safer place to transact”,
Featurespace works with many of the world’s largest banks and
financial institutions to protect customers, reducing risk and
business operating costs. Featurespace was acquired by Visa
in 2024.
Idea
Combining their expertise in Data Science and Computer
Science, Featurespace was created by Cambridge University
Professor, Bill Fitzgerald, and his PhD student, Dave Excell in 2008.
The idea was to teach machines to think and act like humans
in an attempt to build a system to outwit fraud attacks and
manipulation by understanding customer behaviour.
Featurespace went on to build the world’s first Adaptive
Behavioural Analytics engine - the ARIC™ Risk Hub – to solve
this commercial and security challenge. The Risk Hub leverages
machine learning to enable fraud and suspicious activity to be
detected in real time. It is then either stopped automatically or
by sending alerts to anti-money laundering analysts who can
then prioritise them and follow them up in real time, all with
explainable anomaly detection.
The Risk Hub now offers adapted solutions for card fraud,
payment fraud, gaming fraud, application fraud and
scam detection.
Nurture
Relationships with the Cambridge University science and
technology community, and with Featurespace customers,
enabled IP Group Technology Partner, Jon Edington, to be
introduced to Featurespace. We first invested in 2012, becoming
the first institutional investor in the company.
Over the course of seven financing rounds between 2012 and
2024, IP Group invested a total of £22.9m. Funding from us and
co-investors enabled the company to develop and scale-up to
operate globally and significantly grow its customer base to 80
direct customers, including HSBC, Danske Bank and Worldpay.
Revenue in 2023 rose 46.5% to £50.4m.
In addition to capital, we played an active role in sourcing and
securing co-investors, as well as helping Featurespace to hire its
Chief Executive Officer, Martina King. Jon Edington remained an
active member of the board up until the sale to Visa, by which
time IP Group was Featurespace’s largest shareholder.
Impact
Featurespace’s impact on both major financial institutions, as
well as their individual customers has been profound and far-
reaching with an astonishing 500 million consumers protected
from risk as a result of its ARIC™ Risk Hub.
For IP Group, the sale of the company to Visa marked a record
exit. It followed the sale of Garrison earlier in the year, with both
exits further validating the model and our expertise in identifying
and supporting businesses to successful outcomes.
On completion of the sale, IP Group received initial cash
proceeds of £119m, delivering a 70% premium in net asset
value from 2023 NAV; an excellent financial return. £25m
of the proceeds were immediately allocated to our share
buyback programme in support of our commitment to
shareholder returns.
For IP Group, the sale
of the company to Visa
marked a record exit.
It followed the sale of
Garrison earlier in the
year, with both exits
further validating the
model and our expertise
in identifying and
supporting businesses
to successful outcomes.”
Greg Smith
CEO
OUR FINANCIALS
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IP GROUP PLC ANNUAL REPORT 2024
13
STRATEGIC REPORT
BUSINESS OVERVIEW
BUSINESS MODEL IN ACTION
.
FEATURESPACE
OUR FINANCIALS
OUR GOVERNANCE
STRATEGIC REPORT
BUSINESS OVERVIEW
KEY
01
NAV/share
02
Return on NAV
03
Total portfolio
04
% return on portfolio
05
Portfolio investment
06
Cash proceeds
07
Net overheads %
08
Number of new portfolio
investments
09
Third-party funds raised
Strategy pillars
2024 progress
Link to KPIs
Objectives for 2025
Have an
impact on
the world
that counts
•
Ensure genuine impact is a core
component of our processes
•
Focus on thematic areas driven
by the intersection of commercial
opportunity, societal need and
IP Group’s distinctive strengths
•
Develop industry-leading impact
measurement and reporting
•
Maintain and develop ethical
investment framework and
approach
•
A “leading” ESG performer rated AAA by MSCI;
ranked as an industry “Top-Rated” company
by Sustainalytics; PRIME status in the ISS ESG
corporate rating
•
Hysata – largest Series B funding round in
Australian cleantech history
•
Technical success at First Light Fusion with a
record-breaking test of amplifier technology
•
Positive clinical trial data reported at four Life
Sciences companies. Istesso’s Phase 2b study for
leramistat in rheumatoid arthritis demonstrated
novel mechanism of action and effectiveness in
bone repair
•
Reviewed ethical investment framework to ensure
fit for purpose
03
05
08
09
•
Roll out an ESG platform to
our portfolio companies to
support them with their ESG
journeys and provide insights
to facilitate improvement
and growth
•
Continue our portfolio
company stewardship
initiatives, including
reviewing and refreshing
our Portfolio Company
Policy Toolkit to ensure our
portfolio companies have
access to best practice
policies in order to promote
compliance with relevant
legislation and good
corporate governance
Develop
our unique
insight,
expertise
and access
•
Build significant knowledge,
presence and investments in
thematic areas, maintaining deep
relationships with innovators,
institutions and capital providers
•
Continually develop aligned
Group, sector and geographical
investment strategies
•
Capture, develop and share
institutional insight and knowledge
•
Created and invested for the first time in 27 new
companies including Parkwalk investments
•
Restructured to form single investment
committee comprising four partner experts under
Dr Mark Reilly, Managing Partner
•
Rationalised investment teams to focus on
best talent
•
Integrated processes more closely with Parkwalk
to source opportunities
05
08
•
Maintain deal-flow of
distinctive new opportunities
•
Continue to build profile as
deep sector experts with
institutions, innovators and
capital providers through
deep-dives and other
activities
•
Further integrate investment
activities through our
Investment Group
14
IP GROUP PLC ANNUAL REPORT 2024
STRATEGIC PROGRESS
.
OUR FINANCIALS
OUR GOVERNANCE
STRATEGIC REPORT
BUSINESS OVERVIEW
KEY
01
NAV/share
02
Return on NAV
03
Total portfolio
04
% return on portfolio
05
Portfolio investment
06
Cash proceeds
07
Net overheads %
08
Number of new portfolio
investments
09
Third-party funds raised
Read about our
KPIs
on pages 26 and 27
Strategy pillars
2024 progress
Link to KPIs
Objectives for 2025
Accelerate
value
creation
•
Drive short-to-medium-term
returns through priority portfolio
companies that disproportionately
impact returns and underpin the
business model
•
Develop and apply capital
allocation framework across sectors
and geographies, maintaining
financial strength through
balancing investment, realisations
and shareholder returns
•
Further develop access to capital
across the funding spectrum
•
Explore bold ways of creating value
•
Total portfolio investment of £63m across 38
companies
•
Portfolio raised total £784m of capital funding
demonstrating quality
•
Greater focus on exits, revenue generation and
costs to maintain financial strength. Reduction in
net overheads of 13%
•
Total cash proceeds from exits of £183.4m
•
Two significant exits – Garrison and Featurespace,
the latter generating cash significantly above
NAV. Strong pipeline of future realisations
•
Completed £20m share buyback and majority of
£10m extension. Announced intention to extend
the buyback programme in January 2025
01
02
03
04
06
07
09
•
Delivery of priority company
milestones
•
Continued focus on exits
and revenue generation to
maintain financial strength
•
Narrow discount between
share price and NAV/share
•
Increase managed and
advised third-party capital
•
Continue to buy back equity
when NAV at >20% discount
Build a truly
distinctive
reputation
•
Develop and maintain a
distinctive and authentic brand
for shareholders, founders and
co-funders
•
Establish IP Group as an opinion
leader in key ecosystems, including
through category brands
•
Actively promote our financial and
impact track record
•
Raised £95m of third-party managed funds;
third-party AUM now £669m
•
Won three awards for the Group’s new branding
and shortlisted for another three
•
Secured national broadcast and print media
coverage on key issues
•
Completed investor relations programme with
roadshows in the UK, Europe, Middle East and Far
East, as well as capital markets events
05
06
09
•
Continue to build recognition
of IP Group and Parkwalk’s
status as leading investors in
science and technology
•
Continue to help shape
the operating environment
through engagement
•
Continued focus on IR
programme
Be a
home for
exceptional
talent
•
Develop, nurture and grow our
exceptional people, building and
maintaining the quality of our
relatively small team
•
Maintain an engaging, motivating
employee offer that demonstrates
our uniqueness
•
Strongly align remuneration with the
achievement of our vision
•
Build our culture and values,
celebrating diversity, inclusion,
high-challenge/high-support and
regenerating success
•
Delivered 2024 Inclusion and Diversity (“IDP”)
masterplan objectives, being recognised as the
“Top Performing VC Fund” in the 2024 Honordex
Inclusive PE & VC Index
•
Continued evolution of our employee offer,
including effective, stakeholder aligned,
remuneration
•
Introduction of a streamlined and simplified
structure, improving decision-making and
reducing costs
•
Maintained employee engagement (measured
by eNPS) in the “very high” category
•
Successfully embed new
structure, supporting the
build of effective teams
where appropriate
•
Maintain employee
engagement in the “very
high” category
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IP GROUP PLC ANNUAL REPORT 2024
15
STRATEGIC REPORT
BUSINESS OVERVIEW
STRATEGIC PROGRESS
.
OUR FINANCIALS
OUR GOVERNANCE
STRATEGIC REPORT
BUSINESS OVERVIEW
Portfolio breakdown
Number of
companies
Fair value
£
Healthier future: Life Sciences
29
348.5
Healthier future: Oxford Nanopore
1
106.6
Tech-enriched future: Deeptech
27
89.4
Regenerative future: Cleantech (Kiko Ventures)
20
215.9
Platform Investments
5
77.0
Total portfolio
82
837.4
9%
26%
11%
13%
42%
Platform investments are funds or portfolio companies that invest in other opportunities.
Portfolio analysis
Constituent parts of an IP Group share
NAV
97.7 pence
per share
(4.3)
38.7
11.0
3.7
4.4
7.9
9.4
10.9
16.0
KEY
Net cash
Oxa Autonomy Ltd
Oxford Nanopore
Technologies plc
Hinge Health, Inc
Other top 10
Istesso Limited
Remaining portfolio
Hysata Pty Ltd
Other net liabilities
16
IP GROUP PLC ANNUAL REPORT 2024
PORTFOLIO
.
OUR FINANCIALS
OUR GOVERNANCE
BUSINESS OVERVIEW
STRATEGIC REPORT
Mark Reilly
Managing Partner
The Group’s portfolio performed
strongly in terms of cash generation
from full and partial exits, the bulk
of which came from the sale of two
companies, Featurespace Ltd and
Garrison Technology Ltd, from our
Deeptech portfolio, with the balance
from Life Sciences. Many of the
Group’s ‘up and coming’ portfolio
companies, particularly in Life Sciences,
have key developmental milestones
approaching that could have a
material impact on their value in the
next six to eighteen months.”
Overview
IP Group invests in innovative breakthrough technologies that address the profound societal and economic
shifts shaping our future. We invest across three broad themes into companies that contribute to a healthier
future (Life Sciences), a tech-enriched future (Deeptech) and a regenerative future (Cleantech, through our
Kiko Ventures platform). In addition, a small number of investments are categorised as platform investments,
which are funds or portfolio companies that invest in other opportunities.
As at
31 December 2024
As at
31 December 2023
Sector
£m
%
£m
%
Healthier future: Life Sciences (ex-ONT)
348.5
41%
393.8
33%
Healthier future: Life Sciences (ONT)
106.6
13%
173.6
15%
Tech-enriched future: Deeptech
89.4
11%
231.4
20%
Regenerative future: Cleantech
(Kiko Ventures)
215.9
26%
275.3
24%
Platform investments
77.0
9%
90.8
8%
Total portfolio
837.4
100%
1,164.9
100%
In 2024, the Group’s balance sheet investment activities were consolidated with the investment team
retaining exceptional expertise including the investment partners who delivered the Group’s top portfolio
achievements over the past several years such as Ceres Power, WaveOptics, Featurespace and Hinge Health.
Combining deep scientific knowledge with commercial acumen, the team is well-positioned to deliver growth
in our existing portfolio, identify transformative technologies and capitalise on emerging opportunities.
By targeting opportunities arising from the world’s most significant socioeconomic megatrends such as the
transition to intelligent computing, climate change, and advancements in healthcare for growing and aging
populations, we aim to support the development of transformative solutions with global impact. Our portfolio
companies are at the forefront of these changes, leveraging cutting-edge innovations to solve critical
challenges and create sustainable value for society and investors alike.
Performance of key holdings
As detailed in the Chief Executive’s Review, the Group’s portfolio performed strongly in terms of cash
generation from full and partial exits, the bulk of which came from the sale of two companies, Featurespace
Ltd and Garrison Technology Ltd, from our Deeptech portfolio with the balance from Life Sciences.
Despite this success on realisations, 2024 was a poor year overall for NAV performance with the portfolio
recording a fair value reduction of 17%. This was driven by substantial value reductions in a handful of our
most valuable holdings, the largest of which was a £66m fall in the value of our holding in Oxford Nanopore
Technologies plc. Shares in Oxford Nanopore ended the year 38% lower than they started, albeit having made
an appreciable recovery from the low point around mid-year.
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The following table outlines the performance of the Top 10 constituents of our portfolio:
Company
Group stake
at
31 December
2024
%
Net
investment/
(divestment)
£m
Net
unrealised
+ realised
fair value
movement
£m
Fair value at
31 December
2024
£m
Oxford Nanopore
Technologies plc
8.7%
(0.7)
(66.3)
106.6
Istesso Limited
56.5%
1
10.0
(31.9)
91.9
Hysata Pty Ltd
37.0%
11.7
(4.9)
2
76.8
Oxa Autonomy Limited
11.8%
–
(22.9)
42.7
Hinge Health, Inc.
1.7%
–
2.5
36.6
First Light Fusion Limited
27.5%
–
(39.9)
25.0
Pulmocide Limited
11.8%
3.7
0.2
23.1
Mission Therapeutics
Limited
21.2%
3.7
3.0
22.5
Nexeon Limited
5.1%
–
7.5
19.4
Artios Pharma Limited
7.3%
–
0.1
17.4
Other portfolio
n/a
(149.2)
(42.4)
375.4
Total portfolio
(120.8)
(195.0)
837.4
1
Represents undiluted economic interest. Voting interest is below 50%
2
Relates to unrealised FX loss
Despite its share price performance, Oxford Nanopore’s underlying performance has
remained strong with the company recently reporting underlying revenue growth of
23% for the year to £179.2m, excluding the impacts of COVID-19 sequencing and the
Emirati Genome Program. Gross margin increased by 420 basis points to 57.5% (2023:
53.3%), slightly above guidance, driven by margin improvements across the product
portfolio, particularly across both PromethION Flow Cells and devices. Oxford Nanopore
remains well capitalised with £403.8m in cash, cash equivalents and other liquid
investments as at 31 December 2024 (2023: £472.1m). During the second half of the
year, Oxford Nanopore raised gross proceeds of £80m, which included a new £50m
strategic investment from Novo Holdings A/S, a prominent international life sciences
investor. This strategic partnership is expected to bolster Oxford Nanopore’s position in
the biopharmaceutical sector, potentially enhancing its value.
In early 2025, Istesso provided its shareholders with the outcome of its Phase 2b study
of leramistat in rheumatoid arthritis (RA) which was completed in 2024. The leramistat
Phase 2b study was a 12-week randomised, double-blind, placebo-controlled trial
in adults with moderate-severe RA and an inadequate response to treatment with
methotrexate. Although the study did not meet the primary endpoint of improvements
in ACR20 versus placebo, leramistat did demonstrate statistically significant reductions
in the key secondary endpoint of bone erosions, as well as improvements in disability
and fatigue. Following the results and reflecting input from our external valuation
adviser, we have taken the decision to reduce the carrying value by £31.9m. Further
information on the valuation approach including sensitivity analysis is provided in Note
13 within the financial statements.
Istesso highlighted that these findings demonstrate leramistat’s unique mechanism of
action (MOA) and support further evaluation of its potential to promote adaptive tissue
repair in combination with existing disease-modifying anti-rheumatic drugs (DMARDs)
in RA, as well as in other chronic conditions.
Istesso also drew attention to the fact that treatment with leramistat significantly
reduced or stopped the progression of bone erosions. Bone erosions are a central
feature of RA and appear early in the course of the disease. Progression of bone
erosions leads to bone damage and is a major driver of disability and increased
mortality in people living with RA.
Istesso will publish full study results in due course and plans further Phase 2 studies to
evaluate leramistat’s unique potential to promote adaptive tissue repair in RA, as well
as other chronic conditions. Istesso is sufficiently funded to conduct these studies.
Hysata is continuing to develop its high-efficiency electrolyser for green hydrogen
production with an efficiency of 95%, significantly higher than existing commercial
systems. The company announced in May 2024 that it had secured a record-
breaking $111m Series B funding round, co-led by bp Ventures and Templewater, with
participation from IP Group. This investment is intended to expand production capacity
at Hysata’s manufacturing facility in Wollongong, New South Wales, and to advance
their technology towards gigawatt-scale manufacturing. In December, Hysata
entered into Joint Development Agreements with POSCO Holdings and POSCO E&C
to collaboratively enhance electrolyser development through material research and
engineering, aiming to accelerate the commercialisation of Hysata’s next-generation
technology.
While Oxa had a strong year with a number of significant commercial successes, we
have reduced the carrying value to reflect the contraction in comparator valuations
since their last funding round in 2022 and the relative scarcity of capital compared to
that period.
Our innovative nuclear energy company First Light Fusion has not yet succeeded in
raising new capital but has now pivoted its business model to focus on becoming
an IP-rich technology provider, leveraging its amplifier technologies for inertial
confinement fusion (ICF) schemes. This approach has been supported by successful
validation experiments at the Sandia National Laboratories, breaking performance
records and showcasing significant potential for commercialisation. We expect the
company to secure its first revenues imminently. While the company continues to
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pursue alternative funding options and expect to announce developments soon on
that front, we have revised the valuation of our holding to reflect current status.
Aside from Oxford Nanopore, Istesso and First Light, the next largest negative
movement was contributed by a write down for our holding in Ultraleap (£26.5m)
which experienced commercial headwinds due to slower than expected global uptake
of Extended Reality (XR) technologies, though the company recently announced a
partnership to exploit the value of its extensive foundational patents that has the
potential to yield substantial future value for IP Group if it is successful.
Since the year-end, portfolio company Hinge Health, which we backed from inception,
filed its IPO prospectus with the US Securities and Exchange Commission. As the
founding investor in Hinge Health, IP Group has a 1.8% holding in the Company, valued
by the Group at £36.6m as at 31 December 2024.
Upcoming milestones
Many of the Group’s “up and coming” portfolio companies, particularly in Life Sciences,
have key developmental milestones approaching that could have a material impact
on their value in the next six to eighteen months.
In Life Sciences, key trial results are expected from Artios over the next 12 months. Artios
has a pipeline of novel cancer therapies in development that target DNA Damage
Response (DDR) pathways to specifically destroy certain cancers that are difficult to
treat. Artios has built a platform for developing novel inhibitors of specific DNA repair
enzymes. Its lead programme (ATR inhibitor) is in Phase 2 for a genetic subtype of
cancers (ATM negative) that is found in several solid tumours including endometrial
(uterus) cancer, colorectal cancer and ovarian cancer. Initial data was reported in late
2023 (several confirmed responses, and tumour marker reductions), and full data is
expected later this year or early 2026. Artios also has a second programme (PolQ) in
Phase 1/2a with data expected in late 2026.
Iksuda, which is developing next-generation Antibody Drug Conjugates (ADCs) for
difficult-to-treat cancers, has two programmes in Phase 1 which are expected to read
out in the second half of the year while Enterprise Therapeutics is expected to report
data from its Phase 2a trial of ETD001 for cystic fibrosis in the second half. Enterprise
Therapeutics is dedicated to the research and development of novel therapies that
target the underlying mechanisms of mucus congestion in the lungs (one of the main
causes of difficulty in breathing and increased risk of infection in respiratory diseases
such as cystic fibrosis, asthma, and chronic obstructive pulmonary disease).
Microbiotica, which has a proprietary microbiome profiling platform that allows it
to identify whether specific bacterial strains have clinical benefits, is also expected
to issue data from trials of its most advanced programmes (MB097 – its Immuno-
Oncology Programme, and MB310 – its Ulcerative Colitis Programme) toward the end
of this year/early next year.
Pulmocide, which is developing inhaled medicines for the treatment of respiratory
tract infections, is expected to report data from its Phase 3 study of its lead drug
opelconazole for invasive pulmonary aspergillus (IPA), a life-threatening lung infection
in 2026. Opelconazole is a potent inhaled antifungal agent for the treatment of
aspergillus infections of the lung in patients with asthma, cystic fibrosis or following
lung transplantation.
In Cleantech, portfolio company Hysata remains on course to demonstrate a 100kW
hydrogen system this year which would be a key validation point in proving the
capability to scale their breakthrough technology.
Investment focus areas and opportunities
Our investment team has extensive expertise across science, technology, and finance,
bridging the gap between academic innovation and commercial success, creating
a thriving ecosystem for high-impact businesses. The Group is also committed to
impact-driven investment, with a focus on global challenges like climate change,
healthcare innovation, and resource efficiency.
The team continually assesses new opportunities that have the potential to have a
positive impact and deliver exceptional returns and continues to develop an exciting
portfolio of companies across the three sectors we are active in.
Digital Transformation:
The global “digital transformation”, characterised by the
comprehensive integration and relentless increase in sophistication of digital
technologies in every aspect of society and business, is the most profound and
pervasive megatrend shaping the future of our world. Global spending in this area is
forecast to reach $3.4 trillion by 2026.
IP Group has been investing for many years in the fundamental technologies
enabling this transition including artificial intelligence, future computing hardware,
human-machine interfaces and next generation communication innovations. We
are particularly interested in the opportunities for innovation in the compute stack
presented by the changing demands of processing and storage power required
for artificial intelligence to operate at the edge of the network. A good example of a
rising star in this field is our portfolio company Lumai that is pioneering the use of all-
optical neural networks to dramatically accelerate AI computations while reducing
energy consumption, leveraging photonics technology to overcome the limitations
of traditional electronic circuits. Another portfolio company, Intrinsic, is developing
advanced semiconductor memory solutions that could enable faster, more efficient
data processing, critical for AI applications at the network edge.
The transition to a sustainable, low-carbon economy:
In the domain of reducing
humanity’s future reliance on fossil fuels, our cleantech investment vehicle Kiko
Ventures is backing breakthrough technologies driving the transition to a sustainable,
low-carbon economy. Its key focus areas include green hydrogen, energy storage,
carbon capture and utilisation, resource efficiency, and decarbonisation technologies
across energy, transportation, and industry. Kiko has backed up-and-coming start-ups
including University of Oxford spin-outs OxCCU, which is producing sustainable fuels
and chemicals by converting carbon dioxide and hydrogen into high-value products,
and Mixergy, which develops smart hot water tanks.
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Healthcare and digital health:
Finally, in the healthcare domain we are continuing to
support our therapeutics assets as they mature through clinical trial phases whilst also
seeking new opportunities at the boundaries between technology and healthcare in
the digital health domain, a market that is already worth $347bn worldwide. A good
example in this domain is our portfolio company Oxehealth, another University of
Oxford spin-out, that uses advanced video analytics to remotely measure human vital
signs and activity.
Platform investments
IP Group’s Platform investments portfolio comprises holdings in funds and companies
that operate in a similar way to IP Group, most significantly our interest in our US
platform, managed by Longview Innovation, Oxford Science Enterprises Limited,
Cambridge Innovation Capital Limited, and the UCL Technology Fund in all of
which IP Group was a founding investor. This portfolio was valued at £77.0m at
31 December 2024 (2023: £90.8m).
Having been unable to secure additional significant funding from third parties other
than $0.9m which the Group invested in 2024, Longview Innovation has significantly
reduced its cost base and is focused on a number of its most promising portfolio
companies, resulting in a corresponding portfolio fair value reduction of £9.1m in the
year (2023: £42.1m reduction).
Number of investments by sector
As at
31 December 2024
As at
31 December 2023
Sector
Number
%
Number
%
Healthier future: Life Sciences (ex-ONT)
29
36%
32
37%
Healthier future: Life Sciences (ONT)
1
1%
1
1%
Tech-enriched future: Deeptech
27
33%
32
37%
Regenerative future: Cleantech
(Kiko Ventures)
20
24%
16
19%
Platform investments
5
6%
5
6%
Total number of portfolio investments
1
82
100%
86
100%
1
Excludes de minimis holdings, which have a small value to the Group and are not actively
managed to the same extent as core holdings
Portfolio funding position
The following table lists information on the latest possible funding dates for portfolio
companies where IP Group’s investment holding value is greater than £4m, with the
dates reflecting the funding position as at the date of publication.
Fair value of
Group holding at
31 December 2024
£m
%
Funded to breakeven
207.6
30%
2025 H1
106.0
15%
2025 H2
23.6
3%
2026
315.5
47%
2027
34.3
5%
Total companies > £4m value
687.0
100%
Companies < £4m value
76.0
Interest in Limited Partnerships and Platforms
74.4
Total portfolio
837.4
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•
Loss for the period of £207.0m (2023: loss of £174.4m)
•
Net assets £952.5m (2023: £1,190.3m)
•
Net assets per share 97.7p (2023: 114.8p)
Consolidated statement of comprehensive income
A summary analysis of the Group’s performance is provided below:
Year ended
31 December 2024
£m
Year ended
31 December 2023
£m
Net portfolio (loss)
1
(195.0)
(160.5)
Net overheads
2
(19.8)
(22.5)
Foreign exchange
2.7
0.4
Restructuring costs – labour
(2.4)
–
Restructuring costs – professional
(0.3)
–
Administrative expenses –share-based payments charge
(1.9)
(2.6)
Carried interest plan and other deal incentives credit
7.9
4.7
Net finance income
2.1
4.2
Taxation
(0.3)
1.9
Loss for the year
(207.0)
(174.4)
Other comprehensive (expense)
(fx on retranslation of foreign subsidiaries)
(3.0)
(0.4)
Total comprehensive loss for the year
(210.0)
(174.8)
Exclude:
Share-based payment charge
1.9
2.6
Return on NAV
1
(208.1)
(172.2)
1
Defined in note 27 Alternative Performance Measures.
2
See net overheads table on page 22 and definition in note 27 Alternative Performance Measures.
Net portfolio gains/(losses) consist primarily of realised and unrealised fair value gains and losses from
the Group’s equity and debt holdings in spin-out businesses, which are analysed in detail in the portfolio
analysis section.
David Baynes
Chief Financial and Operating Officer
The Group prioritised generating profitable
cash realisations and made excellent
progress in 2024, recording total cash
proceeds of £183.4m, nearly five times the
level achieved in 2023. This enabled the
Group to increase its buyback, as well as
reinvest for future growth.
While continued delays in private
company funding rounds, along with
some company-specific setbacks,
resulted in NAV falling to 97.7 pence per
share, we remain confident in portfolio
valuations and the potential for growth
in the future.”
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Fair value movements
A summary of the unrealised and realised fair value gains and losses is as follows:
Year ended
31 December 2024
£m
Year ended
31 December 2023
£m
Quoted equity & debt investments
(52.0)
(31.8)
Private equity & debt investments
(123.5)
(83.8)
Investments in Limited Partnerships
(13.1)
(36.5)
Foreign exchange movements
(6.4)
(8.4)
Net portfolio losses
(195.0)
(160.5)
A summary of the largest unrealised and realised fair value gains and losses by
portfolio investment is as follows:
Gains
£m
Featurespace Limited
(realised gain)
56.9
Centessa Pharmaceuticals plc
(partial realised gain)
10.3
Nexeon Limited
7.5
Kynos Therapeutics Limited
(realised gain)
5.7
Zihipp Limited (realised gain)
4.6
Other quoted (4 companies)
5.5
Other private (31 companies)
22.1
Foreign exchange
1.5
Total
114.1
Losses
£m
Oxford Nanopore Technologies plc
(66.3)
First Light Fusion Limited
(39.9)
Istesso Limited
(31.9)
Ultraleap Holdings Limited
(26.5)
Oxa Autonomy Limited
(23.0)
Other quoted (3 companies)
(1.5)
Other private (39 companies)
(112.0)
Foreign exchange
(8.0)
Total
(309.1)
Realised fair value gains
Gains on disposal of equity investments represents the difference between the fair
value of consideration received and the carrying value at the start of the accounting
period for the investment in question. The net portfolio loss figure above includes
£63.7m realised gains, the largest of which relates to the gain on disposal of
Featurespace, along with several other realised gains marked in the table above.
Net overheads
Year ended
31 December 2024
£m
Year ended
31 December 2023
£m
Other income
5.5
5.9
Administrative expenses – all other
expenses
(22.5)
(25.8)
Administrative expenses – annual
incentive scheme
(2.2)
(2.6)
Net overheads
(19.2)
(22.5)
Other income
Other income comprises fund management fees and licensing and patent income. In
2024 other income totalled £5.5m (2023: £5.9m), a decrease from 2023 primarily due
a reduction in licensing and patent income partially offset by a £0.4m increase in fund
management fees on third party funds.
Other central administrative expenses including
restructuring costs
Other central administrative expenses, excluding performance-based staff incentives
and share-based payments charges, have decreased by £2.7m from the prior year to
£22.5m (2023: £25.8m) because of reductions in non-staff cost across several expense
categories following a sustained focus on cost reduction.
In the second half of the year, we completed a restructuring and reorganisation of our
business, which will reduce our ongoing costs by around £5m per annum or 23% on
an ongoing basis. This resulted in £2.7m restructuring charge, reflecting the costs of
redundancies made and other restructuring actions taken including the closure of our
Hong Kong operations.
The charge of £2.2m (2023: £2.6m) in respect of the Group’s Annual Incentive Scheme,
reflects a provisional assessment of performance against 2024 AIS targets which
include Group, Team, and Individual performance elements as described in the
Directors Remuneration Report.
Other income statement items
The share-based payments charge of £1.9m (2023: £2.6m) reflects the accounting
charge for the Group’s Restricted Share Plan, Long-Term Incentive Plan and Deferred
Bonus Share Plan. This non-cash charge reflects the fair value of services received
from employees, measured by reference to the fair value of the share-based
payments at the date of award, but has no net impact on the Group’s total equity or
net assets.
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Carried interest plan credit
The carried interest plan credit of £7.9m (2023: £4.7m credit) relates to the
recalculation of liabilities under the Group’s carry schemes, with the credit in the
year reflecting this year’s reduction in value of assets within the scheme. As at
31 December 2024, 65% by value of the Group’s equity & debt investments were
included within carry scheme arrangements (2023: 70%). The liabilities are calculated
based upon any excess of current fair value above cost and hurdle rate of return
within each scheme or vintage. Any payments will only be made following the full
achievement of cost and hurdle via cash realisations and are only paid on the event of
a cash realisation.
Consolidated statement of financial position
A summary analysis of the Group’s assets and liabilities is provided below:
Year ended
31 December 2024
£m
Year ended
31 December 2023
£m
Portfolio
837.4
1,164.9
Other non-current assets
20.4
10.2
Other net current assets/(liabilities)
(4.7)
(7.5)
Cash and deposits
285.6
226.9
Borrowings
(129.1)
(135.2)
Other non-current liabilities
(57.1)
(69.0)
Total Equity or Net Assets (“NAV”)
952.5
1,190.3
NAV per share
97.7p
114.8p
The composition of, and movements in, the Group’s portfolio are described in the
portfolio review above.
Portfolio valuations
2024 saw an increase in the level of capital raised by the portfolio compared to 2023,
with £784m raised (2023: £667m), with our Life Sciences portfolio seeing a particularly
active fundraise period. Across 19 fundraises within our portfolio, 10 were “up” financing
rounds (i.e. raised at a higher valuation than the previous financing rounds), 3 were
“flat” rounds and 6 were “down” rounds. All 6 down rounds had already been reflected
in our 2023 valuations, either reflecting our assessment of setbacks within the
businesses in question leading to valuation adjustments, or due to visibility of the terms
of a forthcoming early-2024 financing. The proportion of down rounds was higher than
has been seen in previous years, reflecting challenging market conditions. In addition,
we have reflected valuation reductions in a number of cases where valuation rounds
have been delayed and which are therefore not included in the statistics on the right.
Year ended
31 December 2024
Year ended
31 December 2023
Analysis of priced funding
rounds in private portfolio
Number
%
Number
%
Up round
10
52%
13
62%
Flat round
3
16%
3
14%
Down round
6
32%
5
24%
Total
19
100%
21
100%
The above table reflects priced funding rounds in the private portfolio (excluding
organic and de minimis companies) and excludes debt funding and funding
transactions where a subsequent tranche is drawn based on pre-agreed pricing.
The table below summarises the valuation basis for the Group’s portfolio. Further
details on the Group’s valuation policy and approach can be found in notes 13 and 14.
Year ended
31 December 2024
£m
Year ended
31 December 2023
£m
Quoted
133.1
203.8
Financing transaction (<12 months)
217.8
187.9
Financing transaction (>12 months)
54.9
162.7
Other: Future market/commercial events
60.7
25.0
Other: Adjusted financing price based on
past performance – upwards
35.9
99.9
Other: Adjusted financing price based on
past performance – downwards
152.7
203.9
Other: Discounted cash flow (“DCF”)
97.2
126.6
Other: Revenue multiple
13.1
85.4
Fair value of investments
765.4
1,095.2
Statements from LP
58.1
69.7
Assets held for sale
13.9
–
Total portfolio
837.4
1,164.9
Within the ‘other: DCF’ category above, the largest individual amount relates to
the Group’s investment in Istesso Limited. Details of the critical estimates and
valuation sensitivities in respect of this investment are included in Note 13 within the
Group’s accounts.
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Other assets and liabilities
The majority of other long-term assets relate to amounts receivable on sale of equity
and debt investments, representing deferred and contingent consideration amounts
to be received in more than one year.
Other long-term liabilities relate principally to carried interest (described above), and
loans from LPs of consolidated funds. The Group consolidates the assets of a fund
in which it has a significant economic interest, IP Venture Fund II LP. Loans from third
parties of consolidated funds represent third-party loans into this partnership. These
loans are repayable only upon these funds generating sufficient realisations to repay
the Limited Partners.
Borrowings
On 2 August 2022, the Group signed a Note Placing Agreement (“NPA”) to issue a £120m
debt private placement, primarily with Phoenix Group. The notes are repaid in £40m
tranches in December in 2027, 2028 and 2029. The interest rate is fixed at an average
of 5.25%. The Group also has a £9.4m EIB debt facility which is being repaid between
now and January 2026 (£6.3m of the EIB debt will be repaid within twelve months of the
period end).
Under the terms of the NPA, the Group is required to maintain a minimum cash
balance of £25m at any time, equity must be at least £500m and gross debt less
restricted cash must not exceed 25% of total equity as at the Group’s 30 June and
31 December reporting dates. The NPA also includes ‘Cash Trap’ provisions which
stipulate that the Group is required to maintain cash and cash equivalents of no
less than £50m at any time, equity must be at least £750m, and gross debt less
restricted cash must not exceed 20% of total equity as at the Group’s 30 June and
31 December reporting dates. In the event of the Cash Trap being triggered, the
Group is not permitted to pay or declare a dividend or purchase any of its shares. In
addition, investments are restricted to £2.5m per calendar quarter other than those
legally committed to. The Group is also required to place the net proceeds of all cash
proceeds (over a threshold of £1m) into a blocked bank account. Entering a Cash Trap
does not constitute a default under the NPA.
All covenants have been met throughout the period. For further details of the Group’s
loans including covenant details see note 18.
Cash and deposits
At 31 December 2024, the Group’s cash and deposits totalled £285.6m, an increase
of £58.7m from a total of £226.9m at 31 December 2023, predominantly due to
realisations of £183.4m.offset by outflows from portfolio investment of £63.0, a £25.1m
net cash outflow from operations and £29.6m of share buybacks.
The principal constituents of the movement in cash and deposits during the period are
as follows:
Investments and realisations
The Group invested a total of £63.0m across 38 portfolio companies during the year
(2023: £73.2m; 33) and realised cash proceeds of £183.4m (2023: £38.6m).
Largest investments and realisations by portfolio company:
Investments
£m
Cash realisations
£m
Hysata Pty Ltd
11.7
Featurespace Limited
118.8
Istesso Limited
10.0
Garrison Technology Limited
29.9
Pulmocide Limited
3.7
Centessa Pharmaceuticals plc
10.6
Mission Therapeutics Limited
3.7
Kynos Therapeutics Limited
9.2
Genomics Limited
3.1
Zihipp Limited
4.4
Other
30.8
Other
10.5
Total
63.0
Total
183.4
Treasury policy
It remains the Group’s policy to place cash that is surplus to near-term working capital
requirements on short-term and overnight deposits with financial institutions that
meet the Group’s treasury policy criteria or in low-risk treasury funds rated prime or
above. The Group’s treasury policy is described in detail in note 3 to the Group financial
statements alongside details of the credit ratings of the Group’s cash and deposit
counterparties.
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Dividend and share buyback
In its 2023 results, the Group reiterated the Board’s commitment to making regular
cash returns to shareholders from realisations but announced that, in light of the
prevailing discount between the Company’s share price and its NAV per share, these
regular cash returns will normally be made in the form of share buybacks when the
share price discount to NAV exceeds 20%. As a result, no dividends were paid in the
period (HY23: £7.7m, 2023: £13.0m), and instead the Group has been engaged in a
buyback programme since late 2023.
During 2024, the Company purchased 45,280,605 ordinary shares (2023: 200,302
ordinary shares), with an aggregate value of £0.9m (2023: £0.2k) which were initially
held in treasury prior to being cancelled in September 2024 along with a further
26,493,520 treasury shares held at the start of the year which were also cancelled
at the same time. A further 20,609,101 shares with an aggregate value of £0.5m were
purchased in the period September to December 2024 and immediately cancelled.
In January 2025 the Group launched a further extension by up to £40m of its buyback
programme, which had been announced in December 2024. In March 2025, as part of
the Group’s preliminary results statement, the Group announced its intention to extend
the buyback programme by a further £10m.
The Directors are seeking shareholder buyback authority at a General Meeting,
convened for 24 April 2025 to ensure the Group retains sufficient flexibility to execute its
current buyback programme in the intervening period leading up to the AGM in June
2025, with the Notice of General Meeting being posted to shareholders.
Taxation
The Group’s business model seeks to deliver long-term value to its stakeholders
through the commercialisation of fundamental research carried out at its partner
universities. To date, this has been largely achieved through the formation of, and
provision of services and development capital to, spin-out companies formed around
the output of such research. The Group primarily seeks to generate capital gains
from its holdings in spin-out companies over the longer term but has historically
made annual net operating losses from its operations from a UK tax perspective.
Capital gains achieved by the Group would ordinarily be taxed upon realisation of
such holdings; however, since the Group typically holds more than 10% in its portfolio
companies and those companies are themselves trading, most of the portfolio will
qualify for the Substantial Shareholdings Exemption (“SSE”) on disposal.
This exemption provides that gains arising on the disposal of qualifying holdings are
not chargeable to UK corporation tax and, as such, the Group has continued not to
recognise a provision for deferred taxation in respect of uplifts in value on those equity
holdings that meet the qualifying criteria. Gains arising on sales of holdings which do
not qualify for SSE will ordinarily give rise to taxable profits for the Group, to the extent
that these exceed the Group’s ability to offset gains against current and brought
forward tax losses (subject to the relevant restrictions on the use of brought-forward
losses). In such cases, a deferred tax liability is recognised in respect of estimated tax
amount payable.
The Group complies with relevant global initiatives including the US Foreign Account
Tax Compliance Act (“FATCA”) and the OECD Common Reporting Standard.
David Baynes
Chief Financial and Operating Officer
24 March 2025
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01
NAV/share p
1
02
Return on NAV £
1
Net Assets divided by the number of outstanding
shares in issue. A useful measure to compare to
the Group’s share price.
Profit for the year excluding share-based
payment charges. Shows a summary of the
income statement gains and losses that directly
impact NAV.
125.3
167.0
132.9
114.8
97.7
2024
2023
2022
2021
2020
Link to strategy
Link to
remuneration
Yes
189.5
452.2
(341.1)
(172.2)
(208.1)
2024
2023
2022
2021
2020
Link to strategy
Link to
remuneration
Yes
03
Total portfolio £m
1
04
% return on portfolio
1
Equity and debt investments plus investments
into limited partnership interests. Shows assets
generating investment returns.
Net portfolio gains or (losses) as a percentage of
total portfolio value. A useful measure to compare
annual returns.
1184.9
1507.5
1258.5
1164.9
837.4
2024
2023
2022
2021
2020
Link to strategy
Link to
remuneration
Yes
21
42
(20)
(13)
(23)
2024
2023
2022
2021
2020
Link to strategy
Link to
remuneration
Yes
Our KPIs measure performance
against our strategy.
KEY
Have an impact on the world that counts
Develop our unique insight, expertise and access
Accelerate value creation
Build a truly differentiated reputation
Be a home for exceptional talent
1
Alternative performance measure. See note 27 for definition and reconciliation to IFRS primary statements.
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IP GROUP PLC ANNUAL REPORT 2024
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05
Portfolio investment £m
1
06
Cash proceeds £m
07
Net overheads %
1
The purchase of equity and debt investments plus
investments into limited partnership interests. A
useful measure to compare annual investment in
the portfolio.
The total amount received from the disposal of
interests in portfolio companies and distributions
from limited partnership funds. Realised funds
are invested into new opportunities or returned to
shareholders.
The Group’s core overheads less operating income
as a percentage of net assets. Reflects the Group’s
controllable “cash-equivalent” cost base in
proportion to net assets.
72.0
106.7
93.5
73.2
63.0
2024
2023
2022
2021
2020
Link to strategy
Link to remuneration
Yes
191.0
213.4
28.1
38.6
183.4
2024
2023
2022
2021
2020
Link to strategy
Link to remuneration
Yes
1.6
1.1
1.5
1.9
2.1
2024
2023
2022
2021
2020
Link to strategy
Link to remuneration
Yes
08
Number of new portfolio
investments
09
Third-party assets under
management £m
The number of portfolio investments that received
initial capital from the Group during the year. A
measure of the Group’s ability to find and invest
in new opportunities. Revised in 2023 to include
Parkwalk investments.
Third-party funds and capital managed or advised
by the Group. Shows progress against the Group’s
stated objective to increase capital managed on
behalf of third-party investors.
22
28
15
10
27
2024
2023
2022
2021
2020
Link to strategy
Link to remuneration
Yes
541.9
586.6
696.8
650.9
669
2024
2023
2022
2021
2020
Link to strategy
Link to remuneration
Yes
1
Alternative performance measure. See note 27 for definition and reconciliation to IFRS primary statements.
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27
KEY PERFORMANCE INDICATORS
.
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STRATEGIC REPORT
KEY PERFORMANCE INDICATORS
.
We are focused on having an impact on the world that counts
Driven by our purpose, we are working at the cutting edge of sectors that are changing
the world. Our three investment themes align our efforts with some of the most
pressing challenges facing humanity and our planet: curing and preventing disease;
managing complex data to solve complex problems; and the decarbonisation of
energy systems to limit climate change. At the same time, we consider how the
way we run our business can maximise impact – through strong governance and
ethical practice; for our exceptionally talented people; for our communities and the
environment; and by supporting our portfolio companies to do the same.
Environment and climate
IP Group’s carbon footprint and exposure to
climate risk as an organisation is low. Through
our investments in carbon capture, nuclear
fusion and hydrogen technology, we also have
a significant opportunity to support the global
transition away from fossil fuels in support
of the Paris Climate Agreement. IP Group’s
Deeptech investments include technologies that
are working to improve product performance
whilst reducing energy consumption, from new
computing architectures to next generation
wireless networks.
Social
We are a responsible organisation that seeks
to have a positive impact on people and
society through our investments and the way
we operate. We conduct all of our operating
and business activities in an honest, ethical
and socially responsible manner, acting
professionally, fairly and with integrity in all
business dealings and relationships. Our culture
and internal frameworks guide our behaviour
and help us focus on the things that really matter
– such as meeting our commitments, developing
and supporting our people, furthering diversity
and inclusion, and making a difference in our
communities. In our Life Sciences portfolio we
are building companies for a healthier future
and in our Deeptech portfolio companies that
will support current and future societal needs in
computing, communication and mobility.
Governance
IP Group endeavours to conduct business in
accordance with established best practice,
to be a responsible employer, and to adopt
appropriate values and standards. We take
our duty as active, responsible investors
and stewards seriously, and our governance
practices in relation to our portfolio companies.
The Group’s Board of Directors oversees the
Group’s approach to ESG and ensures that
ESG factors are incorporated into the Board’s
decision-making process. Further details on
the day-to-day responsibility for ESG matters is
set out on page 32. In 2024 the Group’s Annual
Incentive Scheme (“AIS”) once again contained a
hybrid ESG metric. 50% relates to outperforming
ESG benchmarks and 50% relates to progressing
the collection and analysis of data and
development of impact metrics for the portfolio.
See page 93 for further details.
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IP GROUP PLC ANNUAL REPORT 2024
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Engaging our team
Ensuring our people remain engaged, motivated and aligned with our purpose is as
critical as ever. We recognise the benefits of engaging with our people regularly via
a range of channels, to ensure we are able to develop a positive two-way dialogue,
with both individual employees and representative groups. Our primary measure of
engagement is taken from our Voice of IP Group (“VIP”) surveys.
Our Designated Non-executive Director, Aedhmar Hynes, remains directly responsible
for workforce engagement, acting as a conduit between the Board and the wider
team. Aedhmar attends the regular meetings of our employee forum, IP Connect,
which are facilitated by Anthony York, Group People Director.
IP Connect is a group of employees elected by employees to represent workforce
views. It is consulted regularly for both general and specific feedback on cultural
development as well as other matters. During 2024 the group continued to meet
regularly and provided valuable feedback on a number of key areas, including our
Group values, Executive and wider remuneration, flexible working arrangements and
the corporate reorganisation.
Finally, the small size of our overall team means that we are able to ensure that all of
our people have direct and consistent access to leadership, both informally on a day-
to-day basis and through more formal channels, and at regular all-employee events.
Ethical behaviour
We strive to always conduct our business activities in an honest, ethical and
socially responsible manner and to comply with all laws, regulations and rules
applicable to our business. We expect our portfolio companies, co-investors,
employees and suppliers to hold the same high standards when conducting their
respective businesses.
We are committed to acting professionally and with integrity in all of our
business dealings and relationships, and with consideration for the needs of all of
our stakeholders.
We have adopted policies and standards designed to help and guide employees
in their conduct and business relationships. We take a zero-tolerance approach to
breaches of our policies, and implement and enforce effective systems to mitigate risk.
We provide mandatory training on critical areas such as anti-bribery and corruption,
market abuse, anti-tax evasion and data privacy matters. Copies of our key policies
can be found on our website
www.ipgroupplc.com
.
Human rights and modern slavery
We believe that human rights are universal and non-negotiable. We seek to
promote a working environment where workers are treated with respect, dignity and
consideration, and their fundamental human rights are protected. We comply fully
with applicable human rights legislation in the countries in which we operate, which
includes upholding freedom of association and the right to collective bargaining,
equal remuneration and protection against discrimination.
We are committed to implementing and enforcing effective systems and controls
to ensure modern slavery is not taking place anywhere in our business or supply
chain. We expect the same high standards from our contractors, suppliers and other
business partners. We have adopted principles and policies which are relevant to the
prevention of modern slavery in our organisation. These are overseen and monitored
by our ESG and Ethics Committees. The Company has in place a new supplier checklist,
which includes a confirmation from all new suppliers that they comply in all respects
with the Modern Slavery Act. Our Modern Slavery Statement and our Human Rights
Statement can be found on our website
www.ipgroupplc.com
.
Gender diversity
In the recent past we have focused on gender representation as a proxy of our
progress in this area and, with appropriate data, we will seek to move beyond this
narrow definition of diversity.
Gender split as at 31 December 2024
Male
Female
Number
%
Number
%
Board
4
57%
3
43%
Executive team
7
70%
3
30%
Other senior management/Partners
12
57%
9
43%
Combined senior leadership team
18
60%
12
40%
All employees
32
46%
37
54%
This gender diversity data is determined consistently with the information submitted to
FTSE Women Leaders, accounting for changes to the shape of the organisation after
the submission date. Greg Smith (CEO) and David Baynes (CFOO) are included in data
for the Board and for the Executive team.
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Board and Executive Management diversity
Listing Rules LR 6.6.6R (10) and (11) require the Group to publish information on
Board diversity. Data is for the IP Group Board and Executive Management on
31 December 2024.
Numbers in this table are based on how individuals identify themselves, based on data
which is a subset of data collected regularly from all individuals on a wholly voluntary
basis. Further detail on our Parker Review submission, including our target for senior
management team representation, is set out on page 74.
Executive Management data is for the Executive team. Greg Smith (CEO) and David
Baynes (CFOO) are included in Board data but not the Executive Management data.
Gender
Men
Women
Not specified/
prefer not to say
Number of Board members
4
3
–
Percentage of the Board
57%
43%
–
Number of senior positions on the Board
(CEO, CFO, SID and Chair)
3 (75%)
1 (25%)
–
Number in Executive Management
5
3
–
Percentage of Executive Management
62.5%
37.5%
–
Ethnic background
White British or other
White (including
minority-white groups)
Mixed/
Multiple
Ethnic groups
Asian/
Asian
British
Black/African/
Caribbean/Black
British
Other ethnic
group, including
Arab
Not specified/
prefer not to
say
Number of Board members
6
–
1
–
–
–
Percentage of the Board
86%
–
14%
–
–
–
Number of senior positions on the Board (CEO, CFO, SID and Chair)
4 (100%)
–
–
–
–
–
Number in Executive Management
7
–
1
–
–
–
Percentage of Executive Management
87.5%
–
12.5%
–
–
–
Environment
IP Group’s carbon footprint and exposure to climate risk is low but, as a responsible
business, we continue to focus on managing and reducing the entirety of our
environmental footprint. We aim to become a Net Zero company by 2030 and aim
to achieve this ambition within the time frame by taking a pragmatic approach and
using high-quality carbon offsets.
Sustainable London HQ
Our headquarters in Kings Cross is in an energy-efficient development. The building
has been awarded a BREEAM “outstanding” rating and uses the most efficient route to
create clean localised heat and power.
Environmental disclosures
IP Group is required to report on its annual greenhouse gas (“GHG”) emissions as
part of the Companies Act 2006 (Strategic Report and Directors’ Report) Regulations
2018. IP Group is also required to report in line with Streamlined Energy and Carbon
Reporting (“SECR”) requirements. These requirements include an overview of GHG
emissions, intensity ratios, energy consumption and energy efficiency actions taken by
IP Group over the reporting period for operational office locations. These disclosures
can be found in the table on page 31. See our Task Force on Climate-Related Financial
Disclosures (“TCFD”) disclosure on page 32.
The table on page 31 shows IP Group’s annual energy consumption for global
operations, associated relevant greenhouse gas emissions and additional related
information. This encompasses energy and emissions from office use and has been
expanded beyond the minimum requirements to include emissions associated with
business travel, staff commuting and IT purchases.
The methodology used for the calculation of greenhouse gas emissions is the “GHG
Protocol Corporate Accounting and Reporting Standard”. An “operational control”
boundary has been applied. Carbon conversion factors have been taken from “UK
Government GHG Conversion Factors for Company Reporting – 2022”. Emissions are
reported as tCO
2
e. Scope 2 emissions are reported as “location-based”. Of our total
reported energy consumption, 105,566 kWh was directly related to our UK operations,
producing GHG emissions of 25 tCO
2
e, 86% of our total.
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Energy consumption and emissions
2020
2021
2022
2023
2024
Difference
vs 2023
On-site combustion (kWh)
n/a
n/a
n/a
n/a
n/a
–
Electricity (kWh)
67,165 169,604
122,880
92,245
110,365
20%
Road transport (kWh)
n/a
17,463
n/a
n/a
n/a
–
Total Energy (kWh)
67,165
187,067 122,880
92,245
110,365
20%
Scope 1 emissions (tCO
2
e)
–
–
–
–
–
–
Scope 2 emissions (tCO
2
e)
21
41
24
19
29
53%
Scope 3 emissions (tCO
2
e)
118
42
103
331
218
(34%)
Total emissions (tCO
2
e)
139
83
127
350
247
(29%)
Emissions intensity
tCO
2
e/FTE
1.4
0.9
1.46
3.7
2.7
(27%)
Emissions intensity
tCO
2
e/m
2
0.07
0.05
0.15
0.4
0.3
(25%)
Emissions intensity
IP Group reports two metrics: emissions/staff number in FTE, and emissions per unit of
office floor area in m
2
. The resulting emission intensity calculations for 2024 are:
•
2.7 tCO
2
e/FTE
•
0.3 tCO
2
e/m
2
Our intensity metrics have fallen by 27% and 25% respectively.
Performance
Our Scope 2 emissions increased by 53% vs. 2023 as a result of employees spending
more time in our offices. Scope 3 emissions fell by 34%, primarily as a result of fewer
long haul flights being taken during the year.
Energy efficiency actions
Our offices incorporate a number of energy-efficient technologies: the majority of
light fittings are low energy LED, and motion sensors are installed to maximise energy
efficiency. Other appliances and large office equipment such as printers and laptops
are of energy-efficient design. In 2024 our team participated in the “10 in 10” collective
energy reduction campaign at our office estate, the goal of which was to achieve a
10% reduction in energy consumption during a ten-week period.
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IP Group’s carbon footprint and overall
exposure to climate risk is low
.
Through
our investments we have an opportunity
to contribute to the transition away from
fossil fuels and enable organisations
and governments to meet their Net
Zero goals sooner and support the Paris
Agreement on climate
.
We are well positioned on each of the four elements of
climate-related financial disclosures recommended by
the TCFD.
Governance
Our Board and various Committees ensure active and
ongoing oversight of the Group’s management of
climate-related risk and opportunities.
Strategy
Climate-related risks and opportunities are
integrated into our broader Group-level strategy
and operational processes. The Group’s strategy,
taking into consideration different climate-related
scenarios is resilient. Our purpose focuses us on impact
and we back and support businesses that aim to
meaningfully contribute to a healthier, tech-enriched
and regenerative future, including businesses whose
technologies support action on climate.
Risk Management
We adopt a multifaceted approach to understanding
potential risks to our business and portfolio companies
and ensuring that appropriate mitigations and controls
are enacted for material issues. Climate-related
risks are included in these efforts. We benchmark our
overall ESG and climate risk management process and
disclosures with external ESG ratings agencies, to ensure
that we are in line with or above peers.
Metrics and Targets
In the short term, we aim to become a Net Zero
company by 2030, and aim to achieve this ambition
within this time frame by taking a pragmatic approach
and using high quality carbon offsets in respect of
Scope 2 and 3 emissions. We have already reduced
our overall operational emissions using various other
strategies to date, including the implementation of
hybrid working, moving offices to more sustainable
premises, undertaking business travel only when
necessary, and working with our suppliers to reduce
Scope 3 emissions. Whilst we believe that we should
continue to pursue emissions mitigation activities
for Scope 3 emissions, given that fully decarbonised
aviation technologies will not be available at scale by
2030, we are planning to meet our commitment to Net
Zero in the short term using high-quality carbon offsets.
In the medium to long term, we are investing in
companies which are creating low carbon solutions, as
demonstrated in the opportunities section on page 36.
Further, we do not invest, and do not intend to invest, in
carbon emitting infrastructure.
A summary of our compliance with the recommended
TCFD disclosures can be found on page 37.
Governance
Our approach to ESG and responsible investment and
our related policies are overseen by the Board.
The Board has delegated accountability for climate risk
and strategy (including monitoring our commitment
to becoming a Net Zero company) to the Executive
Directors, with the CFOO having overall responsibility
for ESG and climate matters. Our investment process
considers and incorporates ESG matters, including
compliance with our Ethical Investment Framework,
which is overseen by our Ethics Committee. Our ESG
Committee has responsibility for the oversight and
implementation of our ESG and Sustainability policy,
monitoring current ESG practices within our portfolio
companies and ensuring good stewardship and
governance of our portfolio companies.
Committee mandates and responsibilities
Board
The Board oversees climate-related matters which take into account climate-related
risks and opportunities.
The CFOO has overall responsibility for ESG and climate matters and three members
of the Board play an active role in the functioning and duties of the ESG Committee.
Key matters pertaining to ESG and climate-related risks are discussed amongst the
Executive Team and at the Board. An update on the Group’s ESG activities, as well as
key matters or considerations with respect to climate or broader ESG, are included in
the regular CFOO update to the Board.
Climate-related considerations are factored into the broader IP Group risk
management process and risk register.
ESG Committee
The ESG Committee meets on a regular basis, and has day to day responsibility for
implementing the Group’s ESG strategy, defining the Group’s ESG risk policy, reviewing
climate risks, monitoring adherence to climate risk tolerance, and reviewing all key
climate-related risks and opportunities.
The Committee is chaired by the CEO and attended by the CFOO, a Non-executive
Director, Director of Communications, UK General Counsel, and representatives from
our investment partnerships and operational teams.
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Strategy
Our approach to assessing and
managing climate-related risks and
opportunities
IP Group carries out a climate risk and opportunities
analysis of its operations and most material companies.
The methodology used in our 2023 analysis aligned to
the TCFD recommendations and reporting framework.
It considered a short-to-medium-term, and a long-
term time horizon, and used Network for Greening the
Financial System (“NGFS”) scenarios to assess physical
and transition risks for different time horizons and assess
potential material financial impact on the organisation.
This work was updated in 2024 to account for changes
to the Group’s portfolio in the year and was found to be
sound with no material changes to risks or opportunities.
Full details of the approach and findings were published
in our 2023 Annual Report (pages 48 to 56) and a
summary is provided below.
Time horizons:
Due to the long-term nature of our
investments and given the size and stage of our
companies we do not anticipate material risks within a
time horizon less than five years. Climate-related issues
often manifest themselves over the medium and longer
terms and for this reason we looked at periods over five
years and up to ten years as medium term and over ten
years as long term.
Scope:
We considered key risks at our organisational
level (IP Group) in addition to key risks at an investment
level (with respect to the portfolio in which we invest).
The determination of the severity of the risk assessed
both physical risks and transition risks.
NGFS scenarios tested:
Orderly transition scenario;
Disorderly transition scenario; Hothouse world scenario.
Analysis approach:
Materiality analysis
Identify likely material sustainability issues for our Group and portfolio.
Scenario analysis
Overlay key material issues identified for physical and transition risks, across various
scenarios aligned with the NGFS for different time horizons.
Risk analysis
Gauge level of risks across physical and transition dimensions.
Disclosure
Summarise key findings and highlight any mitigation actions for risks and any actions
with respect to opportunities identified.
Global themes:
Looking at the macro landscape, we see
three global themes relevant to us as a Group:
•
Increasing societal imperative for a regenerative
world accelerating the demand for changes in
industry structure and social and economic reforms
•
Increasing climate regulation
•
Increasing capital flow into climate transition
technologies
Overall conclusions:
•
There were no red flags identified and overall climate
risk at Group and portfolio level is low. See summary
tables on pages 34 and 35.
•
Our Group and portfolio are highly resilient to the
transition to a lower-carbon economy consistent
with a 1.5°C or lower scenario, and additional
scenarios consistent with increased physical
climate-related risks.
•
The portfolio is well positioned to benefit from the
transition to a low carbon world due to its low
exposure to climate-related risks and because of the
large number of companies whose core technology
and/or product offering address opportunities for
energy transition.
•
Climate-related R&D and innovation, expansion of
low emission goods and services across the portfolio,
and successful investment in new technologies were
identified as the most material opportunities for
IP Group. See page 36.
Risk Management
Risks and resilience
Our risk analysis used quantitative scoring for key
material factors across the three NGFS climate
scenarios. We used a time horizon extending to 2050 for
physical risks and a time horizon of 2040 for transition
risks.
See 2023 Annual Report pages 50 and 51 for detail on
our assessment approach, scenarios, TCFD factors
considered, and scoring approach.
IP Group risk summary
The 2023 analysis concluded that risk to IP Group is low
across all scenarios in the following TCFD categories:
•
Policy and legal risk (transition risks) from
increasingly stringent reporting requirements around
climate risk, including TCFD and SECR.
•
Market risk and reputational risk (transition risks)
from failing to incorporate climate change fully into
investment screening and due diligence processes.
•
Acute risk and Chronic risk (physical risks) caused by
business interruption due to extreme weather events
taking electricity or telecommunications networks
offline.
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Summary of key risks
Climate scenarios
Risk description
Orderly
Transition
Disorderly
Transition
Hot House
World
Mitigation measures
IP Group plc:
Policy/legal risk from
increasingly stringent reporting
requirements around climate risk, including
TCFD and SECR.
TCFD Risk category:
Policy and Legal Risks
(Transition Risks)
Ensure robust climate governance
structure is in place, which appropriately
manages climate risks throughout
the organisation, including specifying
which climate considerations should be
considered as part of pre-investment due
diligence.
IP Group plc:
Risk of failing to incorporate
climate change fully into investment
screening and due diligence process.
TCFD Risk category:
Market Risk and
Reputation Risk (Transition Risks)
Formalise the incorporation of climate
change specific risk screening questions in
the pre-investment due diligence process.
IP Group plc:
Business interruption because
of extreme weather events taking electricity
or telecommunications networks offline.
TCFD Risk category:
Acute Risk and Chronic
Risk (Physical Risks)
Develop back up and resiliency plans
which account for potential impacts of
climate change.
Portfolio:
Risk of supply chain disruption,
which limits the availability of component
parts required for manufacturing for
certain companies.
TCFD Risk category:
Acute Risk and Chronic
Risk (Physical Risks)
Support portfolio companies to review
supplier sourcing strategies; encourage
companies to develop contingency plans
for when one supplier is affected; and
encourage companies to avoid over
concentration of risk with key suppliers.
Portfolio:
Risk of increased cost of raw
materials and production costs.
TCFD Risk category:
Acute Risk and Chronic
Risk (Physical Risks)
Support portfolio companies to explore
whether certain inputs can be substituted
for others that may be more cost effective
or have higher availability; and encourage
portfolio companies to develop diversified
supplier sourcing strategies.
KEY
LOW
Low impact to overall business
model/operations and revenue
streams. There is minimal, if any
impact to the operations/revenue
streams and/financial position, of
the company.
MEDIUM
Medium impact to business model/
operations and revenue streams.
There could be some disruption,
but the business is able to adapt/
mitigate and continue operations.
The core service/product offering
and/or financial position, is not
impacted.
HIGH
There could be a major impact to
either the operational capability
and/or products and services.
The company suffers severe
disruption to its operations and
revenue streams as well as financial
position due to the impact of
climate change and the transition
to a greener economy, requiring a
major pivot with respect to its core
products or services.
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Climate scenarios
Risk description
Orderly
Transition
Disorderly
Transition
Hot House
World
Mitigation measures
Portfolio:
Risk of product failure due to
extreme weather conditions driven by
climate change for companies with
products operating in harsh environments
exposed to extreme weather conditions.
TCFD Risk category:
Acute Risk and Chronic
Risk (Physical Risks)
Review product design and testing with
portfolio companies that may be exposed
to this risk.
Portfolio:
Reputational risks associated
with the decommissioning, recycling
and non-recyclable waste associated
with renewable energy products and/or
energy storage systems e.g. fuel cells and
batteries.
TCFD Risk category:
Policy and Legal Risks,
Reputational Risks (Transition Risks)
Support portfolio companies to develop
business models and strategies that
reduce waste and encourage re-use and
facilitate recycling.
Portfolio:
Risks to product deployment
where companies are exposed to
harsh weather conditions that may be
exacerbated by climate change.
TCFD Risk category:
Acute Risk and Chronic
Risk (Physical Risks)
Support portfolio companies where this risk
may apply to factor climate conditions into
product design and testing.
Portfolio risk summary
Following the 2024 testing we have adjusted our portfolio
company risk summary table as follows. The overall number
and distribution of material companies in the portfolio has
changed due to the sale of the Deeptech Garrison and
Featurespace companies during the year and changes to the
valuations of some of our other Deeptech and Life Sciences
portfolio companies. These portfolio changes did not have a
material impact on our overall key risk profile as set out in the
2023 Annual Report.
Investment theme
Sum of total
risks
Number of
companies
Average
risk
Cleantech
82
5
16.4
Life Sciences
128
8
16
Deeptech
–
No material
companies
–
No company in our analysis breaches the high-risk threshold
across both the physical and transition risk assessments and
over the various scenarios that were used.
KEY
LOW
Low impact to overall business
model/operations and revenue
streams. There is minimal, if any
impact to the operations/revenue
streams and/financial position, of
the company.
MEDIUM
Medium impact to business model/
operations and revenue streams.
There could be some disruption,
but the business is able to adapt/
mitigate and continue operations.
The core service/product offering
and/or financial position, is not
impacted.
HIGH
There could be a major impact to
either the operational capability
and/or products and services.
The company suffers severe
disruption to its operations and
revenue streams as well as financial
position due to the impact of
climate change and the transition
to a greener economy, requiring a
major pivot with respect to its core
products or services.
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Categorising our opportunities
Climate-related R&D and innovation, expansion of low emission goods and services across the portfolio, and
successful investment in new technologies were identified as the most material opportunities for IP Group based
on the size of the opportunity and the ability to execute it. These opportunities fell into the following categories (see
more detail on 2023 Annual Report page 55).
Opportunity context
TCFD categories
Low carbon
energy
generation
We expect to see a continuing increase in demand for low carbon energy
generation, such as fusion energy, as the world transitions to zero carbon.
We also expect to see significant demand for small-scale, localised wind
energy generation.
Portfolio companies in this category: First Light Fusion, Hysata, OxCCU
•
Products and
services
•
Markets
•
Energy source
Energy use
reduction
In addition to a different energy paradigm, there will also be a drive for
reduction and efficiency in energy usage. This will be from both a retail
perspective as homeowners seek to lower their energy costs and reduce
emissions, as well as in industrial applications and the transport sector.
Portfolio companies in this category: Helio Display Materials, Mixergy
•
Products and
services
•
Markets
•
Resource
efficiency
Energy
storage
There will be growing need for storing various forms of renewable energy
from solar, wind and hydrogen. We see a significant opportunity as demand
for fuel cell technology grows and we expect the demand for low cost
and long duration fuel cell storage will grow significantly as the world
decarbonises and electric vehicles proliferate.
Portfolio companies in this category: RFC Power, Bramble Energy
•
Products and
services
•
Markets
•
Resource
efficiency
Carbon
capture
and water
availability
There will be increasing demand for emissions reduction technologies
including carbon capture and growing demand for technologies that help
in the conservation, cleaning and filtering of water.
Portfolio companies in this category: Alithic, ElectraLith
•
Products and
services
•
Markets
•
Resource
efficiency
Integrating climate risks and opportunities into businesses,
strategy and financial planning
We have established two key strands to integrate climate risks and opportunities into business strategy and
financial planning:
•
Reduce and mitigate climate risk by integrating assessment findings into our Group risk management process.
See our risk management process on page 38.
•
Capitalise on climate opportunities by leveraging our insight, relationships, capital and expertise to continue to
build our Cleantech portfolio.
Metrics and Targets
Our finance team monitors the number of Cleantech
investments in our portfolio and overall portfolio balance
between Cleantech and other investments.
In terms of business operations, we aim to become a
Net Zero company by 2030, based on the emissions we
are able to measure:
•
Scope 1: We do not have Scope 1 emissions
•
Scope 2: We measure and disclose Scope 2 for our
operational boundary
•
Scope 3: We measure and disclose business travel
and commuting as part of Scope 3. For Scope 3, the
Group does not currently collate data on financed
emissions, but we are working towards doing so in
future.
As our overall emissions are very low, an intensity ratio
allows us to better gauge our energy efficiency and
overall strategy to increase energy efficiency, as well as
make cross-industry comparisons. We use the following
intensity metrics:
•
tCO
2
e/FTE (full time equivalent employee)
•
tCO
2
e/m
2
(of office space)
See page 31 for our energy and emissions disclosures.
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IP Group considers climate-related risk to be financially immaterial in the context
of the Company’s overall financial statements
.
IP Group has complied with the requirements of UK LR 6.6.6R (9)and the Companies Act Section 414CA by including climate-related financial disclosures
consistent with the TCFD recommendations and recommended disclosures. We have considered Section C Guidance for All Sectors, and Section E of the
TCFD Annex entitled ‘Supplemental Guidance for Non-Financial Groups’ in developing this disclosure. The table below describes our compliance with each
area of the disclosure and where this information can be found in this Annual Report and in our 2023 Annual Report disclosure.
Section
Recommendation
2024
disclosure
level
Reference
Governance
Disclose the organisation’s
governance around climate-related
risks and opportunities.
a.
Describe the Board’s oversight of climate-related risks and opportunities.
Page 32
b.
Describe management’s role in assessing and managing climate-related
risks and opportunities.
Page 32
Strategy
Disclose the actual and potential
impacts of climate-related risks and
opportunities on the organisation’s
businesses, strategy and financial
planning where such information is
material.
a.
Describe the climate-related risks and opportunities the organisation has
identified over the short, medium and long term.
Pages 34 to 36
and 2023 Annual
Report page 50
b.
Describe the impact of climate-related risks and opportunities on the
organisation’s businesses, strategy and financial planning.
Page 33
c.
Describe the resilience of the organisation’s strategy. Taking into
consideration different climate-related scenarios, including a 2°C or lower
scenario.
Page 33 and
2023 Annual
Report page 50
Risk Management
Disclose how the organisation
identifies, assesses and manages
climate-related risks.
a.
Describe the organisation’s processes for identifying and assessing
climate-related risks.
Page 33
b.
Describe the organisation’s processes for managing climate-related risks.
Pages 33 to 35
c.
Describe how processes for identifying, assessing and managing climate-
related risks are integrated into the organisation’s overall risk management.
Page 32
Metrics and Targets
Disclose the metrics and targets
used to assess and manage
relevant climate-related risks and
opportunities where the information is
material.
a.
Disclose the metrics used by the organisation to assess climate related
risks and opportunities in line with its strategy and risk management
processes.
Page 36
b.
Disclose Scope 1, Scope 2 and, if appropriate, Scope 3 GHG emissions, and
the related risks.
Page 31
c.
Describe the targets used by the organisation to manage climate-related
risks and opportunities, and performance against targets.
Page 36
DISCLOSURE
LEVEL KEY
Full
Partial
Omitted
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Managing risk: our framework
for balancing risk and reward
Governance
Overall responsibility for the risk framework and
definition of risk appetite rests with the Board who,
through regular review of risks, ensure that risk exposure
is balanced with an ability to achieve the Group’s
strategic objectives. The IP Group Risk Council is the
Executive body that operates to establish, recommend
and maintain an appropriate risk management
framework for the Group and to oversee the effective
application of the framework across the business. The
Risk Council is chaired by the CFOO, its members include
the Company Secretary and Finance Director, and it
has representation from operational business units as
required during the year. Risk identification is carried
out through a bottom-up process via operational
risk registers maintained by individual teams, which
are updated and reported to the Risk Council at least
annually. There is additional top-down input from
Executive Management, with a Non-executive review
carried out by the Audit and Risk Committee at least
annually.
Risk management process
Ranking of the Group’s risks is carried out by combining
a scoring of their impact and likelihood. Operational risks
are aggregated into strategic risks, which identifies key
themes, and ultimately informs our principal risks, which
are described in the Principal risks and uncertainties
section of this report. The operations of the Group, and
the implementation of its objectives and strategy, are
subject to a number of principal risks and uncertainties.
Were more than one of the risks to occur together, the
overall impact on the Group may be compounded.
The design and ongoing effectiveness of the key controls
over the Group’s principal risks are documented using a
“risk and control matrix”, which includes an assessment
of the design and operating effectiveness of the controls
in question. The key controls over the Group’s identified
principal risks are reviewed as part of the Group’s risk
management process, by management, the Audit
and Risk Committee and the Board during the year.
However, the Group’s risk management programme can
only provide reasonable, not absolute, assurance that
principal risks are managed to an acceptable level.
Risk management activity in 2024 included updating
the Group’s existing operational, strategic and principal
risk registers; updating and testing the key controls over
principal risks and conducting an assessment of the
strategic risks; and the appropriateness of our principal
risks and discussion of emerging risks via a Board
risk workshop.
Risk Council activity
During 2024, the Risk Council continued to oversee
the Group’s existing risk management framework,
enhancing risk management and internal
control processes and, in doing so, supported the
Board in exercising its responsibility surrounding
risk management.
During the year, one area of focus for the Risk Council
was developing an implementation plan for the
revised UK Corporate Governance Code, released
in January 2024, which confirmed changes to UK
companies’ requirements in respect of the review and
reporting requirements for material controls “Provision
29 requirements”, which will apply to financial years
beginning on or after 1 January 2026. This included
workshop sessions facilitated by PwC to agree a controls
governance framework and identification of a sub-set
of the Group’s risks which would be considered to be
material. In 2025 we will move forward with identifying
a corresponding set of material controls whose
operation will form the basis of the Group’s Provision 29
requirements.
Other areas of focus for the Risk Council during the
year included:
•
Review of consolidated operational risk registers
following bi-annual updates
•
Monitoring the completion status of remediation
points raised by our internal audit process
•
Review of the results of an annual testing of the
Group’s key controls performed by PwC’s internal
audit team
•
Oversight of plans to wind-up our Hong Kong
operations following the decision not to proceed with
a fund in this geography
•
Review of materials used for a Board risk workshop
•
Monitoring of the Group’s key risk indicators
•
Other procedural matters including overview of the
completion status of e-learning programmes, review
of the Group’s conflicts policy and review of gifts and
hospitality as part of our anti-bribery controls
The Risk Council was supported during the year by
PwC’s Internal Audit team which conducted testing
work over the operating effectiveness of the Group’s
key controls over its principal risks and advised on the
implementation of the UK Corporate Governance Code
2024 Provision 29 requirements as set out above.
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Oversight and challenge by the
Risk Council, central functions
and management
Independent assurance
Board
Risk Council
Collated risk
registers
Executive
Management
HR
Finance
IT
Legal, Cosec & ESG
Communications &
Investor Relations
Australia
Parkwalk
Audit and Risk Committee
Frontline operations
Output of internal audit
resource utilised
Consolidation, analysis, reporting, oversight
Challenge, feedback, learning
Direct reporting
Review and challenge
First line of defence
Third line of defence
Second line of defence
Central functions
01
02
03
IP Capital
UK investment
partnership
Life Sciences
Technology
Cleantech
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RISK MANAGEMENT
.
IP GROUP RISK MANAGEMENT FRAMEWORK
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Principal and emerging risks
A summary of the principal risks affecting the Group
and the steps taken to manage these is set out in this
section. Further discussion of the Group’s approach to
principal risks and uncertainties is given on page 70 of
the Corporate Governance Statement and page 104
of the Audit and Risk Committee Report, while further
disclosure of the Group’s financial risk management
is set out in note 3 to the consolidated financial
statements. Following the 2024 annual review process,
the heatmap below describes the relative potential risks
posed by each of the Group’s identified principal risks
ranked in terms of relative impact and relative likelihood.
Risk appetite
The Group accepts that certain risks are inherent in
achieving its strategic aims, which are set out in the
Strategy section of the report on page 15. The Group
accepts risk provided it is consistent with the Group’s
purpose and strategy, and where it can be effectively
managed and offers an appropriate trade-off between
risk and reward. The Board has determined its risk
appetite in relation to each of its principal risks and
considered appropriate metrics to monitor performance
relative to defined thresholds.
Emerging risks
The Group manages its emerging risks through a
process of risk identification, including regular updates
to the Group’s operational risk registers and horizon
scanning, combined with risk severity scoring. Emerging
risk themes considered by the Group in 2024 included
technological risks such as misinformation and
disinformation, adverse outcomes of AI technologies
and cyber insecurity as well as environmental,
geopolitical, societal and economic risks. The board
considered that economic risks posed the greatest risk
to the Group in the longer-term and that there was
an opportunity for the Group’s portfolio companies to
create solutions or alternatives to address emerging
environmental risks.
Principal risks:
1
Insufficient capital: plc
2
Insufficient capital: portfolio
3
Insufficient returns
4
People
5
Macroeconomic environment
6
Legislation/regulation
7
Cyber and IT security
8
Operations including international operations
2023 principal risk scoring
Principal risk heatmap
Impact
Likelihood
2
1
5
3
6
8
4
7
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01
The Group may have insufficient
capital to deliver its investment
strategy
The Group’s business model relies on the recycling of capital for re-investment from realisations,
with a proportion of realisations also being allocated to shareholder returns. In the longer term,
other sources including debt and equity issues may be used to manage the Group’s capital
position. The ability of the Group to deliver realisations and raise additional funding is influenced
by macroeconomic and capital market conditions.
Link to strategy
Access to sufficient capital allows the Group to
deliver its investment strategy thereby delivering
attractive financial returns
Actions taken by management
•
The Group has significant balance sheet capital and managed funds capital
to deploy in portfolio opportunities
•
The Group regularly forecasts cash requirements of the portfolio to ensure
that the Group’s investment plans reflect currently available capital and
expected realisations
•
The Group ensures that sufficient cash is available to maintain headroom
over debt covenants and regulatory capital requirements
Risk appetite
Examples of risk
•
The Group may not be able to provide the
necessary capital to key assets, which may
affect the portfolio companies’ performance or
dilute future returns of the Group
•
The Group may not be able to realise capital
from its portfolio to fund the desired level of
investment activity in the portfolio
Development during the year
•
Cash proceeds totalled £183.4m in 2024
•
The Group raised £95m of third party-funds during 2024
•
The Group continued its investor outreach exercise with the goal of raising a
UK scale-up fund
•
We continue to maintain a close dialogue with the Group’s equity and debt
investors
•
The Group’s share price continued to trade below NAV during the year
•
The quoted portfolio value saw a fair value reduction of £51.6m in the year
Change
from 2023
KEY
STRATEGIC PILLARS
Have an impact
on the world
that counts
Develop our
unique insight,
expertise
and access
Accelerate value
creation
Build a truly
differentiated
reputation
Be a home for
exceptional talent
CHANGE
FROM 2023
Increase
Decrease
No change
RISK APPETITE
Very low
Low
Balanced
High
Very high
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02
It may be difficult for the Group’s
portfolio companies to attract
sufficient capital
Many of the Group’s portfolio companies are in their development or growth phases and will fund
their growth through raising additional capital from IP Group and other co-investors. The ability
of portfolio companies to attract further capital is influenced by their financial and operational
performance and the general economic climate and trading conditions, particularly in the UK.
Link to strategy
Access to sufficient levels of capital allows
the Group’s portfolio companies to invest in
technology and commercial opportunities to
ensure future financial returns.
Actions taken by management
•
The Group maintains Board representation on the majority of its portfolio
companies and monitors their funding position and plans
•
The Group regularly forecasts cash requirements of the portfolio and tracks
those with a heightened funding risk
•
The Group operates a corporate finance function, which is experienced in
carrying out fundraising mandates for portfolio companies
•
The Group maintains close relationships with a wide variety of co-investors
that focus on companies at differing stages of development
Risk appetite
Examples of risk
•
Portfolio companies may not be able to close
investment rounds, reducing their ability
to scale quickly and in extremis leading to
company failure
•
Reduced investor appetite may lead to lower
valuation funding rounds, resulting in an
unrealised fair value loss in the value of the
Group’s holding
•
Lack of investor appetite for IPOs may mean
that this is not a viable funding option
for portfolio companies in the short to
medium term
Development during the year
•
The Group’s portfolio raised £785m in 2024, with £63m (c. 8%) of this funding
being provided by IP Group
•
IP Capital worked on 5 corporate finance engagements during the year
•
Excluding the Oxford Nanopore holding, the Group held board seats on 77.4%
of portfolio companies valued at greater than £5m by value
•
Our third-party funds had capital to deploy of £119.1m at year end
•
IP Group hosted a flagship investor event which showcased a number of the
Group’s portfolio companies to existing and new investors
•
We continued international investor roadshows in the year in the US, UK, EU
and Middle East
Change
from 2023
KEY
STRATEGIC PILLARS
Have an impact
on the world
that counts
Develop our
unique insight,
expertise
and access
Accelerate value
creation
Build a truly
differentiated
reputation
Be a home for
exceptional talent
CHANGE
FROM 2023
Increase
Decrease
No change
RISK APPETITE
Very low
Low
Balanced
High
Very high
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03
The returns generated by
the Group’s portfolio may be
insufficient
The Group’s portfolio of science-based businesses has the potential to deliver outsize returns,
however they are by their nature riskier than more stable, lower-yielding asset classes or
companies. The Group may not realise a sufficient return on its invested capital at an individual
company or overall portfolio level.
Link to strategy
Insufficient investment returns reduce the Group’s
ability to deliver attractive returns to shareholders
and may also limit the Group’s ability to raise
additional capital.
Actions taken by management
•
The Group’s employees have significant experience in sourcing, developing
and growing early-stage technology companies to significant value
•
There is a rigorous process for the approval of investments and divestments
within a delegated authority framework
•
Members of the Group’s investment teams typically serve as Non-executive
Directors to portfolio companies to help identify and remedy critical issues
•
The Group has portfolio company holdings across different sectors to
reduce the impact of a single company failure or sector decline
•
The Group employs a capital efficient process deploying low levels of initial
capital to enable identification and mitigation of potential failures at the
earliest possible stage
Risk appetite
Examples of risk
•
Portfolio company failure directly impacts the
Group’s value and profitability
•
Concentration of value within a small numbers
of companies could exacerbate the impact
of any impairment or failure of one or more of
these companies
•
The value of the Group’s drug discovery and
development portfolio companies may be
significantly impacted by a negative clinical
trial result
Development during the year
•
We completed five new balance sheet investments during the year, and a
further 13 within Parkwalk
•
Excluding the Oxford Nanopore holding, the Group held board seats on 77.4%
of portfolio companies valued at greater than £5m by value
•
Balance sheet investment decision-making was consolidated within a single
Investment Committee during the year, which we believe will aid investment
decision-making compared with previous sector-specific Investment
Committees
Change
from 2023
KEY
STRATEGIC PILLARS
Have an impact
on the world
that counts
Develop our
unique insight,
expertise
and access
Accelerate value
creation
Build a truly
differentiated
reputation
Be a home for
exceptional talent
CHANGE
FROM 2023
Increase
Decrease
No change
RISK APPETITE
Very low
Low
Balanced
High
Very high
OUR FINANCIALS
OUR GOVERNANCE
IP GROUP PLC ANNUAL REPORT 2024
43
STRATEGIC REPORT
BUSINESS OVERVIEW
RISK MANAGEMENT
.
PRINCIPAL RISKS AND UNCERTAINTIES
OUR FINANCIALS
OUR GOVERNANCE
STRATEGIC REPORT
BUSINESS OVERVIEW
04
The Group may lose key personnel
or fail to attract and integrate new
personnel
The industry in which the Group operates is a specialised area and the Group requires highly
qualified and experienced employees. There is a risk that the Group’s employees could be hired by
competitors or other technology-based companies and organisations or could otherwise choose
to leave the Group.
Link to strategy
The Group’s strategic objective to develop and
scale a portfolio of compelling science-based
businesses capable of delivering attractive
financial returns on our assets, is dependent on
the Group’s employees who work with the portfolio
companies and those who support them.
Actions taken by management
•
Detailed succession plan in place for all senior employees and other
selected key-person dependencies
•
Regular compensation benchmarking carried out for all employees
•
Maintenance of a balanced incentive package comprising a mix of salary,
benefits, performance-based long-term incentives, and benefits such as
flexible working and salary sacrifice arrangements
•
The Group encourages employee development and progression through
targeted learning and development activity, coaching and mentoring and
supports this through the annual appraisal process
•
The Group promotes an open culture of communication and provides an
inspiring and challenging workplace where people are given autonomy to
do their jobs. The Group is fully supportive of flexible working, empowering
employees to work where and how works best to deliver against the
requirements of their role
•
An employee forum, “IP Connect” with an appointed designated Non-
executive Director to facilitate dialogue with the Board in both directions.
Part of IP Connect’s remit is also to support the evolution of the culture and
continuous improvement of working life at the Group
Risk appetite
Examples of risk
Loss of key executives and employees of the
Group or an inability to attract, retain and
integrate appropriately skilled and experienced
employees could have an adverse effect on
the Group’s competitive advantage, business,
financial condition, operational results and future
prospects.
Development during the year
•
Continued excellent employee engagement scores obtained in the year
from employee engagement surveys, with eNPS marginally improving in the
year to +31 (2023: +27) which is within the “very high” category
•
Continued high frequency of employee communications from Executive
Directors and the Head of HR via regular virtual and in-person all-staff
meetings
•
Reduction in the overall number of employees as part of the cost-
reduction exercise allows increased focus on the needs, desires and future
development of individual employees, as well as creating short-term
development opportunities within the new structure
•
Approximately 64% of employees in place at 31 December 2024 have been
with the Company for at least five years
Change
from 2023
KEY
STRATEGIC PILLARS
Have an impact
on the world
that counts
Develop our
unique insight,
expertise
and access
Accelerate value
creation
Build a truly
differentiated
reputation
Be a home for
exceptional talent
CHANGE
FROM 2023
Increase
Decrease
No change
RISK APPETITE
Very low
Low
Balanced
High
Very high
44
IP GROUP PLC ANNUAL REPORT 2024
RISK MANAGEMENT
.
PRINCIPAL RISKS AND UNCERTAINTIES
OUR FINANCIALS
OUR GOVERNANCE
STRATEGIC REPORT
BUSINESS OVERVIEW
05
Macroeconomic conditions may
negatively impact the Group’s
ability to achieve its strategic
objectives
Adverse macroeconomic conditions including volatility in interest rates and inflation could reduce
appetite for investment within the sectors in which we operate. Geopolitical uncertainty including
global conflicts may impact the cost of raw materials; changes to the labour market regulations
may reduce the availability of highly skilled staff within the Group’s portfolio; and protectionist
policies may reduce trade and cross-border investment.
Link to strategy
The Group’s strategic objective to develop a
portfolio of commercially successful portfolio
companies and deliver attractive financial
returns on our assets and third-party funds
can be materially impacted by the current
macroeconomic environment.
Actions taken by management
•
Senior management receive regular capital market and economic updates
from the Group’s capital markets team and its brokers
•
Regular capital allocation process and ongoing monitoring against
agreed budget
•
Regular oversight of upcoming capital requirements of portfolio from both
the Group and third parties
•
The Group’s Risk Council monitors key macroeconomic trends that may
impact the Group
Risk appetite
Examples of risk
•
The success of those portfolio companies
that require significant external funding
may be influenced by the market’s appetite
for investment in early-stage and growth
companies
•
Of the Group’s portfolio value, 17.7% is held in
companies quoted on public markets and
therefore subject to market price volatility
Development during the year
•
Macroeconomic conditions improved in the year, as inflation continued to
moderate in G8 countries, resulting in central banks starting to enact interest
rate cuts. Annual UK CPI inflation fell from 7.3% in 2023 to 2.5% in 2025 and the
UK base rate reduced from 5.25% at the start of the year to 4.75% at year end
•
There remains significant uncertainty around whether inflation will persist in
2025 and result in a slower pace of central bank interest rate cuts
•
Geopolitical risks including conflicts in Ukraine and the Middle East
continued, with increased trade protectionism also emerging as a theme
during the year
•
The Group has maintained significant cash reserves available for investment
and as such is well placed to respond to macroeconomic uncertainty
Change
from 2023
KEY
STRATEGIC PILLARS
Have an impact
on the world
that counts
Develop our
unique insight,
expertise
and access
Accelerate value
creation
Build a truly
differentiated
reputation
Be a home for
exceptional talent
CHANGE
FROM 2023
Increase
Decrease
No change
RISK APPETITE
Very low
Low
Balanced
High
Very high
OUR FINANCIALS
OUR GOVERNANCE
IP GROUP PLC ANNUAL REPORT 2024
45
STRATEGIC REPORT
BUSINESS OVERVIEW
RISK MANAGEMENT
.
PRINCIPAL RISKS AND UNCERTAINTIES
OUR FINANCIALS
OUR GOVERNANCE
STRATEGIC REPORT
BUSINESS OVERVIEW
06
There may be changes to, impacts
from, or failure to comply with,
legislation, government policy
and regulation
There may be negative impacts from changes in government policy, regulation or legislation and
taxation. The Group may fail to comply with legislation and regulation, leading to financial and
reputational damage.
Link to strategy
The Group’s strategic objectives of creating
and maintaining a portfolio of compelling
opportunities to deliver attractive returns for
shareholders could be materially impacted by
failure to comply with, or adequately plan for,
a change in legislation, government policy or
regulation.
Actions taken by management
•
The Group utilises professional advisors as appropriate to support its
monitoring of, and response to changes in, tax, insurance or other legislation
•
The Group delivers regular training in areas including bribery and anti-
money laundering and regulatory compliance
•
The Group has internal policies and procedures to ensure its compliance
with applicable regulations
•
The Group maintains Directors and officers (“D&O”) and professional
indemnity insurance policies
•
The Group responds to public consultations and is in dialogue with the UK
Government in policy areas such as the Enterprise Investment Scheme
Risk appetite
Examples of risk
•
Changes to tax legislation or the nature of the
Group’s activities, in particular in relation to
the Substantial Shareholder Exemption, may
adversely affect the Group’s tax position and
accordingly its value and operations
•
Regulatory changes or breaches could
ultimately lead to withdrawal of regulatory
permissions for the Group’s authorised
subsidiaries, resulting in loss of fund
management contracts, reputational damage
or fines
Development during the year
•
Ongoing focus on regulatory compliance, including third-party reviews and
utilisation of specialist advisors
•
The Group submitted a cessation notice for its Hong Kong licenses during
the year as a result of the decision not to pursue fund operations in that
geography
Change
from 2023
KEY
STRATEGIC PILLARS
Have an impact
on the world
that counts
Develop our
unique insight,
expertise
and access
Accelerate value
creation
Build a truly
differentiated
reputation
Be a home for
exceptional talent
CHANGE
FROM 2023
Increase
Decrease
No change
RISK APPETITE
Very low
Low
Balanced
High
Very high
46
IP GROUP PLC ANNUAL REPORT 2024
RISK MANAGEMENT
.
PRINCIPAL RISKS AND UNCERTAINTIES
OUR FINANCIALS
OUR GOVERNANCE
STRATEGIC REPORT
BUSINESS OVERVIEW
07
The Group and its portfolio
companies may be subjected to
cyber attacks
A significant cyber/information security breach either within the Group or one of its portfolio
companies could result in financial and reputational damage, business disruption and the loss of
commercially sensitive information.
Link to strategy
The Group’s strategic objectives of creating
and maintaining a portfolio of compelling
opportunities to deliver attractive returns for
shareholders could be materially impacted by a
serious cyber security breach at a corporate or
portfolio company level.
Actions taken by management
•
The Group reviews its data and cyber security processes with its external
outsourced IT providers and applies the UK Government’s “ten steps”
framework or other national equivalents where relevant
•
Regular IT management reporting framework in place
•
Internal and third-party reviews of policies and procedures to ensure
appropriate framework in place to safeguard data
•
Assessment of third-party suppliers of cloud-based and on-premises
systems in use
•
Annual Cyber and IT training is supplemented by regular bite-sized and
interactive cyber security training
•
Network and infrastructure security systems to respond to emerging threats
Risk appetite
Examples of risk
•
The Group, or one, or a combination of, its
portfolio companies could face significant
fines from a data security breach
•
The Group or one of its portfolio companies
could be subjected to a phishing attack,
which could lead to invalid payments being
authorised or a sensitive information leak
•
A malware or ransomware attack could lead
to systems becoming non-functioning and
impair the ability of the business to operate in
the short term
Development during the year
•
Ongoing focus on IT security and staff training
•
Continued programme of phishing and penetration testing
•
Implementation of additional cyber security systems to provide enhanced
threat detection
•
Onboarded strategic level legal and external communications resource to
supplement response resources to a serious cyber incident
•
A cyber attack simulation was undertaken in the year to rehearse the
response to a serious cyber incident. The exercise revealed several strengths
in IP Group plc’s cybersecurity posture and incident response capabilities.
The organisation demonstrated robust technical protections. Incident
Management Teams (IMT), including Silver IMT, were activated promptly,
and communication plans were well-executed. The legal team provided
critical guidance on ransom payment decisions and regulatory reporting.
The organisation also showed a proactive approach in reviewing access
controls for all portfolio companies
•
Review of key controls by the Group’s internal auditors
Change
from 2023
KEY
STRATEGIC PILLARS
Have an impact
on the world
that counts
Develop our
unique insight,
expertise
and access
Accelerate value
creation
Build a truly
differentiated
reputation
Be a home for
exceptional talent
CHANGE
FROM 2023
Increase
Decrease
No change
RISK APPETITE
Very low
Low
Balanced
High
Very high
OUR FINANCIALS
OUR GOVERNANCE
IP GROUP PLC ANNUAL REPORT 2024
47
STRATEGIC REPORT
BUSINESS OVERVIEW
RISK MANAGEMENT
.
PRINCIPAL RISKS AND UNCERTAINTIES
OUR FINANCIALS
OUR GOVERNANCE
STRATEGIC REPORT
BUSINESS OVERVIEW
08
The Group may be negatively
impacted by operational
issues both from a UK central
and international operations
perspective
The potential exists for a negative impact to the Group arising from operational issues such as
business continuity; and from the non-compliance of overseas operations with local laws and
regulations; failure to integrate overseas operations with the Group; and an inability to foresee
territory-specific risks and macro-events. The Group may also fail to establish effective control
mechanisms, considering different working cultures and environments, leading to significant
senior management time requirement, distracting from core day-to-day business.
Link to strategy
The Group’s strategy includes building a portfolio
of compelling intellectual property-based
companies across the UK and Australia and New
Zealand. The scale of the Group’s operations,
including internationally, represents increased
importance of successful execution of its
operations.
Actions taken by management
•
Local legal and regulatory advisors have been engaged in the
establishment phase of overseas operations. International teams typically
have their own in-house legal teams and regularly report to the UK-based
General Counsel
•
Business continuity plans are in place for the Group and tested regularly
•
Our executive recruitment function and HR are involved in senior hires for
new territories. Senior international personnel include current and former UK
employees, encouraging a shared culture across territories
•
The risk management framework in place across each business unit has
been established in each international territory and is integrated into the
Group’s regular risk management processes and reporting
•
Third-party suppliers are used for international accounting and payroll
services to reduce the risk of fraud within smaller teams
Risk appetite
Examples of risk
•
A legal or regulatory breach could ultimately
lead to the withdrawal of regulatory
permissions overseas, resulting in loss of trust,
management contracts, reputational damage
and fines
•
Divergent Group cultures may lead
to difficulties in achieving the Group’s
strategic aims
•
Senior management may spend a significant
amount of time overseeing non-UK territories,
which could detract from central Group
strategy and operations
Development during the year
•
Continued coordination of risk reporting across Australia, New Zealand and
Hong Kong
•
Decision taken to discontinue Hong Kong operations
•
Reviewed disaster recovery plans in the year
Change
from 2023
KEY
STRATEGIC PILLARS
Have an impact
on the world
that counts
Develop our
unique insight,
expertise
and access
Accelerate value
creation
Build a truly
differentiated
reputation
Be a home for
exceptional talent
CHANGE
FROM 2023
Increase
Decrease
No change
RISK APPETITE
Very low
Low
Balanced
High
Very high
48
IP GROUP PLC ANNUAL REPORT 2024
RISK MANAGEMENT
.
PRINCIPAL RISKS AND UNCERTAINTIES
OUR FINANCIALS
OUR GOVERNANCE
STRATEGIC REPORT
BUSINESS OVERVIEW
The Directors have carried out a robust assessment
of the viability of the Group over a three-year period
to December 2027, considering its strategy, its current
financial position, its principal risks and its emerging
risks. The three-year period reflects the time horizon
reviewed by the Board, and over which the Group
places a higher degree of reliance over the forecasting
assumptions used.
The strategy and associated principal risks underpin
the Group’s three-year financial plan and scenario
testing, which the Directors review and approve at
least annually. As a business which seeks to accelerate
the impact of science for a better future through our
portfolio companies, our business model seeks to
balance cash investments, the generation of portfolio
returns and portfolio realisations. The three-year plan is
built using a bottom-up model using assumptions for:
•
the level of portfolio investment
•
the level of realisations from the portfolio (net of
carried interest payments)
•
the financial performance (and valuation) of the
underlying portfolio companies
•
the Group’s drawdown and repayment of its debt
•
the Group’s ability to raise further capital
•
the level of the Group’s net overheads and
•
the level of dividends and share buybacks
Of the Group’s principal risks, those relating to
insufficient capital (both Group and portfolio
companies), insufficient investment returns, and
macroeconomic conditions are deemed to be the most
relevant to the Group’s viability assessment, due to their
potential to impact the Group’s liquidity position and
net asset position, both of which directly impact the
level of headroom over the Group’s debt covenants.
Other principal risks including personnel risk; legislation,
governance and regulation; cyber and IT; and
international operations could all have an impact on the
Group’s performance but are less likely to have a direct
impact on viability within the assessment period.
To assess the impact of the principal risks highlighted
above on the prospects of the Group, the financial
plan is stress-tested by modelling severe, but plausible,
and intermediate downside scenarios, where adverse
impacts across the Group’s principal risks relating to
insufficient capital, insufficient investment returns, and
macroeconomic conditions were considered as part of
the review. Under the severe downside scenario, a 70%
reduction in planned realisations and a 35% decline in
portfolio fair values which were considered together
with a series of mitigating actions, including reducing
planned levels of investment.
Under these stress-testing scenarios, significant
reductions to portfolio investments are made to
preserve the Group’s remaining cash balances. In
all scenarios modelled, the Group remains solvent
throughout the three-year period with no breach of debt
covenants or a “cash trap period” occurring. See note 19
for further details on cash trap arrangements.
Based on this assessment, the Directors have a
reasonable expectation that the Group will continue to
operate and meets its liabilities, as they fall due, up to
December 2027.
OUR FINANCIALS
OUR GOVERNANCE
IP GROUP PLC ANNUAL REPORT 2024
49
STRATEGIC REPORT
BUSINESS OVERVIEW
VIABILITY STATEMENT
.
OUR FINANCIALS
OUR GOVERNANCE
STRATEGIC REPORT
BUSINESS OVERVIEW
Shareholders
Employees
Portfolio
companies
Universities,
academics
and research
institutions
Environment
and wider
community
Debt
holders
Inventors,
founders and
entrepreneurs
Regulators
Brokers and
advisors
Governance
bodies including
proxy advisors
Third-party
fund investors
and portfolio
co-investors
Statement by the Directors in
performance of their duties
in accordance with s172(1)
Companies Act 2006
The Directors of IP Group plc consider that they have
acted both individually and together as a Board in the
way that would be most likely to promote the success of
the Company for the benefit of its members as a whole.
This statement describes how the Board has had regard
to the matters set out in s172(1) (a) to (f) Companies Act
2006 (“s172”) when performing its duties for the year ended
31 December 2024.
Engaging with stakeholders
Engaging and maintaining open channels of
communication with the Group’s stakeholders is an
integral part of its business and critical to ensuring the
future success of the business. The Group engages with its
stakeholders in many forms, which allows for flexibility in
the methods of engagement and enables the Company
to facilitate constructive two-way engagement with its
multiple stakeholders.
The following table sets out how the Group actively engages
with its key stakeholders in a way that enables the Group’s
senior executives and Board members to understand
the potential impact of decisions and actions on those
stakeholders. And, further, so that the Group can be
responsive to matters raised by key stakeholders and feed
back to them how their views have been taken into account.
50
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Name of
stakeholder
and relevant
application of S
.
172
Why we engage
Engagement methods – who and how
Impact of engagement
Shareholders
s172(1)
A
E
F
To ensure that:
•
shareholders have a
good understanding
of and confidence in
the Group’s strategy,
performance, purpose
and culture and that the
Group’s strategy remains
focused on delivering
returns to shareholders
•
the Group fosters and
maintains open and
constructive relationships
with its shareholders
•
the Board understands
the issues that are
important to its
shareholders
•
the Board acts fairly
between shareholders of
the Company
•
Direct meetings/calls with individual shareholders,
primarily with the Chair, Senior Independent
Director, Executive Directors and senior
management
•
Direct shareholder access to the Chair, Senior
Independent Director and Board Committee
Chairs relating to matters within the relevant
Committee’s mandate
•
Results announcements, investor roadshows and
presentations in person and broadcast via the
“Investormeetcompany” platform to enable broad
audience engagement and real-time Q&A
•
Group capital market and sector showcase events
which in 2024 included the annual Group Flagship
Event at the Royal Society of Chemistry
•
Broker-facilitated investor forums/conferences
•
The Group’s website, with investors being able to
sign up to regulatory and portfolio company alerts
•
Meetings with analysts and feedback from the
Group’s brokers
•
Annual General Meeting (“AGM”), with the 2024
AGM streamed live on the “Investormeetcompany”
platform. Shareholders were also able to submit
questions in advance of the 2024 AGM
•
Annual Report and Accounts
•
RNS and RNS Reach announcements
•
Shareholder circulars
•
Dedicated IR and company secretarial mailboxes
(IR@ipgroupplc.com and CoSec@ipgroupplc.com)
•
Closer and more direct links between
shareholders and the Board, which
has enabled the Board to gain a
better understanding of shareholder
expectations on the matters which
have been most important to them
in 2024; including strategy, financial
performance, board composition,
operating costs, capital allocation
and share price/discount to NAV
•
Enabled broader audience
engagement and the ability to
engage in a real-time Q&A with
shareholders on a number of
occasions through the year
•
Shareholder views communicated
during results roadshows/AGM Q&A
as well as in-person meetings with
defined agenda items between
roadshows, have been specifically
taken into account in the following
Board decisions:
i.
to continue and increase the Share
Buyback programme on multiple
occasions following a number of
realisations through 2024, as detailed
on page 12;
ii.
to cancel all of the shares held in
treasury (as further detailed on
page 25);
iii.
on the internal reorganisation
exercise undertaken in H2 to improve
efficiency and reduce the ongoing
cost base of the Group, as detailed
on page 12; and
iv.
on strategy regarding access to
third-party capital, as detailed on
page 11.
KEY
S.172(1) FACTORS
A
the likely
consequences of
any decision in the
long term
B
the interests of
the Company’s
employees
C
the need to foster
the Company’s
business
relationships
with suppliers,
customers
and others
D
the impact of
the Company’s
operations on the
community and
the environment
E
the desirability
of the Company
maintaining a
reputation for
high standards of
business conduct
F
the need to act
fairly between
members of the
Company
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OUR GOVERNANCE
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WORKING WITH THE GROUP’S STAKEHOLDERS
.
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Name of
stakeholder
and relevant
application of S
.
172
Why we engage
Engagement methods – who and how
Impact of engagement
Employees
s172(1)
A
B
E
To be an attractive home
for exceptional talent, which
is critical to achieving the
Group’s strategy and vision.
Meaningful engagement
with employees also helps
to foster a strong and
supportive culture.
•
IP Connect employee workforce forum, which
was consulted on matters such as Executive
remuneration and the reorganisation process
undertaken in H2 2024
•
Designated Non-executive Director for employees
who, amongst other things and alongside the
Group People Director, attends all IP Connect
meetings
•
Regular all-staff meetings in person and via video
conference, with questions encouraged
•
Annual all staff interactive Q&A session with the
Non-executives
•
Annual all-staff events and regular staff
social events
•
Weekly all-staff emails from the CEO
•
Staff intranet
•
Global third-party-hosted anonymous “speaking
up” hotline and web reporting tool
•
Regular anonymised engagement surveys
throughout the year
•
Internal training sessions
•
Women’s Networking Group and associated
events and initiatives/development sessions
•
Inclusion and Diversity Project including launch of
internal reverse mentoring scheme
•
Assisted the Board in understanding
employee sentiment following the
reorganisation. This in turn helped
to frame communications, the
balance of focus on exiting/retained
employees and the appropriate
management of key-person
dependencies in the new structure
•
90% of employees believe our culture
is one in which diversity and diverse
perspectives are valued, up from
66% before the Group started our
Inclusion and Diversity Project
•
IP Connect played an integral role
in the formulation and articulation
of the Group’s new values launched
in 2024
KEY
S.172(1) FACTORS
A
the likely
consequences of
any decision in the
long term
B
the interests of
the Company’s
employees
C
the need to foster
the Company’s
business
relationships
with suppliers,
customers
and others
D
the impact of
the Company’s
operations on the
community and
the environment
E
the desirability
of the Company
maintaining a
reputation for
high standards of
business conduct
F
the need to act
fairly between
members of the
Company
52
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Name of
stakeholder
and relevant
application of S
.
172
Why we engage
Engagement methods – who and how
Impact of engagement
Portfolio
companies
s172(1)
A
C
E
To identify, back and grow
science-based opportunities
into a diversified portfolio of
transformative businesses,
which address some of
the world’s most pressing
challenges.
Part of the Group’s purpose
is to build businesses that
have a positive social and
environmental impact, and
this forms an element of
the Board’s consideration of
the long-term impact of its
decisions.
•
Hands-on approach via portfolio company boards
as investor directors/observers
•
Offering fundraising and capital markets expertise
via IP Capital (the Group’s fund management and
corporate advisory business), and commercial
advice and support on IP strategy and due
diligence via the Group’s in-house IP Team
•
Group capital markets events, including
presentations at sector showcase events and at
the Group’s annual flagship event
•
Portfolio company management team
presentations to the Board, either at the Group’s
head office in London or onsite at the portfolio
company, which enables open and transparent
two-way engagement between the Board and the
relevant portfolio company management teams
•
Introductions/facilitating access to co-investors
•
Attending sector conferences and events
alongside portfolio companies and their
management teams
•
Marketing including through the use of social
media to amplify messaging around the portfolio
•
Parkwalk annual portfolio showcase attended by
investors/co-investors, advisors and government
bodies
•
Engagement with portfolio companies including
through ESG survey and provision of portfolio
company best-practice policy toolkit.
•
Development of strong and mutually
supportive relationships between the
Group and its portfolio companies
•
Portfolio companies better
understand the Group’s approach to
strategy, decision-making processes
and capital allocation
•
The Group is able to use its investor
director/observer positions to assist
with governance, strategic planning
and many other practical elements
of building and growing a company
•
Support in achieving completion
of a number of portfolio company
financing rounds
•
Reduction of expenditure by portfolio
companies on third-party advisory
services
•
Enables the Group to operate more
effective stewardship and oversight
of portfolio companies throughout
the year, including outside of
investment cycles
KEY
S.172(1) FACTORS
A
the likely
consequences of
any decision in the
long term
B
the interests of
the Company’s
employees
C
the need to foster
the Company’s
business
relationships
with suppliers,
customers
and others
D
the impact of
the Company’s
operations on the
community and
the environment
E
the desirability
of the Company
maintaining a
reputation for
high standards of
business conduct
F
the need to act
fairly between
members of the
Company
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STRATEGIC REPORT
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Name of
stakeholder
and relevant
application of S
.
172
Why we engage
Engagement methods – who and how
Impact of engagement
Third-party
fund investors
and portfolio
co-investors
s172(1)
A
C
E
To attract new strategic
co-investors, including third-
party fund managers, to
invest alongside the Group
either directly or via a vehicle
or arrangement managed
by the Group.
To build an investment
network to support co-
investment into the Group’s
portfolio companies to
ensure that they are
adequately supported, both
financially and in other areas
such as board support,
corporate governance and
strategy.
To maintain strong
relationships with existing
investors who invest in the
Group’s portfolio via funds
or other arrangements
managed by the Group.
•
Direct meetings/calls between co-investors/third-
party fund investors and members of the Group’s
senior management team
•
Direct meetings with the other Limited Partners in
the Group’s US platform
•
Via portfolio company boards where several co-
investors have a board seat
•
Attending conferences and sector events
•
Group capital markets events including its annual
flagship event
•
Broker-facilitated investor forums/conferences
•
Parkwalk Advisors annual portfolio showcase and
other investor events
•
Built/maintained strong relationships
with co-investors/fund investors
and facilitated access for them into
portfolio company financings
•
Ensured such stakeholders were kept
abreast of the Group’s strategy and
approach to key matters through the
year, including capital allocation
•
Promoted the Group’s brand and
reputation in sector ecosystems
•
Developed sources of new
investment into the Group and/or its
portfolio
Universities,
academics
and research
institutions
and Inventors,
founders and
entrepreneurs
s172(1)
A
C
E
To build, develop and
maintain relationships with
universities, academics and
research institutions in order
to identify promising science
into which the Group can
invest to grow transformative
businesses that have a
positive impact on the future
around such science.
To create and maintain
a pipeline of compelling
intellectual property-based
opportunities.
•
Regular interaction with universities within the UK,
Europe, Australia and New Zealand
•
Annual relationship review in Australia and New
Zealand
•
Parkwalk representatives on relevant university
fund investment committees
•
Attending and presenting at sector events and
conferences
•
Meetings throughout the year with entrepreneurs
and innovators
•
Maintained relationships between
the Group and universities,
academics and research
institutions, which has ensured
these stakeholders are aware of the
Group’s strategy and funding model
•
Generated a pipeline of potential
new investment opportunities
•
Relationships built/enhanced with
founders and entrepreneurs across
various ecosystems to ensure the
Group is their partner of choice
KEY
S.172(1) FACTORS
A
the likely
consequences of
any decision in the
long term
B
the interests of
the Company’s
employees
C
the need to foster
the Company’s
business
relationships
with suppliers,
customers
and others
D
the impact of
the Company’s
operations on the
community and
the environment
E
the desirability
of the Company
maintaining a
reputation for
high standards of
business conduct
F
the need to act
fairly between
members of the
Company
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Name of
stakeholder
and relevant
application of S
.
172
Why we engage
Engagement methods – who and how
Impact of engagement
The
environment
and wider
community
s172(1)
A
D
To generate social and
environmental impact, which
is part of the Group’s core
purpose.
•
Via the Group’s portfolio companies
•
Engagement with ESG Ratings agencies
•
Charity partnership with IntoUniversity
•
Supported the 10,000 Black Interns programme
•
Signatory to Investing in Women Code
•
Member of UN Global Impact
•
Member of UN Principles for Responsible
Investment
•
Identified and backed companies
whose products and services
contribute to a regenerative,
healthier, tech-enriched future for
the world
•
Supported local and wider
communities through charitable and
fundraising initiatives
•
Continued commitment to driving
improvements in inclusion, diversity
and equality across the Group
and wider society via the Group’s
Inclusion and Diversity Project plan
Debt holders
s172(1)
C
E
To build and maintain
strong partnerships with the
Group’s largest debt capital
providers.
•
Regular reporting requirements
•
Direct conversations and consultation on matters
relevant to existing debt holders
•
Outreach to potential lenders on an ad hoc basis
•
Group capital market events
•
Continued strong relationships
with the largest holders of the
Group’s debt
•
Understood debt-holders’ views on
capital allocation and returns to
shareholders, which enabled them to
be taken into account on decisions
by the Board, specifically in these
areas (as referenced above)
Regulators
s172(1)
C
E
To maintain strong
relationships with our
regulators and to foster
confidence in our strong
compliance culture.
•
Direct correspondence on transactions and other
matters as necessary
•
Correspondence with the Takeover Panel on
concert party and other code-related matters
•
Regular reporting to the Financial Conduct
Authority, and incorporation of any feedback
received
•
Regular reporting to the Securities and Futures
Commission, the Australian Securities and
Investment Commission, Australian Prudential
Regulation Authority and the Australian
Transaction Reports Analysis Centre
•
Maintained strong relationships
and communication lines with the
Group’s regulators
•
Confirmation of compliance with
regulatory requirements
KEY
S.172(1) FACTORS
A
the likely
consequences of
any decision in the
long term
B
the interests of
the Company’s
employees
C
the need to foster
the Company’s
business
relationships
with suppliers,
customers
and others
D
the impact of
the Company’s
operations on the
community and
the environment
E
the desirability
of the Company
maintaining a
reputation for
high standards of
business conduct
F
the need to act
fairly between
members of the
Company
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Name of
stakeholder
and relevant
application of S
.
172
Why we engage
Engagement methods – who and how
Impact of engagement
Brokers and
advisors
s172(1)
C
E
To ensure those who
represent us have a
complete understanding
of the Group’s strategy,
performance, purpose and
culture and to maintain
strong relationships through
our brokers and advisors
with UK capital markets
authorities.
•
Regular dialogue and correspondence with
brokers and advisors including industry analysts
•
Group capital markets events and sales team
presentations in connection with the annual and
interim results
•
Broker/advisors attendance at Company Board
meetings to advise on specific strategic matters,
shareholder feedback and sentiment and general
market environment
•
Reinforced the strong relationships
and communication lines between
the Group and the Group’s Brokers
and advisors
•
Enhanced the brokers and advisors’
knowledge and understanding of the
Group and its portfolio companies
Governance
bodies
s172(1)
C
E
To maintain strong
relationships with proxy
advisors, the Investment
Association, ESG ratings
agencies and other
governance bodies.
•
Engagement with ESG ratings agencies to help
demonstrate the Group’s performance, as well as
enabling identification of areas of improvement
•
Engaged with the UK Government and
parliamentarians on key issues and Mansion
House Reforms
•
Group CEO is a member of the London Stock
Exchange Primary Markets Group
•
Responded to UK Government consultations on
matters impacting the Group and its portfolio
including the revisions to the UK Corporate
Governance Code, Long-term investment for
Technology and Science initiative and R&D Tax
Credits, and the UK’s Modern Industrial Strategy
•
Met with leads on the Edinburgh Reforms Review
and the Spin Out Review
•
Two-way engagement with proxy bodies in
relation to their reports on the Group’s Annual
General Meeting and any other General Meetings
•
Regular interaction with EIS Association and HMRC
in relation to EIS investments
•
Regular liaison with government-backed initiatives
in relation to investment within the sector
•
Made sure the Group’s voice was
heard on key issues relevant to the
Group including on Mansion House
Reforms, Listing and Prospectus Rules
reforms, approach to carried interest
and PISCES
•
Ensured the accuracy of the
proxy voting reports and
endeavoured to influence fair voting
recommendations
•
Ensured the ESG ratings agencies
were reporting accurately on
the Group’s performance and
proactively sought to address gaps
KEY
S.172(1) FACTORS
A
the likely
consequences of
any decision in the
long term
B
the interests of
the Company’s
employees
C
the need to foster
the Company’s
business
relationships
with suppliers,
customers
and others
D
the impact of
the Company’s
operations on the
community and
the environment
E
the desirability
of the Company
maintaining a
reputation for
high standards of
business conduct
F
the need to act
fairly between
members of the
Company
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Key shareholder activities in 2024
Q1
•
Annual results presentation*
•
Results roadshow
•
Berenberg UK Corporate conference
Q2
•
Rothschild roadshow
•
AGM presentation*
•
Switzerland roadshow
Q3
•
H1 results presentation*
•
Results roadshow
Q4
•
Ireland roadshow
•
Rothschild roadshow
•
Cantor TMT Conference
•
Middle East roadshow
•
Berenberg European Conference
*
available via the Investor Meet Company platform which is
open to all stakeholders.
Shareholders by sector
Sector/owner
% at 31
December
2024
Pensions
25.47%
Mutual funds
25.13%
Retail
23.66%
Hedge
7.67%
Charities
4.78%
Insurance
4.12%
Investment trusts
3.31%
ETF
2.92%
SWF
1.55%
Other
1.39%
Details of substantial shareholders as at 31 December 2024 can be found on page 107.
Corporate governance and business conduct
In fulfilling its role as a responsible investor, the Group expects high levels of corporate governance within its
portfolio companies. In the majority of the Group’s priority companies, the Group takes up a Board position
to support this requirement. This helps to ensure that robust governance processes are in place within such
companies, which the Group also supports through facilitating introductions to external advisors, sharing
best practice and offering helpful guidance on new legislation. As part of its responsible stewardship
responsibilities, the Group incorporates a requirement for portfolio companies to adopt and maintain
various legal and governance policies to ensure such companies are operating in accordance with the
high standards expected by the Group as an active investor. The Group has developed a best-practice
policy toolkit, which is available to its portfolio companies and which provides template policies for the
key governance and compliance policies that the Group expects its portfolio companies to have in place,
including with regard to anti-corruption and bribery, data protection and “speaking up”.
The Group is committed to preventing modern slavery in its business and supply chains and has adopted
principles and policies that are relevant to the prevention of modern slavery across its organisation and
supply chains. This includes the payment of the London Living Wage.
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Employees (including on inclusion,
equity and diversity matters)
The Board considers engagement with its colleagues
at all levels in the Group to be a key part of the Group’s
culture, and a wide range of events and experiences are
facilitated for employees to participate in, from both a
work and wellbeing perspective.
As further described on page 52, IP Connect, the Group’s
employee forum, works to ensure that employees’
voices are heard by the Group’s management team
and Board. The forum facilitates meaningful and
effective two-way communication between the Board
(via Aedhmar Hynes, the Group’s Designated NED)
and employees, enabling the Board to understand
and actively consider the interests of employees in its
discussions and the decisions it makes. This also helps
to enable employees to understand (where practicable
to do so) why certain decisions are made. The Board
considers that the combination of a Designated NED
and an employee forum continues to be welcomed by
colleagues as an effective and appropriate approach to
employee engagement within the Group.
How stakeholders’ views are
reported to the Board and influence
the Board agenda
Through understanding the views of its stakeholders, the
Board takes into account their opinions, preferences and
concerns when debating and making decisions. Regular
contact is maintained by the Chair, Senior Independent
Director and the Executive Directors with the Group’s key
shareholders, and, where considered appropriate, major
institutional shareholders are consulted on significant
decisions and transactions in contemplation. Where
appropriate, Committee Chairs will also engage with
key shareholders impacted by matters under the remit
of their particular Committee. Key areas of discussion
over the last year have related to progress against
the Group’s strategy, the Group’s approach to capital
allocation including returns to shareholders, the Group’s
operating costs, the disparity between the Group’s share
price and NAV per share, and shareholder returns.
Training and Board processes
The Board receives regular training on its s172
obligations to keep current with evolving market
expectations. Information relating to stakeholder
issues is included in relevant Board papers to enable
the Board to understand and consider relevant
stakeholder interests when making principal decisions.
This information incorporates feedback received from
relevant stakeholders through ongoing stakeholder
engagement.
Where appropriate, being mindful of its obligations as
a listed company and confidentiality requirements,
the Board will, in limited circumstances, seek input
from key stakeholders prior to a decision being taken.
In each case, the Directors consider how a short-term
decision (for example, to sell an asset and achieve
an immediate financial return) links into the Group’s
overall strategy to create long-term value for its
shareholders. The same considerations are taken into
account by the Investment Committee(s) in relation
to decisions made, or proposals recommended to the
Board, under the delegated authorities. Following any
principal Board decision, and where appropriate, the
Board will reach out to relevant stakeholders to explain
its decision as part of its continued meaningful two-way
communication with stakeholders.
Board approval
The Strategic Report as set out on pages 05 to 58 has
been approved by the Board.
On behalf of the Board
Sir Douglas Flint
Chair
24 March 2025
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Executive/Non-executive split
2
1
4
KEY
Executive Director
Non-executive Director
Non-executive Chair
Board tenure
6
2
1
KEY
0–2 years
3–5 years
Over 5 years
Gender balance
3
4
KEY
Male
Female
Governance highlights 2024
Share buyback
In October 2024, the Board approved the extension of
the Group’s buyback programme (utilising a percentage
of realisation proceeds received in the year to date)
and cancellation of shares held in treasury. Further, in
December 2024, the Board approved the application of all
proceeds received from a partial portfolio sale agreed in
December and 20% of the proceeds received from the sale
of Featurespace Limited towards a further extension of the
existing buyback programme to run through 2025
Read more on
page 25
Realisations
The Board approved the sales of Garrison Limited (July 2024)
and Featurespace Limited (September 2024)
Read more on
page 11
International
The Board approved the cessation of plans to enter the
China market through a joint venture
2024 UK
Corporate
Governance
Code
The Board has continued to review and evolve the Group’s
corporate governance arrangements and practices,
including reviewing the Group’s preparedness for the 2024 UK
Corporate Governance Code, which will apply to the Group
from the 2025/26 financial year, to ensure full compliance
with the new code prior to it coming into force.
Corporate
reorganisation
On 31 July 2024 the Board approved a reorganisation of
the operating model of the Group in order to improve the
efficiency and reduce the ongoing cost base of the Group
Read more on
page 12
Board and Committee attendance
The following table shows the attendance of Directors at scheduled Board and Committee meetings in 2024:
Board
meetings
Audit and Risk
Committee
1
Nomination
Committee
Remuneration
Committee
Sir Douglas Flint
7/7
–
3/3
6/6
Greg Smith
7/7
–
–
–
David Baynes
7/7
–
–
–
Heejae Chae
7/7
7/7
3/3
6/6
Dr Caroline Brown
7/7
7/7
3/3
6/6
Aedhmar Hynes
7/7
7/7
3/3
6/6
Anita Kidgell
7/7
7/7
3/3
6/6
Dr Elaine Sullivan
2
3/3
2/3
1/1
2/3
1
The Chair, CEO and CFO attend as observers
2
Dr Elaine Sullivan retired from the Board on 12 June 2024.
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Board Skills Matrix
Skills focus
Individual
Strategic
leadership
Shareholder
engagement
UK plc experience
Shareholder value
delivery
Experience of
innovation
Audit & portfolio
valuation
Tech
expertise
Life science
expertise
Chair experience/
capability
Strategy definition
Comms, branding,
IR
Access to global
networks
International
experience
Sir Douglas Flint CBE
Chair/Nomination chair
Greg Smith
Chief Executive Officer
David Baynes
Chief Financial and
Operating Officer
Aedhmar Hynes
Senior Independent
Director and Designated
Non-executive Director
Dr Caroline Brown
Non-executive Director/
Audit and Risk Chair
Heejae Chae
Non-executive Director/
Remuneration Chair
Anita Kidgell
Non-executive Director
Compliance with the UK Corporate
Governance Code 2018
The table below shows the principles set out in the Code and
where key content can be found.
Board leadership and Company purpose
Board of Directors
61 to 63
Chair’s Corporate Governance Statement
65 to 71
Culture
03 and 52
Employee engagement
29
Governance framework
64
Purpose
IFC
Section 172 Statement
50 to 58
Shareholder and stakeholder engagement
50 to 58
Division of responsibilities
The role of the Board and Committees
66 and 68
Board and Committee attendance
59
Composition of the Board
68 to 70
Director rotation and independence
70
Composition, succession and evaluation
Board biographies
61 to 63
Board composition
68 to 70
Board effectiveness and evaluation
75 to 77
Inclusion and diversity
74
Induction, awareness and development
73
Nomination Committee Report
72 to 77
Succession planning
74 to 75
Audit, risk and internal control
External audit
105
Going concern and long-term viability
49
and 107
Internal audit
104
Risk and internal controls
104
Remuneration
Directors’ Remuneration Report
78 to 100
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KEY
Audit and Risk Committee
Nomination Committee
Remuneration Committee
C
Chair
1
Subject to renewal for subsequent three-year terms as set out on page 70.
2
Excludes appointments to Group portfolio company boards.
Sir Douglas Flint CBE
Non-executive Chair
Effective date of current letter of appointment:
Appointed as a
Non-executive Director from 17 September 2018 and as Non-executive Chair
from 1 November 2018
Independent:
n/a
1
Tenure:
6 years (renewed in September 2024)
Term of office:
3 years
1
, 3 months’ notice
Re-election to Board:
Annually at AGM
Skills and experience
Sir Douglas has extensive experience of public company board leadership,
which helps to focus Board discussion and challenge on the design and
delivery of our strategy. His collaborative approach helps to facilitate open
and constructive boardroom discussion. Previously, Sir Douglas served as
Group Chairman of HSBC Holdings plc from 2010 to 2017. For 15 years prior to
this he was HSBC’s group finance director, joining from KPMG where he was
a partner. Between 2005 and 2011, Sir Douglas served as a non-executive
director on the board of bp plc, latterly chairing its audit committee.
Key external appointments
In other current roles, Sir Douglas is Chairman of Aberdeen plc, Chairman
of the Royal Marsden hospital and charity and a member of a number of
advisory boards and trade associations, through which he keeps abreast
of industry, regulatory and international affairs of relevance to his public
company responsibilities. In 2022, Sir Douglas was appointed as chair of the
UK Government’s Digitalisation Taskforce.
Greg Smith
Chief Executive Officer
Effective date of current service agreement:
6 October 2021
Independent:
No
Tenure:
13 years as an Executive Director, 3 years as Chief Executive Officer
Term of office:
Permanent, 6 months’ notice
Re-election to Board:
Annually at AGM
Skills and experience
Greg gained significant knowledge of the Group and the sector in which it
operates through his decade-long tenure as Chief Financial Officer of the
Group, during which he contributed broadly and successfully to the Group’s
expansion geographically, and in scale. He has deep experience of capital
and resource allocation, and investment appraisal, and this experience,
together with his financial expertise, plays a fundamental role in driving the
Group’s strategy, purpose and vision.
His strong communication skills have been critical to maintaining and
optimising the Group’s relationship with its key stakeholders. Prior to joining
the Group, Greg held positions at both Tarchon Capital and KPMG. Greg is a
Fellow of the ICAEW and holds a degree in mathematics.
Key external appointments
Greg is on a number of advisory bodies which seek to make the UK’s
capital markets more accessible to smaller companies, in terms of both
public listing and scale-up capital, particularly for those companies whose
business is based on innovative science and technology.
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KEY
Audit and Risk Committee
Nomination Committee
Remuneration Committee
C
Chair
1
Subject to renewal for subsequent three-year terms as set out on page 70.
2
Excludes appointments to Group portfolio company boards.
Aedhmar Hynes
Senior Independent Director and Designated
Non-executive Director for employee engagement
Effective date of current letter of appointment:
1 August 2019
Independent:
Yes
Tenure:
5 years (renewed in August 2022)
Term of office:
3 years
1
, 3 months’ notice
Re-election to Board:
Annually at AGM
Skills and experience
Aedhmar brings valuable experience to the Board in
relation to technology disruption, digital transformation
and marketing and strategic communications. Aedhmar
has many years’ experience in communications and
is the former CEO of Text100, a digital communications
agency with 22 offices and over 600 consulting staff
across Europe, Asia and North America.
Aedhmar is also the Senior Independent Director and
the Group’s Designated Non-executive Director for
employee engagement on the Board.
Key external appointments
Aedhmar is trustee of Connecticut Public Broadcasting
and The Page Society, a Board Director of Jackson Family
Wines, Technoserve and Fluidra S.A, member of the US
Foundation Board of the National University of Ireland,
Galway and a Henry Crown Fellow at The Aspen Institute.
David Baynes
Chief Financial and Operating Officer
Effective date of current service agreement:
6 October 2021
Independent:
No
Tenure:
11 years as an Executive Director, 3 years as Chief
Financial and Operating Officer
Term of office:
Permanent, 6 months’ notice
Re-election to Board:
Annually at AGM
Skills and experience
David’s financial background and expertise, together
with his experience gained during his tenure as the Chief
Operating Officer of the Group, provide the experience
required to drive the Group’s achievement of its financial
goals and operating targets. David has a long track
record of working successfully with the boards of
investee companies as they develop and mature, often
in challenging and disruptive circumstances. David
was appointed to the Board in March 2014 following the
acquisition by the Group of Fusion IP plc where he held
the position of Chief Executive Officer for ten years.
David brings previous additional experience taking
companies from start-up to full listing on the London
Stock Exchange, which he has done three times. David
was also previously CFO of Codemasters Limited.
Key external appointments
2
None
Dr Caroline Brown
Non-executive Director
Effective date of current letter of appointment:
1 July 2019
Independent:
Yes
Tenure:
5 years (renewed in June 2022)
Term of office:
3 years
1
, 3 months’ notice
Re-election to Board:
Annually at AGM
Skills and experience
Caroline has a wealth of experience covering
accounting and audit, banking and investments, as
well as science and technology, all of which are highly
relevant for the Board. Caroline holds a first class
degree and PhD in Natural Sciences from the University
of Cambridge, a Masters of Business Administration
from Bayes Business School, London and is a Fellow of
the Chartered Institute of Management Accountants.
She has over 20 years’ plc board experience and held
previous positions in corporate finance at BAML (New
York), UBS and HSBC.
Key external appointments
Caroline is a Non-executive Director of CAB Payment
Holdings plc, Luceco plc and Ceres Power Holdings plc.
She is also a Non-executive external member of the
global partnership council of Clifford Chance LLP.
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KEY
Audit and Risk Committee
Nomination Committee
Remuneration Committee
C
Chair
1
Subject to renewal for subsequent three-year terms as set out on page 70.
2
Excludes appointments to Group portfolio company boards.
Heejae Chae
Non-executive Director
Effective date of current letter of appointment:
3 May 2018
Independent:
Yes
Tenure:
6 years (renewed in May 2024)
Term of office:
3 years
1
, 3 months’ notice
Re-election to Board:
Annually at AGM
Skills and experience
Heejae is an experienced public company director,
bringing both knowledge of finance and industry, having
spent the early part of his career in finance at The
Blackstone Group and Credit Suisse First Boston before
moving into industry. Heejae’s former positions include
CEO of Scapa Group plc, Group Chief Executive of Volex
Group plc and Group General Manager for Amphenol
Corporation.
Key external appointments
Heejae is Executive Chairman of Sysgroup plc and
Non-Executive Director of Elementis plc.
Anita Kidgell
Non-executive Director
Effective date of current letter of appointment:
18 January 2023
Independent:
Yes
Tenure:
2 years
Term of office:
3 years
1
, 3 months’ notice
Re-election to Board:
Annually at AGM
Skills and experience
Anita has over 25 years of pharmaceutical experience
spanning multiple disciplines. She is currently Head
of Corporate Strategy at GSK with over ten years of
experience of leading strategic initiatives in numerous
areas including China, ESG, geopolitics as well as
integrations and demergers. Between 2004 and 2007
she was the Global Head of Investor Relations at GSK
and prior to this held senior positions in Corporate
Communications, at GlaxoWellcome and at the
Brunswick Group.
Anita has a First Class Honours degree in Applied
Biology and has more than ten years’ experience
in pharmaceutical Discovery Research and Clinical
Development.
Key external appointments
Anita is Head of Corporate Strategy at GSK.
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The Board
Audit and Risk
Committee
Pages 101 to 105
Investment Committees
Page 69
Chair
Investment & Capital Group
Page 68
Nomination
Committee
Pages 72 to 77
ESG Committee
Page 32
Chief Executive Officer
Chief Financial and
Operating Officer
Remuneration
Committee
Pages 78 to 100
Ethics Committee
Page 65
Senior Independent Director
Platform Group
Page 68
Disclosure
Committee
Page 69
Company Secretary
Non-executive Directors
Executive Directors
Compliance with
the UK Corporate
Governance Code 2018
(the “Code”)
The Board is committed to meeting
the high standard of corporate
governance set out within the
Code (available at www.frc.org.uk/
directors/corporate-governance-
and-stewardship/uk-corporate-
governance-code) and to
demonstrating compliance with
best practice as it develops.
The Group confirms it applied the
principles and complied with all the
provisions of the Code throughout
the year.
Read
Board biographies
on pages 61 to 63
Read
Board activities
on page 68
Read
roles and responsibilities
of the Board
on page 66
Valuation Committee
Page 103
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Corporate governance
Effective corporate governance is integral to the
Board’s oversight of the design and execution of
the Group’s strategy. The Board confirms that it
has continued to meet the requirements of the
Code. The Board recognises its accountability to
the Company’s shareholders for good governance,
and this report, together with the reports of the
Remuneration, Nomination, and Audit and Risk
Committees of the Board, describe the Group’s
approach to meeting the highest standards of
corporate governance and highlight the key
developments that have taken place in this area
during the year.
Board changes
Dr Elaine Sullivan retired from the Board in June 2024
following nine years of service to the Company. Once
again, the Company expresses its sincere thanks to
Dr Sullivan for her valuable contribution and input
during this period of service. Further information on
the current Board composition can be found in the
Nomination Committee Report on page 72.
ESG
The Group upholds strong business values that
continue to guide the Group in implementing
its strategy, and employees are encouraged to
demonstrate these values throughout their work.
Two executive committees oversee implementation
of and monitor compliance with the Group’s
obligations to conduct business responsibly,
reporting periodically to the Board; the ESG
Committee has responsibility for the oversight
and implementation of the Group’s ESG and
Sustainability policy, and the Ethics Committee
provides guidance to the Group on ethical issues
and monitors compliance with the Group’s Ethical
Investment Framework. These committees work
together to ensure that the Group’s values and
culture are also embedded in the Group’s capital
allocation framework. Further details on the ESG
Committee and Ethics Committee, and on how the
Group mitigates climate-related risk, are included on
page 32.
Consideration of stakeholders
The Board recognises the importance of building
and maintaining strong relationships and two-way
engagement with all the Group’s stakeholders,
in order to promote the long-term success of
the Company and earn their continuing support
for the Group’s purpose, vision and strategy. The
Group continues to foster a culture of innovation,
mutual support, diversity and inclusion. The Group
encourages its employees to engage in healthy
debate and challenge so that it can consider a
wide range of opinions when making decisions.
For more information on the culture that the Group
seeks to foster, and the code of conduct and values
framework and guidelines developed to deliver that
culture, see page 58. For further details on how the
Directors have complied with their duties under
s172 of the Companies Act 2006 (the “CA 2006”),
including in their decision-making, please refer to
pages 50 to 57.
I look forward to welcoming shareholders to our AGM
on 12 June 2025, which will be held at the Company’s
registered office at 3 Pancras Square, King’s Cross,
London, N1C 4AG. In addition, and to facilitate
engagement with shareholders throughout the
year, the Group maintains a dedicated Company
Secretary email address (cosec@ipgroupplc.com)
through which shareholders can submit questions at
any time.
Sir Douglas Flint
Chair
24 March 2025
Sir Douglas Flint
Chair
The Board recognises the importance
of building and maintaining
strong relationships and two-way
engagement with all the Group’s
stakeholders in order to promote the
long-term success of the Company
and earn their continuing support.
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The Board
Role and responsibilities of the Board
The Board is responsible to the Company’s shareholders
for the overall management of the Group in a way that
promotes the Group’s long-term sustainable success,
taking into account the interests of shareholders
and all other relevant stakeholders in carrying out
this responsibility. The Board defines, challenges and
interrogates the Group’s strategic aims and direction,
and provides entrepreneurial leadership within a
framework of controls for assessing and managing
risk. The Board recognises that, in discharging
its responsibilities, it is necessary to support the
maintenance and evolution of a policy and decision-
making framework in which the Group’s strategic aims
are implemented through the following:
•
ensuring that the necessary financial and human
resources are in place to meet those aims and to
ensure the Group is a home for exceptional talent
•
monitoring performance against key financial and
non-financial performance indicators
•
embedding a robust performance management
framework and aligning reward with the long-term
interests of stakeholders
•
planning for Board and senior management
succession
•
overseeing and challenging the system of risk
management
•
setting and monitoring adherence to mandated
values and standards in governance matters
•
monitoring environmental, social and governance
policies and performance
•
helping to shape and embed the Group’s purpose,
vision, strategy, values and culture
The Board recognises that its role in setting, monitoring
and enforcing the standards of behaviour it expects
from its people is of key importance. The Group’s culture
is one of the key strengths of its business and plays
a strong role in attracting, retaining and incentivising
the most talented people. Further information on the
Group’s culture and its values is on page 03.
In supporting the Group’s business and its portfolio
companies, the Board acknowledges the key roles
the Group’s operational functions play in the fields of
capital raising, legal advice and support, intellectual
property strategy and due diligence support. These sit
alongside and support the hands-on approach and
high level of engagement provided by the experienced,
sector-specific investment partnership team members.
The Directors believe that the Group’s approach to
supporting its portfolio companies in this way is unique
and serves not only to build sustainable businesses
with longevity, but will also provide attractive returns for
stakeholders, by creating value over the longer term.
The responsibility of the Directors in promoting the
long-term success of the Company and thereby the
Group is collective and recognises their respective roles
as Executive Directors and Non-executive Directors.
The Non-executive Directors are responsible for
constructively challenging and contributing to proposals
on strategy as part of the Board approval process,
scrutinising the performance of executive management
against targets set and determining appropriate levels
of remuneration. The Non-executive Directors must
also satisfy themselves of the integrity of financial
information, and that financial controls and systems
of risk management are robust and comprehensive.
The Executive Directors are responsible for making and
implementing day-to-day decisions (other than matters
reserved for the Board) within the risk appetite and
tolerance and operating and financial constraints set by
the Board.
The Board reviews the purpose, vision and strategy of
the Group and any issues arising from it on a regular
basis, and exercises control over the performance of the
Group by agreeing budgetary and other targets and
monitoring performance against those targets.
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.
Division of responsibilities
Chair
•
Leadership and conduct of the Board, encouraging open and constructive discussion and challenge
•
Promotes high standards of governance and Board effectiveness, including incorporating the views and interests of stakeholders into Board
decision-making
•
Ensures active engagement and effective communication with shareholders
•
Sets the Board’s agenda and is responsible for ensuring the committees carry out their duties
•
Ensures that Board members receive timely, accurate and clear information about the Group’s activities
•
Ensures that Board members receive appropriate induction and ongoing training on the Group’s activities and their own responsibilities
•
Leads performance assessment of Board members
Chief Executive Officer
(“CEO”)
•
Leads on development and delivery of strategy
•
Leads the management of the Group and establishes financial and operational targets
•
Leads the management of the Group in incorporating ESG factors into the Group’s strategy and business model
•
Responsible for building a team that is able to effectively identify, back and grow impactful early-stage innovation-led companies into a
diversified portfolio of robust, transformative businesses, and for embedding a culture that ensures the team is highly engaged and motivated
to deliver
•
Leads delivery of the Group’s operating plans and budgets and the recommendations in respect of, and the subsequent execution of, Board
decisions
•
Leads succession planning for the senior executive positions alongside the Group People Director and reports to the Nomination Committee
thereon
•
Represents the Group to external stakeholders and engages with them on the Group’s purpose and strategy
Chief Financial and
Operating Officer
(“CFOO”)
•
Oversight and executive responsibility for the Group’s financial and operational systems, processes and matters
•
Maintains an efficient and effective controls environment, including protecting the Group against cyber risks
•
Responsible for executing day-to-day decisions (other than matters reserved for the Board) within the risk appetite and tolerance and
operating and financial constraints set by the Board
•
Monitors operating and financial performance against agreed budgets and targets and reports to the Board on the same
•
Ensures the Group’s financial structure and capacity supports the Group’s objectives
Senior Independent
Director
•
Available to shareholders to discuss their views and concerns when required
•
Intermediary between the Board and the Chair
•
Leads the Board in deliberations where the Chair is conflicted
•
Leads assessment of the Chair’s performance and on any Chair succession matters
Non-executive
Directors (as part of
the Board)
•
Approve Group strategy and operating plans
•
Approve business and financing models
•
Discuss and constructively challenge executive recommendations on matters brought to the Board
•
Monitor and performance manage delivery of strategy and operating plans
•
Provide independent views, support and specialist knowledge
•
Serve on committees of the Board
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Board activities during 2024
Principal decisions
•
Approved extensions of the Group’s share buyback
programme and cancellation of shares held in
treasury
•
Approved amendments to the Group’s delegated
investment and realisation authorities (the
“Delegated Authorities”)
•
Approved significant portfolio company investments
and divestments required in line with the Delegated
Authorities
•
Approved revisions to the Group’s Capital
Allocation Policy
•
Approved a corporate reorganisation in order to
streamline decision-making and reduce operating
expenses
Board and Committee composition
and conduct
•
Reviewed succession planning for the Executive
Directors, senior leadership and Non-executive Board
positions, including the Chair
Strategy and risk
•
Continued to support and engage with the Executive
Directors on the implementation of the Group’s
strategic aims
•
Reviewed the Group’s performance within its
competitive landscape
•
Regularly discussed and debated the form and
implementation of the Group’s Capital Allocation
Policy
•
Debated in detail the Group’s principal risks and the
Board’s approach to the setting of its risk appetite
•
Considered the longer-term emerging risks that may
impact the Group and its business
Corporate Governance
•
Reviewed policies, processes and procedures to
ensure continued compliance with the Code
•
Reviewed, and updated where necessary, the terms
of reference for its committees
•
Received regular updates from the Group’s core
business units and operational functions
•
Implemented the recommendations from the 2023
internal Board evaluation
Stakeholders
•
Considered the Company’s ability to return cash to
shareholders
•
Extended the share buyback programme
•
Received presentations from the Company’s
financial advisors on the current market climate and
shareholder activism
•
Discussed the Company’s share price performance,
in particular the discount to NAV and actions to be
taken to narrow the gap
•
Received quarterly people updates from the Group
People Director including on progress to embed
the Group’s culture and values, improve inclusion
and diversity, expand learning and development
resources and the results and actions from the
regular staff surveys
•
Received updates at each Board meeting from the
investment teams, which included detail on the short
to medium-term strategy for each partnership and
performance of their focus portfolio companies
Schedule of matters
Except for a formal schedule of matters, which are
reserved for decision and approval by the Board, the
Board has delegated the day-to-day management
of the Group’s operations to the Executive Directors,
supported closely by members of the senior
management team. The schedule of matters reserved
for Board decision and approval are those significant
to the Group as a whole due to their strategic, financial
and/or reputational implications. The schedule can be
found within the Corporate governance section of the
Group’s website at
www.ipgroupplc.com
. This schedule
was reviewed in early 2024 and all recommended
changes were accepted by the Board. The schedule will
be reviewed again in 2025.
Committees and oversight
In addition to the Executive Directors, the Board
delegates specific responsibilities to certain committees
that assist the Board in carrying out its functions and
ensure independent oversight of internal control and risk
management.
Each of the three principal committees of the Board
(Audit and Risk, Nomination and Remuneration) has
its own terms of reference, which set out the specific
matters for which delegated authority has been given
by the Board and which can be found within the
Corporate governance section of the Group’s website at
www.ipgroupplc.com
.
Separate reports on the role, composition,
responsibilities and operation of each of the Nomination,
Remuneration and Audit and Risk Committees are set
out on pages 72, 78 and 101, respectively.
The Group’s Corporate Governance Framework set out
on page 64 illustrates the structure of the Board and its
principal committees. Under the Board level, decision-
making sits with the Executive Directors, supported by
their Investment & Capital and Platform Groups, which
both comprise members of the senior leadership
team and have primary authority for the day-to-day
management of the Group’s operations, save for those
matters that are expressly reserved for the Board or its
committees.
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The Disclosure Committee assists the Group in making
timely and accurate disclosure of all information that
is required to be disclosed in order for the Group to
meet its legal and regulatory obligations, including
under the Market Abuse Regulation, and ensures
that relevant training is provided to the Board and
to the wider employee base. This Committee takes
responsibility for the assessment and control of inside
information, both in respect of the Group and its quoted
portfolio companies. The composition of the Disclosure
Committee comprises the Executive Directors, the
Group General Counsel, the UK General Counsel, the
Director of Communications and a minimum of one
Non-executive Director.
The Group operates Investment Committees for (i)
balance sheet investment decisions and (ii) Australian
investment decisions. Decisions relating to investments
and divestments in portfolio companies (other than
those reserved for the Board) are delegated to
the relevant Investment Committee within defined
parameters and with specific quorum requirements.
Separate investment committees are operated by
the Group for third party funds managed by the
Group. Additional executive oversight of key operating
subsidiaries is provided by the CEO sitting on the
Parkwalk Advisors board and both the CEO and CFOO
sitting on the board of the Group’s principal Australian
subsidiary.
Board size and composition
As at 31 December 2024, there were seven Directors
on the Board: the Chair, two Executive Directors and
four Non-executive Directors. The biographies of all
Directors are provided on pages 61 to 63 and details with
respect to the diversity of the Board are set out in the
Nomination Committee Report on page 74.
In accordance with the provisions of the Code, all the
Directors will be offering themselves for re-election at
the 2025 AGM. The Board unanimously recommends to
shareholders the reappointment of the Directors offering
themselves for re-election. The annual Board evaluation
and the annual one-to-one performance appraisal
process confirmed that all Directors of the Company
are effective, commit the required time demanded of
them, and continue to display the appropriate level of
commitment in their respective roles.
Diversity
The disclosure required by DTR 7.2.8A relating to the
Group’s diversity policy is presented in the Nomination
Committee Report on page 74 and in the Meaningful
impact section on page 30.
Company Secretary
All Directors have access to the impartial advice and
services of the Company Secretary. The Company
Secretary acts as a key point of contact for the Chair
and has an important role in ensuring both the quality
of information that flows between the Executive and
Non-executive Directors and that any agreed actions
are completed. The Company Secretary supports the
Chair and the Nomination Committee on performance
evaluation, the induction of new Directors and the
continuing development of current Directors to enable
them to comply with their duties and effectively carry
out their roles.
Non-executive Directors
The Non-executive Directors provide a wide and
diverse range of skills and experience to the Group as
detailed on page 60. By virtue of this, the Non-executive
Directors collectively are well placed to constructively
challenge and scrutinise the performance of executive
management at both Board and Committee meetings.
In order to protect their independence, the Group does
not permit Non-executive Directors to invest personally
in any of the Group’s portfolio companies. All of the Non-
executive Directors comply with this policy.
All Directors are required to obtain the approval of
the Board before taking on any further directorial
appointments or other significant external appointment,
or any engagement with an organisation that competes
with the Group (whether directly or indirectly). In all
cases, Non-executive Directors must ensure that the
aggregate time committed to external appointments
does not impinge upon the time they have committed
to the Group. The Executive Directors are restricted
to only one external (outside the Group) board
appointment. Details of key external appointments of the
Directors can be found on pages 61 to 63.
Board meetings, provision of
information and decisions
The Board and its Committees meet on a scheduled
basis throughout the year as well as on an ad hoc
basis, as required in response to the needs of the
Group’s business.
The Board had 7 scheduled Board meetings and a two-
day strategy session in 2024; 7 Board meetings including
a two-day strategy session are scheduled for 2025. The
requirement for additional scheduled meetings is kept
under review by the Chair and the Company Secretary.
Meetings between the Chair and the Non-executive
Directors, including informal dinners both with and
without the presence of the CEO and other executive
team members, are also held throughout the year.
The Chair, CEO and members of the Platform Group and
Investment & Capital Group work together to ensure
that the Directors receive relevant information to enable
them to discharge their duties and that such information
is accurate, timely and clear. This information includes
management accounts containing an analysis of
performance against budgets and other forecasts,
as well as written reports from the UK investment
partnership, the Australasian and US businesses, the
capital markets division, the Group’s IR, Communications
and ESG functions and Parkwalk Advisors. Additional
information is provided as appropriate or if requested.
At each Board meeting, the Board receives information,
verbal reports and presentations from the CEO and
the CFOO, the Managing Partner of the UK investment
partnership and, by invitation, other members of
the senior management. This includes bi-annual
presentations from the Australasian business units and
presentations from Parkwalk Advisors, the Group People
Director, the Group Finance Director and Director of
Communications. These presentations ensure that all
Directors are aware of, and are in a position to monitor
effectively, the overall performance of the Group, the
development and implementation of its strategy and its
management of risk. In addition, the Board receives in-
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depth presentations throughout the year from selected
portfolio companies, including through engaging in
site visits.
Directors’ conflicts of interest
The Company operates a Conflicts of Interest Policy
which contains procedures for disclosing and managing
conflicts of interest within the Group, at the Board,
and Investment Committee-levels, with the Company
Secretary responsible for the maintenance of a
register of Directors’ conflicts of interest. The Board
has established procedures for managing and, where
appropriate, authorising any such conflicts or potential
conflicts of interest. Directors’ conflicts are a recurring
agenda item at all Board meetings, and this gives
Directors the opportunity to raise at the beginning of
every Board meeting any actual or potential conflict
of interests that they may have on the matters to be
discussed. The Board may revoke or vary any conflicts
authorisation at any time. The Board believes that the
procedures established to deal with conflicts of interest
are operating effectively.
Induction, awareness and
ongoing development
As detailed on page 73 of the Nomination Committee
Report, a comprehensive induction process is in
place for new Directors. The programme is tailored to
the needs of the individual Director and agreed with
them in advance to ensure that they can gain a full
understanding of the Group and its businesses.
On an annual basis, the Company Secretary arranges
for an external governance specialist to attend one
Board meeting to present on the key Corporate
Governance changes over the previous twelve months
and to signpost expected prospective developments.
In addition, the Board is kept updated by the in-
house legal team on key legislative and governance
changes and sentiment affecting the Group and how
the Group is ensuring its compliance and obligations
under all relevant legislation. The Board also receives
presentations from its brokers and financial advisors on
capital market developments in general and specific to
the Company on an ad hoc basis.
As a part of their ongoing development, each Director
receives feedback on their performance following the
Board’s performance evaluation each year, following
which, the Chair will review and agree with each
Director their training and development needs for
the year ahead. Access to training and development
opportunities, including those relevant to the Non-
executive Directors’ membership on the Board’s
committees, is facilitated through the Company
Secretary. Further details relating to the assessment
of the Board’s performance are set out on pages 76
and 77.
Director rotation and independence
The Nomination Committee, supported by the
Company Secretary, has responsibility for succession
planning for each of the Non-executive Directors
(including the Chair). Each Non-executive Director
is appointed for an initial three-year term pursuant
to their respective letters of appointment. This initial
term is then subject to renewal for subsequent three-
year term(s) and, other than the Chair, to a maximum
of three consecutive three-year terms in order to
maintain their independence from a governance
perspective, in accordance with the Code. Provision
19 of the Code applies to the maximum term for the
Chair’s appointment, and the Nomination Committee
is responsible for ensuring compliance with this
provision. The Chair was considered by the Board to be
independent on appointment.
Statement of Non-executive
Directors’ independence
The Code sets out the circumstances that should be
relevant to the Board in determining whether each
Non-executive Director is independent. The Board
considers Non-executive Director independence on an
annual basis as part of each Non-executive Director’s
performance evaluation. Having undertaken this review,
and with due regard to Provision 10 of the Code, the
Board concluded that all the Non-executive Directors
are considered to be independent of management
and free of any relationship or circumstance that could
materially influence or interfere with, or affect, or appear
to affect, the exercise of their independent judgement.
Internal controls and risk
management
The Board recognises the importance of the Financial
Reporting Council’s Guidance on Risk Management,
Internal Control and Related Financial and Business
Reporting. The Group’s internal controls (including key
financial operational and compliance controls), which
are Group-wide and were in place throughout 2024,
were reviewed by the Board, with no significant failings
or weaknesses being identified in respect of the year
ended 31 December 2024 and up to the date of approval
of the Annual Report and Accounts. Where the Board
has identified areas requiring improvement, processes
have been put in place to ensure that the necessary
action is taken and that progress in such areas is
monitored. Details of the Group’s internal controls and
risk management systems are provided on pages 38
and 39.
The Board is responsible for establishing and
monitoring internal control systems and for reviewing
the effectiveness of these systems. The Board
views the effective operation of a rigorous system
of internal control as critical to the success of the
Group. However, it recognises that such systems can
provide only reasonable and not absolute assurance
against material misstatement or loss. Details of
the effectiveness reviews of the systems of risk
management and internal control are provided on
page 104.
The key elements of the Group’s internal control system,
all of which have been in place during the financial year
and up to the date of approval of the Annual Report and
Accounts, are as follows:
Control environment
and procedures
The Group has a clear organisational structure with
defined responsibilities and accountabilities. Its values
surrounding expectation of quality, integrity and ethics
are well documented and communicated clearly
throughout the whole organisation. An overview of
the Group’s risk management framework is set out on
pages 38 and 39.
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The Group accesses outsourced internal audit expertise
provided by PwC. Details of the internal audit activity
during 2024, are on page 104.
Detailed written policies and procedures have been
established covering key operating and compliance
risk areas. These are reviewed and updated at least
annually by the Audit and Risk Committee.
Identification and evaluation of
principal risks and uncertainties
The operations of the Group and the implementation
of its objectives and strategy are subject to a number
of risks and uncertainties. The Board actively identifies
and evaluates the risks inherent in the business;
formally reviews these on at least an annual basis (or
as market or business developments require); and
ensures that appropriate controls and procedures
are in place to monitor and, where possible, mitigate
these risks. Specifically, all decisions relating to strategic
partnerships and other collaborations, strategic
acquisitions and disposals and significant long-term
debt facilities entered into by the Group are reserved for
the Board’s review and approval.
The Board regularly reviews significant fair-value
movements in individual portfolio companies,
concentrating on the Group’s investments in its most
valuable portfolio company holdings. For details on
the activities of the Audit and Risk Committee and the
Group’s Valuation Committee see pages 101 to 105.
As described on page 38, the Group maintains risk
registers setting out mitigations in place in each case.
The principal risks and uncertainties faced by the
Group, as well as the relevant mitigations, are set out on
pages 40 to 48.
Information and financial
reporting systems
The Group evaluates and manages significant risks
associated with the process of preparing consolidated
financial information by having in place systems and
controls that ensure adequate accounting records are
maintained and transactions are recorded accurately
and fairly to permit the preparation of financial
statements in accordance with IFRS. The Board approves
the annual operating budgets and receives details of
actual performance measured against the budget at
each meeting.
Further details in relation to the Group’s approach to
the management of its business risks, and the function
and ongoing roles and responsibilities of its internal Risk
Council are set out on page 38.
Engaging with key stakeholders
Engaging with stakeholders is an integral part of the
Group’s governance and decision-making procedures
and is critical to ensuring the future success of the
business. During 2024, the Board completed its annual
review of the mapping of its key stakeholders, ensuring
all its key stakeholders were captured. This process will
be repeated again in 2025.
Heejae Chae was re-elected as a Director at the 2024
AGM with the support of 78.28% of shareholders voting.
In accordance with the Code, the Group undertook a
vote-matching exercise to understand the breakdown
of which shareholders voted against the resolution.
The Chair then wrote to such shareholders inviting their
engagement on the matter in order that the Board
may better understand the reasons why they had
voted against the resolution. Various feedback was
received via email and on a follow-up call with the
Chair. The Board has taken on board such feedback
which essentially reflected the voting policies of certain
shareholders regarding the number and type of board
appointments an individual Director should hold. The
Board unanimously believes that Mr Chae continues to
fully deliver against all of his responsibilities and is of the
opinion that his contribution continues to add significant
value to the Company, including as Chair of the
Remuneration Committee. As such, the Board considers
that it remains in the interests of all shareholders and
other stakeholders that Mr Chae continues in his role as
a Director of the Company and will be recommending
the re-election of Mr Chae at the 2025 AGM. The Group
updated the market on such shareholder engagement
in December 2024, in accordance with Provision 4 of
the Code.
Further details of the Group’s engagement with its
key stakeholders and issues that matter to such
stakeholders are set out on pages 50 to 58.
Annual General Meeting
Notice of the Annual General Meeting, which will be
held on 12 June 2025 at IP Group plc, 3 Pancras Square,
King’s Cross, London, N1C 4AG, is included with this
Annual Report, containing details of the resolutions to
be proposed at the meeting and explanatory notes
on those resolutions. To ensure compliance with the
Code, the Board proposes separate resolutions for each
issue and proxy forms allow shareholders to vote for
or against, or to withhold their vote, on each resolution.
The results are announced to the market and published
on the Group’s website after the meeting. Shareholders
who attend the Annual General Meeting will have the
opportunity to ask questions and all Directors are
expected to be available to take questions. As noted
above, questions may also be submitted at any time
during the year to cosec@ipgroupplc.com.
The Group’s website (
www.ipgroupplc.com
) is the
primary source of information on the Group. The website
includes an overview of the activities of the Group;
details of its portfolio companies, and its key university
relationships and other strategic collaborations; and
details of all recent Group and portfolio company
announcements.
On behalf of the Board
Sir Douglas Flint
Chair
24 March 2025
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Principal responsibilities
The key objective of the Nomination Committee is
to ensure that the Board comprises individuals with
the necessary skills, knowledge, independence and
diversity of thought and experience, to ensure that
the Board is effective in discharging its duties and
is independent for the purposes of the Code. The
principal responsibilities of the Committee are to:
•
Regularly review the size, composition and skills
of the Board and lead the process and make
recommendations on any changes considered
necessary in the identification and nomination
of new Directors, the reappointment of existing
Directors and the appointment of members to
the Board’s committees
•
Ensure that there is a formal, rigorous and
transparent procedure for the appointment of
new Directors to the Board
•
Assess the roles of the existing Directors in office
to ensure there continues to be a balanced
Board in terms of skills, knowledge, experience,
independence and diversity and that each
Director has and contributes sufficient time to
effectively perform their respective roles
•
Keep under review the leadership needs of the
Group to enable the Group to be successful
in its chosen fields, earn the support of key
stakeholders, including shareholders and deliver
on its strategy
•
Advise the Board on succession planning
for Directors and other senior management
appointments, given that the Board as a whole is
responsible for succession
•
Oversee a pipeline for succession based solely
on merit and with due regard to the benefits of
diversity in all its aspects
•
Guide the Executive Directors on the setting of
diversity and inclusion policies, objectives, targets
and strategies, alongside the Group’s People
Director, and monitor the impact and outcome
of any agreed initiatives
•
Oversee the induction of new Directors and the
training requirements of the Board as a whole
•
Oversee the Group’s controls over potential
and actual conflicts of interests of the Directors
and senior management, including disclosure,
authorisation and management of such conflicts
as may be appropriate or otherwise required by
both the Group’s Conflict of Interests Policy and
applicable law or regulation
•
Assist the Chair in the annual performance
review of the Board; ensure an externally
facilitated performance review is conducted
at least once every three years; and oversee
the implementation of any actions or feedback
arising from each such review
Key activities in the year
The key areas of focus for the Committee in
2024 included:
Board composition
•
A review of the size and diversity of experience
within the Board, including a review of an
updated skills matrix of the current Board
members as part of the medium-term Non-
executive succession plan
Succession planning
•
A detailed review of the medium-term
succession plan for the Non-executive Directors
including the Chair
•
A review of the Executive and senior
management succession plans in both 2024
and early 2025, the latter review taking into
account changes to the structure and senior
employees of the organisation following the H2
reorganisation
Sir Douglas Flint
Chair
Committee membership
The Nomination Committee currently comprises the
following independent Non-executive Directors and
the Chair, all of whose backgrounds and experience
are summarised on pages 61 to 63:
•
Sir Douglas Flint (Chair)
•
Aedhmar Hynes
•
Heejae Chae
•
Dr Caroline Brown
•
Anita Kidgell
Report contents
•
Principal responsibilities
•
Key activities in the year
•
Meetings and Terms of Reference
•
Appointments
•
Diversity and inclusion
•
Succession planning
•
Board effectiveness and performance review
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Governance and I&D
•
Receiving an update from the Group’s Inclusion and
Diversity Project (“IDP”) on the Company’s progress
against milestones and considering whether current
target setting continued to be appropriate
•
A review of the terms of reference for the Nomination
Committee
Performance Review
•
Overseeing the implementation of the actions
identified during the 2023 internally facilitated
performance review of the Board, its committees
and each Director
•
Overseeing the internally facilitated review of the
Board, its committees and each Director in 2024
Meetings and terms of reference
The Nomination Committee meets as and when
required, or as requested by the Board, and had three
scheduled meetings during 2024. The attendance by
each member of the Nomination Committee at the
scheduled meetings during 2024 is set out on page 59.
The terms of reference for the Nomination Committee
were reviewed on 4 February 2025 and it was concluded
that no substantive updates were required at this time.
The Nomination Committee reviews its terms of reference
at least annually and will propose updates where
necessary to reflect evolving market practice applicable
to the Company and best corporate governance.
Appointment process
In making appointments to the Board, the Nomination
Committee adopts a formal, rigorous and transparent
procedure. It considers the balance, skills, knowledge,
independence and diversity characteristics
(including diversity of gender, social and ethnic
backgrounds, cognitive and personal strengths) and
equal opportunity of the Board. Where relevant, and
particularly in considering matters of succession, the
Committee also considers the future challenges likely
to face the business, any emerging trends that may
affect the Group’s long-term success and any specific
technical skills and knowledge that may be required on
the various committees.
In addition, for appointments to the Board, the
Nomination Committee will always assess any potential
conflicts of interest and whether identified candidates
have sufficient time available to devote to the role and
meet what is expected of them effectively.
Induction process
The Group’s induction programme for new Non-
executive Directors is tailored to the needs of each
Director, agreed with them in advance and monitored
throughout the process to ensure each new Director
gains a good understanding of the Group, its strategy, its
people, its portfolio and its business. The typical process
for an induction includes:
•
An overview of the Group and its businesses,
structure, functions, strategic aims, risk management
framework and remuneration policies
•
Meetings with both Executive Directors, the Managing
Partner, the Company Secretary and the other
members of the Executive team
•
Meetings with both the Group’s auditor and internal
audit function
•
Training on key legal, regulatory and governance
matters relevant to the Group and its policies
•
Meetings with some of the Group’s priority
portfolio companies and presentations from their
management teams on their businesses
•
Observing a meeting of the Valuation Committee
•
Sessions as appropriate with the Group’s advisors,
as well as with appropriate external governance
specialists, to ensure the Director understands
the responsibilities and obligations as a Director
of a FTSE 250 company, and of the governance,
regulatory and legislative framework within which
the Board must operate
The appointment process to the Board is
as follows:
Identify
Search
Mapping exercise
of the Board’s
existing skills,
experience,
knowledge and
balance to identify
any gaps.
Nomination
Committee
considers whether
the services of an
external search
consultancy or
public advertising
are required, and
a detailed job
specification is
prepared.
Identify
A diverse list of candidates is created
and following review by the Nomination
Committee, is distilled into a shortlist. The
Committee requires all shortlists to be
gender balanced and will always seek
to include at least one candidate from
an under-represented group in the final
shortlist.
Interview
Appointment
Interviews with
shortlisted
candidates are
carried out by the
Chair (except for
in respect of Chair
or Chair designate
candidates),
the Senior
Independent
Director and at
least two other
Directors.
The Nomination
Committee
makes a
recommendation
to the Board and,
if in agreement
with the
recommendation,
the Board
approves an offer
to be made to the
chosen candidate.
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Diversity and inclusion
The Board is committed to establishing and maintaining
a culture that attracts and retains talented people to
deliver outstanding performance and enhance the
success of the Group. Within that culture, the Board’s
policy is to make appointments to the Board and senior
management based upon merit measured against
objective criteria, whilst recognising that diversity,
in all its many forms, is key to introducing different
perspectives into Board debate and decision-making
and creating optimal balance and composition of the
Board and the Executive team.
The Nomination Committee applies the Board’s diversity
strategy and policy in accordance with its terms of
reference; considering diversity in the widest possible
sense in evaluating the composition of the Board and
the Executive team, identifying suitable candidates
for the Board and Executive team and overseeing the
maintenance of a diverse pipeline for succession.
The Board also ensures that the same rigorous
approach is applied to roles across the wider senior
management team.
The Group supports the diversity targets and
recommendations of the FTSE Women Leaders Review
(aiming to have at least one woman in the Chair or
Senior Independent Director role and 40% female
representation on the Board and in senior management
roles); and the Parker Review updates issued in 2020
and 2023.
As of 31 December 2024, the Board meets the Financial
Conduct Authority’s Listing Rule 6.6.6R(9) target of at
least 40% of individuals on its Board being women, at
least one individual on the Board being from a minority
ethnic background and at least one senior Board
position being held by a woman. Diversity information
for the Board, senior management and the gender split
for the Group as a whole, as at 31 December 2024, can
be found on pages 29 and 30.
Given the Group’s small team, previously low turnover,
and its focus on ensuring that every appointment is
based on an objective, merit-based process, we have
continued with our preference of not setting hard
targets for gender, ethnicity or other characteristics
as part of our recruitment processes. The Committee
continues to aspire to the organisation being
representative of the communities in which we operate,
and monitors progress in this area accordingly. Hard
targets would have been difficult in 2024 given the
additional challenges presented following the corporate
reorganisation we conducted this year, which involved
a number of redundancies and an almost total freeze
on recruitment for 2025. However, following the updated
Parker Review guidance from 2023 and the move
beyond a “one and done” approach to ethnic diversity,
last year we set for the first time a target of 15% of our
senior management team being from an ethnically-
diverse background by the end of 2027. Following the re-
organisation and considering the anticipated minimal
level of recruitment in 2025, we do not expect to make
any significant progress against this target in the short
term, but will of course continue to consider it within any
recruitment activity. We will also further review both the
target and any progress against it as part of our regular
review cycle towards the end of the year, as well as
actions that may be required following such review.
The Group’s broad commitment to inclusion and
diversity is not limited to the areas directly overseen by
the Committee. The Committee has also been active
in overseeing the continuation and evolution of the
inclusion and diversity strategy for the whole Group,
which is overseen by the Group’s Inclusion and Diversity
Project (“IDP”), an employee-led Group which develops
and owns the forward-looking plan to embed diversity
within our culture.
Once again, the Committee is proud of the work
undertaken by the IDP throughout 2024 to maintain a
forward-looking plan of development and improvement
actions. Both the Committee and the Board have
received regular updates on the work of the IDP,
monitoring progress against deliverables and ensuring
that the Executive team are appropriately focused on
this across all areas of the business.
Succession planning
The Nomination Committee recognises that the Group’s
performance is highly dependent upon its ability to
attract, recruit and retain the highest-quality people
and that maintaining a robust succession planning
framework is a key factor in ensuring the Group’s
long-term success. Succession planning also mitigates
the risk of unforeseen circumstances creating a need
for urgent remedial action, ensuring that changes in
Board or senior management positions are effectively
managed, avoiding significant disruption to the Group
and thereby ensuring that the Group can successfully
execute its corporate strategy.
Executive Directors
In partnership with the Group’s People Director,
the Committee reviewed and agreed an updated
succession plan for both Executive Directors and senior
management early in 2024. This has been updated
and refreshed in early 2025 to reflect changes required
following the corporate reorganisation during H2 2024.
The Committee noted that, consistent with its
conclusions from previous years, one of the
disadvantages of a small internal team is the lack
of “bench” coverage for some of the roles. In these
cases, the Committee noted that emergency plans
for either internal coverage via a redesign of roles and
responsibilities, and/or a plan to cover the roles with
external resource for an emergency period, remained
in place, should this be required. The Committee
therefore remains satisfied that management focus
on succession is sufficient to mitigate any short-term
or emergency challenges, and that the management
team is balancing succession and continuity
requirements with appropriate and continued control
over operational expenditure.
Overall, the Nomination Committee remains confident
that the Board and Executive team are well positioned to
deliver the Group’s strategy into 2025 and beyond.
Non-executive Directors
In June 2024, Dr Elaine Sullivan stepped down from the
Board following her ninth year of tenure. The Committee
had already agreed, following its review of the updated
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skills matrix after the appointment of Anita Kidgell in
early 2023, that the Board would be able to continue to
operate effectively without an immediate replacement
for Dr Sullivan, given Ms Kidgell’s skill-set had mitigated
any immediate skills gaps left following Dr Sullivan’s
departure. No additional Directors were therefore
appointed during the year. The Committee did however,
as part of its annual review of the Board composition,
recommend the reappointments of both myself and
my colleague Heejae Chae for our third three-year
terms, subject to annual re-election by shareholders.
The Committee remains of the view that maintaining
a 5:2 ratio on the Board for a period of time will allow
for additional flexibility to identify, recruit and onboard
candidates for the key Board positions going forward.
However, the Committee continues to be mindful that
the maximum nine-year appointment term of each
of myself, Dr Caroline Brown (Audit & Risk Committee
Chair), Heejae Chae (Remuneration Committee Chair)
and Aedhmar Hynes (Senior Independent Director and
Designated NED) are all coming to an end in a relatively
short timeframe during 2027/28.
As such, through 2024, the Committee has discussed
on several occasions the appropriate timeline and
sequencing of the various Board appointments that
will need to be made, including to ensure a satisfactory
combination of continuity and effective and meaningful
handover periods. Members of the Committee have also
engaged on a high-level basis on this topic with some of
the larger shareholders to seek their views, as a further
input into the process. Following these discussions and
considerations, a plan for orderly succession has been
formulated, which the Committee will begin to execute
during 2025 (with the Senior Independent Director
leading Chair succession), allowing plenty of time for an
orderly process and transition over the following years.
Below senior management
In addition to succession planning at Board and senior
management-level, developing internal talent at all
levels within the Group remains a continuous process.
The Nomination Committee is responsible for ensuring
that suitable assessment and development plans
are in place to maximise the potential of the Group’s
employees and that the Group has effective recruitment
policies to continue to attract and retain a diverse mix of
talented employees. The Committee remains confident
that this is the case, albeit is cognisant that, following the
reorganisation in H2 2024, and the need for continued
control over operational expenditure, recruitment
is likely to be relatively minimal through 2025, and
that the focus will be on the retained employees and
their development needs, as well as appropriate
emergency succession plans to effectively mitigate any
unplanned turnover.
Board effectiveness and
performance review
In line with best practice under the Code, the Board
carries out a review of the effectiveness of its
performance and that of its Committees and Directors
every year. This review is externally facilitated every
three years with the next external performance review
due in 2025. The 2024 review was therefore an internal
review, and was led by the Chair, with the support of the
Company Secretary, in line with the process set out right.
Board review process
Summary of progress against the actions
from the 2023 Board effectiveness review
prepared
Board members requested to complete
questionnaires and review summary of
progress against 2024 actions. Follow-up
calls to go through the outputs with the
Company Secretary were held, as necessary
The Company Secretary summarised the
outputs of the above in reports for the Board
and its Committees
Results were presented and discussed at
Board and Committee meetings
Actions and priorities for 2025 were agreed,
as set out on page 77
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Progress against 2024 actions
Set out below is the progress made in 2024 against actions identified through the 2023 internally-facilitated Board effectiveness review.
Action
Progress
Portfolio oversight
Continue to challenge and hold the Executive Directors and the wider
investment teams to account for delivery of priority portfolio company
2024 milestones; undertake scenario planning for various outcomes in
key portfolio companies through 2024.
Priority company progress against milestones reported on specifically
by the Executive Team (balance sheet) at each Board meeting.
Scenario planning for key portfolio companies was prepared for the
Board and challenged continuously throughout the year.
Non-executive
sessions
Schedule additional NED-only focused sessions around Board
meetings, in addition to NED-only dinners, to fully capitalise on the time
everyone is all together around the Board table.
Regular NED-only sessions held during the year, both before and after
Board and Committee meetings, which added to the richness and
challenge of debates and discussions at the meetings themselves.
Succession planning
Agree the staging and timetable for Non-executive Director and Chair
succession planning through to 2027/28 and begin implementing the
same towards the end of the year.
Timetable discussed at each Nomination Committee meeting through
the year; agreement of a plan and execution timetable reached
during 2024.
Board materials
Continue to evolve the structure and succinctness of Board and
Committee papers to focus Board discussion and challenge on the
material questions.
The Company Secretary team worked closely with the Chair and the
Executive Directors to significantly reduce the size of, and duplication
within, Board and Committee papers.
Executive Committee/
Group connectivity
Seek greater participation from the wider Executive Committee
members on ways in which the Board could add further value during its
interactions with them and their respective teams through 2024; seek
and respond to additional feedback and ideas through IP Connect to
continue effective Board connectivity with the wider organisation.
Annual fireside Q&A held with the Non-executive Directors. Designated
NED continued to attend all IP Connect meetings, including around
the corporate reorganisation (see more on page 52). Executive team
members attended and fully participated in the Board strategy days.
Shareholder
engagement and
Board profile
Consider additional opportunities to utilise the Chair and NEDS for
increased engagement with investors and shareholders; consider
ways, including through investor events, the Group’s website etc. to
highlight the individual experience of the NEDs and their strengths/the
collective strength of the Board.
Board members attended the Group’s 2024 flagship event, as well as
other sector-based events held through the year. The Chairman and
Senior Independent Director held several one-to-one meetings with
larger shareholders throughout the year.
ESG
Continue to actively oversee the Group’s commitment to and
communication of its approach to ESG matters, including challenging
how what we are doing compares to others in our peer group and
aligns with external investor priorities.
The Board continued its active oversight of the Group’s approach
to ESG, with Anita Kidgell attending ESG Committee meetings and
reporting back to the Board on progress. The corporate reorganisation
in H2 2024 has caused a full review of the Groups’ approach, including
versus its peers, to ensure deployment of ESG resource is optimised,
proportionate and fit for purpose for the Group.
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Conclusion of the 2024 review
The 2024 internal review concluded that the Board, each of its Committees and each
of the Directors continue to operate effectively to achieve its and their objectives. All
Board members agreed that the Board had continued to operate with a positive and
supportive culture, enabled by a strong Chair. The collegiate nature of the Board, the
diversity of its members and the high level of trust, openness and mutual respect at
meetings were highlighted, as well as the significant challenge fostered by the Chair.
As part of the internal review, Board members agreed that good progress had been
made against the Board’s 2024 priorities. Further, an agreed set of priorities for the year
ahead has been agreed for each of the Chair and the Board.
Key priorities for the Board through 2025 include:
Theme
Actions
Shareholder returns
Given the persistence of the discount to NAV,
continue to challenge management on the Group’s
strategy around returns to shareholders including the
mechanisms to be used, the levels and the proportion
of realisations to be returned; oversee any resulting
actions.
Portfolio focus
Undertake more detailed and regular reviews of the
key portfolio companies through the year, to include
scenario planning, and an even fuller understanding of
the risks and opportunities presented for each.
Business model
evaluation
Further evaluate and challenge the Group’s business
model to identify focus areas for its evolution; oversee
any resulting actions.
Succession
planning and Board
effectiveness
Continue in-year focus on succession planning to
ensure the Board’s purpose and composition evolves
as required and to address known succession
requirements over the next 3 years. Such work to
include an externally facilitated Board effectiveness
review through Q3/4 2025 and a plan to build upon the
outputs of this.
Director performance assessment and review
The performance of each of the Non-executive Directors is reviewed by the Chair with
support from the Company Secretary; the performance of the Chief Executive Officer
is reviewed by the Chair; and the performance of the Chief Financial and Operating
Officer is reviewed by the Chief Executive Officer as part of the annual appraisal
process. In addition to those reviews, the performance of the Executive Directors is
reviewed by the Board on an ongoing basis. One-to-one meetings have been held
amongst the individuals concerned and individual development plans arising from
these meetings are now in place for the year ahead. As an integral part of these
reviews, the time commitment required of each individual Non-executive Director is
reviewed alongside their other commitments. I am pleased to confirm that following
this review I am satisfied that each of our Directors is able to commit sufficient
time to the Group to effectively discharge their role. Further, as part of the Board’s
continued development, certain Board awareness sessions have been planned for
2025, to include continued exposure to and interaction with portfolio companies and
their management teams. In addition, an annual corporate governance update and
presentations from the Group’s brokers and corporate finance advisors on shareholder
perception, market performance (including versus the Group’s peer group), potential
strategic opportunities, defence strategies and shareholder activism are all planned
for 2025.
The Chair’s performance is reviewed by the Senior Independent Director based on
feedback from discussions with individual Directors; the resulting assessment is
discussed with the Chair by the Senior Independent Director and actions required by
the assessment are included in the Chair’s objectives for 2025. The Senior Independent
Director reported back to the rest of the Board regarding this assessment and was
pleased to confirm the Chair performed effectively during 2024.
Given each of the performance reviews found that each Director continued to
perform, the Committee recommends that each Director should be recommended
for re-election by shareholders at the 2025 AGM. Further details of the Directors’ skills,
experience and expertise are set out on pages 61 to 63.
Sir Douglas Flint
Chair of the Nomination Committee
24 March 2025
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Principal responsibilities
The terms of reference for the Remuneration
Committee were reviewed and adopted by the
Board in December 2024. The Committee will
continue to review its terms of reference at least
annually, and will propose updates where necessary
or appropriate. The key responsibilities of the
Committee are unchanged, as follows:
•
Determine the policy for Executive Director
remuneration
•
Design and set the remuneration for the Chair,
Executive Directors and senior management
•
Review workforce remuneration and related
policies to ensure the Group attracts and retains
the best talent
•
Review remuneration practice and overall costs
to the Group
•
Consider retirement benefits and other
employee benefits offered
•
Consider the engagement and independence of
external remuneration advisors
•
Establish the Group’s policy with respect to
employee incentivisation schemes
The full terms of reference of the Committee
are available on the Group’s website at
www.ipgroupplc.com.
Committee meetings are administered and
minuted by the Company Secretary. In addition, the
Committee receives assistance from the CEO, CFOO
and Group People Director who attend meetings by
invitation, except when matters relating to their own
remuneration are being discussed.
Committee focus and key
activities in 2024
During 2024, the Committee continued to work to
ensure that the implementation and outcomes
of the Remuneration Policy agreed at our 2022
AGM remain reasonable and aligned with both
performance and shareholder interests. The
Committee also undertook a robust review of
the Remuneration Policy itself, and having initially
determined that this review would be best supported
by a change in external advisor, completed the
process of appointing and embedding a new
independent advisor in Alvarez & Marsal (“A&M”).
The Committee’s work on both in-year
implementation of the existing policy and the
determination of the right forward-looking approach
was particularly complex during 2024. As set out
on pages 10 to 15, 2024 was a successful year
for the Group in a number of areas. In particular,
the Committee noted the strong performance
on exits during the year, which will underpin the
financial position of the Group whilst the existing
portfolio continues to mature and deliver further
returns. The Committee also noted the continued
emerging pipeline of new opportunities, as well as
the successful delivery of a major cost-reduction
exercise and the significant levels of third-party
capital raised.
However, two of our key metrics, NAV and our share
price, remained challenging throughout 2024. The
Committee remains confident in the strategic
direction of the Company, and believes that the
management team is addressing these issues in
the right way to deliver medium- and long-term
shareholder value. Much of the Committee focus
during 2024 has been on ensuring that this context
is addressed in a balanced way when considering
both remuneration outcomes for 2024 and an
appropriate Remuneration Policy to drive future
performance.
Heejae Chae
Chair of the Remuneration Committee
Committee membership
The Remuneration Committee currently comprises the
following independent Non-executive Directors and
the Chair, all of whose backgrounds and experience
are summarised on pages 61 to 63:
•
Heejae Chae (Chair)
•
Sir Douglas Flint
•
Dr Caroline Brown
•
Aedhmar Hynes
•
Anita Kidgell
Report contents
•
Principal responsibilities
•
Committee focus and key activities 2024
•
Review of Remuneration Policy
•
Remuneration at a glance
•
Remuneration Policy 2025-27
•
Annual report on remuneration
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It is with these factors in mind that the Committee
considered salary levels for the Board during the year.
As we disclosed in the 2023 report, we originally planned
to award a small increase to both Executive and Non-
executive Directors for 2024. However, in the context of
both performance and cost pressures, the Committee
ultimately determined that it would be more prudent to
hold salaries at 2023 levels. Therefore no salary or fee
increases were awarded during the course of the 2024,
and this approach will also be carried forward to the
2025 review.
The same factors influenced the Committee’s
consideration of the appropriate vesting level for the
first Restricted Share Plan (“RSP”) awards made in 2022.
This was considered extensively during the latter part of
2024, in anticipation of performance levels versus the
underpin in place for that award. To ensure outcomes
were appropriately aligned to the shareholder
experience, the 2022 award (and all subsequent
awards) was subject to a robust underpin with a
quantitative trigger.
As a result of the significant external market pressures
which have impacted business performance over the
three-year period, and the subsequent falls in NAV
and below market TSR over the period, the underpin
condition was not met. As such, and in line with the
terms of the underpin, the Committee actively reviewed
the vesting level for the 2022 RSP award, considering
quantitative performance measures as well as taking
into account a broader review of performance. As
part of this review, the Committee noted the actions
taken by the management team to assure long-term
shareholder value growth, including the significant and
sustained level of realisations, strong cash position of
the Group, level of cash returned to shareholders and
the strong pipeline of future opportunity.
Taking into account the wide range of factors specific
to this award, and after careful and balanced
consideration, the Committee concluded that none of
the 2022 RSP awards would vest, and they will therefore
lapse in full.
Following year-end, the Committee considered the
calculated Annual Incentive Scheme (“AIS”) outcome
of 42.5% of maximum for 2024, and determined
that it appropriately reflected and fairly balanced
the successes delivered and continued pressure
experienced through 2024. This will result in a payout of
31.9% of salary for the Executive Directors, a portion of
which will be received in deferred shares.
In addition, and throughout the year, the Committee has:
•
Undertaken a full review of the Director’s
Remuneration Policy, as set out in more detail below
•
Consulted with shareholders on our intended
approach to Remuneration Policy in advance of
publication
•
Considered the skills and experience of the Executive
Directors and the wider business leadership, and
commissioned external benchmarking in order to
determine base salaries and total remuneration
opportunity
•
Reviewed the application of the Group’s
Remuneration Policy for non-Director employees,
including the Group’s approach to salary reviews,
as well as individual base salaries and incentive
scheme targets and pay-outs
•
Engaged with employees on the subject of
remuneration in both 2024 and early 2025 via our
employee forum “IP Connect”
•
Considered and approved the appropriate vesting
level for the 2021 LTIP awards which ultimately lapsed
in 2024, monitored potential outturns for the 2022
RSP awards, and ultimately determined the correct
vesting level as set out above
•
Considered the level of the 2025 RSP awards
•
Considered the Annual Incentive Scheme (“AIS”)
awards and Group performance targets and out-
turns as relevant for 2023, 2024 and 2025
Review of Remuneration Policy
To ensure that our Executive Director remuneration
remains aligned with shareholder interests through the
next Policy cycle, during 2024 the Committee undertook
a full review of the current Policy and alternative options
available. This review was undertaken with the help
of A&M, who replaced Deloitte as the independent
Remuneration Committee Advisors in early 2024.
The review considered all of the key elements of
remuneration, including the overall quantum (both in
absolute terms and versus market peers), incentive mix,
shareholding guidelines, bonus deferral mechanism,
equity incentive structure and quantum as well as the
structure of the underpin applied to Restricted Shares.
As further context, we also took into account evolving
practice in the UK market as well as Group performance
over the last policy period, particularly reflecting
upon the impact of the switch to restricted shares on
behaviour, activity focus and shareholder alignment.
The Committee considered a wide range of alternative
remuneration structure options in detail. Ultimately
we concluded that the fundamental reasons for the
decisions we made on structure, remuneration mix and
the design of specific elements of the package in 2022
remain as applicable today as they did then.
The Committee went to great lengths in 2022
to develop and build consensus for a bespoke
approach constructed to specifically address the
unique remuneration challenges posed by IP Group’s
characteristics. Principally, this included improving the
alignment of interests through the longer investment
and performance cycle by combining prudent base
salary with a very low maximum bonus, and delivery of
the vast majority of our variable remuneration through
Restricted Shares. This model, in particular the focus
on equity awards with a robustly operated underpin,
directly aligns the interests of the management team
with our long-term shareholders.
Retaining this alignment is hugely important as we
seek to grow the business and net asset value over
the coming Policy period. As such, and with the first
Restricted Share awards made under the current
structure only now reaching the point of vesting, we
concluded that there is no compelling rationale for
change at the current time, nor any remuneration
structure or mix that better suits our needs.
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The table below therefore summarises the key elements of the existing Remuneration Policy and remuneration framework which we will be seeking to renew, along with a short
summary of supporting rationale in each case. The following pages contain more detail on our approach:
Remuneration element
Policy summary
Rationale
Salary
Market competitive, benchmarked to both the lower
half of the FTSE 250 and comparative peer group
Alignment to a mid-market level to ensure ability to attract and retain individuals
with the experience, personal attributes and skills required to define and deliver
the Group strategy
Pension
10% of salary (aligned to workforce)
Provision of an equitable, competitive post-retirement income to all employees
regardless of seniority
Annual Incentive Scheme
Maximum of 75% of salary
50% of any payment over £25,000 deferred into shares
over two years
Majority of outcome based on measurable financial
objectives linked to strategy
Variable remuneration to recognise short-term positive outcomes which are
aligned with shareholder interests, with the overall quantum (very low versus
UK-listed peers) set to recognise the primarily long-term nature and potential
asymmetry of performance outcomes within our business model
Restricted Share Plan
Maximum award of 200% of salary (CEO) or 133% of
salary (CFOO)
Three-year vesting/Two-year hold
Quantitative underpin (see page 85)
Competitive long-term share awards, which act as the primary incentive to the
management team and directly align the interests of management with those of
long-term shareholders and other stakeholders
Minimum shareholding
350% of salary (CEO); or
250% of salary (CFOO); and
Two-year post cessation of employment requirement
(see page 87)
Set at a relatively high level versus market comparators to reflect the importance
of long-term alignment between the Executive Directors and our shareholders,
and the potential value delivered by our use of Restricted Shares. It is intended
that the personal wealth of the Executive Directors is ultimately inherently
and directly linked to the performance delivered to shareholders, and the
combination of Restricted Share Awards, a quantitative underpin and minimum
shareholding is set with this objective in mind
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Restricted Share Award underpin
The Committee noted that the underpin in place for
the Restricted Share Plan awards made in 2022, 2023
and 2024 is one of the most robust in place for any
restricted share award in the UK-listed market. As part
of the Committee’s review, due consideration was
also given to the structure and measures contained
within this underpin, and whether it was appropriate
to more closely align with evolving market practice in
this area by moving from our quantitative trigger to a
more qualitative approach. However, the Committee
concluded that the existing structure, combined with
robust Committee oversight of all vesting events
provides an important safeguard, given the overall size
of the awards. As such, the Committee determined that
the underpin for awards made in the coming policy
cycle would also be carried forward unchanged. This
can be found on page 91.
Shareholder feedback
We remain committed to maintaining open and
transparent remuneration principles and practices.
Therefore, as part of this Remuneration Policy review,
we have sought feedback from both shareholders and
proxy advisory groups which helped to inform the final
decision. Ahead of the recommendation we reached out
to over 65% of our register to gather feedback.
The majority of the shareholders we engaged with
indicated their support for our proposals, including a
number of our largest holders. They acknowledged the
need to maintain a thoughtful and distinctive approach,
to align our remuneration with the strategy and
characteristics of our business, and were supportive of
the structures we put in place in 2022.
Whilst no explicit policy changes were made as a
result of the feedback received, the Committee is
confident that the structure in place combined with
robust and active management of remuneration
outcomes (including the quantitative underpin and
robust annual review of RSP vesting) means it can
manage remuneration in line with the best interests of
shareholders over the forthcoming policy period.
As such, we believe that the policy remains appropriate
for our distinctive business model and in the best
interests of our Company and shareholders. We
therefore recommend that shareholders vote in favour
of the new policy.
Employee engagement
In February 2024, Aedhmar Hynes (our Designated
NED) and I directly engaged with our employee forum
“IP Connect” on the subject of Executive remuneration.
We repeated this exercise in early 2025, as part of
our commitment to ensure that this direct dialogue
with employees takes place at least once each year,
enabling our employees to have the opportunity to both
challenge our direction and inform our decision-making
process.
The input provided by IP Connect informed our decisions
relating to both our overall policy and our approach to
the determination of outcomes for 2024. Once again,
we were encouraged by the level of engagement and
quality of discussion. It was also reassuring to find that
our overall strategy for Executive remuneration (outlined
in the Policy) remains well understood, and is considered
by employees to be fair, equitable and reasonable in the
context of the remuneration we offer elsewhere in the
business.
Structure of this report
The following pages contain our proposed
Remuneration Policy in full. This section also contains
a summary of how we intend to implement the policy
during 2025 and detailed disclosure of outcomes in
respect to 2024, summarised in “Remuneration At A
Glance”. We have included additional information on our
bonus metrics for 2024 and 2025, in response to proxy
agency and shareholder feedback.
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2024 Single Figure
Greg Smith
CEO
David Baynes
CFOO
Base
salary
£546k
£374k
Annual
bonus
£174k
42.50% of maximum
£119k
42.50% of maximum
Share
based
incentive
1
£0
0% of original award
£0
0% of original award
1
% 202 1LTIP award, % 2022 RSP award
Variable Pay, Awards & Outcomes 2024
Remuneration outcomes versus policy 2024
Directors’ shareholdings
Base pay and total package
Base salary increase
2025 maximum
implementation
April
2025
April
2024
Greg
Smith
0%
0%
David
Baynes
0%
0%
UK
employees
(Average lfl)
1.4%
6.2%
David Baynes
Greg Smith
£772k
£544k
Base salary
Annual bonus (AIS)
Share-based incentive
Benefits
Pension
David
Baynes
Greg
Smith
£1,092k
£409.5k
£546k
£498k
£280.8k
£374.4k
£2,047.5k
£1,153.2k
Base salary
Max. AIS
RSP grant
0%
50%
100%
150%
200%
RSP vested %
(2022 awards)
RSP policy max
AIS 2024 outcome
AIS policy max
Greg Smith
David Baynes
David Baynes
Greg Smith
4,023,494
817,519
2,798,172
1,970,691
736,319
1,310,039
Shares owned including shares
which have vested but not been
released which have been adjusted
for tax at 47%
Outstanding unvested holdings,
adjusted for tax at 47%
Minimum shareholding requirement
(at 47.50p per share, three-month
rolling average at 31/12/2024)
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This section sets out the Company’s policy on the
remuneration of its Executive and Non-executive
Directors (the “Policy”), which will become effective, for
a period of up to three years, subject to approval by
shareholders at our AGM on 12June 2025.
As described in the Remuneration Statement, our Policy
remains consistent with that introduced in 2022, with no
changes proposed for the forthcoming policy period.
This approach remains aligned to our long-term value
creation philosophy. We have engaged widely with
shareholders throughout the renewal process to ensure
that shareholder input was taken into account.
The basis for our approach to remuneration also
remains consistent with that established in 2022, which
followed a comprehensive review of the structure from
first principles. In summary, our objective continues
to be to maximise the long-term alignment of the
management team and our shareholders, primarily
through reinforcement of the culture and mindset of
ownership. Further, we are seeking to align management
incentive outcomes with the long term, asymmetric
nature of our investments, whilst remaining sensitive to
the requirements of our investors and other stakeholders
alike.
To achieve these objectives the Committee continues
to believe that the Group requires a remuneration
structure that has incentive levers covering both the
short term (one to three years) and the longer term
(three to five years), weighted in proportion to their
relative importance in driving ultimate returns for
long-term shareholders. These are the only relevant
remuneration levers for our Executive Directors, but for
other key members of the wider management team
this is supplemented by incentives directly aligned with
those specific portfolio assets potentially over an even
longer term (five to ten-plus years).
Remuneration Policy table
The table below sets out the key components of the Policy for Executive Directors’ remuneration. Our overall aim is to ensure that we retain individuals with the personal attributes,
skills and experience required to deliver the Group’s strategy, as follows:
Component
Purpose and link to strategy
How this component of remuneration operates
Maximum opportunity
Performance metrics
Salary
To provide an appropriate
level of fixed cash income.
Base salaries will be set by the Committee taking into
account a range of factors, including but not limited
to:
•
scale, scope and responsibility of the role, and the
performance of both the individual and the Group
•
market data for similar roles in companies of
comparable size and complexity
•
impact of salary increases on total remuneration
Salary levels are reviewed in April each year
There is no prescribed
maximum annual salary.
Annual salary increases
for Executive Directors
will not normally exceed
the average increase
awarded to other UK-
based employees, unless
the Committee considers
there are exceptional
circumstances which mean
this is appropriate.
Not applicable
Pension
To provide a competitive
post-retirement benefit in
a way that manages the
overall cost to the Group.
Contribution to Group Pension Plan, a personal
pension plan of the relevant Executive’ Director’s
choosing or an equivalent cash alternative.
The maximum pension
is aligned to the rate
available to the wider
workforce (currently 10% of
salary).
Not applicable
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Component
Purpose and link to strategy
How this component of remuneration operates
Maximum opportunity
Performance metrics
Benefits
To provide a competitive
and appropriate benefits
package to assist
individuals in carrying out
their duties effectively.
Ongoing benefits typically comprise, but are not
limited to, health and travel insurance, income
protection and life assurance and may also comprise
a car benefit (or cash equivalent). Executives are also
provided with telecoms and computing equipment
needed to perform their duties.
Executive Directors may also participate in any all-
employee share plans that may be operated by the
Group from time to time on the same terms as other
employees.
Additional benefits may be provided in certain
circumstances if considered appropriate and
reasonable by the Committee, such as when required
on recruitment. This may include relocation or other
expatriation benefits, allowances or other benefits.
Executive Directors may also choose to participate
in Group salary sacrifice arrangements as and when
offered at their own discretion.
The cost of benefits provided
changes in accordance
with market conditions and
will, therefore, determine
the maximum amount that
would be paid in the form
of benefits under the Policy.
There is, therefore, no overall
maximum opportunity under
this component of the Policy.
Additional benefits, e.g.
relocation, shall not ordinarily
exceed 25% of base salary,
other than in exceptional
circumstances at the
discretion of the Committee.
Maximum awards under all-
employee share plans would
be subject to the prevailing
statutory limit.
Not applicable
Annual
Incentive
Scheme
(“AIS”)
To provide a simple,
competitive, performance-
linked annual incentive
mechanism that supports
our strategic objectives of
long-term equity ownership
and value creation
and aligns the interests
of management and
shareholders.
The AIS is reviewed annually prior to the start of each
financial year to ensure the detailed performance
measures and weightings are appropriate
and continue to support the business strategy.
Performance targets are set at or around the start of
each financial year.
Actual AIS amounts are determined via a two-stage
process. Firstly, performance against the agreed
metrics is assessed. Secondly, the Committee reviews
these results in the context of underlying business
performance and the Group’s financial position and
may adjust the stage one outcome at its discretion.
Awards will typically be payable 50% in cash and 50%
in IP Group shares granted under the IP Group plc
Share Plan, over a minimum bonus amount which will
be settled solely in cash. The Deferred Share award
is made in the form of conditional awards of shares
or nil-cost options (or equivalent at the Committee’s
discretion) and is subject to further time-based
vesting over two years (50% after year one and 50%
after year two). The Committee has discretion to
adjust the percentage split between cash and shares
and will set the minimum bonus amount each year,
below which awards will be settled solely in cash.
Malus and clawback provisions apply (see page 86).
The maximum annual level
of award for Executive
Directors is 75% of salary.
Specific targets and weightings may vary
from year to year in accordance with
strategic priorities but may include targets
relating to:
•
Net Asset Value (“NAV”) per share
•
Other in-year financial performance
metrics (such as realisations or capital
raised); and
•
appropriate non-financial measures
where such metrics are strategically
important (and aligned with long-term
value creation)
A higher weighting will normally be given
to Group financial metrics.
The AIS is a discretionary plan and the
Committee retains the discretion to adjust
targets for any exceptional events that
may occur during the year, and to adjust
any formulaic outcome to reflect overall
business or individual performance or any
other reason considered appropriate.
The performance measures for 2025 are
set out on page 91.
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Component
Purpose and link to strategy
How this component of remuneration operates
Maximum opportunity
Performance metrics
Restricted
Shares
To provide market
competitive long-term
share awards which
align the interests of
management and
shareholders.
Awards of shares which will normally vest after
a period of three years, subject to review by the
Committee of performance against an underpin.
After vesting, shares are subject to a further two-year
holding period.
Awards of Restricted Shares will be granted under the
rules of the IP Group plc Share Plan, and will typically
comprise conditional awards of shares in IP Group
(although instruments with similar economic effect
may be used if considered appropriate).
Malus and clawback provisions apply to every award
(see section on page 86).
The maximum award that
may be made to the CEO
in respect of any financial
year of the Company is 200%
of salary per annum, and
the maximum award that
may be made to any other
Executive Director is 133% of
salary per annum.
Awards will be subject to a performance
underpin measured over a three-year
period. This is set for each individual award
by the Committee, and will be based
around the Group’s key financial and/or
strategic measures.
The underpin for the awards to be made in
2025 is set out on page 91. The Committee
intends that a similar structure will be used
for any awards granted in 2026 and/or
2027, but reserves the discretion to adjust
the underpin criteria for future awards if it
deems this to be appropriate.
If any of the underpin criteria is not met,
the Committee will consider whether it
would be appropriate to scale back the
number of shares that vest (including
to nil).
In addition to the fixed underpin criteria,
the Committee also has general discretion
to adjust vesting levels if it believes this will
better reflect the underlying performance
of the individual or the Company over the
vesting period or where the outcome is not
appropriate in the context of unforeseen
or unexpected circumstances.
Notes to the Policy table
The Committee reserves the right to make any remuneration payments and payments for loss of office (including exercising any discretions available to it in connection with
such payments) notwithstanding that they are not in line with the 2025 Remuneration Policy where the terms of the payment were agreed (i) before the 2025 Remuneration
Policy came into effect, provided that the terms of the payment were consistent with the shareholder-approved Directors’ Remuneration Policy in force at the time they were
agreed; or (ii) at a time when the relevant individual was not a Director of the Company and, in the opinion of the Committee, the payment was not in consideration for the
individual becoming a Director of the Company. For these purposes “payments” includes the Committee satisfying awards of variable remuneration and, in relation to an award
over shares, the terms of the payment are “agreed” at the time the award is granted.
The Committee reserves the right to make minor amendments to the Policy, for regulatory, exchange control, tax or administrative purposes or to take account of a change in
legislation, without seeking shareholder approval.
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Malus and clawback provisions
The Committee has discretion to exercise the following
malus and clawback provisions in respect of the AIS and
the RSP in certain circumstances. These circumstances
include: serious misconduct by a participant; material
misstatement of financial results; payments based
on erroneous or misleading data; serious reputational
damage; material failure of risk management; and
material corporate failure.
In these circumstances, the Committee may:
•
claw back the value of any cash amount paid or
Deferred Share award vested and/or cancel the
vesting of any Deferred Share award, for a period of
up to three years following the date of the relevant
award or payment.
•
reduce the number of shares in respect of an
unvested Restricted Share award and/or claw back
any shares which have vested for a period of up to
five years following the date of award.
Share and incentive plan discretions
The Committee will operate the Restricted Shares and
Deferred Share awards in accordance with the rules of
the IP Group plc Share Plan, this Policy and the Listing
Rules where relevant. Awards may:
•
have any underpins applicable to them amended
or substituted by the Committee if the Committee
considers that an amended or substituted underpin
is reasonable, appropriate and not materially less
difficult to satisfy than when it was originally set
•
incorporate the right to receive an amount (in cash
or additional shares) equal to the value of dividends
which would have been paid on the shares under
an award that vest, up to the time of release. This
amount may be calculated assuming that the
dividends have been reinvested in the Company’s
shares on a cumulative basis
•
be adjusted in the event of any variation of the
Company’s share capital or any demerger, delisting,
special dividend or other event that may affect the
value of the Company’s shares
Approach to recruitment
remuneration
The Committee will apply the Policy for any new
Executive Director recruited to the Board in respect
of all elements of forward-looking remuneration. The
maximum level of variable remuneration will be within
the usual maxima as set out in the Policy table (i.e. 75%
of salary under the Annual Incentive Scheme and 200%
or 133% of salary, as determined by their position under
the Restricted Share Plan).
The Committee retains flexibility to provide benefits in
kind, pensions and other allowances, such as relocation,
education and tax equalisation, required in order to
recruit the intended candidate.
On hiring an external candidate, the Committee may
make awards to buy out remuneration arrangements
forfeited on leaving a previous employer. In doing so,
the Committee will seek to structure buyout awards
on a comparable basis to awards forfeited, taking into
account relevant factors including any performance
conditions attached to these awards, the form in which
they were granted (e.g. cash or shares) and the time
frame of awards. It is intended that the value awarded
would be no higher than, in the Committee’s opinion, the
expected value of the forfeited awards.
Similarly, the policy for a new Chair or new Non-
executive Director would be to apply the same
remuneration elements as apply to the existing Chair or
Non-executive Directors under the Policy, as set out in
the section on page 87.
In addition to the above principles, the following
additional considerations may be applied as
appropriate depending on the circumstances:
•
Phasing of salary levels for new appointments
over time
•
In the case of internal promotion, any existing
elements arising from an individual’s previous role
will continue to be honoured under the Policy, even
if they may not otherwise be consistent with the
policy prevailing when the commitment is fulfilled.
This would include, if applicable, the retention of
any interests under a Long-Term Incentive Carry
Scheme (or similar) awarded prior to becoming
an Executive Director. However, no new allocations
would be made
•
In the case of promotion to Executive Director
following an acquisition or other business
combination, the Committee may permit equity-
based incentive arrangements to continue in force
if they can be “rolled-up” into awards over IP Group
shares, provided the performance and vesting
conditions are considered appropriate
•
In the case of the recruitment of an executive at a
time of the year when it would be inappropriate or
not possible to provide a Restricted Share award
for that year (for instance, due to price sensitive
information), the quantum in respect of the months
employed during the year may be transferred to and
amalgamated with the subsequent year’s award, if
considered reasonable to do so by the Committee
Loss of office payments policy
Executive Directors have service contracts that contain
a contractual notice period of six months by either party.
Executive Directors’ service contracts do not contain any
predetermined provisions for compensation in the event
of early termination. When determining termination
payments, the Committee takes into account a
variety of factors, including individual and Company
performance, mitigation of loss (for example, through
new employment) and the relevant Director’s length of
service.
In the event that a contract is to be terminated, any
payment in lieu of notice will be based on what would
have been earned by way of salary over the notice
period. Such payments to the Executive Director may
be staged over the notice period, with appropriate
consideration of mitigation.
All awards under the Group’s AIS are discretionary.
Should an Executive Director leave (or be under notice)
during the financial year, no AIS award in respect of
that year would typically be receivable. However, if the
individual is a good leaver, they may remain eligible
for an AIS award, subject to time pro-rating for the
proportion of the year served and assessment of
performance undertaken at the normal time following
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year end. Any AIS earned for the year may be paid
wholly in cash at the discretion of the Committee.
On cessation of employment, the treatment of
subsisting share awards would be in accordance with
the IP Group plc Share Plan rules.
Unvested Deferred Share awards will normally lapse,
unless the individual is a good leaver, in which case they
will remain entitled to awards which will normally vest
according to the original timescale.
Unvested Restricted Share awards would normally
lapse. Where the individual is a good leaver, awards
will usually be reduced on a pro-rata basis to take
into account the length of the vesting period which
has elapsed. Vesting and release would normally
occur according to the original timescale and criteria,
including the Committee’s assessment of the underpin
and remaining subject to any applicable holding period.
Post-cessation shareholding requirements would apply
as described right.
For the purposes of the provisions above, a “good
leaver” includes those individuals leaving due to death,
disability, injury, ill health, transfer of the employing
entity outside of the Group or any other reason at the
Committee’s discretion.
Malus/clawback provisions would continue to apply as
described in the section above.
The Committee reserves the right to make any other
payments in connection with a Director’s cessation
of office or employment where the payments are
made in good faith in discharge of an existing legal
obligation, (or by way of damages for breach of such
an obligation) or by way of a compromise or settlement
of any claim arising in connection with the cessation of
a Director’s office or employment. Any such payments
may include but are not limited to paying any fees for
outplacement assistance and/or the Director’s legal or
professional advice fees in connection with his or her
cessation of office or employment. Incidental expenses
may also be payable where appropriate.
Non-executive Directors have letters of appointment
that are terminable on three-months’ notice by
either party.
Change of control
In the event of a change of control, Restricted Share
awards would vest to the extent determined by the
Committee, and normally reduced on a pro-rata basis
to take into account the length of the vesting period
which has elapsed and the Committee’s assessment
of the underpin. The Committee may allow Directors
to exchange their awards over Company shares for
awards in shares of the acquiring company, provided
that the terms of the offer allow this.
Any Deferred Share awards will vest in full upon a
change of control.
Shareholding policy
Executive Directors are subject to a shareholding
requirements policy, under which they are expected
to build up and maintain a minimum shareholding
of 350% of salary for the Chief Executive Officer,
and 250% of salary for all other Executive Directors.
Departing Executive Directors will normally be required
to retain shares following the date of cessation of
their employment under the Group’s post-cessation
shareholding guidelines. This policy came into effect on
1 January 2019 and applies to any shares vesting from
Company incentive plans following this date. The policy
operates as follows:
•
The post-cessation shareholding shall be 100% of the
shareholding guideline that applied at the date of
cessation, or, if lower, the actual holding excluding
personal investment
•
The holding determined at the date of leaving
shall apply for a period of 24 months, on a tapered
straight-line basis, reducing to nil over this period
•
Shares that are no longer subject to performance
conditions, such as Deferred Share awards or vested
Restricted Share awards in the holding period, shall
count towards the guidelines (on a net of assumed
tax basis)
•
The Committee shall have the discretion to operate
the policy flexibly and may waive part or all of
the requirement, for example in compassionate
circumstances
Provisions are in place to support the enforcement of
this policy using the Company’s EBT.
Chair and Non-executive
Director remuneration
The Committee sets the remuneration of the Chair.
A Committee of the Board comprising the Chair and
the Executive Directors sets the remuneration of the
Non-executive Directors. Fees will comprise a base
fee, with additional fees payable for other duties
such as chair of a Committee or for being the Senior
Independent Director or the Designated Non-executive
Director for workforce engagement. Each Non-executive
Director is also entitled to reimbursement of necessary
travel, overnight accommodation (if applicable)
and other expenses, including a tax gross-up where
applicable. Non-executive Directors do not participate in
any of the Group’s variable incentive schemes and are
not eligible to join the Group’s pension schemes.
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Illustration of the application of the Policy
Illustrative values and composition of the Executive Directors’ remuneration packages for the year ending 31 December 2025 under a range of scenarios are set out in
the charts below.
Chief Executive Officer
0.0
0.5
1.0
1.5
2.0
2.5
3.0
Minimum
Target
Maximum
Maximum +
share price
growth
23%
21%
£2.65m
41%
15%
29%
£2.1m
52%
19%
32%
£1.9m
58%
11%
100%
£0.6m
Key
Fixed remuneration
Annual variable remuneration
Chief Financial Officer
0.0
0.5
1.0
1.5
2.0
Minimum
Target
Maximum
Maximum +
share price
growth
29%
17%
£1.44m
35%
20%
35%
£1.19m
42%
24%
39%
£1.05m
47%
13%
100%
£0.41m
Long-term variable remuneration
Share price appreciation
The basis of calculation for the previous graphs and key assumptions used are as follows:
Minimum
Target
Maximum
Maximum with 50%
share price growth
Fixed elements of remuneration
Contracted base salary with effect from 1 April 2025
Estimated cash cost to the Company of benefits
and pension contributions received under the
Remuneration Policy
AIS (pay-out as percentage of maximum opportunity)
0%
50%
100%
100%
RSP (vesting as percentage of maximum opportunity)
0%
100%
100%
100% plus 50% share
price growth
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Development of Remuneration Policy
Consideration of pay and conditions for the wider Group:
The components of pay across the Group’s UK staff are broadly similar. A significant component of long-term incentive
for senior employees, primarily those in the investment teams and excluding the Executive Directors, is in the form of the Group’s Long-Term Incentive Carry Scheme (“LTICS”) or
similar historical arrangements.
The Committee considers general pay and employment conditions of all employees within the Group and is sensitive to these, to prevailing market and economic conditions
and to governance trends when assessing the level of salaries and remuneration packages of the Executive Directors. From a practical perspective, the Group only has around
70 members of staff and, as a result, the Committee currently has the ability to review remuneration levels and changes thereto across the Group as a whole when considering
base salary increases, bonus maxima and award pay-outs for the Executive Directors. The Committee has also been involved in key decisions around remuneration concerning
all employees.
Engagement with our shareholders:
The Committee is committed to an ongoing dialogue with shareholders and seeks to consult with its significant shareholders and the
various proxy advisory groups when considering any major changes to remuneration arrangements. As part of the renewal of this Policy, the Group invited feedback from
four proxy advisory groups and over 65% of our shareholder register prior to publication. All feedback is used to guide the Committee in its finalisation of the remuneration
arrangements and their implementation.
Differences between the Policy and that applied to employees more generally
The components of remuneration set out in the Policy table for Executive Directors are also available to the Group’s employees and, other than as set out below, differ only in
award maxima. The benefits package is typically available to all UK members of staff following completion of a probationary period, with a broadly equivalent package being
offered to overseas staff unless local market conditions or norms dictate otherwise. All permanent UK staff with over three months service before year end are eligible for an
award under the AIS in that year, with similar arrangements for overseas staff.
The key differences between the Policy and that applied to employees generally are:
1.
Awards under the RSP are only made to a limited number of the Group’s more senior employees; and
2.
In common with many of our comparator companies, we operate a Long-Term Incentive Carry Scheme for employees, excluding Executive Directors. Participation in
this scheme is by invitation only, with invitations extended to those employees whose roles include a significant direct impact on the development of underlying portfolio
companies. The objective of the LTICS is to give employees the equivalent of a “founder’s stake” in the portfolio companies that they help to find, create and build, by offering
them the opportunity to participate in the eventual returns from the Group’s portfolio that are in excess of the original capital invested by the Group and after taking account
of an annualised hurdle return. We believe that this will align our employees directly with the long-term returns achieved on the specific assets, and thus maximise the overall
returns to our shareholders. No allocations of this kind will be made to Executive or Non-executive Directors
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Adherence to Corporate Governance Code principles
When considering the renewal of the Remuneration Policy, its operation for the forthcoming year, and outcomes for 2024, the Committee took into consideration the following
principles set out in the 2018 Corporate Governance Code.
Clarity
•
The Company seeks to provide full transparency to shareholders on the operation of the Remuneration Policy, including prospective disclosure of
our NAV target range under the AIS
•
The Committee encourages frequent and open dialogue on Executive Director remuneration with shareholders and, during the triennial review
process, undertook significant consultation with advisors, shareholders, proxy advisors and other stakeholders to ensure the proposed approach
remains optimised
Simplicity
•
Our ongoing remuneration arrangements for Executive Directors, including the AIS, are simple in nature and well understood by participants and
shareholders and other stakeholders, including our employees
•
Our Restricted Share Plan is a simple and effective long-term incentive structure, which directly aligns the interests of the management team and
long-term shareholders
•
Incentive arrangements are cascaded down through the Group and provide alignment and overall simplicity in our approach to remuneration. All
employees participate in the AIS (with additional components based on team and/or individual objectives for non-Director employees), and the
RSP is extended to senior managerial levels and roles which are expected to have a material financial impact on the Group’s outcomes
•
The Committee continuously reviews and challenges the Group’s wider remuneration arrangements and will continue to do so in order to ensure
that this principle continues to be appropriately met
Risk
•
Under both the AIS and RSP, discretion may be applied where formulaic outturns are not considered reflective of overall business or individual
performance or for any other reason considered appropriate by the Committee
•
Deferral of a proportion of AIS awards, our RSP holding periods and our higher than usual minimum shareholding requirement for Executive
Directors (which has not yet been met) including a two-year post-cessation shareholding requirement provide a strong link to the ongoing
performance of the business and the experience of our shareholders
•
Malus and clawback provisions apply to all AIS and RSP awards, as well as our legacy LTIP awards and the awards made under the LTICS scheme
Predictability
•
Our Remuneration Policy contains details of the maximum opportunities and pre-determined target ranges under our AIS and RSP, with actual
outcomes dependent on performance
Proportionality
•
We operate a performance-based philosophy with a focus on the long term
•
Our performance measures under the AIS and RSP underpin, including the use of NAV measures in both, are selected based on their alignment to
Company strategy and shareholder experience
•
The Committee’s ability to apply discretion ensures appropriate outturns in the context of long-term Company performance
•
The focus on the long-term within our remuneration approach, including the delivery of a significant proportion of our incentives in the form
of Company shares and the use of a long-term carried interest scheme for non-Director employees, provides significant alignment between
employees’ and Executive Directors’ remuneration outcomes and long-term Company performance
Alignment to
culture
•
All employees are entitled to participate in the pension scheme and the SAYE scheme. Executive Director participation in these schemes is on the
same terms as for other employees
•
Strong individual and Company performance is incentivised and recognised through our AIS and, for our more senior employees, the RSP (and
previously the LTIP).
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For 2025, the Remuneration Policy will be implemented
as set out below.
Salary
Last year, the average increase for the wider workforce
was 6.2% (including both inflation and promotion
increases). This reflects our continued investment in this
area to ensure that our salary levels remain competitive,
reflecting the importance of attracting and retaining a
high-quality team as part of our business model.
We reported last year that the Executive Directors
would receive salary increases in 2024 of 4.0% each.
However, following the publication of that report, and in
recognition of prudent cost management in challenging
market conditions, it was agreed to hold salaries at the
2023 level and therefore no increase was ultimately
applied in 2024.
Given our ongoing focus on both cost and performance
in the context of a difficult market, we are also intending
to hold salaries at current levels at the 2025 review. As
such, the salaries of the Executive Directors will remain at
current levels, as shown below:
2024/25
base
salary
2024/25
base
salary
Increase
%
Greg Smith (CEO)
£546,000
£546,000
0%
David Baynes (CFOO)
£374,400
£374,400
0%
All other employees other than the most junior will also
forgo any salary increase in 2025. The overall average
increase for the wider workforce is expected to be
around 1.4%.
Retirement and other benefits
Retirement and other benefits will continue to be in
line with the levels stated in the Remuneration Policy
table. Pension benefits for both Executive Directors will
remain aligned with the wider workforce, with employer
contributions of up to 10% of salary.
Annual Incentive Scheme (“AIS”)
The maximum AIS opportunity will remain at 75% of
base salary for both Executive Directors, in line with the
Remuneration Policy.
As such, 40% of the 2025 AIS will be based upon
Group NAV per share growth, which in the view of the
Committee represents the most appropriate leading
indicator of underlying business performance. The
conservative approach to portfolio valuation, set out
in more detail on page 102 underpins the Committee’s
faith in this measure. This element will be awarded at
25% of the maximum level provided a minimum level of
audited NAV per share of 102.6p is achieved by the end
of the year, and will be awarded in full if audited NAV per
share exceeds 112.4p.
The remaining 60% of the 2025 AIS will be based on
other in-year financial metrics, including the level of
realisations achieved from the portfolio, access to
third-party capital and reducing the discount between
NAV per share and our share price. These objectives
support long-term, sustainable growth. Targets for these
elements of bonus will be disclosed retrospectively in
the 2025 Annual Report.
For 2025, there will be no explicit ESG target. This change
does not reflect a reduced focus on impact, which
remains a key part of our strategy as set out throughout
this report. Rather, the change is a reflection of our
drive to simplify and focus our business on the primary
commercial outcomes, as measured by our other
intended AIS objectives.
Targets for all AIS measures are considered by the
Committee to be aligned to strategy and appropriately
stretching, especially in light of the current economic
climate and 2024 performance. However, and in line with
the Remuneration Policy, the Committee may adjust any
2025 outcome to take into account overall business or
individual performance or any other factors it considers
appropriate.
Restricted Share Plan
The Committee intends to make RSP awards to Executive
Directors at the normal level set out in the Remuneration
Policy, being 200% of base salary for the CEO and 133%
of base salary for the CFOO. As has been the case for
each award, the Committee will carefully monitor both
share price and performance in the lead-up to making
these awards, and will adjust the final award level if
appropriate or necessary to do so.
Vesting of the 2025 awards will take place over a three-
year period commencing on 1 April 2025. Any RSP awards
that vest will be subject to a further two-year holding
period. Vesting will be subject to a financial underpin,
such that NAV per share at the end of Financial Yar 2027
must be no lower than 100% of NAV per share at the
end of Financial Year 2024, after making appropriate
adjustments for dividends and any other distributions.
The Committee will also monitor qualitative
performance to ensure that Executive Directors are not
rewarded where the Committee considers there to have
been a failure of performance. This will include a serious
breach of regulation, failure to sufficiently progress
against ESG or impact objectives, material reputational
damage and gross misconduct. In the event of any
underpin condition not being met, the Committee will
review the number of RSP awards which are due to vest,
and may reduce (in full or in part) the number of shares
that ultimately vest. In making this determination, the
Committee will also take into account the need to avoid
windfall gains.
Chair and Non-executive Directors
With a small Board, the Group relies heavily upon a deep
level of commitment from the Chair and all of the Non-
executive Directors. The Chair and each Non-executive
Director serves on multiple Committees as well as the
Board itself.
As described earlier, both the Chair and the Non-
executive Directors chose to forgo the fee increases of
4.0% for 2024 which had been published in last year’s
report.
For the same reasons there will be no increase in
2025, with our Non-executive Director fee remaining at
£57,500, and the Chair fee at £227,000. The additional fee
for Committee chair and other senior roles will remain at
£10,000. There remains no fee payable for membership
of a Board Committee.
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Single figure for total remuneration (audited)
The following table sets out the single figure for total remuneration for Directors for the financial years ended 31 December 2024 and 2023.
Base salary/
fees
1
Benefits
2
Retirement
benefits
3
Total fixed
Annual bonus
(“AIS”)
4
Share-based
incentives
5
Total variable
Total
All £000s
2024
2023
2024
2023
2024
2023
2024
2023
2024
2023
2024
2023
2024
2023
2024
2023
Greg Smith
546
541
3
3
49
48
599
592
174
103
-
70
174
173
773
765
David Baynes
6
374
371
8
7
8
34
33
417
412
119
70
-
67
119
137
536
549
Sir Douglas Flint
227
218
–
–
–
–
227
218
–
–
–
–
–
–
227
218
Dr Elaine Sullivan
7
26
55
–
–
–
–
26
55
–
–
–
–
–
–
26
55
Dr Caroline Brown
78
75
–
–
–
–
78
75
–
–
–
–
–
–
78
75
Aedhmar Hynes
78
75
–
21
–
–
78
96
–
–
–
–
–
–
78
96
Heejae Chae
78
66
–
–
–
–
78
66
–
–
–
–
–
–
78
66
Anita Kidgell
58
53
–
–
–
–
58
53
–
–
–
–
–
–
58
53
1
Base salary/fees represent each Director’s contractual entitlement during the financial year in question, noting that the Group’s salary year runs from 1 April to 31 March.
2
Travel costs for Non-executive Directors are reimbursed with any tax due settled directly with HMRC, and a consumable expenses payment of £26 (net) per month is paid to all employees, Executive
and Non-executive Directors to cover the additional costs of occasional homeworking.
3
Retirement benefits include payments made to defined contribution schemes on behalf of the Directors or the value of a cash equivalent, if applicable. The pension available to the Executive Directors
is aligned to that available for the employee population.
4
AIS executive bonus outturn was 42.5% of the maximum for 2024, equating to 31.9% of base salary, with further detail provided in the table on page 93. Consistent with the Remuneration Policy, the first
£25,000 will be paid in cash and thereafter 50% will be paid in cash and 50% deferred into shares over two years.
5
For 2024, the “Share Based Incentives” section contains the combined figure for both the 2021 LTIP award and the 2022 RSP award, both of which lapsed in full. This is because the date of the final
quantitative vesting measure for both the 2021 LTIP and the 2022 RSP underpin occurred during the 2024 Financial Year.
6
David Baynes receives an annual car allowance or equivalent thereof of £12,000. He also participated in our Electric Vehicle salary sacrifice scheme during the year, sacrificing gross salary of £10,368
over the period, and has use of an electric vehicle with a taxable benefit of £998 in 2024. The benefits figure reported for David Baynes includes all of these amounts in aggregate, in addition to the
value of his other benefits.
7
Dr Elaine Sullivan stepped down as a Director on 13 June 2024.
8
The value shown has been restated from the equivalent figure in last year’s report to reflect an update in the calculation.
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Additional disclosures for single figure for total remuneration table
Annual Incentive Scheme
The targets for the 2024 AIS for Executive Directors were set in line with the Statement
of Implementation for 2024 laid out in the 2023 Directors’ Remuneration Report. That is,
AIS outcomes for 2024 have been determined based upon the following mix of targets:
•
40% on achievement of the targeted levels for the Group’s audited NAV per share
•
25% on the level of realisations generated from the portfolio during the year
•
15% on sourcing managed third-party capital in support of our strategy
•
15% on reducing the discount between share price and NAV per share
•
5% based on ESG metrics aligned to our sustainability strategy
The detailed performance conditions used to calculate initial AIS outturn for 2024 are set out in the table below.
Performance condition
(% weighting)
Payment criteria
2024 performance
(% of component
awarded)
2024 performance
(% of component awarded)
Return on NAV (40%)
5% improvement in NAV per share (target
120.5p): 25% of maximum opportunity
(“threshold”)
15% improvement in NAV per share (target
132.0p): 100% of maximum opportunity
Below minimum target
0% of component
awarded
Both NAV and NAV per share reduced across 2024, primarily due to
a further fall in the value of the quoted portfolio and a number of
discrete (unrealised) value adjustments which reflect our prudent
approach to the valuation of individual portfolio companies.
(see page 10 for details)
Liquidity as a
strategic asset (25%)
£nil to £50.0m (sliding scale)
£194m
100% of component
awarded
Good underlying performance throughout the year which would
have led to a full payment, further supplemented by c.£119m
received in year as a result of the sale of Featurespace.
(see page 11 for details)
Access to third-party
capital (15%)
Access to new co-investment capital of £45m
(25% of maximum opportunity) to £95m (100%
of maximum opportunity
£94.8m
99.7% of component
awarded
Continued EIS fundraising through the year, plus the agreement of
a further tranche of directly-controlled third-party co-investment
capital from our strategic partner, Hostplus.
(see page 11 for details)
NAV per share/share
price discount (15%)
Reduce the discount between share price and
NAV by between 10% (25%) and 40% (100%)
between year end 2023 and year end 2024
Below minimum target
0% of component
awarded
The discount level widened (albeit marginally) over the
measurement period.
ESG Performance
(5%)
50% plc performance: Based on continued
out-performance of sector benchmarks for
Refinitiv, MSCI and ISS.
50% portfolio impact: Based upon making
sufficient progress in the agreement, collection
and analysis of data relating to specific
portfolio company ESG and impact metrics.
100% achievement of plc
element; 0% achievement
of portfolio impact
50% of component
awarded
Outperformance of sector benchmarks for all of Refinitiv, MSCI
and ISS.
Commercial pressures followed by changes in the team meant a
reduced focus on progressing specific portfolio company ESG and
impact metrics during the year. Whilst we believe that this was the
right decision, it means that insufficient progress was made in this
area to allow for the release of an associated AIS payment.
Total weighted
outturn
42.5% of maximum (equating to 31.9% of base salary)
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STRATEGIC REPORT
The Committee discussed the output of the quantitative targets as shown on
page 93, and considered that this outturn appropriately reflected the broader overall
performance of the business over 2024. The Committee particularly noted the impact
of a number of external factors on the calculated bonus amount, including the
continuation of difficult macroeconomic conditions through the year, but also noted
the significant progress in a range of areas expected to underpin shareholder value
growth as the Group moves forward, most particularly the exceptional realisations
performance in the year and the associated improvement in the financial position of
the Group.
As such, the Committee determined that the calculated outcome aligned with a fair
assessment of performance over the year, and that no discretionary adjustment to
this calculated outcome was therefore required.
The resulting AIS outturn for 2024 for the Executive Directors was, therefore, determined
as 42.5% of maximum opportunity. In accordance with the Remuneration Policy, all
amounts to individuals above an initial minimum amount paid in cash, which for the
2024 AIS is £25,000, will be paid 50% in cash and 50% in shares (deferred over two years
under the Group’s Deferred Bonus Share Plan (“DBSP”)).
Share-based incentive schemes
2021 LTIP awards that vested in 2024
As reported in the 2023 Directors’ Remuneration Report, the final outstanding LTIP
award was awarded in 2021. Vesting was dependent upon a combination of Total
Shareholder Return and Growth in NAV over the vesting period, which ran from April
2021 to March 2024. As anticipated in the 2023 report, both measures were below the
levels required to trigger vesting.
After the end of the vesting period, the Committee considered whether this outcome
was appropriate in the context of performance delivered over the vesting period, and
determined that it was a fair and reasonable outcome. As such, the 2021 award lapsed
in full on the vesting date.
There are no further unvested LTIP awards, following the switch to RSP awards in 2022.
2022 Restricted Share Plan awards vesting in 2025
The Committee reviewed the vesting of the 2022 Restricted Share Plan (“RSP”) award,
in the context of the underpins in place for that award. The 2022 RSP award (and all
subsequent awards) are subject to a robust underpin with a quantitative trigger. As
a result of the significant external market pressures which have impacted business
performance over the three-year period and the subsequent reduction in NAV, the
underpin condition was not met.
As such, and in line with the terms of the underpin, the Committee actively reviewed
the vesting level for the 2022 RSP award, considering quantitative performance
measures as well as taking into account a broader review of performance. As part
of this review, the Committee noted the actions taken by the management team to
assure long-term shareholder value growth, including the significant and sustained
level of realisations, strong cash position of the Group, level of cash returned to
shareholders and the strong pipeline of future opportunity.
Taking into account the wide range of factors specific to this award, and after careful
and balanced consideration, the Committee concluded that none of the 2022 RSP
awards would vest, and they will therefore lapse in full.
2024 Restricted Share Plan Awards
Details of the RSP awards granted during 2024 to each Executive Director are set out in
the table below:
Executive Director
Type of
interest
Basis of
award
(% salary)
Face value
(000s)
End of
vesting
period
Greg Smith
2024 RSP
200%
£1,092
31 Mar 2027
David Baynes
2024 RSP
133%
£498
31 Mar 2027
The Committee continues to believe that the maximum award permitted under the
Policy (being 200% of salary for the CEO, 133% of salary for other Executive Directors)
is set at an appropriate and reasonable level. It also recognises the responsibility to
make individual awards in a prudent and responsible way, only utilising the maxima
agreed under the Policy when it is confident that such awards are appropriate and
in the best interests of shareholders. The Committee believes that this condition held
in 2024.
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STATEMENT OF IMPLEMENTATION OF REMUNERATION POLICY IN 2024
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STRATEGIC REPORT
Change in remuneration of the Directors compared to Group employees
The table below sets out the change in the remuneration of the Directors and that of our UK employees (excluding Directors and new joiners/leavers):
% Change in base salary
% Change in bonus
% Change in benefits
(excluding pensions)
2023 to
2024
2022 to
2023
2021 to
2022
2020 to
2021
2019 to
2020
2023 to
2024
2022 to
2023
2021 to
2022
2020 to
2021
2019 to
2020
2023 to
2024
2022 to
2023
2021 to
2022
2020 to
2021
2019 to
2020
Greg Smith
0.9%
3.0%
48.4%
20.8%
5.9%
69.3%
(14.2)%
(65.0)%
23.5%
254.1%
8.2%
(11.7)%
(2.3)%
4.2%
5.1%
David Baynes
0.8%
3.0%
17.4%
7.7%
2.0%
69.3%
(14.6)%
(72.3)%
11.2%
241.0%
6.8%
33.2%
(14.1)%
17.6%
5.2%
Sir Douglas Flint
4.1%
15.5%
4.2%
2.0%
2.2%
–
–
–
–
–
–
–
–
Dr Elaine Sullivan
(52.7)%
13.7%
4.6%
2.2%
1.8%
–
–
–
–
–
–
–
–
Dr Caroline Brown
4.0%
13.9%
17.1%
1.8%
1.8%
–
–
–
–
–
–
–
–
Aedhmar Hynes
4.0%
9.7%
19.6%
19.8%
1.8%
–
–
–
–
(100)%
(26.9)%
142.0%
–
–
Heejae Chae
18.1%
13.1%
3.8%
1.8%
1.8%
–
–
–
–
–
–
–
–
Anita Kidgell
9.4%
–
–
–
–
–
–
–
–
–
–
–
–
UK employees
7.8%
7.3%
10.4%
5.9%
8.0%
4.3%
6.5%
(39.1)%
59.3%
78.7%
9.7%
5.6%
11.9%
7.9%
4.7%
Historical Executive pay and Group performance
The table and graph set out on this page enable a comparison of the TSR of the Group
and the Chief Executive Officer remuneration outcomes over the last ten years.
The chart shows the Company’s TSR performance against the performance of the
FTSE 250 index over the ten-year period to 31 December 2024. Taking into account
IP Group’s business model, there is no directly relevant FTSE sector index. The Directors
have therefore selected the FTSE 250 as relevant equity index for comparison on the
basis that it is the FTSE equity market index of which IP Group is a constituent.
0
50
100
150
200
2024
2023
2022
2021
2020
2019
2018
2017
2016
2015
2014
%
change
Source: Datastream
IP Group
FTSE 250
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ANNUAL REMUNERATION STATEMENT
.
STATEMENT OF IMPLEMENTATION OF REMUNERATION POLICY IN 2024
OUR FINANCIALS
BUSINESS OVERVIEW
OUR GOVERNANCE
STRATEGIC REPORT
Historical Chief Executive Officer remuneration outcomes
The table below summarises the Chief Executive Officer single figure for total remuneration, annual bonus pay-out and share based incentives (LTIP and RSP) vesting as a
percentage of maximum opportunity for the previous ten-year period:
Chief Executive Officer
2015
2016
2017
2018
2019
2020
2021
1
2022
2023
2024
CEO single figure of remuneration (£000s)
669
265
552
413
498
797
730
958
765
773
Annual bonus pay-out (% of maximum)
100%
0%
57%
17%
28%
93%
96.3%
30.4%
25.1%
42.5%
Share-based incentives vesting (% of maximum)
57%
0%
0%
0%
0%
0%
0%
51.1%
13.7%
0%
1
2021 and years thereafter relate to Greg Smith, who was appointed as CEO on 7 October 2021 (previously CFO). Previous years reported relate to Alan Aubrey.
Directors’ shareholdings and share interests
The Group’s Remuneration Policy determines a minimum shareholding requirement of 350% of salary for the Chief Executive Officer and 250% of salary for other Executive
Directors including the CFOO.
At the end of the year, neither Greg Smith nor David Baynes met this requirement. Both Executive Directors are ordinarily, at a minimum, expected to retain all post-tax shares
received under the RSP, LTIP and DBSP to ensure that minimum levels are met and maintained, in line with the Policy.
Interests in shares (audited)
The Directors who held office during 2024 had the following beneficial interests in the ordinary shares of the Company:
At 31 December 2024
Total interest in shares
Total unvested holdings
Current Directors
Shares
owned
Number
Shares which
have fully vested
but have not yet
been issued
Total
interest
Minimum
shareholding
requirement
met?
1
LTIP
DBSP
RSP
Greg Smith
752,686
122,329
875,014
No
0
121,201
5,158,368
David Baynes
673,887
117,797
791,684
No
0
71,628
2,400,201
Dr Elaine Sullivan
2
-
-
-
–
–
–
–
Sir Douglas Flint
94,500
-
94,500
–
–
–
–
Heejae Chae
32,712
-
32,712
–
–
–
–
Dr Caroline Brown
-
-
-
–
–
–
–
Aedhmar Hynes
21,000
-
21,000
–
–
–
–
Anita Kidgell
-
-
-
–
–
–
–
1
Based on owned/vested shares only.
2
At the date of stepping down from the Board
There have been no changes in the interests of the Directors set out above between 31 December 2024 and 25 March 2025.
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Share-based incentive plan awards (audited)
The Executive Directors’ participations in the Group’s Long-Term Incentive Plan (“LTIP”) and Restricted Share Plan (“RSP”) are set out in the table below:
Number of shares
conditionally held at
1 January 2024
Conditional shares
notionally awarded in
the year
Vested
during the
year
1
Lapsed
during the
year
Potential conditional
interest in shares at
31 December 2024
Share price
at date of
conditional
award (p)
Earliest
vesting
date(s)
Greg Smith
2021 LTIP
483,253
–
–
483,253
–
125.40
31–Mar–24
2022 RSP
2
1,043,046
–
–
–
1,043,046
75.50
31–Mar–25
2023 RSP
1,813,953
–
–
–
1,813,953
60.20
31–Mar–26
2024 RSP
–
2,301,369
–
–
2,301,369
47.45
31–Mar–27
3,340,252
2,301,369
–
483,253
5,158,368
David Baynes
2021 LTIP
465,709
–
–
465,709
–
125.40
31–Mar–24
2022 RSP
2
476,809
–
–
–
476,809
75.50
31–Mar–25
2023 RSP
829,215
–
–
–
829,215
60.20
31–Mar–26
2024 RSP
–
1,052,028
–
1,052,028
47.45
31–Mar–27
1,771,733
1,052,028
–
465,709
2,400,201
1
All share-based incentives which vest during a given year will be subject to a further holding period of two years, with shares not being issued to participants until the end of the holding period. The
actual number of shares to be issued at the end of the holding period will be adjusted in aggregate to account for any dividends paid during the vesting and holding period.
2
The 2022 RSP grant, shown in full in the table (as at 31 December 2024) will lapse in full as set out on page 94
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BUSINESS OVERVIEW
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STRATEGIC REPORT
Deferred Bonus Share Plan (“DBSP”) (audited)
Directors’ interests in nil-cost options under the Group’s DBSP that have been granted in order to defer AIS bonuses in accordance with our Policy are as follows:
Options held at
1 January
2024
Option
awarded in
the year
Exercised
during the
year
1
Lapsed
during the
year
Options held at
31 December
2024
Share price
at date of
award (p)
Earliest
vesting
dates
Greg Smith
Deferral from 2021 AIS
88,100
–
88,100
–
–
90.00
31–Mar–24
Deferral from 2022 AIS
39,327
–
39,327
–
–
60.20
31–Mar–24
Deferral from 2022 AIS
39,327
–
–
–
39,237
60.20
31–Mar–25
Deferral from 2023 AIS
–
40,982
–
–
40,982
47.45
31–Mar–25
Deferral from 2023 AIS
–
40,982
–
–
40,982
47.45
31–Mar–26
166,754
81,964
127,427
–
121,201
David Baynes
Deferral from 2021 AIS
75,451
–
75,451
–
–
90.00
31–Mar–24
Deferral from 2022 AIS
23,704
–
23,704
–
–
60.20
31–Mar–24
Deferral from 2022 AIS
23,704
–
–
–
23,704
60.20
31–Mar–25
Deferral from 2023 AIS
–
23,962
–
–
23,962
47.45
31–Mar–25
Deferral from 2023 AIS
–
23,962
–
–
23,962
47.45
31–Mar–26
122,859
47,924
99,155
–
71,628
3
Actual number of options released for exercise is adjusted where relevant to reflect the adjustment made to account for dividend payments made during the holding period.
Save As You Earn (“SAYE”) (audited)
The Group operates an HMRC-registered SAYE share save scheme for all UK employees in which both Executive Directors have participated during the year:
Options held at
1 January
2024
Options
awarded in
the year
Exercised
during the
year
Lapsed
during the
year
Options held at
31 December
2024
Option
exercise
price (p)
Share price
at date of
award (p)
Earliest
vesting
date(s)
Greg Smith
2023 SAYE
39,586
–
–
–
39,586
46.86
58.56
01-Nov-26
David Baynes
2022 SAYE
27,692
–
–
–
27,692
65.0
81.25
01-Nov-25
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BUSINESS OVERVIEW
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STRATEGIC REPORT
Relative importance of spend on pay
The table below shows total employee costs, change in shareholder distributions,
change in NAV and change in share price from 2023 to 2024.
2024
2023
% change
Total employee costs (£m)
19
19
0%
Distributions to shareholders (dividend or
share buyback, £m)
29.6
13.1
126%
NAV (£m)
956.5
1,182.5
(19.6%)
Share price (p)
53.9
58.1
(7.23%)
The information shown in this chart is based on the following:
Total employee pay: total employee costs from note 9 including wages and salaries,
social security costs, pension and share-based payments.
Change in NAV: change in the Group’s net assets excluding goodwill and intangibles
taken from the statement of financial position on page 118.
External appointments for Executive Directors
Any proposed external directorships are considered by the Board to ensure they do
not cause a conflict of interest but, subject to this, Executive Directors may accept
a maximum of two external Non-executive appointments and, indeed, the Board
believes that it is part of their ongoing development to do so. Where an Executive
Director accepts an appointment to the board of a company in which the Group is a
shareholder, the Group generally retains the related fees. In the circumstances where
the Executive Director receives such fees directly, such sums are generally deducted
from their base salary from the Group. Fees earned for directorships of companies in
which the Group does not have a shareholding are normally retained by the relevant
Director. Key external appointments (excluding companies in which the Group holds
shares) held by Executive Directors are set out on pages 61 to 63.
Limits on the number of shares used to satisfy share
awards (dilution limits)
All of the Group’s incentive schemes that contain an element that may be satisfied
in IP Group shares incorporate provisions that in any ten-year period (ending on the
relevant date of grant), the maximum number of the shares that may be issued or
issuable under all such schemes shall (i) not exceed 10% of the issued ordinary share
capital of the Company; and (ii) such shares issued on a discretionary basis shall not
exceed 5% of the issued ordinary share capital of the Company.
The Committee regularly monitors the position and, prior to the making of any share-
based award, considers the effect of potential vesting of outstanding awards to
ensure that the Company remains within these limits. Any awards which are required
to be satisfied by market-purchased shares are excluded from such calculations, but
any shares utilised from treasury to settle share-based awards are included. The table
below sets out the current level of dilution against the limits in the bonus and long-
term incentive plan and sets out the commitments to issue shares made during the
financial year reported.
Maximum
Current dilution
Additional dilution during
the year in question
10% dilution in ten years
3.48%
0.88%
5% dilution in ten years
2.46%
0.66%
Service agreements
The Executive Directors have service contracts that commenced on the dates set out
below and contain a contractual notice period of six months by either party. The Non-
executive Directors have letters of appointment that commenced on the dates set out
below, are generally for an initial fixed term of three years, which is reviewed and may
be extended for two further three-year periods and are terminable on three months’
notice by either party.
The letters of appointment and service contracts are available for inspection at
the Company’s registered office. In accordance with the Code, all Directors submit
themselves for annual re-election by shareholders at each AGM and will do so at the
AGM to be held on 12 June 2025.
Greg Smith
7 October 2021
David Baynes
7 October 2021
Heejae Chae
3 May 2018
Sir Douglas Flint
17 September 2018 (effective as Chair from November 2018)
Dr Caroline Brown
1 July 2019
Aedhmar Hynes
1 August 2019
Anita Kidgell
18 January 2023
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BUSINESS OVERVIEW
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External advisors
The Remuneration Committee is authorised, if it wishes, to seek independent specialist services to provide information and advice on remuneration at the Company’s expense,
including attendance at Committee meetings.
During the early part of 2024, the Remuneration Committee received independent advice from Deloitte LLP in respect of the application of the Group’s Remuneration Policy, and
reporting under the Directors’ Remuneration Reporting Regulations. Fees paid to Deloitte LLP in connection with advice to the Committee during 2024 were £8,000 (excluding VAT),
based on time spent. In April 2024, and following a formal tender process, A&M were appointed as independent advisors to the Remuneration Committee. A&M provided advice in
respect of the review of the Remuneration Policy and its implementation. Fees paid to A&M in connection with advice to the Committee during 2024 were £68,000 (excluding VAT),
based on time spent. A&M does not provide any other services to IP Group.
Both Deloitte LLP and A&M are members of the Remuneration Consultants Group and adhere to its Code in relation to Executive remuneration consulting in the UK. In both
cases, the lead engagement partner has no other connection with the Company or individual Directors, and the Committee is satisfied that advice provided was objective and
independent.
Statement of shareholder voting
The table below sets out the proxy results of the votes on resolutions in respect of Directors’ remuneration at the 2022 AGM and the 2024 AGM.
Votes for
Votes against
Number
% of
votes cast
Number
% of
votes cast
Total votes cast
Votes withheld
Remuneration Policy (2022 AGM)
654,265,665
80.67%
156,765,453
19.33%
820,514,461
9,483,343
Remuneration Report (2024 AGM)
599,931,114
82.62%
126,245,461
17.38%
726,176,583
250,575
The Remuneration Committee was pleased with the level of support for the Remuneration Report at the 2024 AGM, and looks forward to building upon this with the renewal of the
Remuneration Policy at the 2025 meeting.
Remuneration disclosure
This report complies with the requirements of the Large and Medium-sized Companies and Groups Regulations 2008 as amended in 2013, the provisions of the UK Corporate
Governance Code and the Listing Rules.
On behalf of the Board
Heejae Chae
Chair of the Remuneration Committee
24 March 2025
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ANNUAL REMUNERATION STATEMENT
.
STATEMENT OF IMPLEMENTATION OF REMUNERATION POLICY IN 2024
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STRATEGIC REPORT
Principal responsibilities
The duties of the Audit & Risk Committee are set out
in its Terms of Reference, which are available on
the Company’s website. The principal duties of the
Committee are to:
•
Monitor the integrity of the financial statements
of the Group including its Annual and Half-yearly
Reports, and other formal announcements
relating to its financial performance with
consideration being given to any significant
financial reporting judgements contained therein
•
Review and report to the Board on significant
financial reporting issues and judgements
contained in the financial statements
•
Advise the Board on whether it believes the
Annual Report and Accounts, taken as a whole, is
fair, balanced and understandable and provides
the information necessary for shareholders to
assess the Group’s performance, business model
and strategy
•
Review and monitor the Group’s risk management
system and carry out a review of its effectiveness
and approve the statements included in the
Annual Report concerning risk management
•
Ensure that a robust assessment of the principal
risks facing the Group has been undertaken
•
Assess the Group’s ongoing viability and going
concern status
•
Recommend the appointment and remuneration
of the external auditor, assess audit effectiveness
and monitor provision of non-audit services
•
Assess the content of the external auditor’s
independence report in providing both audit and
non-audit services
•
Review the remit, planned scope of activities,
performance and effectiveness of outsourced
internal audit support
•
Monitor the Group’s systems and controls for the
prevention of bribery and fraud
•
Review the adequacy and security of the Group’s
arrangements for its employees to speak up and
raise concerns
Key activities in the year
The key areas of focus for the Committee in 2024
and early 2025 included:
•
Consideration of key areas of accounting
judgement, including: (i) valuation of unquoted
investments at half-year and year-end reporting;
and (ii) IFRS 10 treatment of the US platform and
Istesso Limited
•
Oversight of the transfer of KPMG audit partner
responsibility during the year, following the
outcome of the audit tender process conducted
in 2023
•
Review of management plans on the
implementation of the 2024 UK Corporate
Governance Code including Provision 29
requirements
•
Review the results of an internal audit review in
respect of the operating effectiveness of key
controls over operational risks and continued
monitoring of the implementation of agreed
improvements from this and earlier reviews
Procedural and
governance matters
•
The Group’s Chief Financial & Operating Officer,
Company Secretary, Finance Director and the
external auditor are invited to attend each
Committee meeting, at which they present reports
and provide analysis on key areas of significance
to the Committee in relation to audit and risk
matters
•
At the request of the Committee, the Group’s
Chair and CEO also attended each Committee
meeting
•
Meetings cover regular agenda items on audit,
risk and internal controls, compliance and
policies. Additional matters are considered as
required and other members of management
are invited to attend for specific subjects
where required
Dr Caroline Brown
Chair of the Audit and Risk Committee
Committee membership
The Audit and Risk Committee currently comprises the
following independent Non-executive Directors whose
backgrounds and experience are summarised on
pages 61 to 63:
•
Dr Caroline Brown (Chair)
•
Aedhmar Hynes
•
Dr Elaine Sullivan (retired June 2024)
•
Heejae Chae
•
Anita Kidgell
Report contents
•
Principal responsibilities
•
Key activities in the year
•
Procedural and governance matters
•
Key accounting judgements and other priority
items reviewed by the Committee
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AUDIT AND RISK COMMITTEE REPORT
.
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OUR GOVERNANCE
•
In preparation for each Committee meeting, I meet
privately with management and the external auditor,
and where relevant with representatives of the
internal audit team
•
At the end of the annual audit process and at
several points throughout the year the Committee
meets with the external auditor without any
members of the executive management team being
present
•
As part of the annual evaluation of risk management
and internal controls the Committee as a whole also
met with the Head of the outsourced internal audit
resource without management being present
•
I continued to attend meetings of the Group’s
Valuation Committee as a member, alongside
my fellow Non-executive Director, Heejae Chae.
Attendance at these meetings provides both
an element of independence to the Valuation
Committee and provides a detailed understanding
of portfolio valuation considerations.
•
The Committee met seven times in 2024 and twice in
2025 ahead of the release of the 2024 Annual Report
and Accounts
In relation to governance considerations:
•
The Committee comprises four independent
Non-executive Directors following the retirement
of Dr Elaine Sullivan in June 2024. All members are
considered to be appropriately experienced to
fulfil their role and allow the Committee to perform
its duties effectively (see the Board skills matrix on
page 60 for further details of members skills focus)
•
I am deemed by the Board to have recent and
relevant financial experience, being a Fellow of the
Chartered Institute of Management Accountants,
having held senior executive financial positions and
current Audit and Risk Committee experience
•
The Board is satisfied that for the year under
review, and thereafter, the Group’s Audit and Risk
Committee, as a whole, has competence relevant to
the sector in which the Group operates
•
The Committee assessed its performance in 2024
through an internally facilitated process led by
the Chair, supported by the Company Secretary.
Such process concluded that the Committee had
continued to perform effectively during 2024
•
The Committee undertook an evaluation of the
external auditor’s performance in 2023, which
included input from the Finance Director, CFOO and
wider finance team. Through this process minor
areas for improvement were identified and agreed
with the auditor, who was deemed to have met the
Committee’s expectation in the year
•
In 2024, the Group re-evaluated its internal audit
strategy having considered the Group’s evolving
needs and risk profile and made the strategic
decision to transition from a fully outsourced internal
audit function to a more flexible approach which
allows the Group to utilise internal audit resources
from PwC on an as-needed basis
•
The Committee undertook an assessment of the
outsourced internal audit resource utilised in 2024,
which included input from the individual members
of the Group’s Risk Council, Non-executive Directors
and all those members of management who had
interacted with the outsourced internal audit team in
the year. The assessment considered the outsourced
internal audit team’s understanding of the Group’s
business risks, their subject matter expertise,
professionalism and effectiveness in improving
the Group’s operations via recommendations
that are appropriate for the size, nature and scale
of the business. The Committee concluded that
they were satisfied with the expertise provided by
PwC in the year and welcome the move to a more
focused and strategic use of internal audit resource
going forward
•
The Committee continues to review its terms of
reference at least annually and will propose updates
where necessary or appropriate to reflect current
market practice
Key accounting judgements
Valuation of unquoted equity and
debt investments:
The valuation of unquoted investments remains the
most material area of judgement in the financial
statements and is a key audit risk for the Group. At each
external reporting date the Committee receives updates
from the Valuation Committee and from the external
auditor regarding the approach that has been taken in
assessing and auditing, respectively, the key estimates
and judgements in respect of portfolio valuations.
Significant time at Committee meetings is assigned
to discuss portfolio valuations, which has allowed the
Committee to debate and challenge the approach
taken. The Group continued to apply its valuation policy
consistently across investments at the year end, which
included consideration of the macro environment and
relevant industry metrics such as revenue multiples
where relevant.
As in previous years, the Committee has paid significant
attention to the valuation of the Group’s holdings in
unquoted investments, which have not completed a
funding round within the last twelve months, assets
which have seen significant positive or negative
developments in the year, companies which require
funding in the next twelve months, and assets with
active financings or sale processes on or after the
measurement date. We continue to make use of
third-party valuations specialists, with external valuation
reports being commissioned on six of our larger
investments in 2024 (2023: eleven). This increases the
independence of our process and helps to ensure that
our valuation approach continues to reflect market
best practice.
The Valuation Committee assists in the application
and documentation of management’s valuation
judgements in line with the Group’s accounting policies
and industry valuation guidance from IPEV (International
Private Equity and Venture Capital). The Valuation
Committee is chaired by the CFOO, and its members
are the CEO, Heejae Chae and me. Also in attendance
was the Managing Partner of the Balance Sheet
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investments, Finance Director and external auditor, with
other investment team members joining meetings on
request. During the year, the Committee considered
the Valuation Committee’s terms of reference and
composition and concluded that it was satisfied with the
current level of scrutiny and challenge by the ARC at the
Valuation Committee.
The Valuation Committee met four times in 2024 and
twice in early 2025 to review management’s valuations
for the half-year and full-year results reporting. The
Committee’s 2025 meeting included review of the
proposed Annual Report disclosures, including the
approach to valuation sensitivity disclosures. See further
details in note 13.
Application of the consolidation
requirements of IFRS 10 in respect of
IPG Cayman LP and Istesso Limited
The Group’s US portfolio is held via a limited partnership
fund, IPG Cayman LP, and is managed by Longview
Innovations, formerly an operating subsidiary of the
Group. Following a reorganisation which took place in
2021, the Group was no longer deemed to control IPG
Cayman LP, which was accordingly deconsolidated
in 2021.
In respect of Istesso Limited, although the Group has
a 56.5% undiluted economic interest in the company,
the Group holds a significant proportion of its equity via
non-voting shares resulting in it holding less than 50%
of the voting rights at the company. Additionally, the
Group does not control the board of Istesso Limited via
a majority of board directors and has no mechanism
whereby it can do so. As a result the Group is deemed
not to control Istesso and therefore its results are not
consolidated with those of the Group.
The Committee reviewed and discussed management’s
detailed assessment, including changes in the year, and
conclusion that the Group does not control IPG Cayman
LP and Istesso Limited at its meetings in July 2024 and
February 2025 and agreed that this judgment continued
to be appropriate for both the Group’s half-yearly and
Annual Report and Accounts.
Review of Annual Report and
Accounts and Half-yearly Report
The Committee carried out a thorough review of the
Group’s Annual Report and Accounts and its Half-yearly
Report for 2024 resulting in the recommendation of both
for approval by the Board. In carrying out its review, the
Committee gave particular consideration to whether
the Annual Report, taken as a whole, was fair, balanced
and understandable, concluding that it was. It did this
primarily through consideration of the reporting of the
Group’s performance, business model and strategy, the
competitive landscape in which it operates, the significant
risks it faces, the progress made against its strategic
objectives and by its portfolio companies during the year.
In addition to the significant accounting judgments and
estimates noted above, the committee also considered
revenue recognition, segmental reporting, long-term
viability and going concern disclosures and the use
of Alternative Performance Measures (“APMs”). The
committee also reviewed a summary of controls reliance
gained in the year and related internal control disclosures
made within the Corporate Governance Report.
Going concern and long-term
viability review
On an annual basis the Committee reviews and
approves the long-term viability review prepared by
management and satisfies itself that the Group remains
a going concern for a period of at least 12 months from
the publication date of the accounts, and that therefore
the going concern basis for the preparation of the
Group’s results remains appropriate.
The Committee reviewed a management assessment
of the Group’s long-term viability. The long-term
viability review was based on the Group’s three-year
strategic plan, including forecast levels of investment,
realisations, overheads, financing cash flows and
shareholder returns. Management conducted scenario
analysis under both intermediate and severe downside
scenarios, and back-testing to assess the Group’s ability
to continue operating within the cash trap and covenant
limits of its debt facility. The Committee agreed to
recommend the Viability Statement, which is set out on
page 49, to the Board for approval.
The Valuation Committee
Members
Chief Financial and
Operating Officer
David Baynes
(Chair)
Chief Executive Officer
Greg Smith
Non-executive Director
and ARC Chair
Dr Caroline Brown
Non-executive Director
Heejae Chae
Attendees
Managing Partner of
Balance Sheet Investments
Mark Reilly
Other investment team members by invitation
Finance Director
Chris Glasson
Valuation Committee recommends reporting
date valuations to the
Audit and Risk Committee
Valuation Committee review and challenge
of the recommendations, request further
reviews or third-party support be utilised
Valuation assessments and
recommendations shared with
Committee, including relevant
supporting evidence
Group finance team prepare valuations with
input from:
Investment
Directors
External
valuation
specialists
Market data
sources
Jatin Patel, External Audit Partner attends the Committee
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Risk and internal controls
The key elements of the Group’s internal control
framework and procedures are set out on pages 38 and
39. The principal risks the Group faces are set out on
pages 40 to 48. During the year, the Committee devoted
part of each meeting to items concerning risk and risk
management.
An important element of the Group’s risk management
framework is the Risk Council whose purpose is to co-
ordinate governance, risk and controls internally prior to
reporting to the Committee and Board. Its permanent
members are the CFOO, Company Secretary, Finance
Director and Senior Compliance and Risk Manager, with
other executives and management from across the
business attending during the year as necessary. The
Risk Council met four times during the year and reported
to the Committee at each meeting.
The Committee reviewed management’s progress on
developing an implementation plan for the Provision 29
requirements included in the revised 2024 UK Corporate
Governance Code which will apply to financial years
beginning on or after 1 January 2026. This included
workshop sessions facilitated by PwC to agree a controls
governance framework and identification of a sub-
set of the Group’s risks which would be considered to
be material.
During 2024, the Committee reviewed management’s
updated assessment of strategic and principal risks
and risk appetite statements, prepared using input
from the Risk Council, and took part in a risk workshop
to assess the Group’s principal risks, risk appetite and
desired control investment. The Committee reviewed
output from the Risk Council summarising key themes
arising from the operational risk reviews and the
Group’s updated strategic and principal risk profiles. The
Committee also carried out a horizon scanning exercise
to identify potential emerging risks.
The Committee reviewed the output of an internal audit
review which tested the key controls in place to mitigate
the Group’s principal risks. This review included all key
financial, operational and compliance controls. PwC,
on behalf of management, assessed the control design
and operating effectiveness of these key controls over
principal risks, using the COSO framework principles.
No significant failings or weaknesses were identified.
However, a number of minor control deficiencies were
identified and recommendations for improvement
were agreed with management. Implementation of the
remedial actions is monitored by the Risk Council and
reported to the Committee.
The Committee’s review of risk management systems
in place includes an assessment of performance
of the Risk Council against agreed objectives and
monitoring of key risk indicators against pre-agreed
thresholds determined in response to the Board’s
annual assessment of the Group’s principal risks and risk
appetite.
Cyber security
The Board continues to consider cyber threats as a
principal risk to the business with an overall “high”
risk rating. During the year the Committee has been
provided with regular updates on the cyber and
information security in place across the Group, including
the status of remediation actions agreed in respect of
an internal audit review in 2023. The committee were
also provided with summary output from an externally
facilitated scenario-based training session which
simulated a serious cyber incident with the Group’s
“Silver Response Team” chaired by the CFOO. The Group
continued to deploy regular interactive cyber threat
refresher sessions and a compulsory annual training
session whose completion was monitored by the Risk
Council.
Compliance
Ensuring compliance for regulated businesses remains
a priority from the perspective of the Committee
and regular updates are provided to the Committee
by the Group’s subsidiary compliance officers and
international equivalents. Ongoing internal reviews are
conducted through the use of a compliance monitoring
programme and specialist advisory firms including local
advisors are employed to advise on areas of regulation
relevant to the Group’s operations where required.
The Committee reviewed the summary findings of
procedures in place which review the nature of gifts
and hospitality received and provided in the year to
identify any instances of corruption and bribery, and
management carried out an enhanced fraud risk
assessment and determined that there was a low risk of
fraud occurring undetected.
Internal audit
The Group re-evaluated its fully outsourced internal
audit model in the year and concluded that going
forward the Group would continue to access PwC’s
expertise for specific projects and reviews on an
as-needed basis only and therefore would no longer
maintain an outsourced internal audit function. The
decision followed a review of the Group’s needs and risk
profile and a strategic decision was made to enhance
efficiency and focus on critical areas of internal control
by engaging the PwC internal audit team for specific
projects ensuring targeted and relevant assurance is
obtained. The Committee considered the reduced level
of independent assurance this change would cause and
were satisfied with plans for the external internal audit
resource to be used for directed assurance around
specific, material internal controls. The Committee will
continue to monitor and assess the effectiveness of
internal controls through targeted reviews and audits
ensuring that key risks are adequately managed.
In 2024, the internal audit resource provided by PwC
was focused on delivering a control review in which
Internal Audit carried out testing of the design and
operating effectiveness of the Group’s key controls over
principal risks and advising on the forthcoming Provision
29 requirements of the new UK Corporate Governance
Code. The Committee values the work of the internal
auditor in providing independent and objective
assurance in meeting its corporate governance and
regulatory responsibilities.
The Committee considered the effectiveness of
the internal audit resource utilised by reviewing the
outcomes of their reports and recommendations,
management’s implementation of recommendations
and closure of the audit, access to experts, the annual
strategy document and a management assessment of
quality in the year. The Committee concluded that they
were satisfied with the expertise provided by PwC in the
year and welcome the move to a more focused and
strategic use of internal audit resources going forward.
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External audit
Audit tender outcome
As detailed in the 2023 Annual Report, following a
rigorous formal audit tender process through 2023,
the Board recommended to shareholders the re-
appointment of KPMG LLP as the Group’s external auditor
at the 2024 AGM, and this recommendation was duly
approved. The transition to Jatin Patel, the incoming
audit partner at KPMG has now taken place.
Audit planning
The Committee discussed the auditor’s plan for the
2024 year end audit at its July and December meetings.
This included a summary of the proposed audit scope
and the auditor’s assessment of the most significant
financial reporting risks facing the Group, together
with the auditor’s proposed audit approach. The main
areas of audit focus for the year remained unchanged
and included the valuation of the Group’s unquoted
investments and the recoverability of investments on
the parent company balance sheet.
As in previous years a number of the Group’s smaller
subsidiaries will be audited by Moore Northern Home
Counties Limited.
Appointment and independence
The Committee advises the Board on the appointment
of the external auditor and on its remuneration both
for audit and non-audit work and discusses the nature,
scope and results of the audit with the external auditor.
The Committee keeps under review the independence
and objectivity of the external auditor. Controls in place
include monitoring the independence and effectiveness
of the audit, implementing a policy on the engagement
of the external auditor to supply non-audit services,
and a review of the scope of the audit and fee and
performance of the external auditor.
Mandatory audit firm rotation is required after 20 years,
and a re-tender must be conducted at least every
ten years. The Code requires disclosure of the length
of tenure of the current audit firm and when a tender
was last conducted, as well as advance notice of any
re-tendering plans. KPMG LLP have acted as the auditor
to the Group since 2014, with a tender taking place in
2023 which resulted in the reappointment of KPMG LLP.
The lead audit partner rotates every five years to assure
independence. Jatin Patel became lead audit partner
responsible for the Group’s statutory audit for the 2024
year end onwards following the outcome of the tender
exercise noted above.
Non-audit work
The Group has a policy for setting out what non-audit
services can be procured by the Group from the external
auditor. The policy aims to support and safeguard the
objectivity and independence of the external auditor
and incorporates the requirements of the FRC’s revised
Ethical Standards for auditors.
A copy of the Group’s non-audit services policy is
available at
www.ipgroupplc.com/investors/corporate-
governance
.
An analysis of audit and non-audit fees paid to KPMG is
provided in note 6 to the financial statements. In 2024,
the only non-audit service provided by KPMG in the year
was the review of the Group’s half-yearly results.
The Committee typically engages other firms to perform
finance-related consulting engagements to ensure that
the independence of the auditor is not compromised
and during 2024 engaged the services of PwC (internal
audit, risk and governance), Deloitte (valuations) and
Kroll (valuations).
Auditor independence
KPMG has reviewed its own independence in line with
the FRC’s Ethical Standards for auditors and its own
ethical guideline standards. KPMG has confirmed to the
Committee that following its review it is satisfied that
it has acted in accordance with relevant regulatory
and professional requirements. KPMG has provided
the Committee with details of the safeguards in place
which include a culture of regular training, internal
accountability and independent reviews performed by an
engagement quality control reviewer, who is a partner not
otherwise involved in the Group’s audit, and an annual
attestation from all KPMG partners and staff to confirm
their compliance with internal ethics and independence
policies and procedures, including in particular that the
audit team have no prohibited shareholdings which
include IP Group plc and portfolio company shares.
Having considered the aforementioned safeguards, the
level of non-audit services provided in the year and a
formal statement of independence, the Audit and Risk
Committee is satisfied that the independence of the
auditor has been maintained.
Auditor effectiveness
In order to assess the effectiveness of the external audit
process, the Committee requested that management
provide feedback on the outcome of the 2023 audit
process, considering areas including planning
effectiveness, audit quality and audit efficiency. The
Committee concurred with management’s view that
there had been appropriate focus and challenge of
the primary areas of audit risk and the Committee
concluded that the substantive and detailed approach
taken by the auditor was entirely appropriate
and effective.
As in the previous year, the majority of the Group’s
assets by value were reviewed as part of the audit,
and once again there was particular emphasis on
the valuation of unquoted investments. KPMG utilised
specialist corporate finance staff to support its audit
work on the valuation of Istesso Limited and, overall,
the auditor’s risk-based approach drew on both their
knowledge of the business and the wider economic and
business environment.
Dr Caroline Brown
Chair of the Audit and Risk Committee
24 March 2024
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Report of the Directors
The Directors present their report together with the
audited financial statements for IP Group plc and its
subsidiaries for the year ended 31 December 2024.
Corporate Governance Statement
Information that fulfils the requirements of the Corporate
Governance Statement can be found on pages 58
to 71 and is incorporated into this Directors’ Report
by reference.
Dividend
No dividend was paid, or is to be paid, in relation to the
year ended 31 December 2024.
Directors
The names of Directors who held office during the year
ended 31 December 2024 were as follows:
Executive Directors
•
Greg Smith
•
David Baynes
Non-executive Directors
•
Sir Douglas Flint (Chair)
•
Dr Caroline Brown
•
Heejae Chae
•
Aedhmar Hynes
•
Anita Kidgell
•
Dr Elaine Sullivan (until 12 June 2024) Details of the
interests of the Directors in the share capital of the
Company are set out in the Directors’ Remuneration
Report on page 96.
The appointment and replacement of Directors is
governed by the Company’s Articles of Association
(the “Articles”), the Corporate Governance Code, the
Companies Act 2006 (the “CA 2006”) and related
legislation. Subject to the Articles, the CA 2006 and
related legislation, any directions given by special
resolution and any relevant statutes and regulations, the
business of the Company will be managed by the Board
who may exercise all the powers of the Company.
Principal risks and uncertainties
and financial instruments
The Group is exposed to a number of risks through its
operations, where risk mitigation is most notably focused
on ensuring continued capabilities to support portfolio
companies. The Group’s risk management objectives
and policies are described on pages 38 and 39 and in
the Corporate Governance Report on page 70. Further
information on the Group’s financial risk management
objectives and policies, including those in relation to
credit risk, liquidity risk and market risk, is provided
in note 3 to the consolidated financial statements,
along with further information on the Group’s use of
financial instruments.
Significant events affecting
the Group
Details of the important events affecting the Group and
future development of the business are described on
pages 05 to 15 of the Strategic Report.
Branches of the Group outside
of the UK
The Group does not have any branches outside of
the UK.
Research and development
Details of the Group’s activities in the field of research
and development are set out on pages 10 to 20 of the
Strategic Report.
Significant agreements
The Group has entered into various agreements to form
partnerships or collaborations with nine universities in
Australasia, which contain certain change-of-control
provisions. In addition, in 2022 the Group entered into a
Note Purchase Agreement with Phoenix Group in relation
to private placement debt. This agreement contains
certain provisions that would apply in the event of a
change of control. There are no agreements between
the Company, its Directors or employees that provide
for compensation for loss of office or employment that
occurs because of a takeover bid.
Share capital and related matters
Details of the structure of the Company’s share capital
and the rights attaching to the Company’s shares
are set out in note 1 to the consolidated financial
statements. There are no specific restrictions on the
size of a holding or on the transfer of shares, which
are both governed by the general provisions of the
Company’s Articles of Association (the “Articles”) and
prevailing legislation.
At the last Annual General Meeting (“AGM”) of the
Company held on 12 June 2024 (the “2024 AGM”),
authority was given to the Directors pursuant to the
relevant provisions of the Companies Act 2006 (the “CA
2006”) to allot shares and grant rights over securities in
the Company within the parameters permitted by the
Investment Association’s Share Capital Management
Guidelines. The Directors propose to renew this authority
at the Company’s next AGM to be held on 12 June 2025
(“2025 AGM”).
Authority was also granted at the 2024 AGM to disapply
pre-emption rights in respect of allotment of ordinary
shares on both a general basis and in respect of
acquisitions and specified capital investments, within
the parameters permitted by the Pre-emption Group’s
Statement of Principles published in November 2022
(the “Statement of Principles”). The Directors will seek to
renew these authorities for a similar period at the 2025
AGM in accordance with the Statement of Principles.
At the 2024 AGM, a special resolution was passed
which granted the Directors authority to make market
purchases of the Company’s shares up to a maximum
of approximately 10% of the Company’s issued share
capital as at 19 April 2024. This authority has been
utilised during the year in connection with the Group’s
share buyback programme, which commenced in
December 2023, and which was extended in October
2024, in line with the Group’s commitment to allocate a
proportion of cash realisations to shareholder returns.
Under such programme, during the financial year
ended 31 December 2024, the Group bought back a
total of 65,889,706 ordinary shares of 2p each, the
total consideration for which was £29.6m. The shares
repurchased in 2024 comprised 6.8% of the Group’s
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issued share capital as at 31 December 2024. The share
buyback programme was further extended in January
2025 and remains ongoing.
The Directors will seek to renew the authority to
purchase the Company’s own shares within similar
parameters and for a similar period at the 2025 AGM.
Articles of Association
The Company’s Articles may be amended by a special
resolution of the shareholders and were last amended
at the 2021 AGM.
Substantial shareholders
As at the date stated below the following shareholders
held interests of 3% or more in the Company’s ordinary
share capital. Other than as shown, so far as the
Company (and its Directors) are aware, no other person
held or was beneficially interested in a disclosable
interest in the Company.
Shareholder
% as at
31 December
2024
RPMI Railpen
16.65
Lombard Odier Investment Managers
9.25
BlackRock
5.79
Vanguard Group
5.49
Schroder Investment Management
4.06
Aberdeen
3.96
Legal & General Investment Management
3.30
Imperial College of Science, Technology
& Medicine
3.16
Corporate and social responsibility
Details of the Group’s policies, activities and aims with
regard to its corporate and social responsibilities,
including details of its greenhouse gas emissions, are
included in the Meaningful impact section on pages
28 to 31, in the Corporate Governance Statement on
page 65 and in the s172(1) Statement on pages 50 to 58.
Directors’ indemnity and
liability insurance
During the year, the Company has maintained liability
insurance in respect of its Directors. As permitted by
the Articles and to the extent permitted by law, the
Company has also granted the Directors a qualifying
third-party indemnity provision against any liabilities the
Directors may incur in the execution of their duties as
directors of the Company or its subsidiaries, which was
in force throughout the financial year and remains in
force at the date of approval of this Annual Report.
Regulation
Top Technology Ventures Limited and Parkwalk Advisors
Ltd, wholly-owned subsidiaries of the Company, are
authorised and regulated by the Financial Conduct
Authority under the Financial Services and Markets Act
2000. In Australia, the Group’s wholly-owned subsidiary,
IP2IPO Australia Management Pty Ltd is authorised and
regulated by the Australian Securities and Investment
Commission. IP Group Greater China Services Limited,
a wholly-owned Hong Kong-incorporated subsidiary
of the Company, was, during the year, authorised and
regulated by the Hong Kong Securities and Futures
Commission. This company gave notice to the Hong
Kong Securities and Futures Commission to cease its
regulated activities with effect from 31 December 2024.
Post-balance sheet events
Material events occurring since the balance sheet
date are disclosed in note 28 to the Group’s financial
statements.
Political donations and expenditure
It is the Board’s policy not to make political donations,
incur political expenditure or otherwise make cash
contributions to political parties. The Group did not make
any political donations during 2024. However, the CA
2006 is very broadly drafted in this area and the Board
has raised a concern that it may include activities such
as funding conferences or supporting certain bodies
involved in policy review and law reform. Accordingly, at
the 2024 AGM, the shareholders supported a resolution
on a precautionary basis to authorise the Group to incur
political expenditure (as defined in Section 365 of the CA
2006) not exceeding £50,000 in total at any time from
the date of the 2024 AGM up to the conclusion of the
2025 AGM. The Board intends to seek renewed authority
for the Group to incur political expenditure of not more
than £50,000 in total at the Company’s 2025 AGM.
Disclosure of information to auditor
Each Director at the date of approval of this Annual
Report confirms that:
•
so far as the Director is aware, there is no relevant
audit information of which the Company’s auditor is
unaware; and
•
the Director has taken all steps that they ought
to have taken as a Director in order to make
themselves aware of any relevant audit information
and to establish that the Company’s auditor is
aware of that information
This confirmation is given and should be interpreted
in accordance with the provisions of Section 418 of the
CA 2006.
Going concern
The Directors confirm that they have a reasonable
expectation that the Group will have adequate
resources to continue in operational existence for
at least the next twelve months from the date of the
accounts and, accordingly, they continue to adopt
the going concern basis in preparing the financial
statements. A viability statement, as required by the
Code, can be found in the Strategic Report on page 49.
This Directors’ Report was approved by the Board on
24 March 2025 and signed on its behalf by:
Angela Leach
Company Secretary
24 March 2025
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The Directors are responsible for preparing the Annual
Report, Strategic Report, Directors’ Report, the Directors’
Remuneration Report, the Corporate Governance
Statement and the financial statements in accordance
with applicable law and regulations.
Company law requires the Directors to prepare Group
and parent Company financial statements for each
financial year. Under that law they are required to
prepare the Group financial statements in accordance
with UK-adopted international accounting standards
and applicable law and have elected to prepare the
parent Company financial statements in accordance
with UK accounting standards and applicable law (UK
Generally Accepted Accounting Practice), including FRS
101 Reduced Disclosure Framework.
Under company law, the Directors must not approve
the financial statements unless they are satisfied that
they give a true and fair view of the state of affairs of the
Group and parent Company and of the Group’s profit or
loss for that period. In preparing each of the Group and
parent Company financial statements, the Directors are
required to:
•
select suitable accounting policies and then apply
them consistently
•
make judgements and estimates that are
reasonable, relevant and reliable and, in respect
of the parent Company financial statements only,
prudent
•
for the Group financial statements, state whether
they have been prepared in accordance with UK-
adopted international accounting standards
•
for the parent Company financial statements, state
whether applicable UK accounting standards have
been followed, subject to any material departures
disclosed and explained in the parent Company
financial statements
•
assess the Group and parent Company’s ability
to continue as a going concern, disclosing, as
applicable, matters related to going concern
•
use the going concern basis of accounting unless
they either intend to liquidate the Group or the
parent Company or to cease operations, or have no
realistic alternative but to do so.
The Directors are responsible for keeping adequate
accounting records that are sufficient to show and
explain the parent Company’s transactions and disclose
with reasonable accuracy at any time the financial
position of the parent Company and enable them to
ensure that its financial statements comply with the
Companies Act 2006. They are responsible for such
internal control as they determine is necessary to
enable the preparation of financial statements that are
free from material misstatement, whether due to fraud
or error, and have general responsibility for taking such
steps as are reasonably open to them to safeguard the
assets of the Group and to prevent and detect fraud
and other irregularities.
The Directors are responsible for the maintenance and
integrity of the corporate and financial information
included on the Company’s website. Legislation in the
UK governing the preparation and dissemination of
financial statements may differ from legislation in other
jurisdictions.
In accordance with Disclosure Guidance and
Transparency Rule (“DTR”) 4.1.16R, the financial
statements will form part of the annual financial report
prepared under DTR 4.1.17R and 4.1.18R. The auditor’s
report on these financial statements provides no
assurance over whether the annual financial report has
been prepared in accordance with those requirements.
Responsibility statement of the
Directors in respect of the annual
financial report
The Directors confirm that to the best of their knowledge:
•
the financial statements, prepared in accordance
with the applicable set of accounting standards, give
a true and fair view of the assets, liabilities, financial
position and profit or loss of the Company and the
undertakings included in the consolidation taken as
a whole; and
•
the Strategic Report includes a fair review of the
development and performance of the business and
the position of the Company and the undertakings
included in the consolidation taken as a whole,
together with a description of the principal risks and
uncertainties that they face.
The Directors consider the Annual Report and Accounts,
taken as a whole, is fair, balanced and understandable
and provides the information necessary for shareholders
to assess the Group’s position and performance,
business model and strategy.
On behalf of the Board
Sir Douglas Flint
Chair
24 March 2025
108
IP GROUP PLC ANNUAL REPORT 2024
STATEMENT OF DIRECTORS’ RESPONSIBILITIES
.
IN RESPECT OF THE ANNUAL REPORT AND THE FINANCIAL STATEMENTS
OUR FINANCIALS
BUSINESS OVERVIEW
OUR GOVERNANCE
STRATEGIC REPORT
1.
Our opinion is unmodified
We have audited the financial statements of IP Group plc (“the Company”) for
the year ended 31 December 2024 which comprise the Consolidated Statement
of Comprehensive Income, the Consolidated Statement of Financial Position, the
Consolidated Statement of Cash Flows, the Consolidated Statement of Changes
in Equity, the Company Balance Sheet, the Company Statement of Changes in
Equity, and the related notes, including the accounting policies in note 1 to both the
consolidated and the Company financial statements.
In our opinion:
•
the financial statements give a true and fair view of the state of the Group’s and of
the parent Company’s affairs as at 31 December 2024 and of the Group’s loss for
the year then ended;
•
the Group financial statements have been properly prepared in accordance with
UK-adopted international accounting standards;
•
the parent Company financial statements have been properly prepared in
accordance with UK accounting standards, including FRS 101 Reduced Disclosure
Framework; and
•
the financial statements have been prepared in accordance with the requirements
of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK)
(“ISAs (UK)”) and applicable law. Our responsibilities are described below. We believe
that the audit evidence we have obtained is a sufficient and appropriate basis for our
opinion. Our audit opinion is consistent with our report to the Audit and Risk Committee.
We were first appointed as auditor by the shareholders on 13 May 2014. The period of
total uninterrupted engagement is for the 11 financial years ended 31 December 2024.
We have fulfilled our ethical responsibilities under, and we remain independent of the
Group in accordance with, UK ethical requirements including the FRC Ethical Standard
as applied to listed public interest entities. No non-audit services prohibited by that
standard were provided.
Overview
Materiality: group financial
statements as a whole
£12.3m (2023: £12.4m)
1.1% (2023: 0.9%) of Total Assets
Key audit matters
vs 2023
Recurring risks
Valuation of certain equity and
debt investments (Group)
Recoverability of investment in
subsidiaries (parent Company)
2.
Key audit matters: our assessment of risks of
material misstatement
Key audit matters are those matters that, in our professional judgement, were of most
significance in the audit of the financial statements and include the most significant
assessed risks of material misstatement (whether or not due to fraud) identified by
us, including those which had the greatest effect on: the overall audit strategy; the
allocation of resources in the audit; and directing the efforts of the engagement team.
We summarise below the key audit matters, in decreasing order of audit significance,
in arriving at our audit opinion above, together with our key audit procedures to
address those matters and our findings from those procedures in order that the
Company’s members, as a body, may better understand the process by which we
arrived at our audit opinion. These matters were addressed, and our findings are
based on procedures undertaken, in the context of, and solely for the purpose of, our
audit of the financial statements as a whole, and in forming our opinion thereon, and
consequently are incidental to that opinion, and we do not provide a separate opinion
on these matters.
IP GROUP PLC ANNUAL REPORT 2024
109
BUSINESS OVERVIEW
STRATEGIC REPORT
OUR FINANCIALS
OUR GOVERNANCE
INDEPENDENT AUDITOR’S REPORT
.
TO THE MEMBERS OF IP GROUP PLC
BUSINESS OVERVIEW
STRATEGIC REPORT
OUR FINANCIALS
OUR GOVERNANCE
The risk
Our response
Valuation of certain
unquoted investments
(£632.3 million; 2023:
£961.1 million)
Refer to page 101
(Audit
and Risk Committee
Report)
, page 137
(accounting policy)
and page 138
(financial
disclosures)
.
Subjective Valuation
Certain of the unquoted investments within the total
unquoted investments balance of £632.3m (2023:
£891.4m) are subject to significant inherent estimation
uncertainty in determining their valuation.
The Group’s investments are typically early stage
investments, which are neither profitable nor revenue
generative. The fair value of these investments is
determined with reference to the prices of recent
orderly funding rounds, adjusted for performance
against business plans, product development progress,
or expected cash- out dates. Other investments are
valued using revenue multiples, or in the case of Istesso
(the Group’s largest individual unquoted investment),
discounted cash flow analysis.
As these investments are unquoted and illiquid the fair
value is determined through the application of valuation
techniques. The application of valuation techniques
involves the exercise of significant judgement by the
Group in relation to the assumptions and inputs into the
respective models (e.g., adjustment to funding rounds).
The factors considered in assessing which unquoted
investments were subject to significant risk included
investments requiring short term funding, investments
which are individually significant in value, or those with
positive or negative operational or financial developments.
The effect of these matters is that, as part of our
risk assessment, we determined that the subjective
estimates in fair value measurement of certain
unquoted investments, as identified above, have a high
degree of estimation uncertainty, with a potential range
of reasonable outcomes greater than our materiality for
the financial statements as a whole, and possibly many
times that amount. We additionally identified a fraud risk
associated to the valuation of certain unquoted equity
and debt investments as set out in section 6, “Fraud and
breaches of laws and regulations – ability to detect”.
We continue to perform procedures over limited
and limited liability partnership interests, previously
considered part of this Key Audit Matter in 2023.
Following a reassessment of the risks associated with
the balance of £58.1m (2023: £69.7m), we have not
assessed this as part of the Key Audit Matter in the
current year.
We performed the tests below, rather than seeking to rely on any of the Group’s
controls, because the nature of the balance is such that we would expect to obtain
audit evidence through fully substantive procedures.
Our procedures included:
•
Investment process:
We performed walkthrough testing of the valuation
process undertaken and attended valuation committee meetings to obtain an
understanding of the process and controls in operation.
•
Portfolio understanding:
We obtained an understanding of the investments
included within the portfolio through inquiry (including of the valuation
committee) and through our own independent research.
•
Methodology choice:
In the context of observed industry best practice and
the provisions of the International Private Equity and Venture Capital Valuation
Guidelines, we assessed the appropriateness of the valuation method selected.
•
Our valuation experience:
We assessed key judgements affecting investee
company valuations and compared key underlying financial data inputs to external
sources, investee company audited accounts where available and management
information as applicable. For certain of the life sciences investments (including,
but not limited to, Istesso) we used our own medical specialist to assist us in
understanding the investee businesses and challenging key judgements.
•
For investments held at the price of recent investment, we obtained an
understanding of the circumstances surrounding the transaction and assessed
whether the transaction price represented fair value at the transaction date. We
challenged whether this remains an appropriate basis on which to value the
investment as at the year end, including by assessing the investee company’s
performance against relevant milestones since the transaction. These factors
drive the discount/premium applied to the transaction value.
•
For investments valued based on discounted cash flows or market multiples,
we assessed relevant assumptions including (where applicable) the discount
rate applied, maintainable revenue or earnings assumption, the suitability of the
comparable companies used and discount/premium applied.
•
Our corporate finance expertise:
In respect of the valuation of Istesso, we
used our own valuations specialists to assist us in assessing the principles and
appropriateness of the valuation methodology and independently providing a
reasonable range for the discount rate.
•
Assessing transparency:
We considered the appropriateness, in accordance
with relevant accounting standards, of the disclosures in respect of the valuation
of certain equity and debt investments and the effect of changing one of more
inputs to reasonable possible alternative valuation assumptions.
Our findings:
We found the Group’s valuation of certain equity and debt investments to be
balanced (2023: mildly cautious) and the related disclosures to be proportionate
(2023: proportionate).
110
IP GROUP PLC ANNUAL REPORT 2024
INDEPENDENT AUDITOR’S REPORT
.
TO THE MEMBERS OF IP GROUP PLC
BUSINESS OVERVIEW
STRATEGIC REPORT
OUR FINANCIALS
OUR GOVERNANCE
The risk
Our response
Recoverability of the
parent Company’s
investment in
subsidiaries
(£331.1 million; 2023:
£330.4 million)
Refer to page 162
(accounting policy)
,
and page 163
(financial
disclosures).
Low risk, high value
The carrying amount of the parent Company’s
investments in subsidiaries represents 35% (2023: 34%)
of the parent Company’s total assets.
Their recoverability is not at a high risk of significant
misstatement or subject to significant judgement.
However, due to their materiality in the context of
the parent Company financial statements, this is
considered to be the area that had the greatest effect
on our overall parent Company audit.
We performed the tests below, rather than seeking to rely on any of the parent
Company’s controls, because the nature of the balance is such that we would
expect to obtain audit evidence primarily through the detailed procedures
described.
Our procedures included:
•
Tests of detail:
We compared the carrying amount of 100% of investments with
the relevant subsidiaries’ draft balance sheet to identify whether their net assets,
being an approximation of the minimum recoverable amount, were in excess of
their carrying amount.
•
Assessing subsidiary audits:
We considered the results of our work on all of
those subsidiaries’ net assets.
Our findings:
We found the balance of the parent Company’s investments in subsidiaries and
the related impairment charge to be balanced (2023: balanced) and the related
disclosures to be proportionate (2023 findings: proportionate).
We continue to perform procedures over the application of IFRS 10 in respect of Istesso Limited and IPG Cayman LP. However, given there have been no significant changes in the
financing or organisational arrangements in the current financial year, we have not assessed this as one of the most significant risks in our current year audit and, therefore, it is
not separately identified in our report as a key audit matter this year.
IP GROUP PLC ANNUAL REPORT 2024
111
BUSINESS OVERVIEW
STRATEGIC REPORT
OUR FINANCIALS
OUR GOVERNANCE
INDEPENDENT AUDITOR’S REPORT
.
TO THE MEMBERS OF IP GROUP PLC
BUSINESS OVERVIEW
STRATEGIC REPORT
OUR FINANCIALS
OUR GOVERNANCE
3.
Our application of materiality and an overview
of the scope of our audit
Our application of materiality
Materiality for the Group financial statements as a whole was set at £12.3m (2023:
£12.4m), determined with reference to a benchmark of Group total assets, of which it
represents 1.1% (2023: 0.9%).
Materiality for the parent Company financial statements as a whole was set at £10.3m
(2023: £10.3m), determined with reference to a benchmark of parent Company total
assets, of which it represents 1.1% (2023: 1.1%).
In line with our audit methodology, our procedures on individual account balances
and disclosures were performed to a lower threshold, performance materiality, so as
to reduce to an acceptable level the risk that individually immaterial misstatements
in individual account balances add up to a material amount across the financial
statements as a whole.
Performance materiality was set at 75% (2023: 75%) of materiality for the financial
statements as a whole, which equates to £9.2m (2023: £9.3m) for the Group and
£7.7m (2023: £7.7m) for the parent Company. We applied this percentage in our
determination of performance materiality because we did not identify any factors
indicating an elevated level of risk.
We agreed to report to the Audit Committee any corrected or uncorrected identified
misstatements exceeding £0.61m (2023: £0.62m), in addition to other identified
misstatements that warranted reporting on qualitative grounds.
Overview of the scope of our audit
This year, we applied the revised group auditing standard in our audit of the
consolidated financial statements. The revised standard changes how an auditor
approaches the identification of components, and how the audit procedures are
planned and executed across components. In particular, the definition of a component
has changed, shifting the focus from how the entity prepares financial information to
how we, as the group auditor, plan to perform audit procedures to address group risks
of material misstatement (“RMMs”).
We identified the Group as a whole to be a single component, having considered our
evaluation of the Group’s legal structure, the investment valuation approach across
the Group, the existence of common information systems, and our ability to perform
audit procedures centrally.
Accordingly, we performed audit procedures on the single component. The audit was
performed using the materiality and performance materiality levels set out right.
Impact of controls on our Group audit
The Group relies on a number of IT systems and applications to record financial
transactions. We identified the main finance IT system and the systems used to
monitor and maintain investment data as relevant to our Group audit. Our IT auditors
assisted us in obtaining an understanding of the design of general IT controls and
automated controls addressing significant risk areas and process risk points within the
journals process.
We identified certain control deficiencies in relation to journal entries. In response, we
conducted incremental risk assessment procedures to determine the implications
of the deficiencies identified on each financial statement caption. Ultimately, we
assessed the impact on our approach was limited.
Consistent with our approach noted within the key audit matters, we did not plan to
rely on any of the Group’s automated or manual controls in relation to any areas of
our audit (including in relation to the systems which monitor and maintain investment
data). This is because the nature of the majority of the Group’s balances, including the
key audit matter, are such that we would expect to obtain audit evidence primarily
from substantive audit procedures as that approach was either considered more
appropriate to gain sufficient evidence over the relevant balance or more efficient.
Total assets
£1,151.1m
(2023: £1,411.6m)
Group materiality
£12.3m
(2023: £12.4m)
Total assets
Group materiality
£12.3m
Whole financial statements
materiality (2023: £12.4m)
£9.2m
Whole financial statements
performance materiality
(2023: £9.3m)
£0.6m
Misstatements reported to the
Audit and Risk Committee
(2023: £0.6m)
112
IP GROUP PLC ANNUAL REPORT 2024
INDEPENDENT AUDITOR’S REPORT
.
TO THE MEMBERS OF IP GROUP PLC
BUSINESS OVERVIEW
STRATEGIC REPORT
OUR FINANCIALS
OUR GOVERNANCE
4.
The impact of climate change on our audit
In planning our audit we have considered the potential impacts of climate change on
the Group’s business and its financial statements.
Climate change impacts the Group principally through the valuation of investments
and through potential reputational risk associated with the Group’s strategy. The
Group’s exposure to climate change is primarily through the investee companies, as
the key valuation assumptions and estimates could be impacted by climate risks,
for example where a new low carbon technology is more likely to attract greater
investment; this is most apparent in the Cleantech investments.
As part of our audit we have made enquiries of Directors to understand the extent of
the potential impact of climate change risk on the Group’s financial statements and
the Group’s preparedness. We have performed a risk assessment of how the impact of
climate change may affect the financial statements and our audit, in particular over
the valuation of unquoted investments and the related key audit matter above.
Given the nature of the current investment portfolio, the valuation methods and
investing strategy of the Group, we consider that climate risks do not have a significant
effect on our key audit matters.
We have read the disclosure of climate related information in the front half of the
annual report and considered consistency with the financial statements and our
audit knowledge.
5.
Going concern
The Directors have prepared the financial statements on the going concern basis as
they do not intend to liquidate the Group or the parent Company or to cease their
operations, and as they have concluded that the Group’s and the parent Company’s
financial position means that this is realistic. They have also concluded that there
are no material uncertainties that could have cast significant doubt over their ability
to continue as a going concern for at least a year from the date of approval of the
financial statements (“the going concern period”).
We used our knowledge of the Group, its industry, and the general economic
environment to identify the inherent risks to its business model and analysed how
those risks might affect the Group’s and parent Company’s financial resources
or ability to continue operations over the going concern period. The risks that we
considered most likely to adversely affect the Group’s and parent Company’s available
financial resources and metrics relevant to debt covenants over this period were:
•
Significant additional funding being made into current and future investee
companies; and
•
Reduction in realisations over the period including from listed investments.
We considered whether these risks could plausibly affect the liquidity or covenant
compliance in the going concern period by comparing severe, but plausible downside
scenarios that could arise from these risks individually and collectively against
the level of available financial resources and covenants indicated by the Group’s
financial forecasts.
We considered whether the going concern disclosure in notes 1 to both the Group and
parent Company financial statements gives a full and accurate description of the
Directors’ assessment of going concern.
Our conclusions based on this work:
•
we consider that the Directors’ use of the going concern basis of accounting in the
preparation of the financial statements is appropriate;
•
we have not identified, and concur with the Directors’ assessment that there is
not, a material uncertainty related to events or conditions that, individually or
collectively, may cast significant doubt on the Group’s or parent Company’s ability
to continue as a going concern for the going concern period;
•
we have nothing material to add or draw attention to in relation to the Directors’
statement in notes 1 to both the Group and parent Company financial statements
on the use of the going concern basis of accounting with no material uncertainties
that may cast significant doubt over the Group and parent Company’s use of that
basis for the going concern period, and we found the going concern disclosure
in notes 1 to both the Group and the parent Company financial statements to be
acceptable; and
•
the related statement under the UK Listing Rules set out on page 107 is materially
consistent with the financial statements and our audit knowledge.
However, as we cannot predict all future events or conditions and as subsequent
events may result in outcomes that are inconsistent with judgements that were
reasonable at the time they were made, the above conclusions are not a guarantee
that the Group or the parent Company will continue in operation.
IP GROUP PLC ANNUAL REPORT 2024
113
BUSINESS OVERVIEW
STRATEGIC REPORT
OUR FINANCIALS
OUR GOVERNANCE
INDEPENDENT AUDITOR’S REPORT
.
TO THE MEMBERS OF IP GROUP PLC
BUSINESS OVERVIEW
STRATEGIC REPORT
OUR FINANCIALS
OUR GOVERNANCE
6.
Fraud and breaches of laws and regulations
– ability to detect
Identifying and responding to risks of material misstatement
due to fraud
To identify risks of material misstatement due to fraud (“fraud risks”) we assessed
events or conditions that could indicate an incentive or pressure to commit fraud or
provide an opportunity to commit fraud.
Our risk assessment procedures included:
•
Enquiring of Directors and the Audit and Risk Committee as to the Group’s high-
level policies and procedures to prevent and detect fraud, including the internal
audit function, and the Group’s channel for “whistleblowing” as well as whether they
have knowledge of any actual, suspected or alleged fraud;
•
Reading minutes of meetings of those charged with governance;
•
Consideration of the Group’s remuneration policies, such as the Annual Incentive
Scheme (“AIS”), and the associated performance targets; and
•
Our forensic professionals assisted us in identifying key fraud risks. This included
holding a discussion with the engagement partner and engagement manager
and assisting with designing relevant audit procedures to respond to the identified
fraud risks.
We communicated identified fraud risks throughout the audit team and remained
alert to any indications of fraud throughout the audit.
As required by auditing standards, and taking into account our overall knowledge
of the control environment, we performed procedures to address the risk of
management override of controls, in particular the risk that management may be in a
position to make inappropriate accounting entries and the risk of bias in accounting
estimates and judgements such as valuation of certain unquoted investments.
On this audit we assessed there to be no fraud risk related to revenue recognition.
We obtained an understanding of all revenue streams and assessed that revenue
recognition is simple in nature, with no material estimation or judgement.
We identified a fraud risk relating to the valuation of certain equity and debt
investments held on the balance sheet. As these investments are unquoted and illiquid,
they are valued using valuation techniques. Such techniques are subjective and
involve the exercise of judgement by the Group over areas such as the determination
of discounts or premiums applied to transaction values, market multiples and discount
rate. In addition, the valuation of the equity and debt investment portfolio drives the
remuneration of Directors and is considered a key indicator for their performance. Due
to the highly judgemental nature of these valuations, the reliance on unobservable
inputs and the linkage to Directors’ remuneration, we consider there to be increased
risk of fraud in relation to the valuation of certain equity and debt investments. Further
detail is set out in the key audit matter disclosures in section 2 of this report.
We performed procedures including:
•
Identifying journal entries to test based on risk criteria and comparing the
identified entries to supporting documentation. These included postings made to
unexpected account combinations.
•
Assessing whether the judgements made in making accounting estimates are
indicative of a potential bias, including assessing the valuation of certain equity
and debt investments for bias.
Identifying and responding to risks of material misstatement
due to non-compliance with laws and regulations
We identified areas of laws and regulations that could reasonably be expected to
have a material effect on the financial statements from our general commercial and
sector experience and through discussion with the Directors (as required by auditing
standards), and discussed with the Directors and other management the policies and
procedures regarding compliance with laws and regulations.
As certain entities within the Group are regulated, our assessment of risks involved
gaining an understanding of the control environment including the entity’s procedures
for complying with regulatory requirements.
We communicated identified laws and regulations throughout our team and
remained alert to any indications of non- compliance throughout the audit.
The potential effect of these laws and regulations on the financial statements varies
considerably.
Firstly, the Group is subject to laws and regulations that directly affect the financial
statements including financial reporting legislation (including related companies
legislation), distributable profits legislation and taxation legislation including the
Substantial Shareholding Exemption (“SSE”), and we assessed the extent of compliance
with these laws and regulations as part of our procedures on the related financial
statement items.
Secondly, the Group is subject to many other laws and regulations where the
consequences of non-compliance could have a material effect on amounts or
disclosures in the financial statements, for instance through the imposition of fines or
litigation. We identified the following areas as those most likely to have such an effect:
data protection laws, anti-bribery and employment law. Auditing standards limit the
required audit procedures to identify non-compliance with these laws and regulations
to enquiry of the Directors and other management and inspection of regulatory and
legal correspondence, if any. Therefore, if a breach of operational regulations is not
disclosed to us or evidence from relevant correspondence, an audit will not detect
that breach.
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INDEPENDENT AUDITOR’S REPORT
.
TO THE MEMBERS OF IP GROUP PLC
BUSINESS OVERVIEW
STRATEGIC REPORT
OUR FINANCIALS
OUR GOVERNANCE
Context of the ability of the audit to detect fraud or breaches
of law or regulation
Owing to the inherent limitations of an audit, there is an unavoidable risk that we
may not have detected some material misstatements in the financial statements,
even though we have properly planned and performed our audit in accordance with
auditing standards. For example, the further removed non- compliance with laws and
regulations is from the events and transactions reflected in the financial statements,
the less likely the inherently limited procedures required by auditing standards would
identify it.
In addition, as with any audit, there remained a higher risk of non-detection of fraud,
as these may involve collusion, forgery, intentional omissions, misrepresentations, or
the override of internal controls. Our audit procedures are designed to detect material
misstatement. We are not responsible for preventing non-compliance or fraud and
cannot be expected to detect non- compliance with all laws and regulations.
7.
We have nothing to report on the other information
in the Annual Report
The Directors are responsible for the other information presented in the Annual Report
together with the financial statements. Our opinion on the financial statements does
not cover the other information and, accordingly, we do not express an audit opinion or,
except as explicitly stated below, any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether,
based on our financial statements audit work, the information therein is materially
misstated or inconsistent with the financial statements or our audit knowledge.
Based solely on that work we have not identified material misstatements in the other
information.
Strategic report and Directors’ report
Based solely on our work on the other information:
•
we have not identified material misstatements in the Strategic report and the
Directors’ report;
•
in our opinion the information given in those reports for the financial year is
consistent with the financial statements; and
•
in our opinion those reports have been prepared in accordance with the
Companies Act 2006.
Directors’ Remuneration Report
In our opinion the part of the Directors’ Remuneration Report to be audited has been
properly prepared in accordance with the Companies Act 2006.
Disclosures of emerging and principal risks
and longer-term viability
We are required to perform procedures to identify whether there is a material
inconsistency between the Directors’ disclosures in respect of emerging and principal
risks and the viability statement, and the financial statements and our audit knowledge.
Based on those procedures, we have nothing material to add or draw attention to in
relation to:
•
the Directors’ confirmation within the viability statement on page 49 that they have
carried out a robust assessment of the emerging and principal risks facing the
Group, including those that would threaten its business model, future performance,
solvency and liquidity;
•
the risks and internal controls disclosures on page 38 describing these risks and
how emerging risks are identified, and explaining how they are being managed
and mitigated; and
•
the Directors’ explanation in the viability statement of how they have assessed
the prospects of the Group, over what period they have done so and why they
considered that period to be appropriate, and their statement as to whether they
have a reasonable expectation that the Group will be able to continue in operation
and meet its liabilities as they fall due over the period of their assessment,
including any related disclosures drawing attention to any necessary qualifications
or assumptions.
We are also required to review the viability statement, set out on page 49 under the
UK Listing Rules. Based on the above procedures, we have concluded that the above
disclosures are materially consistent with the financial statements and our audit
knowledge.
Our work is limited to assessing these matters in the context of only the knowledge
acquired during our financial statements audit. As we cannot predict all future events
or conditions and as subsequent events may result in outcomes that are inconsistent
with judgements that were reasonable at the time they were made, the absence
of anything to report on these statements is not a guarantee as to the Group’s and
parent Company’s longer- term viability.
Corporate governance disclosures
We are required to perform procedures to identify whether there is a material
inconsistency between the Directors’ corporate governance disclosures and the
financial statements and our audit knowledge.
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OUR FINANCIALS
OUR GOVERNANCE
INDEPENDENT AUDITOR’S REPORT
.
TO THE MEMBERS OF IP GROUP PLC
BUSINESS OVERVIEW
STRATEGIC REPORT
OUR FINANCIALS
OUR GOVERNANCE
Based on those procedures, we have concluded that each of the following is materially
consistent with the financial statements and our audit knowledge:
•
the Directors’ statement that they consider that the annual report and financial
statements taken as a whole is fair, balanced and understandable, and provides
the information necessary for shareholders to assess the Group’s position and
performance, business model and strategy;
•
the section of the annual report describing the work of the Audit Committee,
including the significant issues that the audit committee considered in relation to
the financial statements, and how these issues were addressed; and
•
the section of the annual report that describes the review of the effectiveness of
the Group’s risk management and internal control systems.
We are required to review the part of the Corporate Governance Statement relating
to the Group’s compliance with the provisions of the UK Corporate Governance Code
specified by the UK Listing Rules for our review. We have nothing to report in this respect.
8.
We have nothing to report on the other matters on
which we are required to report by exception
Under the Companies Act 2006, we are required to report to you if, in our opinion:
•
adequate accounting records have not been kept by the parent Company, or
returns adequate for our audit have not been received from branches not visited
by us; or
•
the parent Company financial statements and the part of the Directors’
Remuneration Report to be audited are not in agreement with the accounting
records and returns; or
•
certain disclosures of Directors’ remuneration specified by law are not made; or
•
we have not received all the information and explanations we require for our audit.
We have nothing to report in these respects.
9.
Respective responsibilities
Directors’ responsibilities
As explained more fully in their statement set out on page 108, the Directors are
responsible for: the preparation of the financial statements including being satisfied
that they give a true and fair view; such internal control as they determine is
necessary to enable the preparation of financial statements that are free from
material misstatement, whether due to fraud or error; assessing the Group and
parent Company’s ability to continue as a going concern, disclosing, as applicable,
matters related to going concern; and using the going concern basis of accounting
unless they either intend to liquidate the Group or the parent Company or to cease
operations, or have no realistic alternative but to do so.
Auditor’s responsibilities
Our objectives are to obtain reasonable assurance about whether the financial
statements as a whole are free from material misstatement, whether due to fraud or
error, and to issue our opinion in an auditor’s report. Reasonable assurance is a high
level of assurance, but does not guarantee that an audit conducted in accordance
with ISAs (UK) will always detect a material misstatement when it exists. Misstatements
can arise from fraud or error and are considered material if, individually or in
aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of the financial statements.
A fuller description of our responsibilities is provided on the FRC’s website at
www.frc.org.uk/auditorsresponsibilities
.
The Company is required to include these financial statements in an annual financial
report prepared under Disclosure Guidance and Transparency Rule 4.1.17R and 4.1.18R.
This auditor’s report provides no assurance over whether the annual financial report
has been prepared in accordance with those requirements.
10.
The purpose of our audit work and to whom we owe
our responsibilities
This report is made solely to the Company’s members, as a body, in accordance with
Chapter 3 of Part 16 of the Companies Act 2006 and the terms of our engagement
by the Company. Our audit work has been undertaken so that we might state to the
Company’s members those matters we are required to state to them in an auditor’s
report, and the further matters we are required to state to them in accordance with
the terms agreed with the Company, and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone other than the
Company and the Company’s members, as a body, for our audit work, for this report,
or for the opinions we have formed.
Jatin Patel (Senior Statutory Auditor)
for and on behalf of KPMG LLP, Statutory Auditor
Chartered Accountants
15 Canada Square
London, E14 5GL
24 March 2025
116
IP GROUP PLC ANNUAL REPORT 2024
INDEPENDENT AUDITOR’S REPORT
.
TO THE MEMBERS OF IP GROUP PLC
BUSINESS OVERVIEW
STRATEGIC REPORT
OUR FINANCIALS
OUR GOVERNANCE
Note
2024
£m
2023
£m
Portfolio return and revenue
Change in fair value of equity and debt investments
13
(246.1 )
(110.9 )
Gain/(loss) on disposal of equity and debt investments
15
(10.8 )
Change in fair value of limited and limited liability partnership interests
14
(12.6 )
(38.8 )
Revenue from services and other income
4
(189.5 )
(154.6 )
Administrative expenses
Carried interest plan and other deal incentives credit
22
Share-based payment charge
21
(1.9 )
(2.6 )
Other administrative expenses
8
(25.3 )
(28.0 )
(19.3 )
(25.9 )
Operating loss
7
(208.8 )
(180.5 )
Finance income
Finance costs
(6.7 )
(5.6 )
Loss before taxation
(206.7 )
(176.3 )
Taxation
10
(0.3 )
Loss for the year
(207.0 )
(174.4 )
Other comprehensive income
Items that may be subsequently reclassified to the income statement
Exchange differences on translating foreign operations
(3.0 )
(0.4 )
Total comprehensive loss for the year
(210.0 )
(174.8 )
Attributable to:
Equity holders of the parent
(205.6 )
(171.3 )
Non-controlling interest
(4.4 )
(3.5 )
(210.0 )
(174.8 )
Loss per share
Basic (p)
11
(19.97 )
(16.53 )
Diluted (p)
11
(19.97 )
(16.53 )
IP GROUP PLC ANNUAL REPORT 2024
117
BUSINESS OVERVIEW
STRATEGIC REPORT
OUR FINANCIALS
OUR GOVERNANCE
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
.
FOR THE YEAR ENDED 31 DECEMBER 2024
BUSINESS OVERVIEW
STRATEGIC REPORT
OUR FINANCIALS
OUR GOVERNANCE
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
.
AS AT 31 DECEMBER 2024
Note
2024
£m
2023
£m
ASSETS
Non-current assets
Goodwill
Property, plant and equipment
Joint venture investment
Portfolio:
Equity investments
13
Debt investments
13
Limited and limited liability partnership interests
14
Receivable on sale of debt and equity investments
15, 17
Total non-current assets
Current assets
Assets held for sale
13
Trade and other receivables
16
Receivable on sale of debt and equity investments
15, 17
Deposits
3
Cash and cash equivalents
3
Total current assets
Total assets
EQUITY AND LIABILITIES
Equity attributable to owners of the parent
Called up share capital
20
Share premium account
Capital redemption reserve
20
Retained earnings
Total equity attributable to equity holders
Non-controlling interest
(13.5 )
(9.1 )
Total equity
Current liabilities
Trade and other payables
18
Borrowings
19
Total current liabilities
Non-current liabilities
Borrowings
19
Carried interest plan liability
22
Deferred tax liability
10
Loans from limited partners of consolidated funds
19
Other non-current liabilities
Total non-current liabilities
Total liabilities
Total equity and liabilities
Registered number: 04204490
an integral part of the financial statements on
pages 117 to 174. The financial statements were approved
by the Board of Directors and authorised for issue on
24 March 2025 and were signed on its behalf by:
Greg Smith
David Baynes
Chief Executive Officer
118
IP GROUP PLC ANNUAL REPORT 2024
BUSINESS OVERVIEW
STRATEGIC REPORT
OUR FINANCIALS
OUR GOVERNANCE
Note
2024
£m
2023
£m
Operating activities
Loss before taxation for the period
(206.7 )
(176.3 )
Adjusted for:
Change in fair value of equity and debt investments
13
(Gain)/Loss on disposal of equity investments
15
(63.7 )
Change in fair value of limited and limited liability partnership interests
14
Carried interest plan and other deal incentives credit
22
(7.9 )
(4.7 )
Carried interest scheme payments
22
(2.5 )
(1.3 )
Share-based payment charge
21
Finance income
(8.8 )
(9.8 )
Finance costs
Depreciation of right-of-use asset, property, plant and equipment
Corporate finance fees settled in the form of portfolio company equity
(0.1 )
Changes in working capital
(Increase)/Decrease in trade and other receivables
16
(0.7 )
Decrease in trade and other payables
18
(7.3 )
(0.3 )
Drawdowns from limited partners of consolidated funds
Other operating cash flows
Interest received
Net cash outflow from operating activities
(25.1 )
(17.9 )
Investing activities
Purchase of equity and debt investments
13
(60.8 )
(63.4 )
Investment in limited and limited liability partnership funds
14
(2.2 )
(9.8 )
Investment in joint venture
(0.6 )
Interest received on deposits
Cash flow to deposits
(230.0 )
(191.7 )
Cash flow from deposits
Proceeds from sale of equity and debt investments
15
Distribution from limited partnership funds
14
Net cash inflow/(outflow) from investing activities
(4.4 )
Financing activities
Dividends paid
26
(13.0 )
Repurchase of own shares – treasury shares
20
(29.6 )
(0.1 )
Lease principal payment
(0.4 )
(0.5 )
Interest paid
(6.8 )
(5.5 )
Repayment of EIB loan facility
19
(6.1 )
(6.2 )
Drawdown of loan facility
19
Net cash (outflow)/inflow from financing activities
(42.9 )
Net increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Effect of foreign exchange rate changes
(0.2 )
(0.2 )
Cash and cash equivalents at the end of the year
The accompanying notes on pages 121 to
159 form an integral part of the financial
statements.
IP GROUP PLC ANNUAL REPORT 2024
119
BUSINESS OVERVIEW
STRATEGIC REPORT
OUR FINANCIALS
OUR GOVERNANCE
CONSOLIDATED STATEMENT OF CASH FLOWS
.
FOR THE YEAR ENDED 31 DECEMBER 2024
BUSINESS OVERVIEW
STRATEGIC REPORT
OUR FINANCIALS
OUR GOVERNANCE
1
Share premium – Amount subscribed for
share capital in excess of nominal value, net
of directly attributable issue costs.
2
Retained earnings – Cumulative net gains
and losses recognised in the consolidated
statement of comprehensive income net of
associated share-based payments credits
and distributions to shareholders.
3
Non-controlling interest – Share of losses
attributable to the Limited Partners of IP
Venture Fund II LP.
4
Currency translation – Reflects currency
translation differences on reserves non-GBP
functional currency subsidiaries. Exchange
differences on translating foreign operations
are presented before tax.
5
Purchase of treasury shares – during 2024,
the Company purchased 45,280,605 ordinary
shares (2023: 200,302 ordinary shares), with
an aggregate value of £0.9 m (2023: £0.1 k)
which were initially held in treasury. These
were subsequently used to settle employee
share based payments of 4,481,489 prior to
the remainder being cancelled in September
2024 along with a further 26,493,520 treasury
shares held at the start of the year which
were also cancelled at the same time. A
further 20,609,101 shares with an aggregate
value of £0.5 m were purchased in the
period September to December 2024 and
immediately cancelled. The nominal value
of the cancelled treasury share has been
added to the Capital redemption reserve.
6
Equity-settled share-based payments
– amounts recognised in respect of the
Group’s share-based payments schemes
recognised as a subsidiary investment in the
Company accounts with a corresponding
entry against equity.
7
Ordinary dividends – there were no
dividends paid in 2024 (2023: £13.0m total;
£13.0m cash). No new shares were issued
in respect of the scrip dividend (2023: no
shares issued).
Attributable to equity holders of the parent
Share
capital
£m
Share
premium
1
£m
Capital
redemption
reserve
5
£m
Retained
earnings
2
£m
Total
£m
Non-
controlling
interest
3
£m
Total
equity
£m
At 1 January 2023
(5.6 )
Total comprehensive income for
the period
Loss for the year
(170.9 )
(170.9 )
(3.5 )
(174.4 )
Currency translation
4
(0.9 )
(0.9 )
(0.9 )
Total comprehensive income for
the period
(171.8 )
(171.8 )
(3.5 )
(175.3 )
Transactions with owners, recorded
directly in equity
Purchase of treasury shares
5
(0.1 )
(0.1 )
(0.1 )
Equity-settled share-based payments
6
Ordinary dividends
7
(13.0 )
(13.0 )
(13.0 )
Total contributions by and distributions
to owners
(10.5 )
(10.5 )
(10.5 )
At 1 January 2024
(9.1 )
Total comprehensive income for
the period
Loss for the year
(202.6 )
(202.6 )
(4.4 )
(207.0 )
Currency translation
4
(3.1 )
(3.1 )
(3.1 )
Total comprehensive income for
the period
(205.7 )
(205.7 )
(4.4 )
(210.1 )
Transactions with owners, recorded
directly in equity
Purchase of treasury shares
5
(1.8 )
(29.6 )
(29.6 )
(29.6 )
Equity-settled share-based payments
6
Ordinary dividends
7
Total contributions by and distributions
to owners
(1.8 )
(27.7 )
(27.7 )
(27.7 )
At 31 December 2024
(13.5 )
120
IP GROUP PLC ANNUAL REPORT 2024
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
.
FOR THE YEAR ENDED 31 DECEMBER 2024
BUSINESS OVERVIEW
STRATEGIC REPORT
OUR FINANCIALS
OUR GOVERNANCE
OUR FINANCIALS
OUR FINANCIALS
IP GROUP PLC ANNUAL REPORT 2024
121
BUSINESS OVERVIEW
BUSINESS OVERVIEW
STRATEGIC REPORT
STRATEGIC REPORT
OUR GOVERNANCE
OUR GOVERNANCE
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
.
A) Basis of preparation
The Annual Report and Accounts of IP Group plc
and its subsidiary companies (together, the “Group”) are for the year ended
financial statements are set out below. The policies have been consistently applied
to all the years presented, unless otherwise stated. The Group financial statements
have been prepared and approved by the Directors in accordance with UK–adopted
international accounting standards (“UK–adopted IFRS”).
The preparation of financial statements in compliance with IFRS requires the use of
certain critical accounting estimates. It also requires Group management to exercise
judgement in the most appropriate selection of the Group’s accounting policies. The
areas where significant judgements and estimates have been made in preparing the
financial statements and their effect are disclosed in note 2.
The financial statements are prepared on a historic cost bases except that the
following assets and liabilities are stated at their fair value.
The financial statements are prepared on a going concern basis. The Directors have
completed a detailed financial forecast alongside severe but plausible scenario–
based downside stress–testing, including the impact of declining portfolio values and
a reduced ability to generate portfolio realisations.
At the balance sheet date, the Group had cash and deposits of £285.6m, providing
liquidity for around three years’ operating expenses and portfolio investment at recent
levels, and scheduled debt repayments. Furthermore, the Group has a portfolio of
investments valued at around £0.9bn, which is anticipated to provide further liquidity
over the forecast period. Accordingly, our forecasting indicates that the Group and it’s
parent Company has adequate resources to enable it to meet its obligations including
its debt covenants and to continue in operational existence for at least the next twelve
months from the approval date of the accounts. For further details see the Group’s
(i) New standards, interpretations and amendments effective from
1 January 2024
No new standards, interpretations and amendments effective in the year have had a
material effect on the Group’s financial statements.
(ii) New standards, interpretations and amendments not yet effective
No new standards, interpretations and amendments not yet effective are expected to
have a material effect on the Group’s future financial statements.
The impact of the following is under assessment: IFRS 18 ‘Primary financial statements’,
which will become effective in the consolidated Group financial statements for the
IFRS 10 Investment Entity Exemption
IFRS 10 defines an investment entity as one which:
a.
Obtains funds from one or more investors for the purpose of providing those
investors with investment management services
b.
Commits to its investors that its business purpose is to invest funds solely for
returns from capital appreciation, investment income or both
c.
Measures and evaluates the performance of substantially all of its investments on
a fair value basis
We believe that IP Group plc does not meet this definition of an investment entity with
the key factors behind this conclusion being:
•
the absence of specific exit strategies for early–stage assets (indicating condition
(b) above is not satisfied)
•
the ability to hold investments indefinitely (indicating condition (b) above is not
satisfied)
•
the flexibility to explore the direct commercialisation of intellectual property within
the Group if that is determined to be the most attractive means of generating
value for shareholders. (indicating condition (a) above is not satisfied)
Accordingly, we have applied IFRS 10 consolidation principles for each group of entities
as follows:
Where the Group has control over an entity, it is classified as a subsidiary. Typically,
the Group owns a non–controlling interest in its portfolio companies; however, in
certain circumstances, the Group takes a controlling interest and hence categorises
the portfolio company as a subsidiary. As per IFRS 10, an entity is classed as under the
control of the Group when all three of the following elements are present: power over
the entity; exposure to variable returns from the entity; and the ability of the Group to
use its power to affect those variable returns.
In situations where the Company has the practical ability to direct the relevant
activities of the investee without holding the majority of the voting rights, it is
considered that de facto control exists. In determining whether de facto control exists
the Group considers the relevant facts and circumstances, including:
•
The size of the Company’s voting rights relative to both the size and dispersion of
other parties who hold voting rights;
•
Substantive potential voting rights held by the Company and by other parties;
•
Other contractual arrangements; and
•
Historic patterns in voting attendance.
continued
1. Basis of preparation
In assessing the IFRS 10 control criteria in respect of the Group’s private portfolio
companies, direction of the relevant activities of the company is usually considered
to be exercised by the company’s board, therefore the key control consideration is
whether the Group currently has a majority of board seats on a given company’s
board, or is able to obtain a majority of board seats via the exercise of its voting rights.
Control is reassessed whenever facts and circumstances indicate that there may be a
change in any of these elements of control.
The consolidated financial statements present the results of the Company and its
subsidiaries as if they formed a single entity. Intercompany transactions and balances
between Group companies are therefore eliminated in full. The consolidated financial
statements incorporate the results of business combinations using the acquisition
method. In the statement of financial position, the acquiree’s identifiable assets and
liabilities are initially recognised at their fair values at the acquisition date. Contingent
liabilities dependent on the disposed value of an associated investment are only
recognised when the fair value is above the associated threshold. The results of
acquired operations are included in the consolidated statement of comprehensive
income from the date on which control is obtained. They are consolidated until the
The majority of the Group’s portfolio companies are deemed to be Associates, as
the Group has significant influence (generally accompanied by a shareholding of
between 20% and 50% of the voting rights) but not control. A small number of the
Group’s portfolio companies are controlled and hence consolidated, as per section
(i) above.
As permitted under IAS 28, the Group elects to hold investments in Associates at fair
value through profit and loss in accordance with IFRS 9. This treatment is specified by
IAS 28 Investment in Associates and Joint Ventures, which permits investments held by
a venture capital organisation or similar entity to be excluded from its measurement
methodology requirements where those investments are designated, upon initial
recognition, as at fair value through profit or loss and accounted for in accordance
with IFRS 9 Financial Instruments. Therefore, no associates are presented on the
consolidated statement of financial position.
Changes in fair value of associates are recognised in profit or loss in the period of
the change. The Group has no interests in Associates through which it carries on its
operating business. During 2023, the Group made a £0.6m investment into a Joint
Venture established in preparation for potential fund operations in China. Joint
ventures are held at fair value with any change in value recognised through the
income statement.
The disclosures required by Section 409 of the Companies Act 2006 for associated
undertakings are included in note 13 of the Company financial statements. Similarly,
those investments which may not have qualified as an Associate but fall within the
wider scope of significant holdings and so are subject to Section 409 disclosures of the
(iii) Limited Partnerships and Limited Liability Partnerships (“Limited
Partnerships”)
a) Consolidated Limited Partnership fund holdings
The Group has a holding in the following Limited Partnership fund, which it determines
that it controls and hence consolidates on a line by line basis:
Interest in Limited | |
partnership | |
Name | % |
IP Venture Fund II LP (“IPVFII”) | 33.3 |
In order to determine whether the Group controls the above funds, it has considered
the IFRS 10 control model and related application guidance. In respect of IPVFII, the
Group has power via its role as fund manager of the partnership, and exposure to
variable returns via its 33.3% ownership interest, resulting in the conclusion that the
Group controls and hence consolidates the fund.
b) Other non-consolidated Limited Partnership fund holdings
In addition to Limited Partnerships where Group entities act as general partner and
investment manager, the Group has interests in three further entities which are
managed by third parties:
Interest in Limited | |
partnership | |
Name | % |
IPG Cayman LP | 58.1 |
UCL Technology Fund LP (“UCL Fund”) | 46.4 |
Technikos LLP (“Technikos”) | 17.8 |
The rationale for IPG Cayman LP’s categorisation as a non-consolidated fund is
considered a significant accounting judgment and is set out in note 2.
The Group has a 46.4% interest in the total capital commitments of the UCL Fund. The
Group has committed £24.8m to the fund alongside the European Investment Fund
(“EIF”), University College London and other investors. Participation in the UCL Fund
provides the Group with the opportunity to generate financial returns and visibility of
potential intellectual property from across University College London’s research base.
The Group has an 17.8% interest in the total capital commitments of Technikos, a fund
with an exclusive pipeline agreement with Oxford University’s Institute of Biomedical
Engineering.
See note 25 for disclosure of outstanding commitments in respect of Limited
Partnerships.
BUSINESS OVERVIEW
STRATEGIC REPORT
OUR GOVERNANCE
OUR FINANCIALS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
.
IP GROUP PLC ANNUAL REPORT 2024
BUSINESS OVERVIEW
BUSINESS OVERVIEW
STRATEGIC REPORT
STRATEGIC REPORT
OUR GOVERNANCE
OUR GOVERNANCE
OUR FINANCIALS
OUR FINANCIALS
IP GROUP PLC ANNUAL REPORT 2024
123
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
.
continued
1. Basis of preparation
iv) Other third-party funds under management
In addition to the Limited Partnership fund IPVFII, described above, the Group also
manages other third-party funds, including within its Parkwalk Advisors business unit,
and on behalf of Australian superannuation fund Hostplus. In both cases, the Group
has no direct beneficial interest in the assets being managed, and its sole exposure
to variable returns relates to management fees and performance fees payable on
exits above a specified hurdle. As a result, the Group is not deemed to control these
managed assets under IFRS10 and they are not consolidated.
The total comprehensive income, assets and liabilities of non–wholly owned entities
are attributed to owners of the parent and to the non–controlling interests in
The Group accounts for business combinations using the acquisition method from
the date that control is transferred to the Group (see (i) Subsidiaries above). Both
the identifiable net assets and the consideration transferred in the acquisition are
measured at fair value at the date of acquisition and transaction costs are expensed
as incurred. Goodwill arising on acquisitions is tested at least annually for impairment.
In instances where the Group owns a non–controlling stake prior to acquisition the
step acquisition method is applied, and any gain or losses on the fair value of the pre–
acquisition holding is recognised in the consolidated statement of comprehensive
C) Other accounting policies
Regulated capital
Top Technology Ventures Limited and Parkwalk Advisors Ltd, are Group subsidiaries
which are subject to external capital requirements imposed by the Financial Conduct
Authority (“FCA”). Similarly, the Group’s subsidiary in Hong Kong IP Group Greater China
Services Limited is subject to external capital requirements imposed by the Securities
and Futures Commission of Hong Kong (“SFC”). As such these entities must ensure that
they have sufficient capital to satisfy their respective requirements. The Group ensures
it remains compliant with these requirements as described in their respective financial
statements.
Cash flow relating to portfolio investments have been presented as investing cash
flows as opposed to cash flows from operating activities. Management considers
this to be an appropriate classification reflecting the fact that these cashflows are
allocated towards resources intended to generate future income and cash flows, in
The Directors have made the following judgements and estimates that have had
the most significant effect on the carrying amounts of the assets and liabilities in
the consolidated financial statements. Estimates and judgements are continually
evaluated and are based on historical experience and other factors, such as
expectations of future events, and are believed to be reasonable under the
circumstances. Actual results may differ from these estimates. The estimates and
assumptions which have the most significant effects on the carrying amounts of the
assets and liabilities in the financial statements are discussed below.
(i) Valuation of unquoted equity and debt investments and limited
partnership interests (significant estimate)
The Group’s accounting policy in respect of the valuation of unquoted equity and debt
investments is set out in note 13, and in respect of limited partnership interests in note
14. In applying this policy, the key areas over which judgement are exercised include:
•
Consideration of whether a funding round is at arm’s length and therefore
representative of fair value.
•
The relevance of the price of recent investment as an input to fair value, which
typically becomes more subjective as the time elapsed between the recent
investment date and the balance sheet date increases.
•
In the case of companies with complex capital structures, the appropriate
methodology for assigning value to different classes of equity based on their
differing economic rights.
•
Where an upwards or downwards calibration adjustment to a funding transaction
valuation to reflect positive or negative developments within the company in
question, the size of the adjustment made.
•
Where using valuation methods such as discounted cash flows or revenue
multiples, the assumptions around inputs including the drug development timeline,
probability of clinical trial success, the selection of relevant comparable deal sizes,
the probability of securing a pharmaceutical partner, drug sales profiles, royalty
rates, discount rates and drug development costs
•
Where valuations are based on future events such as sales processes or
future funding rounds, the appropriate level of execution risk to be applied to
the anticipated event when assessing its valuation impact as at the balance
sheet date.
•
Debt investments typically represent convertible debt; in such cases judgement
is exercised in respect of the estimated equity value received on conversion of
the loan.
•
For limited partnership investments, the above considerations are applied to the
fund in question’s equity and debt investments in determining whether the fund
manager’s Net Asset Value statement values are appropriate.
Valuations are based on management’s judgement after consideration of the above
and upon available information believed to be reliable, which may be affected by
conditions in the financial markets. Due to the inherent uncertainty of the investment
valuations, the estimated values may differ significantly from the values that would have
been used had a ready market for the investments existed, and the differences could be
material. Note 13 provides disclosure details on sensitivity and estimation uncertainty.
Critical estimates in respect of the Group’s investment in Istesso Limited, including
DCF model assumptions in respect of the Phase 2b success rates, selected pharma
partner deal size, pharma partnership probability and royalty rates including sensitivity
disclosures in respect of these estimates are disclosed in Note 13.
(ii) Application of IFRS 10 in respect of Istesso Limited and IPG Cayman LP
(significant judgement)
The judgments in respect of non-consolidation of Istesso Limited and IPG Cayman
LP remain unchanged from the conclusion of our assessment in the prior year, and
there have been no material changes in the facts and circumstances during the year.
The specific considerations in respect of Istesso Limited and IPG Cayman LP are set
out below:
Istesso Limited
In respect of Istesso Limited, although the Group has a 56.5% undiluted economic
interest in the company, the Group holds a significant proportion of its equity via non–
voting shares resulting in it holding less than 50% of the voting rights at the company.
Under Istesso’s Articles of Association, strategic and day-to-day decisions over running
of the business rest with Istesso’s board of directors rather than through shareholder
voting rights attached to direct ownership of equity interests held in the entity. In this
respect, power over Istesso is exercised predominantly through directors’ meetings, on
which IP Group is not deemed to have majority representation. As such, the relationship
between Istesso and IP Group is designed in such a way that “shareholder” voting rights
are not the dominant factor in deciding who directs the investee’s relevant activities, but
it is the directors who do so. IP Group does not control the board of Istesso Limited via
a majority of board directors, and is specifically prevented from appointing additional
directors to gain control of the board via restrictions in Istesso’s Articles of Association.
During the year, the Group advanced a further £10m convertible loan to Istesso
Limited, being the second tranche of a total £23.5m convertible loan which was legally
committed in 2023 and whose drawdown therefore did not have any additional
substantive impact. This was in addition to a £10m convertible loan which was
provided in 2022. The terms of the loans contain specific provisions preventing their
conversion where this would result in IP Group obtaining control of Istesso.
Based on an updated control assessment, including considerations around whether
IP Group has ‘de facto’ control of Istesso including inter alia the number of voting shares
held by the Group and its connected parties and the dispersion of other parties’ voting
rights, we have concluded that the Group does not control Istesso Limited under IFRS 10.
Had the Directors concluded that consolidation in the current year was appropriate,
the impact on the Group Balance Sheet would have been to recognise Istesso
Limited’s assets and liabilities and to recognise additional intangible assets including
goodwill based on the fair value of the company at acquisition. The impact on the
Group Income Statement would have been the recognition of Istesso Limited’s costs
from the point of acquisition. Furthermore, any subsequent fair value movements in
the debt and equity of Istesso Limited would not be recognised until the point where
IP Group was no longer deemed to control Istesso Limited.
IPG Cayman LP
The Group’s US portfolio is held via a limited partnership fund, IPG Cayman LP, which
was set up in 2018 to facilitate third-party investment into this portfolio. The fund is
managed by Longview Innovations Inc., formerly an operating subsidiary of the Group.
Prior to 2021, the Group was judged to control both IPG Cayman LP and Longview
innovations Inc. under IFRS 10 and hence both entities were consolidated.
In 2021, several events took place which caused us to reassess the Group’s control of
both entities:
•
IPG Cayman LP raised additional third–party funds in the first half of 2021, which
reduced the Group’s stake in the fund from 80.7% to 58.1% and revised the fund’s
Limited Partnership Agreement to reduced the Group’s rights to replace the fund
manager.
•
Investors in the 2021 IPG Cayman LP funding round hold a 5 year option to
subscribe additional funds which, if exercised, would result in IP Group holding less
than 50% in the fund.
•
In November 2021 the Group disposed of its equity in IPG Cayman LP’s fund
manager, Longview Innovations Inc. and hence no longer controls the fund
manager.
As a result of these changes, our control assessment concluded that Longview
Innovations Inc, is acting as an agent on behalf of all investors in the Cayman LP and
not solely IPG plc, therefore the Group no longer controls IPG Cayman LP. The Group
therefore ceased to consolidate it from November 2021.
Arriving at this conclusion required the application of judgement, most significantly
in assessing the application guidance contained in IFRS 10 B19 which suggests that
in some instances a special relationship may exist (such as the fact that we remain
the largest individual investor in the fund), implying that an investor has a more than
passive interest in the investee. Having considered this guidance we have concluded
that on balance the Group does not have power over IPG Cayman LP and hence does
not control it.
During 2024, the Group advanced $0.9m into IPG Cayman LP via a Simple Agreement
for Future Equity (“SAFE”). This was in addition to a $10m SAFE investment made in 2023.
The terms of these SAFEs were such that they did not confer any additional substantive
rights to the Group in the normal course of business and as a result did not change the
2. Significant accounting estimates and judgements
BUSINESS OVERVIEW
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IP GROUP PLC ANNUAL REPORT 2024
124
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
.
BUSINESS OVERVIEW
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OUR FINANCIALS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
.
IP GROUP PLC ANNUAL REPORT 2024
125
As set out in the principal risks and uncertainties section on pages 40 to 48, the Group
is exposed, through its normal operations, to a number of financial risks, the most
significant of which are market, liquidity and credit risks.
In general, risk management is carried out throughout the Group under policies
approved by the Board of Directors. The following further describes the Group’s
objectives, policies and processes for managing those risks and the methods used to
measure them. Further quantitative information in respect of these risks is presented
throughout these financial statements.
(i) Price risk
The Group is exposed to equity securities price risk as a result of the equity and
debt investments, and investments in Limited Partnerships held by the Group and
recognised as at fair value through profit or loss.
The Group mitigates this risk by having established investment appraisal processes
and asset monitoring procedures which are subject to overall review by the Board.
The Group holds nine investments valued at £140m at 31 December 2024 which are
publicly traded (2023: ten investments; £203.8m), and the remainder of its investments
are not traded on an active market.
The net portfolio loss in 2024 of £195.0m represents a 17% decrease against the opening
balance (2023: loss of 160.5m; 13% decrease). Sensitivity analysis showing the impact
of movements in quoted equity and debt investments is disclosed in note 13, and
The Group’s main exposure to foreign currency risk is via its investment portfolio, which
is partially denominated in US dollars, Australian dollars, Euros and Swedish Krona.
Further details of currency exposure in the portfolio are given in notes 13 and 14.
The Group’s US dollar-denominated proceeds included in deferred consideration at
December 2024 was £2.5m (2023: £9.4m).
The Group periodically enters into forward foreign exchange contracts to mitigate
risk of exchange rate exposure in respect of non GBP-denominated proceeds. As
at 31 December 2024 there were no contract forward foreign exchange contracts
(iii) Interest rate risk
The Group holds a debt facility with the European Investment Bank and a loan note
facility primarily with Phoenix Group with the overall balance as at 31 December 2024
amounting to £129.4m (excluding setup costs). These loans all bear a fixed rate of
interest, with the annual average interest rate being 5.09% (2023: 4.99%).
For further details of the Group’s loans including covenant details see note 19.
The other primary impact of interest rate risk to the Group is the impact on the income
and operating cash flows as a result of the interest–bearing deposits and cash and
cash equivalents held by the Group.
(iv) Concentrations of risk
The Group is exposed to concentration risk via the significant majority of the portfolio
being UK–based companies and thus potentially impacted by the performance of
the UK economy. In recent years, the Group has decreased the scale of its operations
in the US as a result of the dilution of its holding in IPG Cayman LP. The group has,
however, increased the scale of its operations in Australia as a result of additional
investment in this geography and portfolio value gains.
The Group mitigates Market risk, in co–ordination with liquidity risk, by managing its
proportion of fixed to floating rate financial assets. The table on page 126 summarises
the interest rate profile of the Group.
BUSINESS OVERVIEW
STRATEGIC REPORT
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
.
continued
3. Financial risk management
IP GROUP PLC ANNUAL REPORT 2024
126
| 2024 |
2023 |
|||||||
Floating |
Interest |
Floating |
Interest |
|||||
Fixed rate |
rate |
free |
Total |
Fixed rate |
rate |
free |
Total |
|
£m |
£m |
£m |
£m |
£m |
£m |
£m |
£m |
|
Financial assets |
||||||||
Equity investments |
– |
– |
713.8 |
713.8 |
– |
– |
1,011.5 |
1,011.5 |
Debt investments |
– |
– |
51.6 |
51.6 |
– |
– |
83.7 |
83.7 |
Limited and limited liability partnership interests |
– |
– |
58.1 |
58.1 |
– |
– |
69.7 |
69.7 |
Assets held for sale |
– |
– |
13.9 |
13.9 |
– |
– |
– |
– |
Trade receivables |
– |
– |
0.7 |
0.7 |
– |
– |
0.6 |
0.6 |
Other receivables |
– |
– |
5.6 |
5.6 |
– |
– |
7.6 |
7.6 |
Receivable on sale of debt and equity investments |
– |
– |
20.1 |
20.1 |
– |
– |
9.2 |
9.2 |
Deposits |
170.0 |
– |
– |
170.0 |
126.0 |
– |
– |
126.0 |
Cash and cash equivalents |
10.8 |
104.4 |
0.40 |
115.6 |
16.8 |
83.9 |
0.2 |
100.9 |
Total |
180.8 |
104.4 |
864.2 |
1,149.4 |
142.8 |
83.9 |
1,182.5 |
1,409.2 |
Financial liabilities |
||||||||
Trade payables |
– |
– |
(0.3) |
(0.3) |
– |
– |
(0.5) |
(0.5) |
Other accruals and deferred income |
– |
– |
(12.2) |
(12.2) |
– |
– |
(16.5) |
(16.5) |
Borrowings |
(129.1) |
– |
– |
(129.1) |
(135.2) |
– |
– |
(135.2) |
Carried interest plan liability |
– |
– |
(27.3) |
(27.3) |
– |
– |
(38.0) |
(38.0) |
Deferred tax liability |
– |
– |
(4.5) |
(4.5) |
– |
– |
(4.8) |
(4.8) |
Loans from Limited Partners of consolidated funds |
– |
– |
(19.9) |
(19.9) |
– |
– |
(19.8) |
(19.8) |
Other non-current liabilities |
– |
– |
(5.4) |
(5.4) |
– |
– |
(6.4) |
(6.4) |
Total |
(129.1) |
– |
(69.6) |
(198.7) |
(135.2) |
– |
(86.0) |
(221.2) |
continued
3. Financial risk management
STRATEGIC REPORT
STRATEGIC REPORT
OUR GOVERNANCE
OUR GOVERNANCE
OUR FINANCIALS
OUR FINANCIALS
BUSINESS OVERVIEW
BUSINESS OVERVIEW
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
.
IP GROUP PLC ANNUAL REPORT 2024
127
At 31 December 2024, if interest rates had been 1% higher/lower, post-tax loss for the
year, and other components of equity, would have been £1.8m (2023: £2.2m) higher/
lower as a result of higher interest received on cash and deposits.
The Group seeks to manage liquidity risk, to ensure sufficient liquidity is available to
meet foreseeable needs and to invest cash assets safely and profitably. The Group’s
treasury management policy asserts that no more than 60% of the Group’s cash and
cash equivalents will be placed in fixed-term deposits with a holding period greater
than three months at any one point in time. Accordingly, the Group only invests
working capital in short-term instruments issued by a pre-approved list of reputable
counterparties. The Group continually monitors rolling cash flow forecasts to ensure
The Group’s credit risk is primarily attributable to its deposits, cash and cash
equivalents, debt investments and trade receivables. The Group seeks to mitigate
its credit risk on cash and cash equivalents by making short-term deposits with
counterparties, or by investing in treasury funds with an “AAA” credit rating or above
managed by institutions. Short-term deposit counterparties are required to have
where applicable, a prime short-term credit rating at the time of investment (ratings
are generally determined by Moody’s or Standard & Poor’s). Moody’s prime credit
ratings of “P1”, “P2” and “P3” indicate respectively that the rating agency considers the
counterparty to have a “superior”, “strong” or “acceptable” ability to repay short-term
debt obligations (generally defined as having an original maturity not exceeding 13
months). An analysis of the Group’s deposits and cash and cash equivalents balance
analysed by credit rating as at the reporting date is shown in the table opposite. All
other financial assets are unrated.
2024 | 2023 | |
Credit rating | £m | £m |
P1 | 206.9 | 158.9 |
AAAMMF 1 | 78.6 | 66.7 |
Other 2 | 0.1 | 1.3 |
Total deposits and cash and cash equivalents | 285.6 | 226.9 |
1
The Group holds £78.6m (2023: £66.7m) with JP Morgan GBP liquidity fund, which has a AAAMMF
credit rating with Fitch.
2
The Group holds £0.1m (2023: £1.3m) with Arbuthnot Latham, a private bank with no debt in
issue and, accordingly, on which a credit rating is not applicable. Bloomberg assess Arbuthnot
Latham’s 1-year default probability at 0.021279% (2023: 0.020408%).
The Group has no significant concentration of credit risk, with exposure spread over a
large number of counterparties and customers. The Group has detailed policies and
strategies which seek to minimise these associated risks including defining maximum
counterparty exposure limits for term deposits based on their perceived financial
strength at the commencement of the deposit. The single counterparty limit for fixed
term deposits in excess of 3 months at 31 December 2024 was the greater of 60% of
total group cash or £50m (2023: 60%; £50m). In addition, no single institution may hold
more than the higher of 50% of total cash or £50m. (2023: 50%; £50m).
The group’s exposure to credit risk on debt investments is managed in a similar way
to equity security price risk, as described above, through the Group’s investment
appraisal processes and asset monitoring procedures which are subject to overall
review by the Board. The maximum exposure to credit risk for debt investments,
BUSINESS OVERVIEW
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
.
IP GROUP PLC ANNUAL REPORT 2024
128
4. Revenue from services and other income
Revenue from services and other income is generated primarily from within the
United Kingdom and is stated exclusive of value added tax, with further revenue
generated in the Group’s Australian operations. Revenue is recognised when the
Group satisfies its performance obligations, in line with IFRS 15. Revenue breakdown
and disclosure requirements under IFRS 15 have not been presented as they are
considered immaterial. Revenue from services and other income comprises:
Fund management services
Fund management fees include:
•
fund management fees which are earned either as a fixed percentage of total
funds under management or a fixed percentage of capital subscribed, and
are recognised as the related services are provided and
•
performance fees payable from realisations in excess of an agreed return to
investors which are recognised upon realisation of assets.
Licence and royalty income
The Group’s Intellectual Property licences typically constitute separate
performance obligations, being separate from other promised goods or services.
Revenue is recognised in line with the performance obligations included in the
licence, which can include sales-based, usage-based or milestone-based
royalties.
Advisory and corporate finance fees
Fees earned from the provision of business support services including executive
search services and fees for IP Group representation on portfolio company
boards are recognised as the related services are provided. Corporate finance
advisory fees are generally earned as a fixed percentage of total funds raised and
recognised at the time the related transaction is successfully concluded. In some
instances, these fees are settled via the issue of equity in the company receiving
the corporate finance services at the same price per share as equity issued as
fund management services or from licensing activities, royalty revenues and patent
For both the year ended 31 December 2024 and the year ended 31 December 2023,
the Group’s revenue and profit before taxation were derived largely from its principal
activities within the UK.
For management reporting purposes, the Group is currently organised into five
operating segments:
i.
Venture Capital investing within our ‘Healthier future’ thematic area
ii.
Venture Capital investing within our ‘Tech-enriched future’ thematic area
iii.
Venture Capital investing within our ‘Regenerative future’ thematic area
iv.
Venture Capital investing: Other, representing investments not included within our
three thematic areas above, including platform investments
v.
the management of third-party funds and the provision of corporate
finance advice
BUSINESS OVERVIEW
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IP GROUP PLC ANNUAL REPORT 2024
129
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
.
continued
5. Operating segments
Reporting line items within Venture Capital investing which are not allocated by thematic sector are presented in the ‘Venture Capital investing: other’ segment. The element of
our ‘Healthier future’ thematic area relating to Oxford Nanopore Technologies Limited is disclosed separately given its size.
These activities are described in further detail in the strategic report on pages 16 to 20.
| Year ended 31 December 2024 | ||||||||
Venture | ||||||||
Venture | capital | Venture | ||||||
capital | investing: | capital | Venture | Venture | ||||
investing: | Of which | Tech- | investing: | capital | capital | Third-party | ||
Healthier | Oxford | enriched | Regenerative | investing: | investing: | fund | ||
future | Nanopore | future | future | Other | Total | management | Consolidated | |
Statement of comprehensive Income | £m | £m | £m | £m | £m | £m | £m | £m |
Portfolio return and revenue | ||||||||
Change in fair value of equity and debt investments | (126.0) | (65.6) | (45.6) | (75.1) | 0.6 | (246.1) | – | (246.1) |
(Loss)/gain on disposal of equity and debt investments | 7.5 | (0.7) | 56.1 | – | 0.1 | 63.7 | – | 63.7 |
Change in fair value of limited and limited liability | ||||||||
partnership interests | (12.6) | (12.6) | – | (12.6) | ||||
Revenue from services and other income | 0.3 | 0.3 | 5.2 | 5.5 | ||||
(118.5) | (66.3) | 10.5 | (75.1) | (11.6) | (194.7) | 5.2 | (189.5) | |
Administrative expenses 1 | ||||||||
Carried interest plan credit 1 | 7.9 | 7.9 | – | 7.9 | ||||
Share-based payment charge 1 | (1.6) | (1.6) | (0.3) | (1.9) | ||||
Other administrative expenses 1 | (19.8) | (19.8) | (5.5) | (25.3) | ||||
(13.5) | (13.5) | (5.8) | (19.3) | |||||
Operating loss | (118.5) | (66.3) | 10.5 | (75.1) | (25.1) | (208.2) | (0.6) | (208.8) |
Finance income 1 | 8.1 | 8.1 | 0.7 | 8.8 | ||||
Finance costs 1 | (6.7) | (6.7) | – | (6.7) | ||||
Loss before taxation | (118.5) | (66.3) | 10.5 | (75.1) | (23.7) | (206.8) | 0.1 | (206.7) |
Taxation 1 | (0.3) | (0.3) | – | (0.3) | ||||
Loss for the year | (118.5) | (66.3) | 10.5 | (75.1) | (24.0) | (207.1) | 0.1 | (207.0) |
STATEMENT OF FINANCIAL POSITION | ||||||||
Assets | 463.1 | 106.6 | 101.1 | 215.9 | 352.0 | 1,132.1 | 19.1 | 1,151.2 |
Liabilities 1 | (191.8) | (191.8) | (6.9) | (198.7) | ||||
Net Assets | 463.1 | 106.6 | 101.1 | 215.9 | 160.2 | 940.3 | 12.2 | 952.5 |
Other segment items | ||||||||
Portfolio investment | (36.3) | (1.0) | (8.5) | (15.7) | (2.5) | (63.0) | – | (63.0) |
Cash proceeds | 30.4 | 1.6 | 148.9 | – | 4.1 | 183.4 | – | 183.4 |
BUSINESS OVERVIEW
STRATEGIC REPORT
OUR GOVERNANCE
OUR FINANCIALS
IP GROUP PLC ANNUAL REPORT 2024
130
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
.
continued
5. Operating segments
| Year ended 31 December 2023 |
||||||||
Venture |
||||||||
Venture |
capital |
Venture |
||||||
capital |
investing: |
capital |
Venture |
Venture |
||||
investing: |
Of which |
Tech- |
investing: |
capital |
capital |
Third- |
||
Healthier |
Oxford |
enriched |
Regenerative |
investing: |
investing: |
party fund |
||
future |
Nanopore |
future |
future |
Other |
Total |
management |
Consolidated |
|
Statement of Comprehensive Income |
£m |
£m |
£m |
£m |
£m |
£m |
£m |
£m |
Portfolio return and revenue |
||||||||
Change in fair value of equity and debt investments |
(92.9) |
(31.9) |
(7.0) |
(8.7) |
(2.3) |
(110.9) |
– |
(110.9) |
(Loss)/gain on disposal of equity and debt investments |
(12.9) |
– |
2.1 |
– |
– |
(10.8) |
– |
(10.8) |
Change in fair value of limited and limited liability |
||||||||
partnership interests |
(38.8) |
(38.8) |
– |
(38.8) |
||||
Revenue from services and other income |
1.3 |
1.3 |
4.6 |
5.9 |
||||
(105.8) |
(31.9) |
(4.9) |
(8.7) |
(39.8) |
(159.2) |
4.6 |
(154.6) |
|
Administrative expenses 1 |
||||||||
Carried interest plan credit 1 |
4.7 |
4.7 |
– |
4.7 |
||||
Share-based payment charge 1 |
(2.3) |
(2.3) |
(0.3) |
(2.6) |
||||
Other administrative expenses 1 |
(22.6) |
(22.6) |
(5.4) |
(28.0) |
||||
(20.2) |
(20.2) |
(5.7) |
(25.9) |
|||||
Operating loss |
(105.8) |
(31.9) |
(4.9) |
(8.7) |
(60.0) |
(179.4) |
(1.1) |
(180.5) |
Finance income 1 |
9.4 |
9.4 |
0.4 |
9.8 |
||||
Finance costs 1 |
(5.6) |
(5.6) |
– |
(5.6) |
||||
Loss before taxation |
(105.8) |
(31.9) |
(4.9) |
(8.7) |
(56.2) |
(175.6) |
(0.7) |
(176.3) |
Taxation 1 |
1.9 |
1.9 |
– |
1.9 |
||||
Loss for the year |
(105.8) |
(31.9) |
(4.9) |
(8.7) |
(54.3) |
(173.7) |
(0.7) |
(174.4) |
STATEMENT OF FINANCIAL POSITION |
||||||||
Assets |
576.5 |
173.6 |
231.4 |
275.3 |
310.2 |
1,393.4 |
18.2 |
1,411.6 |
Liabilities 1 |
(214.7) |
(214.7) |
(6.6) |
(221.3) |
||||
Net Assets |
576.5 |
173.6 |
231.4 |
275.3 |
95.5 |
1,178.7 |
11.6 |
1,190.3 |
Other segment items |
||||||||
Portfolio investment |
(33.9) |
– |
(11.9) |
(17.6) |
(9.8) |
(73.2) |
– |
(73.2) |
Cash proceeds |
3.7 |
– |
33.2 |
0.1 |
1.6 |
38.6 |
– |
38.6 |
1
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IP GROUP PLC ANNUAL REPORT 2024
131
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
.
Details of the auditor’s remuneration are set out below:
2024 |
2023 |
|
£000 |
£000 |
|
Audit of these financial statements (KPMG LLP) |
635.9 |
525.3 |
Audit of financial statements of funds and |
153.5 |
139.2 |
subsidiaries of the companies (KPMG LLP) |
||
Audit related assurance services (KPMG LLP) |
74.3 |
72.3 |
Total assurance services |
863.7 |
736.8 |
Operating loss has been arrived at after charging:
2024 |
2023 |
|
£m |
£m |
|
Depreciation of right-of-use asset, property, |
(0.6) |
(0.6) |
plant and equipment |
||
Total employee costs (see note 9) |
(19.0) |
(19.0) |
Other administrative expenses comprise:
2024 |
2023 |
|
£m |
£m |
|
Employee costs (less share-based payment charge) |
14.7 |
16.4 |
Professional services |
3.2 |
4.2 |
Depreciation of tangible assets |
0.6 |
0.6 |
Other expenses |
4.1 |
6.8 |
22.6 |
28.0 |
|
Restructuring costs – labour |
2.4 |
– |
Restructuring costs – professional services |
0.3 |
– |
Total |
25.3 |
28.0 |
9. Employee costs
Employee benefits
Pension obligations
The Group operates a company defined contribution pension scheme for which
all employees are eligible. The assets of the scheme are held separately from
those of the Group in independently administered funds. The Group currently
makes contributions on behalf of employees to this scheme or to employee
personal pension schemes on an individual basis. The Group has no further
payment obligations once the contributions have been paid. The contributions are
recognised as employee benefit expenses when they are due.
The Group engages in equity-settled share-based payment transactions in
respect of services receivable from employees, by granting employees conditional
awards of ordinary shares subject to certain vesting conditions. Conditional
awards of shares are made pursuant to the Group’s Long-Term Incentive Plan
(“LTIP”) awards and/or the Group’s Annual Incentive Scheme (“AIS”). The fair value
of the shares is estimated at the date of grant, taking into account the terms and
conditions of the award, including market-based performance conditions.
The fair value at the date of grant is recognised as an expense over the period
that the employee provides services, generally the period between the start of the
performance period and the vesting date of the shares. The corresponding credit
is recognised in retained earnings within total equity. The fair value of services
is calculated using the market value on the date of award and is adjusted for
expected and actual levels of vesting. Where conditional awards of shares lapse,
the expense recognised to date is credited to the statement of comprehensive
income in the year in which they lapse. Where the terms for an equity-settled
award are modified, and the modification increases the total fair value of the
share-based payment or is otherwise beneficial to the employee at the date of
modification, the incremental fair value is amortised over the vesting period.
See the audited section of the Directors’ Remuneration Report on pages 78 to 100
BUSINESS OVERVIEW
STRATEGIC REPORT
OUR GOVERNANCE
OUR FINANCIALS
continued
9. Employee costs
IP GROUP PLC ANNUAL REPORT 2024
132
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
.
2024 |
2023 |
|
£m |
£m |
|
Salaries |
10.6 |
11.3 |
Defined contribution pension cost |
1.1 |
1.1 |
Other bonuses accrued in the year |
1.8 |
2.6 |
Social security |
1.2 |
1.4 |
Restructuring costs – labour |
2.4 |
– |
Employee costs |
17.1 |
16.4 |
Share–based payment charge (see note 21) |
1.9 |
2.6 |
Total employee costs |
19.0 |
19.0 |
by the Group during the year was 98, all of whom were involved in management and
can be found in the audited sections of the Directors’ Remuneration Report on
Full provision is made for deferred tax on all temporary differences resulting
from the carrying value of an asset or liability and its tax base. Deferred tax is
determined using tax rates (and laws) that have been enacted or substantively
enacted by the reporting date and are expected to apply when the related
deferred tax asset is realised or deferred tax liability settled. Deferred tax assets
are recognised to the extent that it is probable that the deferred tax asset will be
2024 |
2023 |
|
£m |
£m |
|
Current tax |
||
UK corporation tax on profits for the year |
– |
– |
Foreign tax |
– |
– |
– |
– |
|
Deferred tax charge/(credit) |
0.3 |
(1.9) |
Total tax |
0.3 |
(1.9) |
The Group primarily seeks to generate capital gains from its holdings in spin-out
companies over the longer term. The majority of these capital gains qualify for UK
Substantial Shareholding Exemption (“SSE”) and are therefore not taxable, resulting
in the Group making annual net operating losses from its operations from a UK tax
perspective.
Gains arising on sales of holdings which do not qualify for SSE will ordinarily give rise
to taxable profits for the Group, to the extent that these exceed the Group’s ability to
offset gains against current and brought forward tax losses (subject to the relevant
restrictions on the use of brought–forward losses). In such cases, a deferred tax liability
The amount for the year can be reconciled to the loss per the statement of
comprehensive income as follows:
2024 |
2023 |
|
£m |
£m |
|
Loss before tax |
(206.7) |
(176.3) |
Tax at the UK corporation tax rate of 25% (2023: 23.52%) |
(51.7) |
(41.5) |
Expenses not deductible for tax purposes |
(1.8) |
(1.1) |
Income not taxable |
(15.9) |
2.5 |
Fair value movement on investments qualifying for SSE |
65.8 |
40.9 |
Movement on share–based payments |
0.3 |
0.6 |
Movement in tax losses arising not recognised |
3.6 |
0.1 |
CIR (Corporate Interest Rate) reactivation |
– |
(3.1) |
Foreign tax |
– |
0.1 |
Rate change on deferred tax |
– |
(0.4) |
Total tax charge/(credit) |
0.3 |
(1.9) |
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IP GROUP PLC ANNUAL REPORT 2024
133
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
.
continued
10. Taxation
At 31 December 2024, deductible temporary differences and unused tax losses, for
which no deferred tax asset has been recognised, totalled £333.0m (2023: £298.3m).
An analysis is shown below:
2024 |
2023 |
|||
Deferred |
Deferred |
|||
Amount |
tax |
Amount |
tax |
|
£m |
£m |
£m |
£m |
|
Share–based payment |
(52.4) |
(13.1) |
(48.1) |
(12.0) |
costs and other temporary |
||||
differences |
||||
Unused tax losses |
(279.6) |
(69.9) |
(250.2) |
(62.6) |
Total unrecognised |
||||
deferred tax asset |
(333.0) |
(83.0) |
(298.3) |
(74.6) |
At 31 December 2024, deductible temporary differences and unused tax losses, for
which a deferred tax liability has been recognised, totalled £18.0m (2023: £18.9m). An
analysis is shown below:
2024 |
2023 |
|||
Deferred |
Deferred |
|||
Amount |
tax |
Amount |
tax |
|
£m |
£m |
£m |
£m |
|
Temporary timing differences |
39.6 |
9.9 |
54.1 |
13.5 |
Unused tax losses |
(21.6) |
(5.4) |
(35.2) |
(8.7) |
Total recognised |
||||
deferred tax liability |
18.0 |
4.5 |
18.9 |
4.8 |
2024 |
2023 |
|
Earnings |
£m |
£m |
Earnings for the purposes of basic and dilutive earnings |
(202.6) |
(171.3) |
per share |
2024 |
2023 |
|
Number of |
Number of |
|
Number of shares |
shares |
shares |
Weighted average number of ordinary shares for the |
1,014,672,586 |
1,036,400,406 |
purposes of basic earnings per share |
||
Effect of dilutive potential ordinary shares: |
– |
– |
Options or contingently issuable shares |
||
Weighted average number of ordinary shares for the |
||
purposes of diluted earnings per share |
1,014,672,586 |
1,036,400,406 |
2024 |
2023 |
|
pence |
pence |
|
Basic |
(19.97) |
(16.53) |
Diluted |
(19.97) |
(16.53) |
No adjustment has been made to the basic loss per share in the years ended
31 December 2024 and 31 December 2023, as the exercise of share options would have
the effect of reducing the loss per ordinary share and therefore is not dilutive.
Potentially dilutive ordinary shares include contingently issuable shares arising under
the Group’s LTIP arrangements, and options issued as part of the Group’s Sharesave
schemes and Deferred Bonus Share Plan (for annual bonuses deferred under the
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134
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
.
Financial assets and liabilities
Financial assets and liabilities are recognised in the balance sheet when the relevant Group entity becomes a party to the contractual provisions of the instrument. De–
recognition occurs when rights to cash flows from a financial asset expire, or when a liability is extinguished.
Derivative financial instruments are accounted for at fair value through profit and loss in accordance with IFRS 9. They are revalued at the balance sheet date based on market
prices, with any change in fair value being recorded in profit and loss. Derivatives are recognised in the Consolidated statement of financial position as a financial asset when
their fair value is positive and as a financial liability whey their fair value is negative. The Group’s derivative financial instruments are not designated as hedging instruments.
In respect of regular way purchases or sales, the Group uses trade date accounting to recognise or derecognise financial assets.
The Group classifies its financial assets into one of the categories listed below, depending on the purpose for which the asset was acquired.
Held for trading and financial assets are recognised at fair value through profit and loss. This category includes equity investments, debt investments and investments in
limited partnerships. Investments in associated undertakings, which are held by the Group with a view to the ultimate realisation of capital gains, are also categorised as
at fair value through profit or loss. This measurement basis is consistent with the fact that the Group’s performance in respect of investments in equity investments, limited
partnerships and associated undertakings is evaluated on a fair value basis in accordance with an established investment strategy.
Financial assets at fair value through profit or loss are initially recognised at fair value and any gains or losses arising from subsequent changes in fair value are presented in
These assets are non–derivative financial assets with fixed and determinable payments that are not quoted in an active market. They arise principally through the provision
Deposits
Deposits comprise longer–term deposits held with financial institutions with an original maturity of greater than three months and, in line with IAS 7 are not included within
cash and cash equivalents. Cash flows related to investments in, and maturities of amounts held on deposit are presented within investing activities in the consolidated
statement of cash flows. Interest income related to deposits is included within cashflows from operating activities.
Cash and cash equivalents include cash in hand and short-term deposits held with financial institutions with an original maturity of three months or less. Interest income
Current financial liabilities are composed of trade payables and other short–term monetary liabilities, which are recognised at amortised cost.
Non–current liabilities are composed of loans from Limited Partners of consolidated funds, outstanding amounts drawn down from a debt facility provided by the European
Investment Bank, loan notes provided by Phoenix Group, carried interest plans liabilities, and other liabilities.
Unless otherwise indicated, the carrying amounts of the Group’s financial liabilities are a reasonable approximation to their fair value. Non–current liabilities are recognised
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12. Categorisation of financial instruments
IP GROUP PLC ANNUAL REPORT 2024
135
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
.
At fair |
|||
value |
|||
through |
|||
profit or |
Amortised |
||
loss |
cost |
Total |
|
Financial assets |
£m |
£m |
£m |
Equity investments |
713.8 |
– |
713.8 |
Debt investments |
51.6 |
– |
51.6 |
Limited and limited liability partnership interests |
58.1 |
– |
58.1 |
Assets held for sale |
13.9 |
– |
13.9 |
Trade and other receivables |
– |
6.3 |
6.3 |
Receivables on sale of debt and equity investments |
20.1 |
– |
20.1 |
Deposits |
– |
170.0 |
170.0 |
Cash and cash equivalents |
– |
115.6 |
115.6 |
At 31 December 2024 |
857.5 |
291.9 |
1,149.40 |
Equity investments |
1,011.5 |
– |
1,011.5 |
Debt investments |
83.7 |
– |
83.7 |
Limited and limited liability partnership interests |
69.7 |
– |
69.7 |
Trade and other receivables |
– |
8.2 |
8.2 |
Receivables on sale of debt and equity investments |
9.2 |
– |
9.2 |
Deposits |
– |
126.0 |
126.0 |
Cash and cash equivalents |
– |
100.9 |
100.9 |
At 31 December 2023 |
1,174.1 |
235.1 |
1,409.2 |
In light of the credit ratings applicable to the Group’s cash and cash equivalent and deposits, (see note 3 for further details), we estimate expected credit losses on the Group’s
receivables to be under £0.1m and therefore not disclosed further (2023: less than £0.1m), similarly we have not presented an analysis of credit ratings of trade and other
receivable and receivables on sale of debt and equity investments.
All net fair value gains in the year are attributable to financial assets designated at fair value through profit or loss on initial recognition (2023: all net fair value gains in the year
are attributable to financial assets designated at fair value through profit or loss on initial recognition).
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
.
Fair value hierarchy
The Group classifies financial assets using a fair value hierarchy that reflects the significance of the inputs used in making the related fair value measurements. The
level in the fair value hierarchy, within which a financial asset is classified, is determined on the basis of the lowest level input that is significant to that asset’s fair value
measurement. The fair value hierarchy has the following levels:
Level 1 – Quoted prices in active markets.
Level 2 – Inputs other than quoted prices that are observable, such as prices from market transactions.
Level 3 – One or more inputs that are not based on observable market data.
Equity investments
Fair value is the underlying principle and is defined as “the price that would be received to sell an asset in an orderly transaction between market participants at the
measurement date” (IPEV guidelines, December 2022).
Where the equity structure of a portfolio company involves different class rights in a sale or liquidity event, the Group takes these different rights into account when forming
a view on the value of its investment.
Valuation techniques used
The fair value of unlisted securities is established using appropriate valuation techniques in line with December 2022 IPEV guidelines. The selection of appropriate valuation
techniques is considered on an individual basis in light of the nature, facts and circumstances of the investment and in the expected view of market participants. The Group
selects valuation techniques which make maximum use of market–based inputs. Techniques are applied consistently from period to period, except where a change would
result in better estimates of fair value. Several valuation techniques may be used so that the results of one technique may be used as a cross check/corroboration of an
alternative technique.
Valuation techniques used include:
•
Quoted bid price: The fair values of quoted investments are based on bid prices in an active market at the reporting date.
•
Funding transaction: The fair value of unquoted investments which have recently raised equity financing may be calculated with reference to the price of the recent
investment. For investments for which the capital structure involves different class rights in a sale or liquidity event, a full scenario analysis via the use of the probability–
weighted expected return method (“PWERM”) is used to calculate the implied values of the existing share classes.
•
Other: Future market/commercial events: Scenario analysis is used, which is a forward–looking method that considers one or more possible future scenarios. These
methods include simplified scenario analysis and relative value scenario analysis, which tie to the fully diluted (“post–money”) equity value. The PWERM method may be
utilised for this valuation technique for investments which have an equity structure which involves different class rights in a sale or liquidity event.
•
Other: Adjusted funding transaction price based on past performance – upwards/downwards: The milestone approach involves making an assessment as to whether
there is an indication of change in fair value based on a consideration of the relevant milestones, typically agreed at the time of making the investment decision.
•
Other: Discounted cash flows: deriving the value of a business by calculating the present value of expected future cash flows.
•
Other: Revenue multiple: the application of an appropriate multiple to a performance measure (such as earnings or revenue) of the investee company in order to derive
a value for the business.
The fair value indicated by a recent transaction is used to calibrate inputs used with valuation techniques including those noted above. At each measurement date, an
assessment is made as to whether changes or events subsequent to the relevant transaction would imply a change in the investment’s fair value. The price of a recent
investment is not considered a standalone valuation technique (see further considerations below). Where the current fair value of an investment is unchanged from the price of
a funding transaction, the Group refers to the valuation basis as ‘Funding transaction’.
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13. Portfolio: Equity and debt investments
IP GROUP PLC ANNUAL REPORT 2024
137
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
.
Price of recent investment as an input in assessing fair value
The Group considers that fair value estimates which are based primarily on observable market data will be of greater reliability than those based on assumptions. Given
the nature of the Group’s investments in seed, start–up and early–stage companies, where there are often no current and no short–term future earnings or positive cash
flows, it can be difficult to gauge the probability and financial impact of the success or failure of development or research activities and to make reliable cash flow forecasts.
Consequently, in many cases the most appropriate approach to fair value is a valuation technique which is based on market data such as the price of a recent investment,
and market participant assumptions as to potential outcomes.
Calibrating such scenarios or milestones may result in a fair value equal to price of recent investment for a limited period of time. Often qualitative milestones provide a
directional indication of the movement of fair value.
In applying a calibrated scenario or milestone-approach to determine fair value, consideration is given to performance against milestones that were set at the time of
the original investment decision, as well as taking into consideration the key market drivers of the investee company and the overall economic environment. Factors that
the Group considers include, inter alia, technical measures such as product development phases and patent approvals, financial measures such as cash burn rate and
profitability expectations, and market and sales measures such as testing phases, product launches and market introduction.
Where the Group considers that there is an indication that the fair value has changed, an estimation is made of the required amount of any adjustment from the last price of
recent investment.
Where a deterioration in value has occurred, the Group reduces the carrying value of the investment to reflect the estimated decrease. If there is evidence of value creation
the Group may consider increasing the carrying value of the investment; however, in the absence of additional financing rounds or profit generation it can be difficult to
determine the value that a market participant may place on positive developments given the potential outcome and the costs and risks to achieving that outcome and
accordingly caution is applied.
Debt investments
Debt investments are generally unquoted debt instruments which are convertible to equity at a future point in time. Such instruments are considered to be hybrid
instruments containing a fixed rate debt host contract with an embedded equity derivative. The Group designates the entire hybrid contract at fair value through profit or
loss on initial recognition and, accordingly, the embedded derivative is not separated from the host contract and accounted for separately. The price at which the debt
investment was made may be a reliable indicator of fair value at that date depending on facts and circumstances. Any subsequent remeasurement will be recognised as
changes in fair value in the statement of comprehensive income.
Disclosure of unrealised and realised gains and losses
‘Change in fair value of equity and debt investments’ per the Group Income Statement represents unrealised revaluation gains and losses on the Group’s portfolio of
investment.
Gains on disposal of equity investments represents the difference between the fair value of consideration received and the carrying value at the start of the accounting
period for the investment in question.
Changes in fair values of investments do not constitute revenue.
Assets held for sale
During 2024, an element of the Group’s investments in Artios Pharma Limited, Nexeon Limited and Mission Therapeutics Limited were included in a secondary sale of shares
which was agreed within the year but which had not completed at year end. In addition, the Group had commenced selling a pre-specified proportion of its shares in
Centessa Pharmaceuticals plc prior to year end, with the share disposal completing in early 2025. Accordingly these investments met the classification criteria as assets held
13. Portfolio: Equity and debt investments
IP GROUP PLC ANNUAL REPORT 2024
138
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
.
Equity and Debt Investments within the Top 10 by holding value
The following table lists information on the debt and equity investments within the most valuable 10 portfolio company investments, representing 58% of the total portfolio value
(2023: 61%). Detail on the performance of these companies is included in the portfolio review section of the Strategic Report.
The Group engages third-party valuation specialists to provide valuation support where required; during the period we commissioned third-party valuations on four out of the
top 10 holdings (2023: 6).
Fair value | Fair value | ||
of Group | of Group | ||
holding at | holding at | ||
31 Dec 2024 | 31 Dec 2023 | ||
Company name | Primary valuation basis | £m | £m |
Oxford Nanopore Technologies plc | Quoted bid price | 106.6 | 173.6 |
Istesso Limited * | DCF | 91.9 | 113.8 |
Hysata Pty Ltd | Funding transaction < 12 months, PWERM | 76.8 | 70.0 |
Oxa Autonomy Limited * | Adjusted funding – downwards | 42.7 | 65.7 |
Hinge Health, Inc.* | Adjusted funding – downwards | 36.6 | 34.0 |
First Light Fusion Limited * | Future event | 25.0 | 64.9 |
Pulmocide Limited | Adjusted funding – upwards | 23.1 | 19.2 |
Mission Therapeutics Limited | Funding transaction < 12 months, PWERM | 22.5 | 15.8 |
Nexeon Limited | Future event | 19.4 | 11.8 |
Artios Pharma Limited | Adjusted funding – downwards | 17.4 | 17.4 |
Total | 462.0 | 586.2 |
* Third-party valuation specialists used for 31 December 2024 valuation. In these instances, the valuation basis is management’s assessment of the primary valuation input used by the third-party
valuation specialist.
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139
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
.
continued
13. Portfolio: Equity and debt investments
Level 1 | Level 3 | |||
Equity | Unquoted | Debt | ||
investments | equity | investments | ||
in quoted | investments | in unquoted | ||
spin–out | in spin–out | spin–out | ||
companies | companies | companies | Total | |
£m | £m | £m | £m | |
At 1 January 2023 | 228.7 | 892.1 | 38.1 | 1,158.9 |
Investments | – | 32.8 | 30.6 | 63.4 |
Transaction–based reclassifications | – | 7.8 | (7.8) | – |
Other transfers between hierarchy levels | 1.8 | (1.8) | – | – |
Disposals | (1.6) | (7.6) | (0.3) | (9.5) |
Fees settled via equity | – | 0.1 | – | 0.1 |
Other change in portfolio value | – | (6.8) | – | (6.8) |
Change in fair value 1 | (24.5) | (103.7) | 23.5 | (104.7) |
Change in FX 1 | (0.6) | (5.2) | (0.4) | (6.2) |
At 1 January 2024 | 203.8 | 807.7 | 83.7 | 1,095.2 |
Investments | 1.5 | 40.9 | 18.4 | 60.8 |
Transaction–based reclassifications | 0.3 | 49.5 | (49.8) | – |
Other transfers between hierarchy levels | – | – | – | – |
Disposals | (11.8) | (116.6) | (1.0) | (129.4) |
Reclassification to Assets Held for Sale | (7.1) | (6.8) | – | (13.9) |
Other change in portfolio value | – | (1.1) | (0.1) | (1.2) |
Change in fair value 1 | (53.7) | (187.4) | 1.7 | (239.4) |
Change in FX 1 | 0.1 | (5.5) | (1.3) | (6.7) |
At 31 December 2024 | 133.1 | 580.7 | 51.6 | 765.4 |
1
The total unrealised change in fair value and FX in respect of Level 3 investments was a loss of £192.5m (2023: loss of £85.8m).
Unquoted equity and debt investment are measured in accordance with IPEV guidelines with reference to the most appropriate information available at the time of
measurement. Where relevant, several valuation approaches are used in arriving at an estimate of fair value for an individual asset.
For assets and liabilities that are recognised at fair value on a recurring basis, the Group determines whether transfers have occurred between levels in the hierarchy by re-
assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period. Transfers between
levels are then made as if the transfer took place on the first day of the period in question, except in the cases of transfers between tiers based on an initial public offering (“IPO”)
of an investment wherein the changes in value prior to the IPO are calculated and reported in level 3, and those changes post are attributed to level 1.
Transfers between level 3 and level 1 occur when a previously unquoted investment undertakes an initial public offering, resulting in its equity becoming quoted on an active
market. In the current period, transfers of this nature amounted to £nil (2023: £1.8m). Transfers between level 1 and level 3 would occur when a quoted investment’s market
becomes inactive, or the portfolio company elects to delist. There have been no instances in the current year, totalling £nil (2023: one instance, totalling £nil).
Transfers between level 3 debt and level 3 equity occur upon conversion of convertible debt into equity. In the current year, transfers of this nature amounted to £49.8m (2023: £7.8m).
BUSINESS OVERVIEW
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.
continued
13. Portfolio: Equity and debt investments
IP GROUP PLC ANNUAL REPORT 2024
140
In the year, a transfer between level 3 debt and level 1 equity of £0.3m (2023: nil) occurred when a convertible loan issued to a listed company (Abliva AB) was converted into
listed equity.
The Group has considered the impact of ESG and climate change issues on its portfolio, including performing a materiality assessment (see summary TCFD disclosures on
page 32) which suggested the Group’s portfolio has a relatively low level of climate change risk, and clear areas of opportunity via the Group’s Cleantech investments. For an
overview of the portfolio split by sector, please refer to the Managing Partner’s Portfolio Review on page 17. We believe the Group’s current valuation approach, reflects market
participant assessment of the ESG and climate risks and opportunities of our portfolio.
Valuation inputs and sensitivities
Unobservable inputs are typically portfolio company-specific and, based on a materiality assessment, are not considered significant either at an individual company level or in
aggregate where relevant for common factors such as discount rates.
The sensitivity analysis table below has been prepared in recognition of the fact that some of the valuation methodologies applied by the Group in valuing the portfolio
investments involve subjectivity in their significant unobservable inputs. Furthermore, given that many of the Group’s portfolio are the early stage or growth stage of development,
their valuations can be significantly impacted by factors including, but not limited to, the availability of financing, technical and commercial setbacks, market developments and
regulatory approvals.
The table illustrates the possible impact on valuation of different sensitivities. The varying levels of sensitivity applied in the table below are intended to reflect the relative level of
judgment in applying the valuation approach. Additional analysis for Istesso Limited and Hinge Health, Inc is provided after the table below, which merit specific focus in light of
the specific facts and circumstances of these investments.
Variable | |||||||||
Fair value of | input | Fair value of | |||||||
Valuation technique | investments | Variable inputs | sensitivity | Positive impact | Negative impact | investments | |||
2024 | 2023 | ||||||||
£m | % | £m | % of NAV | £m | % of NAV | £m | |||
Quoted | 133.1 | n/a | n/a | n/a | n/a | n/a | n/a | 203.8 | |
Funding transaction | 217.8 | • | Inputs used in PWERM models to quantify the | +/–5 | 10.9 | 1.1 | (10.9) | (1.1) | 187.9 |
<12 months | impact of funding transactions on subordinate | ||||||||
securities including exit values and timelines. | |||||||||
Funding transaction | 54.9 | +/–5 | 2.7 | 0.3 | (2.7) | (0.3) | 162.7 | ||
>12 months | |||||||||
Other: Future market/ | 60.7 | • | Estimated impact of future event | +/–10 | 6.1 | 0.6 | (6.1) | (0.6) | 25.0 |
commercial events | • | Execution risk discount applied to future event | |||||||
(where positive) | |||||||||
• | Scenario probabilities | ||||||||
| • | Discount rates | ||||||||
• | Extent to which future event is indicative of facts | ||||||||
and circumstances in existence at the balance | |||||||||
sheet date | |||||||||
Other: Adjusted | 35.9 | • | Company-specific milestone analysis resulting | +/–10 | 3.6 | 0.4 | (3.6) | (0.4) | 99.9 |
financing price based | in a positive calibration adjustment versus the | ||||||||
on past performance – | previous funding transaction price | ||||||||
Upwards* | |||||||||
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
.
continued
13. Portfolio: Equity and debt investments
Variable | |||||||||
| Fair value of | input | Fair value of | |||||||
Valuation technique | investments | Variable inputs | sensitivity | Positive impact | Negative impact | investments | |||
| 2024 | 2023 | ||||||||
| £m | % | £m | % of NAV | £m | % of NAV | £m | |||
Other: Adjusted | 152.7 | • | Company-specific milestone analysis resulting | +/–10 | 15.3 | 1.6 | (15.3) | (1.6) | 203.9 |
financing price based | in a negative calibration adjustment versus the | ||||||||
on past performance – | previous funding transaction price | ||||||||
Downwards* | |||||||||
Other: Revenue | 13.1 | • | Estimate of future recurring revenues | +/–10 | 1.3 | 0.1 | (1.3) | (0.1) | 85.4 |
multiple* | • | Selection of comparable companies | |||||||
| • | Discount/premium to multiple | ||||||||
Other: DCF* | 97.2 | • | Discount rate | +/–20 | 19.4 | 2.0 | (19.4) | (2.0) | 126.6 |
| • | Clinical trial and drug approval success rates | ||||||||
| • | Estimate of likelihood, value and structure of a | ||||||||
potential pharmaceutical partnership | |||||||||
| • | Estimate of addressable market | ||||||||
| • | Market share and royalty rates | ||||||||
| • | Probability estimation of liquidity event | ||||||||
| • | Estimate of forward exchange rates | ||||||||
Total | 765.4 | 59.3 | 6.1 | (59.3) | (6.1) | 1,095.2 | |||
* Due to the large number of inputs used in the valuation of these assets, unobservable inputs are below a size threshold that would warrant disclosure under IFRS 13, paragraph 93(d). Due to the large
number of inputs, any range of reasonably possible alternative assumptions does not significantly impact the fair value and hence no valuation sensitivity is required under IFRS 13 paragraph 93(h)(ii).
Within the ‘Other: DCF’ category is Istesso Limited, in which we value the equity of IP Group’s holding at £55.0m at 31 December 2024 (2023: £86.7m).
The Group was notified of the outcome of Istesso’s Phase 2b trial for Leramistat in February 2025, reflecting information which Istesso Limited had received prior to
31 December 2024. As a result, the outcome of the trial was judged by management to be an adjusting post balance sheet event, reflecting facts and circumstances which were
knowable at 31 December 2024.
The valuation of the equity in this company is based on a DCF model which assesses the value of the future cash flows arising from the continued development of the company’s
lead asset Leramistat via an additional focussed Phase 2b trial, followed by a pharmaceutical partnership, after which the drug would be taken into a Phase 3 trial followed by
regulatory approval. This DCF model has been updated to reflect the outcome of Istesso’s Phase 2b trial, with the main impact being a delay in market launch of the drug by 3½
years. The inputs in the DCF model include:
•
the drug development timeline, based on the current development pathway which would see the drug being approved in mid-2031 if successful
•
probability of Ph2b and Ph3 clinical trial success, based on comparable clinical trial success rates within autoimmune indications in Ph2 and Ph2 trials, with an estimate of the
overall Ph2 rate split between Ph2a (now complete) and Ph2b
•
the selection of relevant comparable deal sizes, based on comparable publicly announced deals within the autoimmune space
•
the probability of securing a pharmaceutical partner post Ph2b
•
Leramistat’s sales profile based on a bottom up model which estimates the number of patients failing 1st line biological drug treatment, with the assumption that Leramistat
would address this available patient population
•
royalty rates receivable by Istesso of drug sales, based on comparable publicly announced deals within the autoimmune space
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continued
13. Portfolio: Equity and debt investments
IP GROUP PLC ANNUAL REPORT 2024
142
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
.
•
discount rate, based on the WACC of a large pharma partner which would take on
development of the drug for Phase 3 and onwards
•
The remaining costs to develop Leramistat up until the point of drug partnership
The valuation is sensitive to the inputs noted above. It is in the Group’s view that the
valuation would be impacted by a combination of changes to these inputs but to
provide context to the sensitivity of each input to the valuation as required IAS 1, the
table below sets out the impact on valuation of changing critical inputs in isolation.
Impact on |
||||
IPG equity |
||||
Assumption |
holding |
Impact % |
||
Input |
used |
Sensitivity |
£m |
of NAV 1 |
Phase 2b success rate |
63% |
+/– 10% |
£12m |
+/– 1.2% |
Selected pharma partner |
Bottom |
|||
deal size |
quartile |
Median |
£60m |
+6.2% |
Pharma partnership probability |
90% |
+/– 10% |
£7m |
+/– 0.7% |
Royalty rate |
15% |
+/– 5% |
£14m |
+/– 1.4% |
1
Being impact on IPG equity holding as a proportion of the Group’s Net Asset Value
Under the DCF methodology, in the event that the drug fails to progress to the market
as a result of trial failures (at either Phase 2b or Phase 3), failure to receive regulatory
approval or failure to partner with a pharmaceutical partner, the model assumes a
zero value outcome.
The modelling approach focuses on a core drug development scenario as outlined
above, however other outcomes such as the requirement to conduct more than one
additional Phase 2b study are possible. In this outcome, the value of the programme
would be materially lower than the concluded fair value estimate.
A valuation range was not calculated in respect of the Group’s debt investment in
Istesso Limited, which totals £36.9m (2023: £27.0m). In the event of a negative outcome
in terms of the drug development pathway, this would be anticipated to have a
material negative impact on the value of the Group’s debt investment.
Within the ‘Other: Adjusted financing price based on past performance – Downwards’
category is Hinge Health, Inc, whose equity value is £36.6m at 31 December 2024
(2023: £34.0m). The valuation of this company is based on the last financing round
price, with a downwards calibration adjustment applied. Our estimated range for the
value of the Group’s equity investment in Hinge Health, Inc. as at 31 December 2024 is
£30m to £38m (2023: £36m to £50m). In March 2025, the company filed a registration
statement with the US SEC for an intended NYSE IPO; as at the publication date of the
accounts the outcome and pricing range of the IPO is uncertain, but could result in a
material post year end movement in the Group’s valuation.
2024 |
2023 |
|
Change in fair value in the year (including fx) |
£m |
£m |
Fair value gains |
42.7 |
97.4 |
Fair value losses |
(288.8) |
(208.3) |
Total |
(246.1) |
(110.9) |
The Company’s interests in subsidiary undertakings are listed in note 11 to the
Company’s financial statements.
Currency risk
Exposure to currency risk through asset allocation, which is calculated by reference
to the currency in which the asset is quoted, is shown below. A +/-1% sensitivity has
been included to demonstrate the effect of fluctuations in foreign exchange rates. 1% is
considered to be appropriate due to the stable currencies in which we hold cash.
At 31 December 2024 |
||
Investments |
Sensitivity |
|
£m |
+/- 1% £m |
|
US dollar |
96.8 |
1.0 |
Australian dollar |
94.0 |
0.9 |
Euro |
12.9 |
0.1 |
Swedish Krona |
5.7 |
0.1 |
Total |
209.4 |
2.1 |
At 31 December 2023 |
||
Investments |
Sensitivity |
|
£m |
+/- 1% £m |
|
US dollar |
85.5 |
0.8 |
Australian dollar |
99.9 |
1.0 |
Euro |
6.7 |
0.1 |
Swedish Krona |
1.6 |
– |
Total |
193.7 |
1.9 |
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
.
IP GROUP PLC ANNUAL REPORT 2024
143
partnership interests
Valuations in respect of Limited and Limited Liability Funds are based on IP Group’s
share of the Net Asset Value of the fund as per the audited financial statements
prepared by the fund manager. The key judgments in the preparation of these
accounts relate to the valuation of unquoted investments. Management conduct
an analysis of the appropriateness of valuations of specific equity and debt
investments in portfolio companies held within the fund in question. In making
these assessments, the Group has applied a valuation methodology consistent
with that set out in note 13. Where a significant divergence from the Group’s
valuation methodology is identified, an adjustment is made to the fund manager
NAV statement to bring the value of the fund investment in line with the Group’s
accounting policy in respect of debt and equity investments.
Investments in these Limited and Limited Liability Partnerships are recognised at
fair value through profit and loss in accordance with IFRS 9.
‘Changes in fair value of Limited Partnership investments’ per the Group Income
Statement represents revaluation gains and losses on the Group’s investment in
Fund interests are valued on a net asset basis, estimated based on the managers’
NAVs. Manager’s NAVs apply valuation techniques consistent with IFRS and are subject
to audit. Where audited accounts are received in arrears of the publication of the
Group’s results hence these are marked as unaudited in the table below, however a
retrospective review of audited accounts versus earlier unaudited results is carried out.
Managers’ NAVs are usually published quarterly, two to four months after the quarter
end. The below table analyses the fund valuations with reference to manager NAV
dates used at 31 December.
Limited & Limited Liability |
Functional |
2024 |
2023 |
|
Partnerships |
currency |
Status |
£m |
£m |
IPG Cayman Fund L.P. |
USD |
Unaudited |
37.7 |
46.0 |
(Longview Innovation) |
||||
UCL Technology Fund L.P. |
GBP |
Unaudited |
18.0 |
20.7 |
Technikos LLP |
GBP |
Unaudited |
2.4 |
3.0 |
Total |
58.1 |
69.7 |
We reviewed the underlying valuation methodologies adopted by our Fund
managers for all Fund investments of material value. Following our review of valuation
methodologies we were satisfied that the techniques utilised were appropriate.
Limited & Limited Liability Partnerships movements in year |
£m |
At 1 January 2023 |
99.6 |
Investments during the year |
9.8 |
Distribution from Limited Partnership funds |
(0.9) |
Change in fair value during the year |
(36.5) |
Currency revaluation |
(2.3) |
At 1 January 2024 |
69.7 |
Investments during the year |
2.2 |
Distribution from Limited Partnership funds |
(1.2) |
Change in fair value during the year |
(13.1) |
Currency revaluation |
0.5 |
At 31 December 2024 |
58.1 |
The Group considers interests in limited and limited liability partnerships to be level 3 in
the fair value hierarchy throughout the current and previous financial years.
The valuation of the Group’s interests in limited and limited liability partnerships is a
significant accounting estimate, as management has applied judgment in considering
whether to adjust the NAV estimates provided by the fund manager. This assessment
was based on an analysis of the appropriateness of valuations of specific equity and
debt investments in portfolio companies held within the fund in question. In making
these assessments, the Group has applied a valuation methodology consistent with
that set out in note 13. Unobservable inputs are portfolio company-specific and, based
on a materiality assessment, are not considered individually significant either at an
individual company level or in aggregate where relevant for common factors such as
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IP GROUP PLC ANNUAL REPORT 2024
144
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
.
2024 |
2023 |
|
£m |
£m |
|
Proceeds from sale of equity and debt investments |
182.2 |
37.7 |
Movement in amounts receivable on sale of debt and |
10.9 |
(39.0) |
equity investments |
||
Carrying value of investments |
(129.4) |
(9.5) |
Gain/(loss) on disposal |
63.7 |
(10.8) |
Gain/(loss) on disposal of investments is calculated as disposal proceeds plus
deferred and contingent consideration receivable in respect of the sale, less the
carrying value of the investment at the point of disposal.
The subsequent receipt of deferred and contingent consideration amounts is reflected
in the above table as a positive amount of disposal proceeds and a negative
movement in amounts receivable on sale of debt and equity investments, resulting in
2024 |
2023 |
|
Current assets |
£m |
£m |
Trade debtors |
0.7 |
0.6 |
Prepayments |
0.8 |
0.8 |
Interest receivable |
1.3 |
2.9 |
Other receivables |
3.5 |
3.9 |
Trade and other receivables |
6.3 |
8.2 |
The Directors consider the carrying amount of trade and other receivables at
amortised cost to approximate their fair value. All receivables are interest free,
repayable on demand and unsecured.
17. Receivable on sale of debt and equity investments
Consideration in respect of the sale of debt and equity investments may include
elements of deferred consideration where payment is received at a pre–agreed
future date, and/or elements of contingent consideration where payment is
received based on, for example, achievement of specific drug development
milestones. In such instances, these amounts are designated at fair value through
profit and loss on initial recognition. Any subsequent remeasurement will be
2024 |
2023 |
|
£m |
£m |
|
Deferred and contingent consideration (non-current) |
18.5 |
7.8 |
Deferred and contingent consideration (current) |
1.6 |
1.4 |
Total deferred and contingent consideration |
20.1 |
9.2 |
The following table summarises the primary valuation basis used to value the deferred
and contingent consideration:
2024 |
2023 |
||
Investment |
Primary Valuation Basis |
£m |
£m |
Featurespace |
Discounted sale amount |
11.1 |
– |
Oxular |
Discounted sale amount |
1.6 |
– |
Kynos |
Discounted sale amount |
0.5 |
– |
Garrison |
Discounted sale amount |
0.7 |
– |
Enterprise |
Probability-weighted DCF model |
4.4 |
7.7 |
Therapeutics |
reflecting potential milestone |
||
Holdings Limited |
payments |
||
Zihipp Limited |
Probability-weighted DCF model |
1.8 |
1.5 |
reflecting potential milestone |
|||
payments |
|||
Total |
20.1 |
9.2 |
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IP GROUP PLC ANNUAL REPORT 2024
145
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
.
2024 |
2023 |
|
Current liabilities |
£m |
£m |
Trade payables |
0.3 |
0.5 |
Social security expenses |
0.6 |
0.6 |
Bonus accrual |
2.7 |
3.0 |
Lease liability |
1.0 |
1.4 |
Payable to Imperial College and other third parties |
3.4 |
6.9 |
under revenue share obligations |
||
Other accruals and deferred income |
4.5 |
4.7 |
Trade and other payables |
12.5 |
17.1 |
of consolidated funds
2024 |
2023 |
|
Current liabilities |
£m |
£m |
Borrowings |
6.3 |
6.3 |
Total |
6.3 |
6.3 |
2024 |
2023 |
|
Non–current liabilities |
£m |
£m |
Loans drawn down from the Limited Partners |
19.9 |
19.8 |
of consolidated funds |
||
Borrowings |
122.8 |
128.9 |
Total |
142.7 |
148.7 |
Loans drawn down from the Limited Partners of
consolidated funds
The Group consolidates the assets of a co–investment fund, IP Venture Fund II LP,
which it manages. Loans from third parties of consolidated funds represent third–
party LP loans into this partnership. Under the terms of the Limited Partnership
Agreement, these loans are repayable only upon these funds generating sufficient
realisations to repay the Limited Partners. Management anticipates that the funds
will generate the required returns and consequently recognises the full associated
The classification of these loans as non–current reflects the forecast timing of returns
and subsequent repayment of loans, which is not anticipated to occur within one year.
As at 31 December, loans from Limited Partners of consolidated funds comprised loans
into IP Venture Fund II LP £19.9m (2023: £19.8m).
BUSINESS OVERVIEW
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IP GROUP PLC ANNUAL REPORT 2024
146
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
.
continued
19. Borrowings and Loans from Limited Partners of consolidated funds
Borrowings
Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently carried at amortised cost; any difference between the
proceeds (net of transaction costs) and the redemption value is recognised in the consolidated statement of comprehensive income over the period of the borrowing using
the effective interest rate method. Costs incurred in the course of issuing additional debt are recognised on the balance sheet and charged to the income statement on a
In 2023, the Group drew a second £60m tranche of the £120m private placing it agreed with investors including Phoenix Group in 2022. The terms of the facilities are
summarised below:
Outstanding |
Repayment commencement |
||||
Description |
Initial amount |
amount |
Date drawn |
Interest rate |
date & terms |
EIB Facility |
£50.0m |
£9.4m |
Feb 2017 |
Fixed 3.026% |
Repayable over 8 years from |
Jul 2018 |
|||||
IP Group Series A Notes |
£20.0m |
£20.0m |
Dec 2022 |
Fixed 5.230% |
Repayable in full in Dec 2027 |
IP Group Series B Notes |
£20.0m |
£20.0m |
Dec 2022 |
Fixed 5.210% |
Repayable in full in Dec 2028 |
IP Group Series C Notes |
£20.0m |
£20.0m |
Dec 2022 |
Fixed 5.300% |
Repayable in full in Dec 2029 |
IP Group Series D Notes |
£20.0m |
£20.0m |
Jun 2023 |
Fixed 5.230% |
Repayable in full in Dec 2027 |
IP Group Series E Notes |
£20.0m |
£20.0m |
Jun 2023 |
Fixed 5.210% |
Repayable in full in Dec 2028 |
IP Group Series F Notes |
£20.0m |
£20.0m |
Jun 2023 |
Fixed 5.300% |
Repayable in full in Dec 2029 |
Total |
£170.0m |
£129.4m |
Loans totalling £129.4m (2023: £135.6m) are subject to fixed interest rates and are
recognised at amortised cost. The fair value of these loans as at 31 December 2024 is
£118.7m (2023: £125.3m).
In December 2022, the Group drew down the first Tranche of £60m of a £120m loan
Note Purchase Agreement (“NPA”) and a further £60m in June 2023. The NPA contains
the following covenants:
•
Total equity must be at least £500m as at the Group’s 30 June and 31 December
reporting dates
•
Gross debt less restricted cash must not exceed 25% of total equity as at the
Group’s 30 June and 31 December reporting dates
•
The Group must maintain cash and cash equivalents of not less than £25m at
any time
Breach of any of the above covenants constitutes default under the NPA.
The NPA also includes a ‘Cash Trap’ mechanism, which is triggered based on
conditions listed below. In the event of the Cash Trap being triggered, the Group is
not permitted to pay or declare a dividend or purchase any of its shares. In addition,
investments are restricted to £2.5m per calendar quarter other than those legally
committed to. The Group is also required to place the net proceeds of all realisations
(over a threshold of £1m) into a blocked bank account. Entering a Cash Trap does not
constitute a default under the NPA.
A Cash Trap period is entered if any of the following conditions are breached.
•
Total equity must be at least £750m as at the Group’s 30 June and 31 December
reporting dates
•
Gross debt less restricted cash must not exceed 20% of total equity as at the
Group’s 30 June and 31 December reporting dates
•
The Group must maintain cash and cash equivalents of not less than £50m at
any time.
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19. Borrowings and Loans from Limited Partners of
continued
IP GROUP PLC ANNUAL REPORT 2024
147
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
.
A cash trap period can be remedied by:
•
Transferring sufficient cash into the restricted cash account so that gross debt less
restricted cash is less than 20% of total equity
•
If because of low equity of high leverage, once these are restored at a subsequent
30 June or 31 December measurement date
•
If because of low liquidity, once two month-ends have passed with liquidity > £50m
The EIB loan contains a debt covenant requiring that the ratio of the total fair value
of IP Group investments plus cash and qualifying liquidity to debt should at no time
fall below 6:1. The Group must maintain an amount of unencumbered funds freely
available to the Group set with reference to the outstanding EIB facility which was
£9.4m at December 2024 (2023: £15.6m). The loan also stipulates that on any date, the
aggregate of all amounts scheduled for payment to the EIB in the following six months
should be kept in a separate bank account, which totalled £3.2m on 31 December 2024
(2023: £3.3m) The Group is required to maintain a minimum cash balance of £5.6m
(2023: £9.4m).
The Group closely monitors that the covenants are adhered to on an ongoing basis
and has complied with these covenants throughout the year. The Group will continue
to monitor the covenants’ position against forecasts and budgets to ensure that it
operates within the prescribed limits.
The NPA includes fixed and floating charges over the Company’s assets, details of
which are available on Companies House. The EIB loan includes certain guarantees
over assets held by Touchstone Innovations Business LLP.
The maturity profile of the borrowings including undiscounted cash flows and fixed
interest is as follows:
2024 | 2023 | |
£m | £m | |
Due within 6 months | 6.2 | 6.4 |
Due 6 to 12 months | 6.3 | 6.4 |
Due 1 to 5 years | 141.8 | 112.4 |
Due after 5 years | – | 42.1 |
Total 1 | 154.3 | 167.3 |
The maturity profile of the borrowings was as follows:
2024 | 2023 | |
£m | £m | |
Due within 6 months | 3.1 | 3.1 |
Due 6 to 12 months | 3.1 | 3.1 |
Due 1 to 5 years | 123.2 | 89.4 |
Due after 5 years | – | 40.0 |
Total 1 | 129.4 | 135.6 |
1
These are gross amounts repayable and exclude amortised costs of £0.4m (2023: £0.4m)
incurred on obtaining the Phoenix loans, these are amortised on a straight-line basis over the life
of the borrowings.
A reconciliation in the movement in borrowings is as follows:
2024 | 2023 | |
£m | £m | |
At 1 January | 135.2 | 81.4 |
Repayment of debt | (6.1) | (6.2) |
New borrowings | – | 60.0 |
At 31 December | 129.1 | 135.2 |
consolidated funds
Financial instruments issued by the Group are treated as equity if the holders have only a residual interest in the Group’s assets after deducting all liabilities. The objective of
the Group is to manage capital so as to provide shareholders with above-average returns through capital growth over the medium-to-long term. The Group considers its
2024 | 2023 | |||
Issued and fully paid: | Number | £m | Number | £m |
Ordinary shares of 2p each | ||||
At 1 January | 1,063,188,005 | 21.3 | 1,063,188,005 | 21.3 |
Shares purchased and cancelled | (20,609,101) | (0.4) | – | – |
Cancellation of shares held in Treasury | (67,292,636) | (1.4) | – | – |
Share capital at 31 December | 975,286,268 | 19.5 | 1,063,188,005 | 21.3 |
Existing treasury shares at 1 January | (26,493,520) | (0.5) | (28,110,373) | (0.6) |
Purchase of treasury shares | (45,280,605) | (0.9) | (220,302) | – |
Cancellation of treasury shares | 67,292,636 | 1.3 | – | – |
Shares transferred out of treasury for SAYE | – | – | 285,335 | – |
Settlement of employee share-based payments | 4,481,489 | 0.1 | 1,551,820 | – |
Outstanding at 31 December | 975,286,268 | 19.5 | 1,036,694,485 | 20.7 |
The Company has one class of ordinary shares with a par value of 2p (“Ordinary Shares”) which carry equal voting rights, equal rights to income and distributions of assets on
liquidation, or otherwise, and no right to fixed income.
During 2024, the Company purchased 45,280,605 ordinary shares (2023: 200,302 ordinary shares), with an aggregate value of £0.9m (2023: £0.2k) which were initially held in
treasury. These were subsequently used to settle employee share based payments of 4,481,489 prior to the remainder being cancelled in September 2024 along with a further
26,493,520 treasury shares held at the start of the year which were also cancelled at the same time. A further 20,609,101 shares with an aggregate value of £0.5m were purchased
in the period September to December 2024 and immediately cancelled. The nominal value of the cancelled treasury share has been added to the Capital redemption reserve.
Retained profits have been reduced by £29.6m (2023: £0.2k), being the net consideration paid for the purchase of treasury, including expenses directly relating to the treasury
148
IP GROUP PLC ANNUAL REPORT 2024
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
.
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In 2024, the Group continued to incentivise employees through its RSP and AIS. The
main terms of both are described in more detail in the Directors’ Remuneration Report
on pages 78 to 100.
Deferred bonus share plan (“DBSP”)
Awards made to employees under the Group’s AIS above a certain threshold include
50% deferred into IP Group equity through the grant of nil–cost options under the
Group’s DBSP. The number of nil–cost options granted under the Group’s DBSP is
determined by the share price at the vesting date. The DBSP options are subject to
further time–based vesting over two years (typically 50% after year one and 50% after
year two).
An analysis of movements in the DBSP options outstanding is as follows:
Weighted- | Weighted- | |||
average | average | |||
Number of | exercise | Number | exercise | |
options | price | of options | price | |
2024 | 2024 | 2023 | 2023 | |
At 1 January | 2,153,379 | – | 2,556,682 | – |
AIS deferral shares award | 1,578,434 | – | 1,120,292 | – |
during the year | ||||
Exercised during the year | (1,593,233) | – | (1,523,595) | – |
At 31 December | 2,138,580 | – | 2,153,379 | – |
Exercisable at 31 December | – | – | – | – |
1,643,895 shares were transferred from treasury in respect of DBSP scheme during
the year, comprising 1,593,233 DBSP options exercised on 23rd April 2024 and a further
50,662 shares relating to dividends accrued on those options.
The options outstanding at 31 December 2024 had an exercise price of £nil (2023: £nil)
and a weighted–average remaining contractual life of 0.6 years (2023: 0.5 years).
The weighted average share price at the date of exercise for share options exercised
in 2024 was 48.3p (2023: 61.0p).
As the 2024 AIS financial performance targets were met and as the number of DBSP
options to be granted in order to defer such elements of the AIS payments as are
required under our remuneration policy are based on a percentage of employees’
salary, the share–based payments line includes the associated share–based
payments expense incurred in 2024.
IP Group Restricted Share Plan (“RSP”)
As set out in the Remuneration Policy approved by shareholders in 2022, a Restricted
Share Plan was introduced in 2022 to replace the previous LTIP structure. Vesting of
these awards will take place over a three-year period, with any awards that vest
subject to a further two-year holding period. For 2022, 2023 and 2024 awards, a
financial underpin exists which may result in awards lapsing if NAV per share on the
vesting date is lower than 100% of NAV per share on the award date, after making
appropriate adjustments for dividends. Further information on the Group’s RSP is set
out in the Directors’ Remuneration Report on page 91.
The 2024 RSP awards were made on 23 April 2024. The awards will ordinarily vest on
31 March 2026, to the extent that the performance underpin has been met.
The movement in the number of shares conditionally awarded under the RSP is set
out below:
Weighted- | Weighted- | |||
average | average | |||
Number of | exercise | Number | exercise | |
options | price | of options | price | |
2024 | 2024 | 2023 | 2023 | |
At 1 January | 10,238,863 | – | 3,458,509 | – |
Forfeited during the year | (1,362,198) | – | (16,367) | – |
Notionally awarded during | 8,833,966 | – | 6,796,721 | – |
the year | ||||
At 31 December | 17,710,631 | – | 10,238,863 | – |
Exercisable at 31 December | – | – | – | – |
The options outstanding at 31 December 2024 had an exercise price of £nil (2023: £nil)
and a weighted–average remaining contractual life of 3.5 years (2023: 3.9 years).
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
.
The fair value of the RSP shares notionally awarded in 2024 was calculated using the
Finnerty pricing model with the following key assumptions:
2024 | 2023 | |
IP Group share price as of valuation date | £0.539 | £0.602 |
Exercise price | £nil | £nil |
Indicated discount for lack of marketability | 15% | 15% |
Adjusted probability assigned for performance conditions | 20% | 20% |
Fair value at grant date | £0.21 | £0.24 |
Pre-2022 IP Group Long-Term Incentive Plan (“LTIP”)
Awards under the historic LTIP scheme took the form of conditional awards of
ordinary shares of 2p each in the Group which vest over the prescribed performance
period to the extent that performance conditions have been met. The Remuneration
Committee imposes objective conditions on the vesting of awards and these take into
consideration the guidance of the Group’s institutional investors from time to time.
General information on the Group’s LTIP is set out in the Directors’ Remuneration Report
on page 94.
The 2021 LTIP awards were made on 6 May 2021. Following the completion of the
performance period on 31 March 2024, the relevant performance targets for vesting of
the 2021 LTIP award were not met and these options lapsed in full.
Following the lapse of the 2021 awards noted above, and the exercise of vested options
under the 2019 scheme during the year, the only remaining outstanding conditionally
awarded shares relate to the 2020 awards, which vested in 2023 and will be exercised
in the first half of 2025 following completion of their two-year post-vesting mandatory
holding period.
The movement in the number of shares conditionally awarded under the LTIP is set
out below:
Weighted- | Weighted- | |||
average | average | |||
Number of | exercise | Number of | exercise | |
options | price | options | price | |
2024 | 2024 | 2023 | 2023 | |
At 1 January | 7,728,493 | – | 14,490,039 | – |
Lapsed during the year | (3,950,040) | – | (6,759,628) | – |
Forfeited during the year | (10,907) | – | (1,918) | – |
Exercised during the year | (2,703,041) | – | – | – |
At 31 December | 1,064,505 | – | 7,728,493 | – |
Exercisable at 31 December | 1,064,505 | – | 4,596,014 | – |
2,837,594 shares were transferred from treasury in respect of the exercise of 2019 LTIPs,
comprising 2,703,041 conditionally awarded shares exercised on 23rd April 2024 and a
further 134,553 shares relating to dividends accrued on those conditionally awarded
shares.
The conditionally awarded shares at 31 December 2024 had an exercise price in the
range of £nil (2023: £nil) and a weighted–average remaining contractual life of 0.3
years (2023: 0.8 years).
The fair value charge recognised in the statement of comprehensive income during
the year in respect of all share–based payments, including the DBSP, RSP and LTIP was
£1.9m (2023: £2.6m).
The aggregate gain made by Directors on the exercise of options in the year was
150
IP GROUP PLC ANNUAL REPORT 2024
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
.
21. Share–based payments
continued
BUSINESS OVERVIEW
STRATEGIC REPORT
OUR FINANCIALS
OUR GOVERNANCE
22. Long–term incentive carry scheme
– Carried interest plan liability
The Group operates a number of Long-Term Incentive Carry Schemes (“LTICS”) for
eligible employees which may result in payments to scheme participants relating
to returns from investments.
Under the Group’s LTICS arrangements, a profit–sharing mechanism exists
whereby if a specific vintage (being a group investment made within a defined
time period) delivers returns in excess of the base cost of investments together
with an agreed hurdle rate, scheme participants receive a share of excess returns.
Of the Group’s total equity and debt investments 65% are included in LTICS
arrangements (2023: 69.0%).
The calculation of the liability in respect of the Group’s LTICS is derived from the
fair value estimates for the relevant portfolio investments and does not involve
significant additional judgement (although the fair value of the portfolio is a
significant accounting estimate). The actual amounts of carried interest paid
will depend on the cash realisations of individual vintages, and valuations may
change significantly in the next financial year. Movements in the liability are
2024 | 2023 | |
£m | £m | |
At 1 January | 38.0 | 44.1 |
Credit for the year | (7.9) | (4.7) |
Payments made in the year | (2.5) | (1.3) |
Foreign exchange rate movement | (0.3) | (0.1) |
At 31 December | 27.3 | 38.0 |
IP GROUP PLC ANNUAL REPORT 2024
151
BUSINESS OVERVIEW
STRATEGIC REPORT
OUR FINANCIALS
OUR GOVERNANCE
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
.
BUSINESS OVERVIEW
STRATEGIC REPORT
OUR FINANCIALS
OUR GOVERNANCE
BUSINESS OVERVIEW
STRATEGIC REPORT
OUR GOVERNANCE
OUR FINANCIALS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
.
.
The Group has various related parties arising from its key management, subsidiaries and equity stakes in portfolio companies.
(i) Key management personnel transactions
The following key management held shares in the following spin–out companies as at 31 December 2024:
Number | |||||
Number of | of shares | Number of | |||
shares held at | acquired/ | shares held at | |||
1 January | (disposed of) | 31 December | |||
Director/PDMR | Company name | 2024 | in the period | 2024 | % |
Greg Smith | Alesi Surgical Limited | 2 | – | 2 | <0.1% |
Crysalin Limited (dissolved) | 149 | – | – | – | |
Emdot Limited | 4 | – | 4 | 0.23% | |
Istesso Limited | 313,425 | – | 313,425 | 0.37% | |
Itaconix plc 1 | 90 | – | 90 | <0.1% | |
Mirriad Advertising plc | 16,667 | – | 16,667 | <0.1% | |
Oxa Autonomy Limited | 8 | – | 8 | <0.1% | |
Oxford Nanopore Technologies plc | 27,008 | – | 27,008 | <0.1% | |
Rio AI Limited | 144,246 | – | 144,246 | <0.1% | |
Surrey Nanosystems Limited | 88 | – | 88 | <0.1% | |
Tissue Regenix Group plc | 500 | – | 500 | <0.1% | |
Xeros Technology plc | 13 | – | 13 | <0.1% | |
David Baynes | Alesi Surgical Limited | 4 | – | 4 | <0.1% |
Arkivum Limited | 377 | – | 377 | <0.1% | |
Creavo Medical Technologies Limited (dissolved) | 46 | – | – | – | |
Mirriad Advertising plc | 16,667 | – | 16,667 | <0.1% | |
Oxford Nanopore Technologies plc | 2,784 | – | 2,784 | <0.1% | |
Ultraleap Holdings Limited | 2,600 | – | 2,600 | <0.1% | |
Zeetta Networks Limited | 424 | – | 424 | 0.11% |
BUSINESS OVERVIEW
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STRATEGIC REPORT
STRATEGIC REPORT
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OUR FINANCIALS
OUR FINANCIALS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
.
.
continued
23. Related party transactions
Number | |||||
Number of | of shares | Number of | |||
shares held at | acquired/ | shares held at | |||
1 January | (disposed of) | 31 December | |||
Director/PDMR | Company name | 2024 | in the period | 2024 | % |
Mark Reilly | Actual Experience plc 2 | 28,000 | – | 28,000 | <0.1% |
AudioScenic Limited | 53 | – | 53 | <0.1% | |
Bramble Energy Limited | 16 | – | 16 | <0.1% | |
Diffblue Limited | 8,038 | – | 8,038 | <0.1% | |
Itaconix plc1 | 7,547 | – | 7,547 | <0.1% | |
Mirriad Advertising plc | 66,666 | – | 66,666 | <0.1% | |
Mixergy Limited | 126 | – | 126 | <0.1% | |
Oxa Autonomy Ltd | 8 | – | 8 | <0.1% | |
Ultraleap Holdings Limited | 1,700 | – | 1,700 | <0.1% |
From 13 May 2024, Sam Williams ceased to act as a Person Discharging Management Responsibility. Shares he held in spin–out companies up to this date are disclosed as follows:
Number | |||||
Number of | of shares | ||||
shares held at | acquired/ | Number of | |||
1 January | (disposed of) | shares held at | |||
Director/PDMR | Company name | 2024 | in the period | 13 May 2024 | % |
Sam Williams | Accelercomm Limited | 127 | – | 127 | <0.1% |
Alesi Surgical Limited | 1 | – | 1 | <0.1% | |
Centessa Pharmaceuticals plc | 3,247 | – | 3,247 | <0.1% | |
Creavo Medical Technologies Limited (dissolved) | 23 | – | 23 | <0.1% | |
Genomics plc | 333 | – | 333 | <0.1% | |
Ibex Innovations Limited | 1,701 | – | 1,701 | <0.1% | |
Istesso Limited | 7,048,368 | – | 7,048,368 | 8.29% | |
Microbiotica Limited | 7,000 | – | 7,000 | <0.1% | |
Mirriad Advertising plc | 3,333 | – | 3,333 | <0.1% | |
Oxa Autonomy Ltd | 3 | – | 3 | <0.1% | |
Oxehealth Limited | 65 | – | 65 | <0.1% | |
Oxford Nanopore Technologies plc | 25,609 | – | 25,609 | <0.1% | |
Topivert Limited 2 | 1,000 | – | 1,000 | <0.1% | |
Ultraleap Holdings Limited | 558 | – | 558 | <0.1% |
1
Opening position restated to reflect share consolidation.
2
Company being closed down.
continued
23. Related party transactions
BUSINESS OVERVIEW
STRATEGIC REPORT
OUR GOVERNANCE
OUR FINANCIALS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
.
.
Policy for Executive Director holdings in portfolio companies
The policy for Executive Director shareholdings in portfolio companies specifies:
•
New direct investments in portfolio companies by Executive Directors are
prohibited, with the exception of the take-up of pre-emption rights which relate
to existing portfolio company shareholdings. Both Mr Smith and Mr Baynes are
covered by this policy.
•
Mr Smith and Mr Baynes have voluntarily submitted to an additional binding
condition such that any net proceeds received as a result of realisations
from direct holdings in portfolio companies that exceed £250,000 will be used
to purchase shares in IP Group, until such time as they meet the Minimum
Shareholding Requirement set for their role (currently 350% of annual salary for Mr
Smith, 250% for Mr Baynes).
(ii) Key management personnel compensation
Key management personnel compensation comprised the following:
2024 | 2023 | |
£000 | £000 | |
Short–term employee benefits 1 | 2,176 | 3,091 |
Post–employment benefits 2 | 48 | 108 |
Share–based payments 3 | 615 | 1,161 |
Total | 2,839 | 4,360 |
1
Represents key management personnel’s base salaries, benefits including cash in lieu of pension
where relevant, and the cash–settled element of the Annual Incentive Scheme.
2
Represents employer contributions to defined contribution pension and life assurance plans.
3
Represents the accounting charge for share-based payments, reflecting LTIP and DBSP options
currently in issue as part of these schemes. See note 21 for a detailed description of these
B) Portfolio companies
(i) Services
The Group earns fees from the provision of business support services and corporate
finance advisory services to portfolio companies in which the Group has an equity
stake. Through the lack of control over portfolio companies these fees are considered
arm’s length transactions. The following amounts have been included in respect of
these fees:
2024 | 2023 | |
Statement of comprehensive income | £m | £m |
Revenue from services | – | – |
2024 | 2023 | |
Statement of financial position | £m | £m |
Trade receivables | 0.1 | 0.1 |
(ii) Investments
The Group makes investments in the equity and debt of unquoted and quoted
investments where it does not have control but may be able to participate in the
financial and operating policies of that company. It is presumed that it is possible
to exert significant influence when the equity holding is greater than 20%. The Group
has taken the Venture Capital Organisation exception as permitted by IAS 28 and not
recognised these companies as associates, but they are related parties. The total
amounts included for investments where the Group has significant influence but not
control are as follows:
2024 | 2023 | |
Statement of comprehensive income | £m | £m |
Net portfolio (losses)/gains | (125.7) | 31.7 |
2024 | 2023 | |
Statement of financial position | £m | £m |
Equity and debt investments | 345.8 | 566.4 |
BUSINESS OVERVIEW
BUSINESS OVERVIEW
STRATEGIC REPORT
STRATEGIC REPORT
OUR GOVERNANCE
OUR GOVERNANCE
OUR FINANCIALS
OUR FINANCIALS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
.
continued
23. Related party transactions
C) Subsidiary companies
Subsidiary companies that are not 100% owned either directly or indirectly by
the parent Company have intercompany balances (which are eliminated at a
consolidated level) with other Group companies which are disclosed as follows:
2024 | 2023 | |
£m | £m | |
Intercompany balances with other Group companies | 2.2 | 2.1 |
These intercompany balances represent funding loans provided by Group companies
The Group’s key objective when managing capital, as set out in note 20, is to safeguard
the Group’s ability to continue as a going concern so that it can continue to provide
returns for shareholders and employees for other stakeholders. The Group sets the
amount of capital in proportion to risk. The Group manages the capital structure,
and makes adjustments to it, in light of changes in economic conditions and the
risk characteristics of its underlying assets. In order to maintain or adjust the capital
structure, the Group may adjust the amount of issued share capital, issue or repay
debt and dispose of interests in portfolio companies.
During 2024, the Group’s strategy, which was unchanged from 2023, was to maintain
an appropriate level of cash and short-term deposit balances in line with the Group’s
capital allocation plans, whilst having sufficient cash reserves to meet working capital
requirements in the foreseeable future.
The Group has external borrowings with associated covenants that are described in
note 19. These include covenants around the Group’s minimum equity and maximum
debt/equity ratio. Consideration is given to the level of headroom against these
covenants as part of the Group’s capital allocation process where planning corporate
actions such as dividends and share buybacks, which have an impact on the
IP GROUP PLC ANNUAL REPORT 2024
155
Commitments to Limited Partnerships
Pursuant to the terms of their Limited Partnership agreements, the Group has committed to invest the following amounts into Limited Partnerships as at 31 December 2024:
Year of | ||||
commencement | Invested | Remaining | ||
of commitment | Commitment | to date | commitment | |
Year ended 31 December 2024 | £m | £m | £m | |
IP Venture Fund II LP | 2013 | 10.0 | 10.0 | – |
UCL Technology Fund LP | 2016 | 24.8 | 23.4 | 1.4 |
Total at 31 December 2024 | 34.8 | 33.4 | 1.4 |
Year of | ||||
commencement | Invested | Remaining | ||
of commitment | Commitment | to date | commitment | |
Year ended 31 December 2023 | £m | £m | £m | |
IP Venture Fund II LP | 2013 | 10.0 | 9.9 | 0.1 |
UCL Technology Fund LP | 2016 | 24.8 | 23.2 | 1.6 |
Total at 31 December 2023 | 34.8 | 33.1 | 1.7 |
2024 pence | 2023 pence | |||
per share | £m | per share | £m | |
Ordinary shares: | ||||
Interim dividend | – | – | 0.51 | 5.3 |
Final dividend | – | – | 0.76 | 7.7 |
Dividends paid to equity owners in the financial year | – | 13.0 | ||
Proposed final dividend at financial year end | – | – | – | – |
There were no dividends paid or proposed in 2024 (2023: £13.0 m dividends; £13.0m settled in cash). Due to the limited take up of scrip dividends the scheme was discontinued in
On 18 December 2023 the Group initiated a share buyback of up to £20 million. This £20m share buyback tranche completed in September 2024. On 7th October 2024 it was
announced to increase the Group’s share buyback programme by a further £10m which was completed on 7 January 2025.
In January 2025 the Group launched a further extension by up to £40m of its buyback programme, which had been announced in December 2024. In March 2025, as part of the
Group’s preliminary results statement, the Group announced Intention to extend buyback programme by a further £10m.
The Board remains committed to making regular cash returns to shareholders from realisations. In future these regular cash returns will normally be made in the form of share buybacks
156
IP GROUP PLC ANNUAL REPORT 2024
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
.
BUSINESS OVERVIEW
STRATEGIC REPORT
OUR FINANCIALS
OUR GOVERNANCE
BUSINESS OVERVIEW
BUSINESS OVERVIEW
STRATEGIC REPORT
STRATEGIC REPORT
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OUR GOVERNANCE
OUR FINANCIALS
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
.
IP GROUP PLC ANNUAL REPORT 2024
157
IP Group management believes that the alternative performance measures included in this document provide valuable information to the readers of the financial statements
as they enable the reader to identify a consistent basis for comparing the business’ performance between financial periods and provide more detail concerning the elements
of performance which the managers of the Group are most directly able to influence or are relevant for an assessment of the Group. They also reflect an important aspect
of the way in which operating targets are defined and performance is monitored by the Directors. These measures are not defined by IFRS and therefore may not be directly
comparable with other companies’ APMs, including those in the Group’s industry. APMs should be considered in addition to, and are not intended to be a substitute for, or superior
to, IFRS measurements.
The Directors believe that these APMs assist in providing additional useful information on the underlying trends, performance and position of the Group. Consequently, APMs are
used by the Directors and management for performance analysis, planning, reporting and incentive–setting purposes.
Calculation
Reference for | 2024 | 2023 | |||
APM | reconciliation | Definition and purpose | £m | £m | |
NAV | Primary | NAV per share is defined as Net Assets divided by the number of outstanding shares. | NAV | £952.5m | £1,190.3m |
per share 1 | statements | The measure shows net assets managed on behalf of shareholders by the Group per | Shares in issue | 975,286,268 | 1,036,694,485 |
note 20 | |||||
outstanding share. | NAV per share | 97.7p | 114.8p | ||
NAV per share is a standard measure used within our peer group and can be directly | |||||
compared with the Group’s share price. | |||||
Return | Primary | Return on NAV is defined as the total comprehensive income or loss for the year | Total | (210.0) | (174.8) |
on NAV | statements | excluding charges which do not impact on net assets, specifically share–based | comprehensive | ||
note 4 | payment charges. | income | |||
The measure shows a summary of the income statement gains and losses which | Excluding: | ||||
directly impact NAV. | Share-based | 1.9 | 2.6 | ||
payment charge | |||||
Return on NAV | (208.1) | (172.2) | |||
Net portfolio | note 13, 14, 15 | Net portfolio gains/(losses) are defined as the movement in the value of holdings in the | Change in fair value | (246.1) | (110.9) |
gains/ | portfolio due as a result of realised and unrealised gains and losses. | of equity and debt | |||
(losses) | investments | ||||
The measure shows a summary of the income statement gains and losses which are | |||||
directly attributable to the total portfolio (see definition above), which is a headline | Gain/(loss) on | 63.7 | (10.8) | ||
measure for the Group’s portfolio performance. | disposal of equity | ||||
investments | |||||
This is a key driver of the Return on NAV which is a performance metric for Directors’ and | |||||
Change in fair value | (12.6) | (38.8) | |||
employees’ incentives. | |||||
of LP interests 2 | |||||
Net portfolio | (195.0) | (160.5) | |||
(losses) | |||||
Total | Consolidated | Total portfolio is defined as the total of equity investments, debt investments and | Equity investments | 713.8 | 1,011.5 |
portfolio 3 | statement | investments in LPs. | Debt investments | 51.6 | 83.7 |
of financial | |||||
| position, | This measure represents the aggregate balance sheet amounts which the Group | LP interests | 58.1 | 69.7 | |
considers to be its investment portfolio, and which is described in further detail within the | Assets held for sale | 13.9 | – | ||
note 13, 14 | portfolio review section of the strategic report. | ||||
Total portfolio | 837.4 | 1,164.9 |
BUSINESS OVERVIEW
STRATEGIC REPORT
OUR GOVERNANCE
OUR FINANCIALS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
.
continued
27. Alternative performance measures (“APM”)
158
IP GROUP PLC ANNUAL REPORT 2024
Calculation
Reference for | 2024 | 2023 | |||
APM | reconciliation | Definition and purpose | £m | £m | |
Portfolio | Primary | Portfolio investment is defined as the purchase of equity and debt investments plus | Purchase of | (60.8) | (63.4) |
investment | statements | investments into limited partnership interests. | equity and debt | ||
investments | |||||
This gives a combined measure of investment into the Group’s portfolio. | |||||
Investment in limited | (2.2) | (9.8) | |||
and limited liability | |||||
partnerships | |||||
Portfolio investment | (63.0) | (73.2) | |||
Cash | Primary | Cash proceeds is defined as the proceeds from the disposal of equity and debt | Proceeds from | 182.2 | 37.7 |
proceeds 1 | statements | investments plus distributions received from limited partnership interests. | the sale of equity | ||
investments | |||||
Distributions | 1.2 | 0.9 | |||
from limited | |||||
partnership funds | |||||
Cash proceeds | 183.4 | 38.6 | |||
Net | Financial | Net overheads are defined as the Group’s core overheads less operating income. The | Other income | 5.5 | 5.9 |
overheads 2 | review, note 8 | measure reflects the Group’s controllable net operating “cash–equivalent” central | Other administrative | (25.3) | (28.0) |
cost base. | expenses | ||||
Excluding: | |||||
Non-portfolio | (2.7) | (0.4) | |||
foreign exchange | |||||
movements | |||||
Restructuring costs | 2.4 | – | |||
– labour | |||||
Restructuring costs | 0.3 | – | |||
– professional | |||||
Net overheads | (19.8) | (22.5) | |||
Gross | Primary | Cash and deposits is defined as cash and cash equivalents plus deposits. | Cash and cash | 115.6 | 100.9 |
cash and | statements | equivalents | |||
deposits | Deposit | 170.0 | 126.0 | ||
Gross cash and | 285.6 | 226.9 | |||
deposits |
Calculation
Reference for | 2024 | 2023 | |||
APM | reconciliation | Definition and purpose | £m | £m | |
Loss | Primary | (Loss)/profit excluding ONT is defined as the Groups (loss)/profit for the year (after tax) | (Loss) for the year | (207.0) | (174.4) |
excluding | statements | excluding the (loss)/profit on the investment held in Oxford Nanopore publicly quoted | Excluding: | ||
ONT | shares both realised and unrealised. | ||||
Change in fair value | 66.3 | 31.9 | |||
This measure gives a view of the results of this business excluding this single investment | of equity investment | ||||
which, given its size and recent share price volatility, may be helpful to users of the | in Oxford Nanopore | ||||
accounts as a view of the underlying business. | (Loss)/profit | (140.7) | (142.5) | ||
excluding ONT | |||||
Simple | Note 27 | Defined as net portfolio gains/losses divided by the opening total portfolio value. | Net portfolio (losses) | (195.0) | (160.5) |
return on | This measure gives a view of the size of portfolio gains or losses relative to the opening | Opening total | 1,164.9 | 1,258.5 | |
capital (%) | portfolio value, giving useful additional context for the value of gains or losses. | portfolio value | |||
Simple return on | (17%) | (13%) | |||
capital (%) | |||||
% Return on | Note 27 | Defined as return on NAV divided by the opening Net Asset Value. | Return on NAV | (208.1) | (172.2) |
NAV (%) | (return on | This measure gives a view of the size of Return on NAV relative to the opening Net Asset | Opening Net | 1,190.3 | 1,376.1 |
NAV) Primary | Value, giving useful additional context for the value of returns. | Asset Value | |||
statements | |||||
Return on NAV (%) | (17%) | (13%) | |||
(Net | |||||
Asset Value) |
1
For consistency with how we report investments as the purchase of equity and debt investments plus investment in limited and limited liability partnerships, the Directors believe that this new measure
showing cash proceeds is defined as the proceeds from the disposal of equity and debt investments plus distributions received from limited liability partnerships interests profit represents a useful
additional measure for users of the accounts.
2
For clarity non-portfolio foreign exchange movements have been excluded from net overheads, these exchange movements are on intercompany loans and other balance sheet items including cash,
and which do not represent an ongoing overhead cost for the group. Their exclusion is therefore considered to give a more accurate view of the underlying net overhead costs of the business.
3
At 31 December 2024, the Group was in the process of disposing of a number of assets, which were accordingly reclassified within current assets as Assets Held for Sale. These assets are considered to
be part of the Group’s investment portfolio and have been managed as such throughout the period. Accordingly, the APM has been amended to included Assets Held for Sale within the Group’s Total
As at 21 March 2025, unrealised fair value losses in respect of the Group’s quoted portfolio totalled £14.7m, largely in respect of Oxford Nanopore Technologies plc, which has seen
a fair value loss of £13.8m since 31 December 2024.
The Group was notified of the outcome of Istesso’s Phase 2b trial for Leramistat in February 2025, reflecting information which Istesso Limited had received prior to
31 December 2024.
Since 1 January 2025, the Group has delivered cash proceeds of £24.7m.
In January 2025 the Group launched a further extension by up to £40m of its buyback programme, which had been announced in December 2024. In March 2025, as part of the
IP GROUP PLC ANNUAL REPORT 2024
159
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STRATEGIC REPORT
OUR FINANCIALS
OUR GOVERNANCE
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
.
27. Alternative performance measures (“APM”)
continued
BUSINESS OVERVIEW
STRATEGIC REPORT
OUR FINANCIALS
OUR GOVERNANCE
BUSINESS OVERVIEW
STRATEGIC REPORT
OUR GOVERNANCE
OUR FINANCIALS
.
AS AT 31 DECEMBER 2024
2024 | 2023 | ||
Note | £m | £m | |
ASSETS | |||
Non-current assets | |||
Investment in subsidiary undertakings | 2 | 331.5 | 330.4 |
Equity and debt investments | 3 | 3.5 | 3.5 |
Limited liability partnership interests | 4 | 2.3 | 2.9 |
Loans to subsidiary undertakings: long term | 5 | 605.0 | 640.9 |
Total non-current assets | 942.3 | 977.9 | |
Current assets | |||
Loans to subsidiary undertakings: short term | 5 | 0.9 | 0.9 |
Trade receivables | 1.9 | – | |
Cash & cash equivalent | – | – | |
Total current assets | 2.8 | 0.9 | |
Total assets | 945.1 | 978.6 | |
EQUITY AND LIABILITIES | |||
Capital and reserves | |||
Called-up share capital | 6 | 19.5 | 21.3 |
Share premium account | 6 | 102.5 | 102.8 |
Capital redemption reserve | 6 | 1.8 | – |
Retained earnings | 6 | 700.7 | 734.0 |
Total equity attributable to equity holders | 824.5 | 858.1 | |
Current liabilities | |||
Trade and other payables | 0.9 | 0.9 | |
Total current liabilities | 0.9 | 0.9 | |
Non-current liabilities | |||
Borrowings | 119.7 | 119.6 | |
Deferred tax liability | – | – | |
Total non-current liabilities | 119.7 | 119.6 | |
Total liabilities | 120.6 | 120.5 | |
Total equity and liabilities | 945.1 | 978.6 |
160
IP GROUP PLC ANNUAL REPORT 2024
Registered number: 04204490
The Company has taken advantage of the exemption granted
by Section 408 of the Companies Act 2006 whereby no
individual income statement of the Company is disclosed.
The Company’s loss for the financial year was £5.9m
(loss: 2023: £5.8m).
The accompanying notes form an integral part of the financial
statements. The financial statements on pages 117 to 174 were
approved by the Board of Directors and authorised for issue on
24 March 2025 and were signed on its behalf by: signed on its
behalf by:
Greg Smith
David Baynes
Chief Executive Officer
Chief Financial Officer
BUSINESS OVERVIEW
BUSINESS OVERVIEW
STRATEGIC REPORT
STRATEGIC REPORT
OUR GOVERNANCE
OUR GOVERNANCE
OUR FINANCIALS
OUR FINANCIALS
.
AS AT 31 DECEMBER 2024
Capital | |||||
Share | Share | redemption | Retained | ||
capital | premium(i) | reserve(iii) | earnings(ii) | Total | |
£m | £m | £m | £m | £m | |
At 1 January 2023 | 21.3 | 102.8 | – | 750.3 | 874.4 |
Total comprehensive income for the period | |||||
Loss for the year | – | – | – | (5.8) | (5.8) |
Total comprehensive income for the period | – | – | – | (5.8) | (5.8) |
Transactions with owners, recorded directly in equity | |||||
Purchase of treasury shares (iii) | – | – | – | (0.1) | (0.1) |
Equity-settled share-based payments (iv) | – | – | – | 2.6 | 2.6 |
Ordinary dividends (v) | – | – | – | (13.0) | (13.0) |
Total contributions by and distributions to owners | – | – | – | (10.5) | (10.5) |
At 1 January 2024 | 21.3 | 102.8 | – | 734.0 | 858.1 |
Total comprehensive income for the period | |||||
Loss for the year | – | – | – | (5.9) | (5.9) |
Total comprehensive income for the period | – | – | – | (5.9) | (5.9) |
Transactions with owners, recorded directly in equity | |||||
Other movements | – | (0.3) | – | 0.3 | – |
Purchase of treasury shares (iii) | (1.8) | – | 1.8 | (29.6) | (29.6) |
Equity-settled share-based payments (iv) | – | – | – | 1.9 | 1.9 |
Ordinary dividends (v) | – | – | – | – | – |
Total contributions by and distributions to owners | (1.8) | (0.3) | 1.8 | (27.4) | (27.7) |
At 31 December 2024 | 19.5 | 102.5 | 1.8 | 700.7 | 824.5 |
I
Share premium – Amount subscribed for share capital in excess of nominal value, net of directly attributable issue costs.
ii
Retained earnings – Cumulative net gains and losses recognised in the statement of comprehensive income net of associated share-based
payments credits and distributions to shareholders.
iii Purchase of treasury shares – During 2024, the Company purchased 45,280,605 ordinary shares (2023: 200,302 ordinary shares), with an aggregate
value of £0.9m (2023: £0.1m) which were initially held in treasury. These were subsequently used to settle employee share-based payments of
4,481,489 prior to the remainder being cancelled in September 2024 along with a further 26,493,520 treasury shares held at the start of the year
which were also cancelled at the same time. A further 20,609,101 shares with an aggregate value of £0.5m were purchased in the period September
to December 2024 and immediately cancelled. The nominal value of the cancelled treasury share has been added to the Capital redemption
reserve.
iv Equity-settled share-based payments – amounts recognised in respect of the Group’s share-based payments schemes recognised as a subsidiary
investment in the Company accounts with a corresponding entry against equity.
v
Ordinary dividends – there were no dividends paid in 2024 (2023: £13.0m total; £13.0m cash). No new shares were issued in respect of the scrip
dividend (2023: no shares issued).
IP GROUP PLC ANNUAL REPORT 2024
161
1. Accounting policies
These financial statements were prepared in accordance with Financial Reporting
Standard 101 Reduced Disclosure Framework (“FRS 101”).
In preparing these financial statements, the Company applies the recognition,
measurement and disclosure requirements of UK–adopted international accounting
standards (“UK–adopted IFRS”) but makes amendments where necessary in order to
comply with Companies Act 2006 and has set out below where advantage of the FRS
101 disclosure exemptions has been taken.
Under section s408 of the Companies Act 2006 the company is exempt from the
requirement to present its own profit and loss account.
In these financial statements, the Company has applied the exemptions available
under FRS 101 in respect of the following disclosures: a cash flow statement and
related notes; disclosures in respect of transactions with wholly owned subsidiaries;
disclosures in respect of capital management; from presenting a comparative period
reconciliation for share capital, the effects of new but not yet effective IFRSs; and
disclosures of compensation of key management personnel.
As the consolidated financial statements include the equivalent disclosures, the
Company has also taken the exemptions under FRS 101 available in respect of the
following disclosures: IFRS 2 Share-Based Payments in respect of Group-settled share-
based payments; and certain disclosures required by IFRS 13 Fair Value Measurement
and the disclosures required by IFRS 7 Financial Instrument Disclosures.
The Company proposes to continue to adopt the reduced disclosure framework of FRS
101 in its next financial statements.
The accounting policies set out below have, unless otherwise stated, been applied
consistently to all periods presented in these financial statements.
Going concern
The parent Company financial statements are prepared on a going concern basis set
out in Note 1 of the consolidated financial statements of IP Group Plc.
Subsidiary investments
Investments in subsidiaries are stated at cost less, where appropriate, provision for
impairment. The Company tests the investment balances for impairment annually or
whenever there is an indication that the value of carrying amount may not be recoverable.
In light of the fact that the majority of the assets in the Company’s subsidiaries are
recorded at fair value, subsidiary net assets are taken as an approximation of their
minimum recoverable amount. If the carrying value of an investment in a subsidiary is
in excess of the minimum recoverable amount, the value of the investment is impaired.
Consideration has been given as to whether the fact that IP Group plc’s shares are
trading at a discount to net asset value constitutes a trigger an impairment assessment
for the value of the Company’s subsidiary investments. Given that the majority of the
assets within the Company’s subsidiaries are held at fair value, the Directors do not
believe that as a result of this assessment an additional impairment is required.
Equity and debt investments and Limited Liability
Partnership interests
Equity investments, debt investments and investments in limited partnerships are
categorised as financial assets at fair value through profit or loss. This measurement
basis is consistent with the fact that the Group’s performance in respect of
investments in equity investments, limited partnerships and associated undertakings is
evaluated on a fair value basis in accordance with an established investment strategy.
Financial assets at fair value through profit or loss are initially recognised at fair value
and any gains or losses arising from subsequent changes in fair value are presented in
profit or loss in the statement of comprehensive income in the period which they arise.
The valuation methods applied are the same as those at the Group level; details of
which can be found in note 13 to the Group’s financial accounts.
Intercompany loans
All intercompany loans are initially recognised at fair value and subsequently
measured at amortised cost. Where intercompany loans are intended for use on
a continuing basis in the Company’s activities, and there is no intention of their
settlement in the foreseeable future, they are presented as non-current assets.
Financial instruments
Currently the Company does not enter into derivative financial instruments. Financial
assets and financial liabilities are recognised and cease to be recognised on the basis
of when the related titles pass to or from the Company.
Share-based payments
The Group operates a number of equity-settled share-based compensation schemes
under which the employing subsidiary within the Group receives services from
employees as consideration for equity instruments in IP Group plc. For further details
on these schemes, see note 21 in the Group accounts. When options are exercised, the
company issues new shares. The proceeds received net of any directly attributable
costs are credited to share capital (nominal value) and the balance to share
premium. In the Company financial statements, the grant of share options is treated
as a capital contribution. Specifically, the fair value of employee services received
(measured at the date of grant) is recognised over the vesting period as an increase
to investment in subsidiary undertakings, with a corresponding credit to equity in the
parent entity financial statements.
Borrowings
Borrowings are recognised initially at fair value, net of transaction costs incurred.
Borrowings are subsequently carried at amortised cost; any difference between the
proceeds (net of transaction costs) and the redemption value is recognised in the
consolidated statement of comprehensive income over the period of the borrowing
using the effective interest rate method. Costs incurred in the course of issuing
additional debt are recognised on the balance sheet and charged to the income
statement on a straight-line basis over the term of the borrowings.
162
IP GROUP PLC ANNUAL REPORT 2024
NOTES TO THE COMPANY FINANCIAL STATEMENTS
.
BUSINESS OVERVIEW
STRATEGIC REPORT
OUR FINANCIALS
OUR GOVERNANCE
2. Investments in subsidiary undertakings
2024
£m
2023
£m
At 1 January
330.4
329.2
Investment in respect of share-based payments
1.9
2.6
Impairment of subsidiary undertakings in the year
(0.8)
(1.4)
At 31 December
331.5
330.4
Details of the Company’s subsidiary undertakings as at 31 December 2024 are detailed
in note 10 to the Company financial statements.
3. Equity and debt investments
2024
£m
2023
£m
At 1 January
3.5
3.5
Fair value gains in the year
–
–
Disposals in the year
–
–
At 31 December
3.5
3.5
Details of the Company’s associated undertakings and significant holdings as at
31 December 2024 are disclosed in note 11 to the Company financial statements.
4. Limited liability partnership interests
2024
£m
2023
£m
At 1 January
2.9
2.7
Fair value (loss)/gain during the year
(0.6)
0.2
At 31 December
2.3
2.9
Other investments relate to the Group’s 17.7% partnership interest in Technikos LLP, see
notes 1 and 14 of the Group accounts for further details.
5. Loans to subsidiary undertakings
2024
£m
2023
£m
At 1 January
641.8
599.0
(Repayment)/drawdown of loans by subsidiary
undertakings during the year
(36.1)
42.8
At 31 December
605.7
641.8
2024
£m
2023
£m
Current
0.9
0.9
Non-current
605.0
640.9
At 31 December
605.9
641.8
The Directors consider the carrying amount of trade and other receivables at
amortised cost to approximate their fair value. All receivables are interest free,
repayable on demand and unsecured.
The amounts due from subsidiary undertakings are interest free, repayable on
demand and unsecured. Loans classified as non-current are not expected to be
recalled within one year.
Given the nature of the subsidiary undertakings to which they relate, the Company
considers expected credit losses on the Company’s receivables to be less than £0.1m
and therefore not disclosed further (2023: under £0.1m).
IP GROUP PLC ANNUAL REPORT 2024
163
BUSINESS OVERVIEW
STRATEGIC REPORT
OUR FINANCIALS
OUR GOVERNANCE
NOTES TO THE COMPANY FINANCIAL STATEMENTS
.
BUSINESS OVERVIEW
STRATEGIC REPORT
OUR FINANCIALS
OUR GOVERNANCE
6. Share capital and reserves
Share
capital
£m
Share
premium
£m
Capital
redemption
reserve
£m
Profit and
loss reserve
£m
At 1 January 2024
21.3
102.8
–
734.0
Comprehensive income
–
–
–
(5.9)
Purchase of treasury shares
(1.8)
–
1.8
(29.6)
Equity-settled share-based
payments
–
–
–
1.9
Other movements
–
(0.3)
–
0.3
Ordinary dividends
–
–
–
–
At 31 December 2024
19.5
102.5
1.8
700.7
Details of the Company’s authorised share capital and changes in its issued share
capital can be found in note 20 to the consolidated financial statements. Details of the
movement in the share premium account can be found in the consolidated statement of
changes in equity.
7. Profit and loss account
As permitted by Section 408 of the Companies Act 2006, the Company’s profit and loss
account has not been included in these financial statements. The Company’s loss for
the year was £5.9m (2023: loss of £5.8m).
Details of the auditor’s remuneration are disclosed in note 6 to the consolidated
financial statements.
Amounts receivable by the Company’s auditor and its associates in respect of services
to the Company and its associates, other than the audit of the Company’s financial
statements, have not been disclosed as the information is required instead to be
disclosed on a consolidated basis in the consolidated financial statements.
8. Directors’ emoluments, employee information and
share-based payments
The remuneration of the Directors is borne by Group subsidiary undertakings. Full
details of their remuneration can be found in the sections labelled as audited within
the Directors’ Remuneration Report and note 21 of the Group accounts.
The Company had no employees during 2024 or 2023.
9. Dividends and share buyback
There were no dividends paid in 2024 (2023: £13.0m dividends; £13.0m settled in
cash). Due to the limited take up of scrip dividends the scheme was discontinued in
prior years.
On 18 December 2023 the Group announced that, in light of the prevailing discount
between the Company’s share price and its NAV per share, it had initiated a share
buyback of up to £20 million. This £20m share buyback tranche completed in September
2024. On 7th October 2024 it was announced to increase the Group’s share buyback
programme by a further £10m to run until 31 December 2024. This increased the share
buyback programme to a total of £30million. The Board remains committed to making
regular cash returns to shareholders from realisations. In future these regular cash returns
will normally be made in the form of share buybacks when the share price discount to
NAV exceeds 20%. Regular dividend payments will be suspended under such conditions,
including consideration of any final dividend for 2024.
10. Borrowings
2024
£m
2023
£m
Current
–
–
Non-current
119.7
119.6
At 31 December 2024
119.7
119.6
The Group expanded its debt facilities in the prior year with the addition of an agreed
borrowing primarily from Phoenix group which it has used to fund our portfolio of
businesses. The terms of the facilities are summarised in note 19 of the consolidated
financial statements.
164
IP GROUP PLC ANNUAL REPORT 2024
NOTES TO THE COMPANY FINANCIAL STATEMENTS
.
BUSINESS OVERVIEW
STRATEGIC REPORT
OUR FINANCIALS
OUR GOVERNANCE
11. Details of subsidiary undertakings
Name of subsidiary undertakings
Proportion
of
ownership
interest
%
(i)
Proportion
of voting
power held
%
(i)
Proportion
of nominal
value held
%
Held by
parent/
Group
IP2IPO Limited
100.0
100.0
100.0
Direct
IP2IPO Carry Partner Limited
100.0
100.0
100.0
Indirect
IP2IPO Americas Limited
100.0
100.0
100.0
Indirect
IP2IPO US Partners Limited
100.0
100.0
100.0
Indirect
Top Technology Ventures Limited
(iii)
100.0
100.0
100.0
Direct
Fusion IP Sheffield Limited
(ii)
100.0
100.0
100.0
Indirect
Fusion IP Cardiff Limited
(ii)
100.0
100.0
100.0
Indirect
IP Venture Fund II (GP) LLP
(iii)
100.0
100.0
100.0
Indirect
IP Ventures (Scotland) Limited
(iii)
100.0
100.0
100.0
Indirect
IP2IPO Portfolio (GP) Limited
(iii)
100.0
100.0
100.0
Indirect
IP2IPO Portfolio LP
100.0
100.0
100.0
Indirect
IP Capital Limited
(ii)
100.0
100.0
100.0
Indirect
IP2IPO Asia-Pacific Limited
100.0
100.0
100.0
Direct
IP Group Greater China Limited
100.0
100.0
100.0
Indirect
IP Group Greater China Services Limited
100.0
100.0
100.0
Indirect
IP2IPO ANZ Carry Limited
(ii)
100.0
100.0
100.0
Indirect
Kiko Ventures Limited
(ii)
100.0
100.0
100.0
Indirect
IP2IPO Australia Pty Limited
100.0
100.0
100.0
Indirect
IP2IPO Australia HP Pty Limited
100.0
100.0
100.0
Indirect
IP2IPO Australia Management Pty Limited
100.0
100.0
100.0
Indirect
IP2IPO Australia GP Pty Limited
100.0
100.0
100.0
Indirect
IP2IPO Australia CT Pty Limited
100.0
100.0
100.0
Indirect
IP2IPO Australia VCMP LP
100.0
100.0
100.0
Indirect
IP2IPO Australia VCLP No 1 LP
100.0
100.0
100.0
Indirect
IP2IPO Australia TS Pty Ltd
100.0
100.0
100.0
Indirect
Parkwalk Advisors Limited
100.0
100.0
100.0
Direct
Touchstone Innovations Limited
100.0
100.0
100.0
Indirect
IP2IPO Innovations Limited
100.0
100.0
100.0
Indirect
Innovations Limited Partner Limited
100.0
100.0
100.0
Indirect
IP2IPO Company Maker Limited
100.0
100.0
100.0
Indirect
IP GROUP PLC ANNUAL REPORT 2024
165
BUSINESS OVERVIEW
STRATEGIC REPORT
OUR FINANCIALS
OUR GOVERNANCE
NOTES TO THE COMPANY FINANCIAL STATEMENTS
.
BUSINESS OVERVIEW
STRATEGIC REPORT
OUR FINANCIALS
OUR GOVERNANCE
Name of subsidiary undertakings
Proportion
of
ownership
interest
%
(i)
Proportion
of voting
power held
%
(i)
Proportion
of nominal
value held
%
Held by
parent/
Group
Touchstone Innovations Businesses LLP
100.0
100.0
100.0
Indirect
IPG USA (LP) Limited
100.0
100.0
100.0
Indirect
IPG USA SCO LP
100.0
100.0
100.0
Indirect
IP2IPO Nominees Limited
(ii)
100.0
100.0
100.0
Direct
IP2IPO Services Limited
(ii)
100.0
100.0
100.0
Direct
LifeUK (IP2IPO) Limited
(ii)
100.0
100.0
100.0
Direct
IP Industry Partners Limited
(ii)
100.0
100.0
100.0
Direct
Biofusion Licensing (Sheffield) Limited
(ii),(iv)
100.0
100.0
100.0
Indirect
Fusion IP Nottingham Limited
(ii),(iv)
100.0
100.0
100.0
Indirect
Fusion IP Two Limited
(ii),(iv)
100.0
100.0
100.0
Indirect
Asterion Limited
66.8
66.8
66.5
Indirect
PH Therapeutics Limited
(ii)
60.0
60.0
60.0
Indirect
IP Venture Fund II LP
(v)
33.3
33.3
33.3
Indirect
i
All holdings are via ordinary shares unless separate classes are specified in the table.
ii Dormant/non-trading company.
iii Company/engaged in fund management activity.
iv Acquired as part of the Fusion IP plc acquisition.
v
As detailed in note 1 to the Group financial statements, though less than 33.3% of beneficial and nominal interest is held by the Group, the Group’s position as fund manager to IP Venture Fund II LP
means the Group fulfils the control criteria set out in IFRS 10 and the fund is thus consolidated.
All companies above have their registered offices at 2nd Floor 3 Pancras Square, Kings Cross, London, England, N1C 4AG , unless separately listed on the following page.
IP Ventures (Scotland) Limited: 50 Lothian Road, Festival Square, Edinburgh, EH3 9WJ.
Asterion Limited: Windsor House, Cornwall Road, Harrogate, England, HG1 2PW.
PH Therapeutics Limited: Windsor House, Cornwall Road, Harrogate, England, HG1 2PW.
IP2IPO Australia Pty Limited: Level 35, 360 Elizabeth Street, Melbourne, VIC 3000, Australia.
IP Group Greater China Limited: 6/F Alexandra House, 18 Chater Road, Central Hong Kong.
IP Group Greater China Services Limited: 6/F Alexandra House, 18 Chater Road, Central Hong Kong.
IP2IPO Australia HP Pty Limited: Level 16, 379 Collins Street, Melbourne, VIC 3000, Australia.
IP2IPO Australia Management Pty Limited: Level 16, 379 Collins Street, Melbourne, VIC 3000, Australia.
IP2IPO Australia GP Pty Limited: Level 16, 379 Collins Street, Melbourne, VIC 3000, Australia.
166
IP GROUP PLC ANNUAL REPORT 2024
NOTES TO THE COMPANY FINANCIAL STATEMENTS
.
11. Details of subsidiary undertakings
continued
BUSINESS OVERVIEW
STRATEGIC REPORT
OUR FINANCIALS
OUR GOVERNANCE
IP2IPO Australia CT Pty Limited: Level 16, 379 Collins Street, Melbourne, VIC 3000, Australia.
IP2IPO Australia VCMP LP: Level 16, 379 Collins Street, Melbourne, VIC 3000, Australia.
IP2IPO Australia VCLP No 1 LP: Level 16, 379 Collins Street, Melbourne, VIC 3000, Australia.
IP2IPO Australia TS Pty Ltd, 658 856 832, Level 16, 379 Collins Street, Melbourne, VIC, 3000, Australia.
IPG USA SCO LP: 13 Queens Road, Aberdeen, AB15 4YL.
All companies above are incorporated in England and Wales
Limited, IP2IPO Australia HP Pty Limited, IP2IPO Australia Management Pty Limited, IP2IPO Australia GP Pty Limited, IP2IPO Australia CT Pty Limited, IP2IPO Australia VCMP LP and IP2IPO
Australia VCLP No 1 LP which were incorporated in Australia and IP Group Greater China Limited and IP Group Greater China Services Limited are both incorporated in Hong Kong.
All companies above undertake the activity of commercialising intellectual property unless stated otherwise. All companies are consolidated into the Group’s financial
performance and position following the acquisition method.
12. Details of significant holdings and associated undertakings
Name of undertaking
Registered address
Proportion
of nominal
value held
%
(i)
Held by
parent/
Group
(ii)
IPG-CEL China Ventures Limited
Level 54, Hopwell Centre, 183 Queen’s Road East, Hong Kong
50.0%
Group
Accelercomm Limited
5 Benham Road Benham Road, Chilworth, Southampton, England, SO16 7QJ
26.4%
Group
Ordinary Shares (Accelercomm Limited)
25.8%
Group
Ordinary A Shares (Accelercomm Limited)
30.9%
Group
B Preference Shares (Accelercomm Limited)
24.5%
Group
Additive Assurance Pty Ltd
382 Huntingdale Rd, Oakleigh South VIC 3167, Australia
32.5%
Group
Seed Extension Preference Shares (Additive Assurance)
32.5%
Group
Alesi Surgical Limited
Cardiff Medicentre, Heath Park, Cardiff, CF14 4UJ
30.5%
Group
Preferred D Shares (Alesi Surgical Limited)
23
.4%
Group
Preferred B Shares (Alesi Surgical Limited)
28.1%
Group
Preferred Ordinary Shares (Alesi Surgical Limited)
40.3%
Group
Ordinary Shares (Alesi Surgical Limited)
57.0%
Group
A Shares (Alesi Surgical Limited)
100.0%
Group
Preferred C Shares (Alesi Surgical Limited)
42.0%
Group
Alimetry Limited
70 Symonds Street, Grafton, Auckland 1010, New Zealand
22.2%
Group
Series B Preference Shares (Alimetry Limited)
22.2%
Group
AMSL Innovations Pty Ltd
42 Stafford St Stanmore, NEW SOUTH WALES, 2048 Australia
35.7%
Group
Series B Shares (AMSL Innovations Pty Ltd)
35.7%
Group
Ankere Therapeutics Pty Ltd
Level 9, 31 Queen Street Melbourne VIC 3000
32.4%
Group
IP GROUP PLC ANNUAL REPORT 2024
167
BUSINESS OVERVIEW
STRATEGIC REPORT
OUR FINANCIALS
OUR GOVERNANCE
NOTES TO THE COMPANY FINANCIAL STATEMENTS
.
11. Details of subsidiary undertakings
continued
BUSINESS OVERVIEW
STRATEGIC REPORT
OUR FINANCIALS
OUR GOVERNANCE
Name of undertaking
Registered address
Proportion
of nominal
value held
%
(i)
Held by
parent/
Group
(ii)
Seed Shares (Ankere Therapeutics Pty Ltd)
54.5%
Group
AnywhereHPLC Limited
Irdb Building (Level 1) Du Cane Road Imperial College London, Hammersmith
Campus London W12 0HS
50.0%
Group
Ordinary Shares (AnywhereHPLC Limited)
50.0%
Group
Aqdot Limited
Lab 1 Iconix 2 Iconix Park, London Road, Cambridge, CB22 3EG
28.1%
Group
Preference Shares (Aqdot Limited)
37.4%
Group
Ordinary Shares (Asterion Limited)
66.8%
Group
Atazoa Limited
Skempton Building, Imperial College Room 205, Skempton Building, Imperial
College, London, SW7 2AZ
24.9%
Group
Ordinary Shares (Atazoa Limited)
49.9%
Group
AudioScenic Limited
Suite A, Epsilon House Enterprise Road, Southampton Science Park,
Southampton, England, SO16 7NS
34.0%
Group
Ordinary Shares (AudioScenic Limited)
38.5%
Group
A Ordinary Shares (AudioScenic Limited)
33.1%
Group
B Ordinary Shares (AudioScenic Limited)
30.4%
Group
Autifony Therapeutics Limited
Stevenage Bioscience Catalyst, Gunnels Wood Road, Stevenage, Hertfordshire,
England, SG1 2FX
24.9%
Group
A3 Preference Shares (Autifony Therapeutics Limited)
35.5%
Group
A Preference Shares (Autifony Therapeutics Limited)
38.4%
Group
Ordinary Shares (Autifony Therapeutics Limited)
1.5%
Group
Azuri Technologies Limited
St. John’s Innovation Centre, Cowley Road, Cambridge,
42.4%
Group
Ordinary shares (Azuri Technologies Limited)
37.4%
Group
A Preference Shares (Azuri Technologies Limited)
50.2%
Group
Barocal Limited
140b Newmarket Road, Cambridge, England, CB5 8HE
32.0%
Group
Ordinary Shares (Barocal Limited)
32.0%
Group
Bramble Energy Limited
Atrium Court Tilgate Business Park Brighton Road Crawley RH11 9BP
31.6%
Group
Ordinary Shares (Bramble Energy Limited)
32.0%
Group
A Ordinary Shares (Bramble Energy Limited)
32.4%
Group
Canopus Networks Pty Ltd
98 Tambourine Bay Rd, Riverview, New South Wales 2066, AU
38.0%
Group
168
IP GROUP PLC ANNUAL REPORT 2024
12. Details of significant holdings and associated undertakings
continued
NOTES TO THE COMPANY FINANCIAL STATEMENTS
.
BUSINESS OVERVIEW
STRATEGIC REPORT
OUR FINANCIALS
OUR GOVERNANCE
Name of undertaking
Registered address
Proportion
of nominal
value held
%
(i)
Held by
parent/
Group
(ii)
Ordinary Shares (Canopus Networks Pty Ltd)
38.0%
Group
Cardian Limited
30 Broad Street Broad Street, Great Cambourne, Cambridge, England, CB23 6HJ
53.7%
Group
A Preference Shares (Cardian Limited)
100.0%
Group
Ordinary Shares (Cardian Limited)
13.6%
Group
Ordinary Shares 2 – Revenue shares (Cardian Limited)
100.0%
Group
Cardiovascular Imaging Solutions Limited
Suite 19 Maple Court, Grove Park, Maidenhead, Berkshire, England, SL6 3LW
24.9%
Group
Ordinary Shares (Cardiovascular Imaging Solutions Limited)
24.9%
Group
C-Capture Limited
Windsor House, Cornwall Road, Harrogate, England, HG1 2PW
31.1%
Group
Ordinary Shares (C-Capture Limited)
22.2%
Group
Series A Preference Shares (C-Capture Limited)
37.0%
Group
A2 Preferred Shares (C-Capture Limited)
17.1%
Group
A1-B Preference Shares (C-Capture Limited)
100.0%
Group
Chromosol Limited
3 Field Court Grays Inn London WC1R 5EF
34.6%
Group
Ordinary Shares (Chromosol Limited)
34.6%
Group
CyAmast Pty Ltd
South Wharf, VIC 3006, Australia
34.1%
Group
Ordinary Share (CyAmast Pty Ltd)
34.1%
Group
Deep Render Ltd
1 St. Katharine’s Way, London, England, E1W 1UN
45.7%
Group
Series A Preferred Shares (Deep Render Ltd)
60.0%
Group
Defenition Limited
Windsor House, Cornwall Road, Harrogate, England, HG1 2PW
49.5%
Group
B Ordinary Shares (Defenition Limited)
100.0%
Group
Ordinary Shares (Defenition Limited)
48.5%
Group
Diffblue Limited
5 New Street Square London EC4A 3TW
28.3%
Group
Series A Shares (Diffblue Limited)
52.6%
Group
Non-Voting Preference Shares (Diffblue Limited)
100.0%
Group
Series A1 Shares (Diffblue Limited)
22.3%
Group
Electralith Pty Ltd
Level 35, 360 Elizabeth Street, Melbourne, VIC 3000
24.1%
Group
Series A Preference Shares (Electralith Pty Ltd)
19.5%
Group
Ordinary Shares (Electralith Pty Ltd)
28.2%
Group
IP GROUP PLC ANNUAL REPORT 2024
169
BUSINESS OVERVIEW
STRATEGIC REPORT
OUR FINANCIALS
OUR GOVERNANCE
NOTES TO THE COMPANY FINANCIAL STATEMENTS
.
12. Details of significant holdings and associated undertakings
continued
BUSINESS OVERVIEW
STRATEGIC REPORT
OUR FINANCIALS
OUR GOVERNANCE
Name of undertaking
Registered address
Proportion
of nominal
value held
%
(i)
Held by
parent/
Group
(ii)
Emdot Limited
3 Pancras Square, King’s Cross, London, England, N1C 4AG
26.3%
Group
Ordinary Shares (Emdot Limited)
26.3%
Group
Enterprise Therapeutics Holdings Ltd
Sussex Innovation Centre Science Park Square, Falmer, Brighton, England, BN1 9SB
20.3%
Group
Series B Shares (Enterprise Therapeutics Holdings Ltd)
16.4%
Group
Series A Shares (Enterprise Therapeutics Holdings Ltd)
47.6%
Group
Series B1 Preferred Shares (Enterprise Therapeutics Holdings
15.0%
Group
Series B2 Preferred Shares (Enterprise Therapeutics Holdings
26.0%
Group
First Light Fusion Limited
Unit 10 Mead Road, Yarnton, Kidlington, Oxfordshire, OX5 1QU
27.5%
Group
Ordinary Shares (First Light Fusion Limited)
28.2%
Group
Forge Photonics Pty Ltd
Suite 201, 697 Burke Road, Camberwell VIC 3124
31.5%
Group
Ordinary Shares (Forge Photonics Pty Ltd)
31.5%
Group
Gripable Limited
Thornton House, 39 Thornton Road, London, England, SW19 4NQ
36.8%
Group
Ordinary Shares (Gripable Limited)
37.1%
Group
Hysata Pty Ltd
AIIM Building, Innovation Campus, North Wollongong NSW 2500
46.3%
Group
Ordinary Shares (Hysata Pty Ltd)
63.4%
Group
Series A Preference Shares (Hysata Pty Ltd)
44.7%
Group
Ibex Innovations Limited
Netpark Plexus Thomas Wright Way Sedgefield Stockton-on-Tees TS21 3FD
35.9%
Group
Ordinary Shares (Ibex Innovations Limited)
35.9%
Group
Ieso Digital Health Limited
The Jeffreys Building, Cowley Road, Cambridge, Cambridgeshire, United
Kingdom, CB4 0DS
20.9%
Group
A Ordinary Shares (Ieso Digital Health Limited)
85.2%
Group
Ordinary Shares (Ieso Digital Health Limited)
14.7%
Group
A1 Preference Shares (Ieso Digital Health Limited)
47.1%
Group
B1 Preferred Shares – CLN (Ieso Digital Health Limited)
22.8%
Group
B1 Preferred Shares (Ieso Digital Health Limited)
15.0%
Group
C1 Preferred Shares – CLN (Ieso Digital Health Limited)
35.2%
Group
Iksuda Therapeutics Limited
The Biosphere, Draymans Way, Newcastle Helix, Newcastle upon Tyne, NE4 5BX
21.5%
Group
Ordinary Shares (Iksuda Therapeutics Limited)
22.6%
Group
A Ordinary Shares (Iksuda Therapeutics Limited)
50.0%
Group
Series A Shares (Iksuda Therapeutics Limited)
29.2%
Group
170
IP GROUP PLC ANNUAL REPORT 2024
NOTES TO THE COMPANY FINANCIAL STATEMENTS
.
12. Details of significant holdings and associated undertakings
continued
BUSINESS OVERVIEW
STRATEGIC REPORT
OUR FINANCIALS
OUR GOVERNANCE
Name of undertaking
Registered address
Proportion
of nominal
value held
%
(i)
Held by
parent/
Group
(ii)
Inosi Therapeutics Pty Ltd
South Wharf, VIC 3006, Australia
26.0%
Group
Ordinary Shares (Inosi Therapeutics Pty Ltd)
26.0%
Group
Intelligent Ultrasound Group plc
Floor 6A, Hodge House, 114-116 St Mary Street, Cardiff, CF10 1DY
20.5%
Group
Ordinary Shares (Intelligent Ultrasound Group plc)
20.5%
Group
Intrinsic Semiconductor Technologies Limited
Ucl Business Plc, The Network Building, 97 Tottenham Court Road, London, United
Kingdom, W1T 4TP
24.3%
Group
A Ordinary Shares (Intrinsic Semiconductor Technologies Limited)
43.7%
Group
B Ordinary Shares (Intrinsic Semiconductor Technologies Limited)
24.1%
Group
Ionix Advanced Technologies Limited
Lynthorne House Intercity Way Leeds LS13 4LQ
28.6%
Group
Ordinary Shares (Ionix Advanced Technologies Limited)
28.5%
Group
B Ordinary Shares (Ionix Advanced Technologies Limited)
100.0%
Group
E Ordinary Shares (Ionix Advanced Technologies Limited)
27.8%
Group
Ipalk SAS
112 rye des hautes variennes, 45200, Amilly France
22.0%
Group
Ordinary Shares (Ipalk SAS)
22.0%
Group
Istesso Limited
2nd Floor 3 Pancras Square, Kings Cross, London, United Kingdom, N1C 4AG
27.0%
Group
Ordinary Shares (Istesso Limited)
40.6%
Group
A Shares (Istesso Limited)
77.8%
Group
Kira Biotech Pty Limited
The Precinct, Level 2/315 Brunswick St, Fortitude Valley QLD 4006, Australia
24.2%
Group
Series A Shares (Kira Biotech Pty Limited)
38.6%
Group
Jetra Therapeutics Pty Ltd
St Lucia QLD 4072 Australia
31.7%
Group
Ordinary Shares (Jetra Therapeutics Pty Ltd)
31.7%
Group
Lumai Limited
61 Derwent Avenue, Headington, Oxford, England, OX3 0AS
31.6%
Group
Series A Shares (Lumai Limited)
Lumai Limited
32.2%
Ordinary Shares (Lumai Limited)
31.2%
Group
Magnomatics Limited
Park House, Bernard Road, Sheffield, S2 5BQ
37.2%
Group
A Shares (Magnomatics Limited)
52.1%
Group
Ordinary Shares (Magnomatics Limited)
15.3%
Group
C Ordinary Shares (Magnomatics Limited)
100.0%
Group
B Shares (Magnomatics Limited)
100.0%
Group
IP GROUP PLC ANNUAL REPORT 2024
171
BUSINESS OVERVIEW
STRATEGIC REPORT
OUR FINANCIALS
OUR GOVERNANCE
NOTES TO THE COMPANY FINANCIAL STATEMENTS
.
12. Details of significant holdings and associated undertakings
continued
BUSINESS OVERVIEW
STRATEGIC REPORT
OUR FINANCIALS
OUR GOVERNANCE
Name of undertaking
Registered address
Proportion
of nominal
value held
%
(i)
Held by
parent/
Group
(ii)
Metabometrix Limited
12 Lodgefield Welwyn Garden City AL7 1SD
23.0%
Group
Ordinary Shares (Metabometrix Limited)
23.0%
Group
Mixergy Limited
30 Upper High Street, Thame, Oxfordshire, OX9 3EZ
25.5%
Group
Ordinary Shares (Mixergy Limited)
26.6%
Group
A Ordinary Shares (Mixergy Limited)
22.0%
Group
B Ordinary Shares (CLN) (Mixergy Limited)
20.2%
Group
mRNAex Pty Ltd
Suite 201, 697 Burke Road Camberwell VIC 3124
25.0%
Group
Seed Preference Shares (mRNAex Pty Ltd)
36.4%
Group
NGenics Global Limited
School of Physics, Engineering and Technology University of York Heslington York
YO10 5DD
29.6%
Group
Ordinary Shares (NGenics Global Limited)
29.6%
Group
OxCCU Tech Limited
C/O James Cowper Kreston 2 Chawley Park, Cumnor Hill, Oxford, Oxfordshire,
England, OX2 9GG
24.8%
Group
Ordinary Shares (OxCCU Tech Limited)
26.5%
Group
Series A Preferred Shares (OxCCU Tech Limited)
12.5%
Group
Oxehealth Limited
Bee House Eastern Avenue Milton Abingdon OX14 4SB
27.4%
Group
Ordinary Shares (Oxehealth Limited)
27.4%
Group
OxSyBio Limited
3 Field Court, London, WC1R 5EF
45.2%
Group
Ordinary Shares (OxSyBio Limited)
45.8%
Group
A Shares (OxSyBio Limited)
100.0%
Group
Preference shares (OxSyBio Limited)
40.0%
Group
Perlemax Limited
318 Broad Lane, Kroto Innovation Centre, Sheffield, South Yorkshire,
England, S3 7HQ
34.5%
Group
Ordinary Shares (Perlemax Limited)
34.5%
Group
Ordinary Shares (PH Therapeutics Limited)
60.0%
Group
172
IP GROUP PLC ANNUAL REPORT 2024
NOTES TO THE COMPANY FINANCIAL STATEMENTS
.
12. Details of significant holdings and associated undertakings
continued
BUSINESS OVERVIEW
STRATEGIC REPORT
OUR FINANCIALS
OUR GOVERNANCE
Name of undertaking
Registered address
Proportion
of nominal
value held
%
(i)
Held by
parent/
Group
(ii)
Resseptor Therapeutics Pty Ltd
Suite 201, 697 Burke Road, Camberwell VIC 3124
38.0%
Group
Ordinary Shares (Resseptor Therapeutics)
38.0%
Group
RFC Power Limited
Windsor House, Cornwall Road, Harrogate, England, HG1 2PW
31.9%
Group
T Ordinary Shares (RFC Power Limited)
100.0%
Group
Ordinary Shares (RFC Power Limited)
28.3%
Group
Riotech Pharmaceuticals Limited
49 Arrivato Plaza, Hall Street, St Helens, United Kingdom, WA10 1GH
24.0%
Group
Ordinary Shares (Riotech Pharmaceuticals Limited)
24.0%
Group
SkyStrata, Inc.
5179 Britten Ln, Ellicott City, MD 21043, United States
28.8%
Group
Common Stock (SkyStrata, Inc.)
28.8%
Group
Spinetic Energy Limited
Office D Beresford House Town Quay Southampton SO14 2AQ
29.6%
Group
Ordinary Shares (Spinetic Energy Limited)
29.6%
Group
Sunborne Systems Limited
3 Field Court Gray’s Inn London WC1R 5EF
22.0%
Group
Ordinary Shares (Sunborne Systems Limited)
22.0%
Group
Surrey Nanosystems Limited
East Side Business Park, Beach Road, Newhaven, England, BN9 0FB
21.1%
Group
A Ordinary Shares (Surrey NanoSystems Limited)
15.3%
Group
Ordinary Shares (Surrey NanoSystems Limited)
32.2%
Group
A2 Shares (Surrey Nanosystems Limited)
9.1%
Group
Sweetgen Limited
3 Field Court, Gray’s Inn, London, WC1R 5EF
50.0%
Group
Ordinary Shares (Sweetgen Limited)
50.0%
Group
Telectica Limited
Second Floor Kennel Club House, Gatehouse Way, Aylesbury, Buckinghamshire,
United Kingdom, HP19 8DB
26.4%
Group
Seed Preferred Shares (Telectica Limited)
90.5%
Group
Topivert Limited
1 More London Place, London, SE1 2AF, United Kingdom
28.7%
Group
Ordinary Shares (Topivert Limited)
1.8%
Group
A Ordinary Shares (Topivert Limited)
37.8%
Group
Series B1 Preferred Shares (Topivert Limited)
34.0%
Group
Series B2 Preferred Shares (Topivert Limited)
37.1%
Group
IP GROUP PLC ANNUAL REPORT 2024
173
BUSINESS OVERVIEW
STRATEGIC REPORT
OUR FINANCIALS
OUR GOVERNANCE
NOTES TO THE COMPANY FINANCIAL STATEMENTS
.
12. Details of significant holdings and associated undertakings
continued
BUSINESS OVERVIEW
STRATEGIC REPORT
OUR FINANCIALS
OUR GOVERNANCE
Name of undertaking
Registered address
Proportion
of nominal
value held
%
(i)
Held by
parent/
Group
(ii)
TriboSim Limited
49 Station Road Tribosim Ltd, Polegate, East Sussex, England, BN26 6EA
22.5%
Group
Ordinary Shares (TriboSim Limited)
22.5%
Group
Ubiquigent Limited
Dundee University Incubator Dundee Technopole, James Lindsay Place, Dundee,
DD1 5JJ
37.2%
Group
Ordinary Shares (Ubiquigent Limited)
37.2%
Group
Uniphy Limited
Nexus, Discovery Way, Leeds, United Kingdom, LS2 3AA
39.0%
Group
Ordinary Shares (Uniphy Limited)
39.1%
Group
A Shares (Uniphy Limited)
16.0%
Group
B Shares (Uniphy Limited)
4.0%
Group
Zeetta Networks Limited
11th Floor One Temple Row Birmingham B2 5LG
21.8%
Group
Ordinary Shares (Zeetta Networks Limited)
12.3%
Group
Preference Shares (Zeetta Networks Limited)
25.4%
Group
Zoompast Limited
Office 7, 35-37 Ludgate Hill, London, EC4M 7JN
31.3%
Group
Ordinary Shares (Zoompast Limited)
31.3%
Group
i
All holdings are via ordinary shares unless separate classes are specified in the table.
ii
Voting % less than 50%.
The significant influence noted above has been determined in line with IAS 28 and Schedule 4 of The Large and Medium-sized Companies and Groups (Accounts and Reports)
Regulations 2008.
174
IP GROUP PLC ANNUAL REPORT 2024
NOTES TO THE COMPANY FINANCIAL STATEMENTS
.
12. Details of significant holdings and associated undertakings
continued
BUSINESS OVERVIEW
STRATEGIC REPORT
OUR FINANCIALS
OUR GOVERNANCE
The production of this report supports the work of the
Woodland Trust, the UK’s leading woodland conservation
charity. Each tree planted will grow into a vital carbon store,
helping to reduce environmental impact as well as creating
natural havens for wildlife and people.
Company registration number
04204490
Registered office
2nd Floor 3 Pancras Square Kings Cross London N1C 4AG
Directors
Sir Douglas Jardine Flint
(Non-executive Chair)
Gregory Simon Smith
(Chief Executive Officer)
David Graham Baynes
(Chief Financial and Operating Officer)
Aedhmar Hynes
(Non-executive Director and Senior Independent Director)
Dr Caroline Anne Brown
(Non-executive Director)
Heejae Richard Chae
(Non-executive Director)
Anita Kidgell
(Non-executive Director)
Company Secretary
Angela Leach
Brokers
Bank of America Merrill Lynch
Financial Centre 2 King Edward Street London EC1A 1HQ
Deutsche Numis
London Office 45 Gresham Street London EC2V 7BF
Joh
.
Berenberg, Gossler & Co
.
KG
60 Threadneedle Street London EC2R 8HP
Registrars
Link Group
10th Floor Central Square 29 Wellington Street Leeds LS1 4DL
Bankers
Royal Bank of Scotland
PO Box 333 Silbury House 300 Silbury Boulevard Milton Keynes MK9 2ZF
Solicitors
Travers Smith LLP
10 Snow Hill, City of London, London, EC1A 2AL
Independent auditor
KPMG LLP
15 Canada Square London E14 5GL
COMPANY INFORMATION
.
Our family brands
IP GROUP PLC
2ND FLOOR, 3 PANCRAS SQUARE,
KINGS CROSS, LONDON, N1C 4AG
T +44 (0)20 7444 0050
WWW.IPGROUPPLC.COM