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Calm returns to IP

IP 's business - the commercialisation of university intellectual property rights - has suffered in the midst of stock market volatility. But the situation has stabilised and the value of the 64 companies in IP's portfolio has held steady at £101m.

There has been a revival of activity on the Alternative Investment Market (Aim), too. So there was a £17.4m fund-raising for Oxford Nanopore, which puts the value of IP's 24.6 per cent stake at £25.6m and delivered a £2.2m fair value gain. In addition, two of the companies in IP's stable gained listings - Tissue Regenix and Ilika. These are the first since 2007, although the price that the latter achieved resulted in a £2m loss. Even so, unrealised losses on investment valuations dropped from £12.4m to £10.6m. What's more, IP has stepped up its investments in new projects in the period - to 17 against 20 for the whole of last year; an outlay of £3.1m against £1.6m in last year's first half.

Broker KBC Peel Hunt expects a full-year adjusted pre-tax profit of £2.5m, giving adjusted EPS of 2p (from a £6.5m loss and a loss per share of 24p in 2009).

IP GROUP (IPO)
ORD PRICE:33pMARKET VALUE:£84.4m
TOUCH:32-33p12-MONTH HIGH:62pLOW: 27p
DIVIDEND YIELD:nilPE RATIO:na
NET ASSET VALUE: 65pNET CASH:£23.9m

Half-year to 30 JunTurnover (£m)*Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
2009na-4.9-1.84nil
2010na-3.8-1.49nil
% change----

Ex-div: -

Payment: -

*The change in fair value of equity and debt investments is negative, hence no turnover line

.

More analysis of company results

IC View

Strip out the cash, worth 9p a share, and the shares trade at a hefty 55 per cent discount to IP's tangible net asset value of 53p a share. But given the long lead times in bringing IP's investments to market, and until there's a marked revival in IPO activity - especially on Aim - a catalyst for a near-term re-rating is hard to spot. Fairly priced.

Last IC view: Fairly priced, 41p, 21 Aug 2010

visible-status-Public story-url-IC_IP_results060910.xml

By Anthony Lugg,
06 September 2010

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