Fusion IP increases losses but aims to reap benefits of investment

FUSION IP is aiming to move into profit next year and reap the benefits of its investment into world class research in areas including engineering, medical technology and electronics.

Announcing its preliminary results for the 12 months ended July 31, the Sheffield-based group said losses for the period, including the cost of subsidiary spin-outs and amortisation increased to £5m compared to £3.1m the previous year.

Chief executive David Bayles said the losses reflected the impact of a full year of operating activity in its Cardiff operation and an increase in the operating costs of the group’s growing portfolio of spin-out companies.

Fusion IP – which makes businesses out of academic research – currently owns the rights to more than £167m per year of research across a range of areas.

However the group said that after removing the operating costs of the subsidiary spin out companies and the amortisation of the Cardiff IP rights, underlying losses increased only marginally to £1.6m compared to £1.4m in 2007.

The group said that the losses were broadly in line with budget.

The group said that despite the turbulent financial market it raised £2.1m through a share placing with institutional investors.

Fusion IP said it remained confident that “there is continued opportunity for expansion of our model in the UK at the appropriate time”.

Cash balances for the group stand at £6.4m and overall Fusion IP has invested £2.7m in spin-out companies in the period.

Highlights from the period include the expansion of an exclusive 10 year agreement with the University of Sheffield and a co-investment Memorandum of Understanding signed with Finance Wales – which has more than
£130m of investment funds under its control.

Portfolio activity throughout the year was significant, with two equity-based exits.

CellTran, of which Fusion IP owns 16% – was put into administration due to the poor funding climate.

The board said the value of CellTran had already been fully written down by the group in previous financial periods, reflecting its policy of taking a rigorous approach to investments in portfolio companies and withdrawing funding support where it is considered that financial returns do not justify it.

Mr Baynes said: “The year has been both challenging and exciting. We remain totally focussed on creating value from our portfolio of companies and have some exciting technologies at an advanced stage with strong management teams to take them through commercialisation.

“We were delighted to expand our 10 year exclusive agreement with the University of Sheffield and to raise the associated funds, in what have been extremely challenging markets. We now have a strong IP pipeline
from which the focus of our business is better balanced between the longer term drug development companies and the quicker to market medtech, energy, engineering and electronics companies. We are confident that this rebalancing will generate exciting and fruitful result.”

Fusion recently changed its name from Biofusion to reflect its enlarged business, which includes more than 20 portfolio companies based on intellectual property (IP) from clean technology energy and renewables to engineering and medical technology.